Growers push new deal
CANE growers are pushing for a sweeter deal as they face a more heavily consolidated set of mill owners which threatens to increase the growers’ vulnerability. This month the Canegrowers organisation released a report that outlined consultants’ recommendations as to how the growers can increase their caim over sugar beyond farm gate
Currently, mills claim ownership over sugarcane as it is harvested and delivered to the mill. But the question of ownership of sugar beyond the farm gate has been put to the test in recent years. At issue is title to the growers’ two-thirds economic interest in sugar, which the Green Pool report released this month recommends be legally transferred to growers, saying it would give growers the say they need to drive a vibrant future for the $ 12 billion Australian sugarcane industry.
Canegrowers says the instability of current marketing arrangements is having a negative impact on grower confidence and investment. ‘‘If left unchecked, that kind of uncertainty places at risk continued grower investment in cane production and undermines the industry’s long term viability,’’ said Canegrowers chairman Paul Schembri. ‘‘Gaining title over their economic interest would put significant bargaining power back in the hands of growers, in a future where large monopolies would otherwise dominate the agenda.’’
He believes the timing is right for all sugarcane growers to rise up in solidarity and assert their right to the legal title of sugar produced.
Canegrowers is backing a solution where growers have title over their share of the sugar, and can continue to utilise the bulk marketing power of grower- miller owned, Queensland Sugar Limited, which markets 80 per cent of Queensland’s production, leveraging significant outcomes for Australian sugar on the export market.
‘‘ Canegrowers says if large monopoly buyers were to take on pricing of large chunks of sugar production themselves, growers would lose the transparency and assurance that they were achieving the best return that they currently achieve through marketing through an entity they partially own and control.
‘‘In gaining title to their economic interest in sugar, growers could continue to drive through their growermiller owned body, QSL, an indisputable value proposition and retain indisputable transparency. We will not stand by and become sidelined participants in the industry.
‘‘We expect the sugarcane growing sector to stand shoulder to shoulder on this issue.’’
Chairman of Canegrowers, Mossman, Drew Watson, told the Gazette that, ‘‘In the past the mills took ownership of the sugar that was produced from cane, but the payment for that sugar to each farmer was a reflection of the world market price and premiums achieved by our miller/grower owned single desk marketing agent QSL.
Growers shared the risks and rewards as world market prices drifted up and down. ‘‘Recently there has been a consolidation of mill ownership in Queensland giving these mills even more monopolistic power over growers.
These big milling companies have the ability to do their own marketing and bypass QSL but growers fear that transparency will be lost and marketing premiums will not flow back to them.
The Green Pool Report recommends growers gain title to their economic interest sugar (under the payment formula the sugar proceeds are split about 2/3 grower and 1/3 miller) so that they can make their own judgement as to who does their marketing and give growers some ability to negotiate outcome. ‘‘The added benefit is the security that brings with the ownership of the sugar.
For 10 years the Mossman Mill faced economic difficulties and growers were classed as unsecured creditors, and so there was the constant uncertainty that the bank could foreclose and growers not get paid. Title to the sugar would have removed this risk.’’