A PIVOTAL meeting between sugar cane growers and millers in Townsville on Thursday failed to dissolve an impasse over industry marketing arrangements, sparking moves in Canberra to legislate for a mandatory code of conduct.
In April last year, Wilmar Sugar Australia announced it would exit the traditional Queensland Sugar Limited (QSL) marketing arrangements, sparking fears growers would no longer have control or choice over product pricing.
A federal government Taskforce was subsequently established with Prime Minister Tony Abbott’s approval, to consider the industry’s altered marketing dynamics including drafting a mandatory industry code.
Ahead of yesterday’s meeting, Queensland LNP MP George Christensen said he was prepared to allow growers and Wilmar time to reach an industry-driven resolution, before handing down the Taskforce report’s findings to Agriculture Minister Barnaby Joyce and Small Business Minister Bruce Billson.
A Federal Senate inquiry into the issue same issue was tabled on Wednesday, which also backed a mandatory code of conduct.
Mr Christensen said the Taskforce had recommended a mandatory code that delivered a mechanism to distribute relevant interests in the quantities of sugar obtained from cane between growers and millers.
He said it would also provide a link between the price paid for cane and the selling price of sugar; the ability to choose marketing services; non-discriminatory provisions; and a mechanism to resolve disputes.
Mr Christensen said the problem was sparked in early 2014 when Wilmar “unilaterally declared” they would “strip growers of this age old right to have a say in marketing of sugar that determines their pay”.
Since then, he said, a sit-down agreement between sugar cane growers and the millers had not been reached on the issue.
“Wilmar have basically said it’s our way or the highway.
“The overarching fact is cane growers operate in markets which are not truly free, as they are, by and large, forced to sell their product to a single monopoly miller.”
Mr Christensen said he was advised by growers at today’s meeting that Wilmar had “categorically rejected any potential offer of choice in marketing for growers”.
“It leaves our Taskforce no other action than to recommend to government to bring down a mandatory code of conduct to resolve this impasse,” he said.
“We don’t want to see Australian growers relegated, unfortunately, to the standards of their cousins in Asia, where the situation between millers and growers is basically like some medieval landlord peasant relationship.
“That’s not how we do business in Australia in agriculture.
“We want both farmers and the millers to actually be benefitting, not it to be a one sided relationship where farmers are at the whim and the beck and call of the mills.
“But that’s what will happen unless something takes place in terms of government intervention.”
Through the code proposal, Mr Christensen said the Taskforce wasn’t asking for a return to regulation.
“What we are simply saying is to keep in place the practices that have gone on before in this industry which ensures growers have a say in the marketing arrangements,” he said.
Wilmar Sugar Australia issued a statement saying they’d offered to recognise cane farmers’ “grower economic interest” and provide an independent Grower Transparency Committee formed to give farmers access to sugar sales.
Wilmar executive general manager North Queensland John Pratt said the new Transparency Committee - nominated by growers, for growers - would set a new gold-standard benchmark for supply chain fairness and transparency for Australian farmers.
“We are not aware of any other farmers in Australia, including beef, dairy, seafood, horticulture and pork farmers getting access to this level of market sensitive overseas sales performance data,” he said.
“Wilmar’s proposal also includes guaranteed dispute resolution measures, which will ensure farmers have continuing access to in-contract arbitration under the Commercial Arbitration Act.”
Mr Pratt said the only element of Canegrowers’ proposal that Wilmar was unable to substantively deliver on was the extreme proposal to transfer ownership or control of its manufactured sugar to farmers.
“Relinquishing the right to market our sugar would be financially damaging for our company and our growers, risking the future viability of our mills and the employment of our 2000 mill employees,” he said.
But Canegrowers vice-chairman Steve Guazzo said all Wilmar had done was repackaged their previous offer.
He said Wilmar’s press release made it appear the company had made considerable concessions – but in fact had only offered “mere puffery” which was little more than what was previously on the table.
“Wilmar have not moved on grower choice in marketing,” he said.
“They have offered growers no choice and no arbitrated pre-contractual dispute resolution ability.
“While Wilmar has agreed to recognise the term grower economic interest sugar, they failed to allow growers choice over how it is marketed – basically the main tenant for having grower economic interest recognised.”
Mr Guazzo said Wilmar’s actions reinforced his group’s strong support for the federal Government’s proposed mandatory code of conduct.
Mr Christensen said the Taskforce report and its recommendations represented the end of the beginning.
He said the report would now be presented to Mr Billson and Mr Joyce with the code proposal to go through the usual checking process - including legal and trade considerations - to ensure it meets all of the required criteria.
But he said the “we don’t have years and years (to spare) on this because growers and the sugar industry are in “limbo”.
“There is an impasse that needs to be fixed well before 2017,” he said.
“I don’t want to set deadlines for the ministers but I’m going to be suggesting to them that they need to have a solution to this prior to June 30 next year – the sooner the better.”
Mr Christensen said he didn’t expect Wilmar to be happy about the code process advancing but stressed he had urged an industry resolution to reached.
“While you’re holding a gun to growers heads and saying ‘here’s a take it or leave it contract, you will take our demands and our demands are that you will have no more say in the marketing arrangements which determine your price - your pay - for your product’, we can’t sit by and just watch the whole industry go into a heap,” he said.
Mr Christensen said the Taskforce had heard repeated messages of warning about the marketing arrangements, from many farmers; including farming families and corporate farmers.
“One of the biggest investor companies in sugar cane farming told us that if this goes ahead they will divest from the industry (and) there will be no confidence in the industry,” he said.
“So I would say again to the millers that are thinking of going down this track, regardless of this process they really do need to think again.
“They might win this battle – with this code they won’t – but ultimately if they’ve won this battle they might lose the war because we will see growers, wholesale, go over to other products, like rice.
“But people might just do that because they lack the confidence in the future of the sugar industry if they don’t have some say in the marketing efforts that determines the price they’re paid.”
Queensland NLP Senator Matt Canavan said the draft code recommended in the Senate report and attached to the Taskforce report could be used to “go forward in this industry, in a peace process, to end the war”.
Senator Canavan said codes of conduct existed in other industries like wheat exports where growers had limited market choices.
“The position cane growers find themselves in is very similar to the position grain growers find themselves in, in having only having one export facility, often to go through,” he said.
“The code is a very reasonable and moderate change and I hope the government will consider it and I hope Wilmar will also consider it because the best outcome would be that we get a commercial negotiated outcome that allows the sugar industry to go forward.”
NSW Nationals Senator John Williams said the code was needed because cane growers have no choice in where they deliver sugar cane to.
Queensland LNP MP Warren Entsch said Codes were only used “very, very sparingly and only when it’s absolutely essential”.