As the 2015 crushing season draws to a close, there is unrest in the sugar industry as the proposed Katter’s Australian Party (KAP) Bill is due for debate and voting on in parliament tonight.

The LNP has sent a clear message they intend to support the Katter Party Bill and will seek to make amendments for workable common sense changes, reported the LNP’s agricultural spokeswoman Deb Frecklington.

The Palaszczuk Government plan to fight the Bill with Deputy Premier Jackie Trad vowing to take the sugar battle to Canberra and the ACCC if the Government suffered a defeat in Parliament tonight, claiming foreign investment in the state would be compromised.

The KAP Bill and LNP Bill, to be debated on this evening, allow the growers to decide who buys their product, while currently the foreign owned mills had the power to decide who raw sugar was sold to, giving millers market power since the market was deregulated in 2006. The proposed legislation is designed to address this market imbalance.

According to the Qld Productivity Commission report, the Bill is seeking to prevent anti-competitive behaviour and promote pro-competative outcomes.  The Bill is to ensure economic viability for both growers and mill owners, among others, in the Queensland sugar industry.

The Agricultural and Environment Committee (AEC) report claims that the intent of the Bill is to protect the interest of Queensland’s cane growers in the State’s vitally important sugar industry as mill owners opt out of long-standing sugar marketing arrangements with Queensland Sugar Limited (QSL).

QSL’s role as a not for profit, in which both growers and millers own shares, is to act in the best interest of the sugar industry and as a tax exempt not for profit entity does not distribute profits to its members.

As cane is  non a tradeable commodity, the sugar industry developed a ‘Cane Price Formula’ in 1915 to calculate how the returns of the raw sugar produced would be fairly allocated between both growers mills.

Currently the price payable to growers is determined using this formula which is achieved through the sale of that sugar by the mill owner.  This formula has, with variations, been in use in Cane Supply Agreements (CSA) in Queensland for over a century.

Under this arrangement there is the ‘grower economic interest sugar’ and the ‘mill economic interest sugar’, which is currently referred to as the two-thirds : one-third system.  It was estimated that grower’s total costs and investment in the production of sugar cane and ultimately raw sugar, was two-thirds of the industry’s costs, while the miller costs and investment represented one-third.

Cane growers fear they will lose their economic right to this system if the Bill is opposed.

Local cane grower Doug Rasmussen asks; “as a farmer who do you want to sell your sugar to, the foreign owned companies or Queensland Sugar Limited?

“It will be a very sad day if the Government of Queensland fight a 115 year old industry that has worked well for everyone concerned.

“Over 18 months ago most Queensland sugar mills were sold to foreign companies. These companies don’t want QSL who has, for 100 years, traditionally found the best price for sugar, at arms length.  But once you get a big boy in there, they will sell to whom ever they desire, it’s not open or transparent.

“Once we lose QSL we are in for ginormous changes for the worse,” said a very concerned Mr Rasmussen.

Fearing they will be faced with a “Woolies or Coles” situation, cane growers believe the sugar industry could potentially end up like the Australian diary industry, where they will be faced with a “take it or leave” basis in the market forcing them to become farm gate price takers.  

Don Murday, another local cane grower said the proposed legislation gives growers the choice of who to market the raw sugar.

“After the Bill passes we will continue to operate as we have for the past 100 years, and it will restore market balance and give the grower a choice of who will market their sugar rather than a multi national industry dictating it,” said Mr Murday.

In a report by Minter Ellison, the question of ownership of sugar cane and raw sugar was raised.  This questioning has lead to the conclusion that a cane grower's title in their cane ceases to exist, along with the cane itself, once the cane is crushed. The property in the raw sugar resides with the mill owner that produces the sugar, not by virtue of any agreement with the supplier of the cane, but by reason of the fact that the mill owner manufactured the product.

The report claims it can be argued that while cane growers have an exposure, under a CSA, to prices for raw sugar, they have no proprietary interest in any part of the raw sugar produced by the mill owner. The report states that understanding this point is crucial to analysing any proposed law which would purport to give growers 'choice' as to how raw sugar is to be marketed.

As we wait for Parliament to conclude an outcome of the Bill this evening, Mossman Mill’s 2015 crushing season ended 26 November, with 13,754 hectares of sugarcane harvested compared to 13,981 hectares in 2014 and just over 1.2 million tonnes (Mt) crushed in total (2014: 1.1Mt).

The mill produced approximately 150,000 tonnes (t) of raw sugar for the domestic market, with 50,000t of J-Spec sugar exported to Japan.

Mackay Sugar’s Mossman Mill General Manager Haydn Slattery said the 2015 crop increased on last year despite the drier weather conditions experienced during the growing cycle.

 “This year’s crush saw approximately 955,000t of cane crushed at Mossman Mill and 256,000t toll crushed at MSF Sugar’s Tableland Mill.

“An average of 87.7t of cane per hectare was harvested, which was an increase of 7 per cent on last year’s result of 81.6t.

“The mill operated reasonably well, crushing 33,000t of cane over most weeks,” Mr Slattery said.

An extensive capital and maintenance program is now underway to prepare the mill for the 2016 season.