Letter to the Editor 05-01-2017

Letter to the Editor 05-01-2017
January 5 2017

To:      The Editor, The Australian Financial Review

From:  Paul Schembri, Chairman CANEGROWERS

Foreign Investment Review Board Chairman Brian Wilson has displayed how little he knows or understands about the $2 billion Australian sugar industry in his comments in The Australian Financial Review of 5 January, 2017.

Legislation passed in Queensland to safeguard competition and choice in the provision of raw sugar marketing services DO NOT discriminate between local and foreign owned companies in the milling sector.

There are no ‘two classes of businesses’ as Mr Wilson incorrectly states. The Queensland Parliament should rightly be offended that at Mr Wilson’s implication that it would pass legislation which would seek to differentiate and discriminate against foreign-owned businesses in this way.

Everyone is and should be subject to the same rules which, of course, can and do change because of changing circumstances. Think of labour laws, food safety rules and environmental requirements which evolve over time.

Is Mr Wilson suggesting by his comments that foreign companies coming into Australia should be immune from future changes in law?

It is shame Mr Wilson did not take the time to concern himself with the way Wilmar has treated Australian farmers as a second class business risk that simply needs to be managed on their balance sheet.

Six of the seven milling companies operating in Queensland (including three which are foreign owned) have negotiated commercially viable cane supply contracts which comply with the 2015 Sugar Industry (Real Choice in Marketing) Amendment Act. Only Wilmar Sugar has, as yet, been unable to do that.

This is not an issue of foreign ownership. Ownership structure has nothing to do with fairness for small businesses in their relationship with much larger, regional monopolies.

Growers have a direct economic interest in the outcome of the marketing of the sugar. A percentage of their business income is dependent on the final price the sugar gets on the world market and they accept the risks that come with forward pricing this component.

This was the case when Wilmar Sugar bought the CSR mills, with FIRB approval, nothing here has changed.

The 2015 legislative amendments were made necessary by Wilmar Sugar’s move to railroad growers into using only a marketing pathway that it owns. Under the legislation growers can choose between a mill-owned marketing company, the industry-owned QSL or any other entity which decides to set up shop in Queensland. In this way it encourages competition in marketing.

Mr Wilson is wildly incorrect is his statement that giving our members, small business owners, the ability to choose a marketer is ‘..likely to restrict competition and deter new spending on mills or more innovative marketing..’

Without the legislation, there is no competition and therefore no incentive to drive innovation and efficiency in marketing services and other trading companies would be permanently locked out of the Queensland market.

Investment has not been deterred. In August, MSF Sugar (owned by the Thai company Mitr Phol) announced it would spend $75 million before the end of 2018 on a green power station on Atherton Tableland as the first step to a proposed $500 million investment. It has also spent millions on programs to improve irrigation efficiency to boost its cane supply and has successfully negotiated collective cane supply agreements with growers.

We invite Mr Wilson and your editorial staff to talk with us, visit our farms and meet our members to truly understand this vibrant, productive and proud Australian industry before further ignorance on this issue is displayed in the pages of this paper.

Paul Schembri, Chairman, CANEGROWERS

To download a plain text pdf of The Australian Financial Review article, click here.