The nation’s largest sugar miller, Wilmar, has signalled it will meet with cane grower collectives for the first time since controversial legislation was passed by Queensland Parliament last December.
The laws require millers to allow farmers a choice of marketer for what is termed “grower economic interest” (GEI) raw sugar.
The Australian Sugar Milling Council had labelled the laws unjust and threatened court action to quash the legislation.
Wilmar has now written to its growers saying it was “putting together agreements that comply with the new law”.
“There is still a lot of work to be done to make sure we get this right, especially given the complex issues that the legislation has thrown up,” Wilmar’s John Pratt said.
“Our approach will ensure that we effectively manage commercial risks for Wilmar and growers.”
But the Singaporean-owned company would not rule out pursuing future legal action.
“I think we reserve our rights in that regard, but really that’s not our focus,” Mr Pratt said.
“Our focus right now is meeting with our growers and growers representatives.”
Time ticking for supply contracts
Current cane supply contracts expire at the end of the 2016 season, creating headaches for both millers and growers who want to take advantage of the very strong prices being paid for sugar globally.
Without a supply contract in place, growers are unable to forward price.
The chairman of lobby group Canegrowers, Paul Schembri, said Wilmar’s move was a “positive development”.
“Certainly we’re not getting carried away…I’m under no illusions as to how difficult a conversation is yet to be had,” Mr Schembri said.
“But we think this is pushing this issue in the right direction now.”
Wilmar’s letter to growers said the company would begin discussions, “without prejudice”, with Canegrower collectives on April 19.
“We will be offering all GEI marketing entities the same type of commercial arrangements,” Mr Pratt said.
Canegrowers said Wilmar’s willingness to come to the table was an acknowledgement that there could be a workable outcome for all involved in the long-running standoff over raw sugar marketing.
“It’s a major change in language; it’s a substantial advancement from where this industry has been in relation to this raw sugar marketing dispute,” said Mr Schembri.
“We now have a greater level of confidence that a contract can be made for 2017.”
Handling and storage another push point
The handling and storage of export-ready raw sugar is set to become another flash point in the bitter stoush over marketing.
Queensland Sugar Limited (QSL) is currently contracted to operate Queensland’s six bulk export terminals owned by growers and millers under the company Sugar Terminals Limited (STL).
Mr Pratt claimed that was a fundamental conflict of interest in the new marketing environment as Wilmar and QSL would be competing for the marketing rights of GEI sugar.
“We believe it’s inappropriate to have a fellow competitor operating the terminals,” he said.
STL has commissioned a review of its operations in light of the changed marketing rules for the 2017 season.
Source – ABC