QUEENSLAND is poised to re-regulate its $2 billion sugar industry, only 10 years after a $444 million bailout package from federal taxpayers to move the industry away from government intervention.
Although the minority Palaszczuk Labor government opposes the private members bill proposed by Katter's Australian Party, the Liberal National Party is expected to back the changes in State Parliament this week.
It only requires the support of former ALP member turned independent MP Billy Gordon to become law.
A recent Queensland Productivity Commission report warned the plan by Katter's Australian Party MP Shane Knuth to reintroduce pre-arbitration between cane growers and the sugar mills could cost the industry millions.
The commission found no evidence of abuse of market power by the sugar millers - as claimed by cane growers - saying commercial negotiations had delivered significant investment into the industry.
"There was no evidence to support a case for market failure in the Queensland sugar industry that would indicate the need for additional government intervention," the commission found.
"The benefits of additional regulation, as proposed by the bill, do not outweigh the costs. [We] conclude that retaining the existing regulatory framework - with no additional regulation - will provide the greatest net benefit to Queensland."
But the Katter's Australian Party, which has grown increasingly frustrated by the Palaszczuk government acting on its wish list of programs, is pushing ahead with the legislation which is expected to be voted on in State Parliament on Wednesday night.
It claims sugar millers have gained too much market power in negotiating cane supply agreements since the market was deregulated in 2006.
They are also angry over three of the seven milling companies in Queensland - the foreign-owned Wilmar Sugar Australia, Tully Sugar and MSF Sugar - announcing they will opt out of long-standing sugar marketing arrangements with Queensland Sugar from 2017.
Australian Sugar Milling Council chief executive Dominic Nolan said the council had been blindsided by the LNP's support for the Katter's Australian Party bill.
"Replacing the KAP bill with the LNP bill spells disaster for Queensland jobs," Mr Nolan said.
"The re-regulation of the sugar industry will result in the decline of Queensland's second-largest manufacturing industry."
The millers have offered a compromise position would ensure a guaranteed minimum of sugar through Queensland Sugar but have yet to receive a formal response.
Agriculture Minister Bill Byrne said the proposed changes were bad for Queensland.
"They still fundamentally re-regulate the industry and put jobs and trade at legal and investor risk," Mr Byrne said.
Queensland accounts for 95 per cent of Australia's sugar industry, which generates about $2 billion each year and employs 16,000 people. There are almost 4000 cane farms in Queensland supplying 21 mills, owned by seven different milling companies.
The former Howard government offered a $444 million transition package to the sugar industry in 2004 after a plunge international sugar prices and the rise of Brazil as a major competitor.
The money was conditional on moving away from Queensland's single-desk marketing arrangements and Queensland Sugar (a not-for-profit company owned by growers and millers) entered into voluntary agreements, with the majority of most mills to export their raw sugar.
But the decision by the three mills to market their own sugar has resulted in conflict between millers and growers.
The LNP's agricultural spokeswoman Deb Frecklington said the system denied growers a bigger say in the marketing of their sugar.
"We'll be seeking workable, common sense changes to the Katter's Australian Party Sugar Industry Bill which is due for debate and vote in Parliament on Wednesday night," Ms Frecklington said.