We are now seeing a last chance for cane farmers to retain equity in their local sugar mills; with the boards of iconic farmer owned mills, Tully Sugar and Proserpine Cooperative, recommending the sale of these historic assets to foreign interests.
These events bring home the adage, ‘You can only sell the farm once!’ and once sold, farmers will have forever lost control over their mills and over any say in a major part of their business.
ACFA has urged farmers to focus on maximising long-term shareholder value and to explore the synergies of rationalising these assets into a majority, farmer-owned Australian sugar milling company. It is better that farmers retain some equity in their industry assets and farmers needn’t look too far to see what has happened in other industries when the locals no longer control assets that are vital to their farming businesses. Farmer ownership of milling assets ensures that premiums from the more lucrative Asian markets, stay local! It also ensures that they have an influence in issues affecting costs and profitability, such as season length.
The international market for sugar, especially the premiums in the Asian region is driving a ‘feeding frenzy’ on Australian sugar milling assets. 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. 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 their local economies but may not best serve the longer-term interests of their farming businesses.
The Mackay Sugar led initiative to amalgamate farmer-owned mills is one way to preserve farmers’ interests and to retain the advantage of pooling our sugar and retaining our markets, through QSL. It is also a way to maintain a critical mass which is 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.
It is now decision time for farmer controlled structures in the Australian Sugar Industry!