A SERIES of ‘nuclear bombs’ have been dropped on the Australian sugar industry, according to Queensland Sugar Limited (QSL) CEO Greg Beashel.
At the Rural Press Club in Brisbane on Wednesday, Mr Beashel spoke about the way forward for sugar marketing. In his address, he put forward QSL’s proposed solution: the grower choice model.
“It’s a proposal where growers get to tick a box, say each year, about who markets their sugar - QSL or their local mill,” he said.
“Our thinking around that is we think a competitive model is the best solution here and it will encourage innovation and better performance.
“I think people should get to have a choice about how their sugar is sold, marketed and priced and that choice should be provided every year.”
Mr Beashel said QSL was very supportive of Agriculture Minister John McVeigh’s announcement on Tuesday to investigate competition concerns in the sugar industry.
“I think that’s probably the impetus we need to get back around the table and solve this issue,” he said.
Mr Beashel said QSL had a history of outperforming the market benchmarks across its price pools.
Approximately 3.5 million tonnes of sugar is contracted to QSL until 2017. Singaporean-based company Wilmar Sugar, Thai-owned MSF Sugar and Tully Sugar, owned by Chinese agribusiness COFCO, recently announced plans to exit the QSL marketing system from July 2017.
On Tuesday, Mackay Sugar, Bundaberg Sugar and Isis Central Sugar Mill announced they had rolled over their Raw Sugar Supply Agreements (RSSA) with QSL for the 2017 season. The combined output of those three groups is forecast to be 600,000t.
In his Press Club address, Mr Beashel challenged three key perceptions about the industry.
“Point one is we believe canegrowers shouldn’t just sell cane to a mill… the sugar price is something that the growers should be involved in and should have a say in,” he said.
“Point two is that sugar millers have a monopoly over growers and when that monopoly starts to lead to some market value issues around the millers wanting to do something the growers aren’t comfortable with - we think there is a role for government to get involved in resolving those issues.
“Thirdly, we see QSL as a progressive and effective organisation – we don’t see it as an outdated single desk model – we don’t even see it as a single desk model, we see it as a voluntary model.”
Mr Beashel has been involved in the sugar industry for more than 20 years, in a number of roles with QSL and CSR. QSL is a not-for-profit organisation that can be voluntarily participated in, is industry-owned and provides a number of pricing and marketing choices for its clients. Although it now operates under a voluntary model, 10 years ago it was a regulated, single desk system.
“I’ve got to say the players in the industry back in those days didn’t have a trading capability - they weren't involved in selling and marketing sugar in the world market,” he said.
“We’ve had some people enter the industry that have a capability in that area and I think they have got a role to play in offering those skills to the industry, if the industry wants to use them.”