Australia’s largest sugar miller, Wilmar, has told cane grower representatives new supply agreements for the 2017 season will not come until the end of June.
The two groups sat down this week for the first time since new laws provided growers with the ability to choose a marketing entity.
Wilmar said it needed more time to work through the complexity of drafting a cane supply agreement.
“The change that’s been brought about by the legislation that passed in December is quite profound,” Wilmar’s John Pratt said.
“It’s taken us a deal of time to understand the legislation and pull out thoughts together.”
Wilmar wants agreement, not arbitration
Mr Pratt has committed to presenting contracts to growers by June 30.
He reinforced the fate of Wilmar’s milling operations were inextricably linked to its growers and both needed to find a viable way forward to avoid “dangerous” arbitration.
“The last thing we want to see is growers moving to other crops because they’ve become disenchanted or disenfranchised with growing cane,” he said.
“We want to reach agreement; we certainly don’t want to end up in arbitration.“
But Canegrowers Herbert River chairman Steve Guazzo suggested growers were being disadvantaged every day they were without a contract for the next season.
He said while he felt progress was made, growers were seeking certainty and the opportunity to recoup costs already associated with producing the 2017 crop.
“Growers are anxious, prices have improved …and I don’t want to hear anybody say it’s growers’ fault that we can’t forward price,” Mr Guazzo said.
“We are ready, willing and able to start negotiating and get this contract in place as soon as possible and we’re waiting now for Wilmar to come up to the table and help us to do that.”
Mr Guazzo attended on behalf of the Herbert River, Burdekin, Proserpine and Sarina grower collectives, representing more than 10 million tons of cane supply.
“I think everyone made an effort to put their best foot forward and start dealing with some good will,” he said.
“As long as we do it within the rules of the law, I think we can come up with an arrangement that both can live with.”
Growers push for contract
Canegrowers Mackay chairman Kevin Borg said his members wanted to see agreements earlier than the middle of the year.
He said the main barrier to earlier contracts were differences in legal opinions, but Canegrowers was willing to work with Wilmar to reach an understanding.
“I think we are reasonably close to coming to some agreement … we would like to think that when Wilmar go away and draft something up on their own, we can sit down together and work through that.
“We have some differences in legal opinion so we need to work through those issues.”
But Wilmar has defended the delay in meeting with grower groups.
John Pratt said it would have been “premature” to enter discussions before now.
Mr Pratt described the initial “without prejudice” conversations as a constructive starting point.
“We need to come up with agreements that are commercially robust and will work in all circumstances,” he said.
“Wilmar doesn’t want to take on the risk of having forward pricing commitments without a link to the supply of physical sugar.
“There’s nothing for Wilmar to be gained by dragging the chain and frustrating the process for growers to forward price.”
Source – ABC