The Tully region is a scene of devastation. The destruction is like that which cyclone Larry wreaked upon Innisfail in 2006, only over a greater area. The damage to farms and townships is immense and will take years to remedy.
Early cane crops are blown down and broken but it is hoped that a good amount will be mill-able. Late plant and ratoons are badly smashed; there viability unknown. Whatever is mill-able will be affected by dead cane, suckers and layering, so it will be some time before a useful crop assessment can be made.
In the Tully region the MIS forests are smashed off head high leaving as few as ten leafless trees per acre, like stranded matchsticks. The tax subsidised MIS industry has taken a lot of land out of sugar production in recent years, demonstrating the enormous risk facing such schemes and their inability to regenerate quickly like sugar cane and horticulture.
Innisfail/Babinda has some badly smashed cane and farmers are saying the 2011 harvest will be badly affected. As one farmer remarked; “This time round, Innisfail copped a bullet but Tully copped a missile – a direct hit.”
Mulgrave has suffered blown down crops; the Tableland area seems to have escape cane crop damage and the Mossman district has been very lucky with minor damage in the Mossman River Valley.
Heavy rain is hampering clean-up operations as the area comes into the traditional wet month of March.
The Maryborough Sugar Factory closure of Babinda mill has caused angst among employees and farmers. Haulage distances raises concern over cut to crush delays and the scheduling and reliability of rail transport infrastructure. The rail network is a single line and will need to cope with full rakes and return traffic.
ACFA has commenced contract negotiations with Maryborough Sugar Factory.
Last Friday Tully Sugar shareholders narrowly voted down a special resolution to amend the constitution and lift the20% individual shareholding limit.
The vote has highlighted division between shareholders attracted by the $41 per share offer by international sugar trader Bunge and those wanting to form a company of millers committed to supplying Queensland Sugar Limited (QSL).
We are currently in a time of unprecedented international interest in Australian sugar milling assets, a good news story for our industry which needs to be managed carefully.
It is true that the Tully region has been hard hit by cyclone Yasi and could use the cash generated by the proposed buyout but in the longer term will this be the best option?
Sugar assets in the hands of the trade will ultimately serve the interests of the trade. That may align with the immediate needs of shareholders and there local economies but will that best serve the longer term interests of their farming businesses?
There may be other ways to better align the longer term interests of the region and its growers in the context of a strong Australian sugar industry. The options should be explored!
The formation of a block of grower-owned milling entities is one way to preserve growers’ interests and to retain the advantage of pooling our sugar and retaining our markets through QSL. It is also essential to provide forward pricing. Without grouping together there can be no QSL and without QSL there can be no pooling and forward pricing would be difficult to fund.
Grouping together also increases the efficiency of the bulk sugar terminals, whereas a fragmented industry may cause issues with terminal access and associated costs.
The grower owned mills have 60 days from last Friday to put a proposal together. It is now decision time for grower controlled structures in the Australian Sugar Industry – perhaps the last chance for the Australian industry to retain ownership.