Concerns over Queensland sugar re-regulation

A private members bill proposed in Queensland Parliament by Katter’s Australian Party would re-regulate the state’s sugar market.

Katter’s Australian Party member Shane Knuth says the bill, Sugar Industry (Real Choice in Marketing) Amendment Bill 2015, will provide cane growers “with the right to have real choice over who sells and prices grower economic interest sugar”.

The member for Dalrymple told parliament earlier this year the amendment bill would address the imbalance in the market powers that he said currently exist between mill owners and growers.

“The imbalance and the power of the regional monopolies enjoyed by each mill in the market for sugarcane was first recognised in Australia in the early years of the 20th century, when sugar industry regulations were introduced to prevent mills from exercising their ability to squeeze the primary producers.

“Those regulations recognised the interdependence of the growers and the millers, to ensure growers and mills shared the market rewards and the risks from the sale of sugar. Although not described as such, the concept of grower economic interest (GEI) sugar, was given effect.”

The sugar market in Queensland was replaced by voluntary structures in 2005. But Knuth says recent happenings in the sugar market have given good reason for re-regulation.

“In April 2014, Wilmar issued a public statement and indicated its intentions to exit the current sugar marketing arrangements from the end of the 2016 season,” he recalled.

“Shortly afterwards, two other milling groups, MSF Sugar, which is owned by Thailand’s Mitr Phol Group, and Tully Sugar, which is owned by China’s COFCO, also announced their intentions to exit the current marketing structure from the end of 2016, giving uncertainty to sugar marketing.

“That decision of the unilateral mills will deny growers any choice in how their share of production, their GEI sugar, is marketed in the future.

“Unless addressed, those anti-competitive actions will restore the monopoly position of mills in the market for sugarcane, with ramifications across the whole industry.”

The minority Palaszczuk Government opposes Knuth’s bill, but the Liberal National Party is in support of the bill. With only a few more votes required to pass, some are now on edge over the potential re-regulation of Queensland’s sugar market.

“The LNP’s support for re-regulation flies in the face of the LNP’s economic principles and contravenes their own party’s recently released Real Economic Plan,” Australian Sugar Milling Council chief executive Dominic Nolan said.

The LNP’s economic plan for Queensland states “there will be no surprises, so businesses can invest with confidence” – a phrase Nolan believes is being violated by the party’s support for re-regulation.

“The LNP decision to support the Katter Party re-regulation and strip away mill’s ownership rights over their manufactured product spells doom for industry and investment in Queensland agriculture,” he said.