There has been a lot of talk in the media about Queensland’s bulk sugar terminals and who will operate them.
Sugar Terminals Limited (STL) recently announced it was abandoning a long and successful commercial partnership with Queensland Sugar Limited (QSL) for the operation of these terminals. Instead, STL will insource responsibility for Queensland’s sugar storage and export facilities.
People not involved in the sugar industry were probably unaware these bulk sugar terminals even existed, and a dispute between two businesses over who operates them may not seem particularly important.
But for the sugar industry, which underpins many regional communities along 2,000 kms of Queensland coastline and is a significant contributor to the state economy, these bulk sugar terminals are a vital piece of industry infrastructure that gives our sugar industry an advantage over international competitors.
The construction of these terminals was funded directly by growers over a number of years, and as such, they are industry assets.
Today, the custodian of these assets is STL, a listed company with both grower and miller shareholders.
However, for many years QSL has been responsible for their day-to-day operation, an arrangement strongly supported by growers.
As an industry-owned organisation and Australia’s largest sugar marketing company, QSL has built up a lot of trust within the growing community.
QSL is also a not-for-profit organisation, operating the terminals solely for the benefit of the industry.
STL, on the other hand, would be obligated to operate the terminals for the benefit of shareholders.
STL’s decision to insource terminal operations was made without consulting growers, the very people who built these terminals to strengthen the industry.
On the face of it, there seems little justification for this change. It appears to be more about corporate manoeuvring than improving efficiency.
There is certainly no disputing that QSL has operated the terminals safely and efficiently, and its performance has been highly scrutinized.
With this in mind, CANEGROWERS is now calling on STL to make clear:
• how they intend to operate the terminals to deliver lower operating costs and an improvement in efficiency
• how these cost savings will flow through to growers
• what the forward operating strategy is for the terminals
• how STL will ensure this strategy is used to benefit the Australian sugarcane industry and not be distracted seeking alternative business models driven by a focus on shareholder returns.
The successful operation of our terminals is vital to the overall success of Australia’s sugarcane industry.
QSL’s smooth and efficient operation of these terminals has ensured the industry maintained a competitive edge. This recent move by STL is threatening that competitive advantage and growers are rightly concerned. They deserve an explanation.