CANEGROWERS statement on STL’s in-sourcing decision
In January 2023, Sugar Terminals Limited announced its decision to terminate a long and successful commercial partnership with Queensland Sugar Limited for the operation of the industry’s bulk sugar terminals.
Since then, CANEGROWERS has been working closely with both organisations to find a solution that is in the best interests of the whole industry.
Board and executive representatives from both STL and QSL addressed grower-leaders at the recent CANEGROWERS Policy Council meeting in Brisbane.
There have also been numerous (separate) meetings between the CANEGROWERS, STL and QSL leadership teams (CEO and Chair) over the past two months.
In addition, we have encouraged both STL and QSL to visit sugarcane growing districts and make their cases directly to local CANEGROWERS elected representatives and members.
CANEGROWERS has provided significant public commentary on this issue and has repeatedly stated that STL’s decision is unjustified, unnecessary, and if not resolved satisfactorily, could threaten Australia’s long-established and hard-won reputation as a reliable and prompt supplier of high quality, sustainably produced raw sugar.
QSL has operated Queensland’s bulk sugar terminals safely and efficiently, and has never been found wanting in its service in the operation of the terminals.
As a not-for-profit organisation, QSL also operates the terminals on a cost-recovery basis only – something that has long given growers confidence that these assets are managed in the best interests of the industry.
By terminating the agreement with QSL and in-sourcing operations, STL is installing itself as a monopoly owner-operator, despite having no hands-on experience in sugar terminal operations.
Growers have not been provided any evidence to demonstrate how STL will deliver on its aspirations to be a low cost, efficient terminal operator, surpassing QSL’s performance.
Decisions in relation to terminal ownership and operations need to be made with the best interests of the industry in mind.
CANEGROWERS has repeatedly called on both parties to come together to resolve their operational issues in an orderly way.
Growers want to be assured that:
- terminals will be operated without increased costs while ensuring efficiency and reliability
- there is a forward operating strategy and business plan in place for the terminals
- terminal operations will always prioritise sugar access
- pricing and access arrangements will continue to be on an equitable basis for all customers
- a thorough, independent review of both STL and QSL business cases is conducted
- monopoly-like behaviour will be avoided
Queensland’s six purpose-built bulk sugar terminals are vital industry assets. They give us a significant competitive advantage in the world market and their efficient, effective and safe operation as a service to the industry is paramount.
Queensland’s sugarcane farmers funded two-thirds of the construction costs of these terminals, so we are not about to sit quietly back and see that legacy risked in any way because these organisations are unable to agree what’s actually in the best interests of the industry.
The bottom line is, these terminals have operated very well under QSL. It is up to STL to demonstrate to growers that they can do a similar or better job, at a lower cost. But we have yet to be convinced of that.
If there is a better operating model, then surely STL and QSL as two organisations that should be thinking in the best interests of the industry, should resolve the situation in a professional manner.
CANEGROWERS will continue to fight to ensure this issue is resolved in an acceptable way as soon as possible.
CANEGROWERS Chairman
Owen Menkens