A risky busi­ness

Townsville Bulletin - - Investor - by Martin Rasini martin. rasini@ townsville­bul­letin. com. au Tony Rag­gatt

THE for­mer chief ex­ec­u­tive of Queens­land Sugar has ques­tioned the ex­porter’s per­for­mance, say­ing much of the $ 105.5 mil­lion loss it in­curred from the 2010 sea­son ‘‘ would ap­pear to be a re­sult of poor risk man­age­ment’’.

John Pol­lock said yes­ter­day it ap­peared QSL had not con­sid­ered the im­pact of n e w r a w s u g a r s u p p l y agree­ments and had ap­plied t o a one mil­lion t onne sea­sonal pool a risk man­age­ment pol­icy pre­vi­ously ap­plied to a pool up to three times larger.

How­ever, QSL said Mr Pol­lock’s claims con­tained fac­tual in­ac­cu­ra­cies and, with dis­tri­bu­tion of losses agreed among millers, its fo­cus was on work­ing with all in­dus­try play­ers ‘‘ to en­sure the ap­pro­pri­ate bal­ance of flex­i­bil­ity, trans­parency, op­ti­mal re­turns and ef­fec­tive risk man­age­ment’’.

Mr Pol­lock said the agree­ments, ac­com­pa­nied by a new board in 2009, al­lowed millers to price up to 70 per cent of fore­cast sugar pro­duc­tion, with the bal­ance p r i c e d b y Q S L i n t h e had not only failed to man­age pro­duc­tion risk, but had mul­ti­plied it by adopt­ing an in-sea­son mar­ket­ing plan.

‘‘ QSL’s de­fence is that its de­ci­sions were made us­ing guide­lines agreed by the in­dus­try, but the truth is the new board was brought in to de­velop new poli­cies to man­age a vastly dif­fer­ent risk en­vi­ron­ment,’’ he said.

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