Cane Grower’s Bane: Stall Tactics & Dodgy Contract Practices

A long-running dispute between Queensland Sugar Limited (QSL) and Singapore-based mill owner Wilmar Sugar seems to be reaching an end, after the government decided to bring in a code of conduct for the industry. After cane growers faced possible collapse due to the ongoing dispute, which was further exacerbated by cyclone Debbie, the Queensland government has appointed a permanent mediator to deal with such issues.

In late May, negotiations with mediator Richard Chesterton finally saw the parties reach an agreement. It’s fair to say that Wilmar are not entirely happy about the arrangement, or more to the point, the need for legislation. However, for cane growers it represents an end to a bitter dispute which has reportedly cost them millions.

Shane Rutherford, executive general manager of Wilmar Australia spoke with ABC radio about the mediation process and results.

“We’re obviously very pleased that we’ve reached an acceptable outcome for ourselves and our growers, and now we move forward.”

“It has been a difficult and protracted period. We have a couple of weeks now to finalise about 20 different cane supply agreements. And in about 3 weeks’ time we start the crush. We are looking forward to starting the crush, and I think things will settle down once the cane starts coming in and growers can forward price with us or their marketer of choice.”

Wilmar Sugar and QSL, the Queensland sugar industry’s marketing body, had been locked in a dispute since 2014 over issues such as mill access and sugar prices. The stalemate affected about 1,500 canegrowers that supply Wilmar’s eight Queensland mills. Wilmar has faced criticism about possible stalling tactics and underhanded protraction of negotiations which had essentially short-changed many growers.

“There’s been a lot of misconception and potentially misinformation around this issue. Wilmar was always absolutely committed to ensuring that the grower-CCS relativity system was going to be maintained,” said Mr Rutherford. “The payment arrangements were a little bit complicated and I think people were struggling to understand that, but we have reached an arrangement now with QSL that’s sorted that out and growers will be paid in exactly the same way that they were in 2016.”

When questioned about why the negotiations took so long that eventually the Queensland government was left with no choice but to legislate for industry change, Mr Rutherford had the following response:

“The new legislation that came in December last year really turned the industry on its head. It fundamentally changed the relationships between the parties. It introduced a whole range of new risks. Wilmar is Queensland’s largest raw sugar miller, we produce about 60% of the sugar. It’s probably no surprise then that things are going to be a little bit more complex for us. We have 1,500 growers.”

“Fundamentally it was about ensuring that we acted in a reasonable way, but also in a commercially responsible way.”

Needless to say, Wilmar are not thrilled at having been subject to compulsory mediation, which presumably forced them into the kinds of concessions they’ve been hoping to avoid during the lengthy battle.

“The legislation is in place, it’s the law and we’re going to follow the law,” Mr Rutherford explains. “As to what’s happens in the future, I think every Queensland mill is on the record as saying that they would like to see the legislation repealed. Queensland Productivity Commission, the federal Productivity Commission, both say that the legislation is unhelpful and it’s unnecessary. That’s really for another day.”

“There are really no winners in this situation and I understand that it’s disappointing for those growers who have missed out. Sugar prices are quite volatile, we’ve got a long way to go to the end of the season and there’s every possibility that those prices might return and we certainly hope so.”

QSL chief executive Greg Beashel earlier confirmed that an agreement had been signed, and thanked growers for their patience.

“I’d like to thank the many growers who have steadfastly supported QSL during what has been a protracted and frustrating OSA negotiation process,” he said in a statement.

“We appreciate that this support has often come at great cost to you – both financially and emotionally.”