Peter Hackett from Koumala sees the industry in order the way it is and is afraid changes will damage his business.
Peter Hackett from Koumala sees the industry in order the way it is and is afraid changes will damage his business. Contributed

Sugar industry in turmoil

A MOVE by New South Wales Liberal Democratic Senator David Leyonhjelm to seek disallowance of the Sugar Code of Conduct has been criticised by Canegrowers.

Canegrowers Chairman Kevin Borg said growers depended on the code and its disallowance would be detrimental to the entire industry.

"I don't know where it is going to end,” he said. "There is going to be a debacle if this motion does go through.”

The code was put in place in April 2017 to put an end to a standoff between Queensland Sugar Limited and foreign owned mill Wilmar about pricing agreements.

Three mills Wilmar, MSF Sugar and Tully Sugar gave notice to withdraw from the Raw Sugar Supply Agreement with QSL. As part of the industry deregulation in 2006 the agreement was amended to be voluntarily. Withdrawal would see the mills take on the marketing, exporting and selling of the raw sugar.

Peter Hackett from Koumala is a third-generation cane grower and said the code put the industry in good order.

"It gave us a choice of marketer and certainty that we got a choice of marketer and it has put competition into the marketplace,” Mr Hackett said.

"I think the Senator should visit our area and talk to the growers and get some first-hand knowledge about what he is talking about.

"I don't think he has a full understanding of what has affected us. It has put fair dinkum choice in the marketplace as we have now got at least two places to market our sugar.”

He said if the disallowance took effect the industry would be affected by uncertainty yet again. Reverting back to old standards or using another mill to create competition was not an option for him.

"We finally got it sorted and got a choice and everybody is getting going with the job that we are supposed to be doing,” he said.

If the price was to go down further or significant costs added to production, he said it would be hard for him to continue.

Canegrowers chairman Paul Schembri said he had written to the Senator inviting him to meet with growers but had not received a response.

He said the code was a sole recommendation in 2015 of the Rural and Regional Affair Committee chaired by WA ALP Senator Glenn Sterle and was widely supported in Parliament.

"This code doesn't kick in until there is a problem - it is a safety net in a situation where one side of the negotiating table holds a lot more power than the other,” he said.

Mr Schembri travelled to Canberra on Monday to speak with Senators. As a result the proposal was postponed until October 17, 2017. He said Canegrowers would continue to lobby for the code to remain in place.

Senator Leyonhjelm said the code was merely a political stunt, stifling free market forces and taxpayers had paid nearly $5million to deregulate the sugar industry. He said he didn't need to visit Queensland, as he had been on many cane farms and knew their story.

"The fact is they sell their cane to the millers and they put it into a pool for their miller and they don't own it any more,” he said. "What the sugar industry is saying is that, even after we have sold our cane, we want to control what is done to it.”

Senator Leyonhjelm said it was not fair to millers forcing them to arbitration.

"If I was a miller I would say 'who is running my business?',” he said.

He said if farmers were not giving themselves a choice by selling to the one mill the "logical thing for them to do” would be to build a mill themselves.

The Australian Sugar Milling Council stated support for the disallowance motion and said the code was a disincentive to investment for the sugar industry and duplicated red tape, as it was almost an exact copy of existing state legislation.

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