Bombshell for growers
• Mackay Sugar struggling with $212m debt • Idea #1 — growers to pay $2 a tonne levy • Idea #2 — growers buy half Mossman mill
MOSSMAN canegrowers are in shock and the sustainability of the industry is in question after Mackay Sugar told them it wants to impose a$2 a tonne levy to help improve its mills.
Mackay also flagged it wanted to explore the issue of selling half the mill to the growers.
The company, whose financial problems are now being telegraphed very clearly, is considering recommendations in a report by consultants Kidder Williams, which is looking at ways to deal with Mackay’s $212 million debt and the need to improve and sustain efficiency across its mills.
Mackay’s chairman, Andrew Cappello, told ABC Radio the company wanted to have shed meetings with growers in
all its regions about possible changes under the recommendations.
But according to prominent local grower Don Murday, chairman of the Australian Canefarmers Association, agreement on these things is going to be difficult.
But Mr Murday’s initial fears after the announcement of these possible moves were lessened somewhat yesterday after he had a briefing, as a bargaining agent, with Mackay’s chairman Mr Cappello and CEO Jason Lowry.
He said it became clear Mackay Sugar Ltd needed to improve its equity position so it could borrow money to improve efficiency across all its mills.
“The board haven’t decided on anything,” Mr Murday said. “These are just options out of the consultant’s report.
“There’s still no details – it was just a consultation process today.
“Their focus is on getting mill performance back up. We did well here in Mossman last year but their Mackay mills are dragging.
“Mossman has already been improved because it had to take on all that extra cane to crush in the past two seasons. We’re lucky we have got an acceptable level of mill performance, which they still don’t have in Mackay.
“It’s not all doom and gloom. This is just the first step – getting the feedback and how to progress from here.”
Regarding the $2 a tonne levy proposal, Mr Murday said he would prefer it didn’t happen, but rather they look at the performance of Qld Commodities Services, Mackay’s marketing agents, because “I prefer they look at the income side of the business more than the costs”.
Mr Murday said taking another $2 off farmers meant that for a lot of them it was the loss of around half their profit margin.
One effect of losing $2 a tonne would likely be that farmers would be more stinting of their inputs into their crop.
They might plant less, and they would cut back on spraying and other things.
He said that as far as selling half the Mossman mill back to the growers, “it’s just not going to happen”.
“We’ve been there before,” he said, “and we got burnt – the noteholders and the third cane pay people didn’t get a cent out of sustaining the mill in the past, and I cannot see them doing it again.”
Separately, last year Mackay Sugar settled a legal wrangle with trucking company Qube, which has been transporting cane to the Mossman and Tablelands mills.
Qube had taken Mackay Sugar to court, alleging it had been underpaid to the tune of $790,000.
We’ve been there before and we got burnt . . . I cannot see the growers doing it again Canegrower Don Murday