It has been two months since we were last in this place. Two months ago, I spoke about the ongoing dispute between cane growers and the miller Wilmar. It was a matter of great urgency then, and it is of even greater urgency now. Today the economic future of an entire region hangs in the balance. The clock is ticking. The sugarcane harvest starts in June, just four months away. But whether or not that harvest starts in the Burdekin or in Proserpine, Sarina or many other sugarcane districts will depend on the resolution of a dispute between growers and the Singaporean-owned Wilmar. Wilmar owns all the sugar mills in the Burdekin as well as the only mill in Proserpine and in Sarina.
It has a monopoly in other districts as well. It is illegal for a grower to send cane to a mill without a supply agreement being in place. It is illegal for a miller to accept cane from a farmer without a supply agreement being in place. No agreement being in place means farmers cannot forward price their crop. No forward pricing means growers cannot take advantage of the current record-high world sugar prices. No agreement also means no harvest. No harvest means an entire regional economy disintegrates. It also means farming families are pushed to the brink financially and mentally.
If the sugar cane is not harvested, it is left to stand in the field, and the quality of that cane continues to deteriorate until the next crush. It can be harvested a year later, but the return is so low that it does not even cover the costs incurred in one year and nowhere near the costs of two years, so no agreement being in place effectively means a farming family will have no income for two years straight. Even a delayed agreement beyond the end of this month could mean growers miss out on the record world-high sugar prices. Wilmar knows this, and Wilmar is banking on farming families acting out of desperation and caving in by signing the unfair contract that it has put out for them to sign. Wilmar are the world’s biggest sugar company, and they can easily ride the bump of having no income from one region or one country for a year.
Farmers actually do not have that luxury. Wilmar can ride the bump because they want to create a situation where they completely control the entire industry. We just have to look at the contracts that they have sent to the farmers to know that to be a fact. If the farmers go broke, that simply presents an opportunity for Wilmar to buy up cheap farms and vertically integrate. The end result would be great for a foreign-owned miller. The end result for the farmer, however, would see farmers renting, working the same land they once owned for whatever pittance the foreign company is willing to throw them. Our farmers would become the local serfs controlled by a foreign power. What stands in its way is Queensland law designed to protect farming interests, but Wilmar has managed to sidestep that legislation.
Wilmar is deliberately dragging out negotiations with QSL, Queensland Sugar Ltd, and farmers because it is trying to circumvent the Queensland legislation that gives farmers choice in how their sugar is marketed. The legislation does not give them a choice in the miller. Growers have to use the miller to crush their cane because the miller has a monopoly, but the farmers can use a separate company to market their sugar, as they have been doing for many, many years. It is the marketing role performed by QSL, Queensland Sugar Ltd, that Wilmar is trying to take over by force. Wilmar dragged out the supply agreement process, refusing to offer 2017 agreements until after the 2016 election because, I suspect, it hoped that Labor would win the federal election and do something about federal intervention in the state laws. It should be noted that it was not the Labor government in Queensland that passed the law to give farmers choice in marketing. It was Liberal National Party in opposition that helped pass a Katter’s Australian Party bill. When federal Labor failed to win the election, Wilmar could not do anything about it then.
We did not have any action down here from the Labor Party in keeping the miller’s newfound marketing monopoly. Tuesday, 7 February 2017 HOUSE OF REPRESENTATIVES 106 CHAMBER Wilmar then took a very, very different approach. They employed delaying tactics, hoping growers, faced with the best prices that they have seen in years, would sign anything to lock those prices in. But, when the farmers were finally offered their agreements, they did not sign, because they believed the agreements were unfair. Wilmar know that the longer they drag out the stalemate, the more pressure there will be on farmers to sign—pressure from family, pressure from banks and pressure just because they feel that they are going to lose those record-high world prices.
