Wilmar Sugar Australia has dumped its $75 million sugar storage facility plan for North Queensland as it claims amendments to the Sugar Industry Act last year removed its incentive to invest.
The proposed 500,000 tonne capacity storage facility would have been the third largest in the state.
Wilmar argues that the Sugar Industry (Real Choice in Marketing) Amendment Act remains untested for compliance with national competition prices which is why it has put the brakes on future investment in Australia.
The draft Productivity Commission report points to evidence the current marketing arrangements had not been subjected to the kinds of long-term competitive forces that have driven innovation and cost savings in other industries.
The findings have been seized upon by the Australian Sugar Milling Council (ASMC), which wants the legislation reviewed by the National Competition Council.
But peak body Canegrowers and Queensland Sugar Limited (QSL) demanded the new law be given a chance to work.
This week Wilmar confirmed it would revisit its storage facility plan if the Amendment Act was repealed.
Canegrowers chairman Paul Schembri said amendments did not provide for the introduction of new statutory marketing arrangements for the sugar industry, nor do the provisions re-regulate the international marketing of Australian sugar.
ASMC CEO Dominic Nolan said the new legislation would not improve Queensland’s competitiveness in the global raw sugar market.
“The legislation inhibits the interdependent relationship between growers and mills, and instead sets up a conflict-based approach, when a collaborative approach … is needed in the industry,” he said.
A Wilmar spokesman said “the Sugar Industry Amendment Act has stripped Wilmar of ownership rights in the majority of the sugar that it manufactures, has deprived Wilmar of the opportunity to optimise returns from its investment and imposed commercial burden … not imposed on any other industry sector in Australia”.
QSL CEO Greg Beashel said the only reason milling companies continued to lobby against the new provisions was to protect their interests and attempt to stymie competition.
The final report by the Productivity Commission, yet to be released, carries no weight unless a government decides to adopt or act on it. The global sugar price has hit its highest level in four years.