CANE growers say their sugar marketing system is at crisis point following Tully Sugar's decision today to withdraw from the industry-owned sugar marketer Queensland Sugar Limited (QSL) in 2017.
In a statement, Tully Sugar says it will continue its arrangements with QSL for seasons 2014, 2015 and 2016 before it moves “towards a new progressive model for the future”.
The move comes just days after MSF Sugar confirmed it was joining Wilmar in withdrawing from QSL.
Tully Sugar says it has provided written notice to QSL that as a result of the decisions of Wilmar and MSF Sugar to not extend their agreements, Tully Sugar will not extend its Raw Sugar Supply Agreement (RSSA) beyond June 30, 2017.
Tully Sugar is a wholly owned subsidiary of Chinese agribusiness company COFCO.
In a statement, Tully Sugar chief executive officer Alick Osborne said QSL had served the Tully industry well, but it was now in the best interests of all parties to pursue new commercial partnerships.
“Tully Sugar have always been strong supporters of QSL and we are meeting our commitment to continue our agreement with them for the next three years,” Mr Osborne said.
“However, the recent decisions by Wilmar and MSF Sugar to terminate their agreements at the end of the 2016 sugar season means that QSL loses more than 70 per cent of its critical export mass and its competitive marketing advantage. This presents unacceptable risks to our business and our growers.
“As we move towards developing new partnerships for season 2017 we will be working closely with all our 240 grower suppliers to build a new commercial framework that provides greater certainty and sustainability.
“Tully Sugar’s strong backing by COFCO ensures that we will be able to have in place the capacity to provide the risk management, export marketing, finance and logistics services that are currently provided by QSL.”
Peak industry body Canegrowers has described Tully Sugar and COFCO’s move as “farcical”, and repeated its call to State and federal governments to intervene on sugar marketing.
“Not even a week has passed since every sugar mill sat around the table with growers at crisis talks hosted by Queensland Agriculture Minister John McVeigh to beat out a solution with wins for every party,” Canegrowers said in a statement.
“The parties which have since served notice on QSL appear to be thumbing their nose at the collaborative process being sought be the government and industry, not using the talks to put cards on the table, instead sitting on the knowledge that their next move was days away.
“Canegrowers is deeply disturbed by the total disregard to growers.”