THE pathway towards a solution for the sugar industry is still unclear, as industry stakeholders begin to put forward their own marketing models.
Queensland Sugar Limited CEO Greg Beashel addressed the Rural Press Club in Brisbane last week and 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.
North Queensland accountancy and financial planning firm, Carey Accountants, have worked with cane farmers for a number of years.
Carey Accountants director Robert Carey said he was concerned the uncertainty of supply would lead to a down grade in QSL’s international credit rating.
“I believe that Greg Beashel’s suggestion that a possible new QSL model that could allow growers to ‘tick a box each year’ to see who markets their sugar has flaws and is unworkable,” Mr Carey said.
“Raw sugar marketers (no matter who they are) need to have security of supply so that they can go out and look for long term contracts and pricing opportunities.
“How can this happen if the marketer only has guaranteed raw sugar supply for one year?”
Wilmar Sugar was contacted to find out more about their marketing plans from July 2017 onwards, however they declined the opportunity to comment.
In April 2014, Wilmar Sugar released on information update on their website, outlining their proposed model.
The document outlines plans to establish a new joint marketing company (JMC) controlled by Wilmar and growers.
It said: “Every grower entity that is party to a cane supply agreement with Wilmar Sugar Australia will qualify to be a member of the JMC.”
In a statement released last week, Wilmar Sugar north Queensland executive general manager John Pratt said their main aim in proposing changes to sugar marketing was to generate the best returns for growers and Wilmar.
“Wilmar’s marketing proposal preserves choice for growers about how they price their sugar exposure and offers them more choices and more control over the price they receive for their cane,” Mr Pratt said.
Canegrowers chairman Paul Schembri said they had been working closely with QSL on its proposed model.
He said they wanted to ensure it confirmed the economic interest growers had in sugar and gave growers real choice over who marketed that sugar.
“One of the key issues which threatens transparency and competition in the marketing system going forward is the ability of a corporate company to force growers out of being able to use a system of their choosing and into one of its own commercial interests,” he said.
“Many of our growers have said that for them, this means being able to choose to continue to go through QSL, a not-for profit industry marketing body which they partly own and therefore have enviable transparency into the pricing and marketing of their sugar, if they so choose.”
Mr Schembri said Canegrowers had also been working on its own grower model.
He said ultimately, growers want the option to choose.
“It’s true people are getting really confused by the terminology ‘grower model’ because Wilmar’s first proposal called its solution a grower model, but as far as the growing sector was concerned it was more like a model the mills wanted growers to adopt,” he said.
“Many aspects of the original model are similar to what is being put forward now, but some critical elements have been addressed in Canegrowers proposed model to protect growers and ensure transparency and competition now and in the future.”