Wilmar are dragging out negotiations with Queensland Sugar Ltd because, without an on-supply agreement in place between QSL and Wilmar, farmers cannot use QSL for marketing purposes. If growers fold because that option is not available and they sign up to Wilmar’s cane supply agreement now, the only available choice for them for marketing is Wilmar if they want a forward price. So right now it is basically Wilmar’s way or the highway, and the end of the highway is coming up in less than four months. In fact, for forward pricing it could be coming up in less than three weeks. Wilmar claim to be negotiating in good faith, but the facts say otherwise. Wilmar made details of their offer to QSL confidential, stopping QSL from publicly pointing out the unfair nature of the contract, but then Wilmar cherry picked parts of the confidential proposal and emailed it out to growers to create the impression that the impasse was the fault of QSL.
In November, Wilmar sent an email out to growers displaying this newfound commitment to transparency. The email from Wilmar’s Executive General Manager North Queensland, John Pratt, said: To clear up another myth that Wilmar is hiding something, I am making available to you today the up to date GEISSA term sheet that we have produced in the course of the negotiations as well as the associated Co-mingling Agreement. It went on to say: The only thing preventing QSL from being offered to you as a GEI marketer is QSL not yet accepting reasonable terms for the purchase of sugar from Wilmar. The only thing preventing most grower collectives proceeding to conclusion of cane supply agreements is QSL not accepting reasonable terms for the purchase of sugar from Wilmar. The only thing preventing growers capitalising on current strong prices is QSL not … accepting reasonable terms for the purchase of sugar from Wilmar. We invite QSL to tell us—and you—what is holding us all back from getting on with it. Wilmar might have a little bit more credibility if they had not got the timing of the communications so horribly wrong. The terms that QSL was apparently not accepting were sent to QSL half an hour after the email was sent out to farmers. QSL did respond by telling growers exactly where the sticking points were, including potential for lower quality sugar to be provided on behalf of growers, bringing lower premiums to growers; exposing growers to potential tax risk; slowing down disclosure of grower nominations, which will hinder immediate pricing; providing no recourse to seek compensation for Wilmar mills’ failures; and unreasonable constraints on QSL storage arrangements.
To avoid issues arising from lack of transparency in the negotiations, farmers asked for a seat at the negotiation table. QSL agreed, but Wilmar refused. The ACCC agreed with the farmers, saying that it would be advantageous for them to have a seat at the table. I have to say they still hold out. A tripartite approach, including grower reps, led to successful negotiations between QSL and Maryborough sugar. In fact, we have seen successful negotiations with all the other mills covered by the choice in marketing legislation. Some of the other millers did not like the legislation, but they sat down and got on with it. They worked within the law and negotiated a good outcome, proving that the law is workable if the miller wants to work with it. Wilmar remains the only miller using their monopoly power to bully farmers. There has been some movement in negotiations, but there is no significant movement on key issues. After making assurances in the first week of December that this issue would be resolved in two weeks—they did that in front of me and a representative of the Deputy Prime Minister —I have to say we are nine weeks later with no resolution.
It must be a rolling two weeks, because 12 days ago Wilmar told Senator Pauline Hanson that the issue would be resolved in—you guessed it—two weeks. The time has passed for Wilmar to willingly come to the table and do the right thing. It is now time for the government—the federal government—to enact the code of conduct for the sugar industry that has already been drafted. The code needs to be legislated and enforced to ensure a foreign corporation can never ride roughshod Tuesday, 7 February 2017 HOUSE OF REPRESENTATIVES 107 CHAMBER over canegrowers again. This matter will be resolved one way or another. One way is for Wilmar to do the right thing; another way is for the government to force Wilmar to do the right thing. If neither of these paths is taken, the destination will be the complete destruction of the sugar industry in the Burdekin. Do not take my word for it; take canegrower Joe Linton’s word. He was quoted in the Townsville Bulletin just recently saying: If it continues on like this, there’s a great potential the town… of the Burdekin— … will collapse if they don’t sort the marketing situation with QSL. I urge Wilmar to get on with it.
HOUSE OF REPRESENTATIVES PROOF Federation Chamber GRIEVANCE DEBATE Queensland: Sugar Industry SPEECH Source House Page 105 Proof Yes Questioner Responder Speaker Christensen, George, MP