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22-05-2014, 10:59 PM
Sugar giant Wilmar caned for export opt-out
SUE NEALES THE AUSTRALIAN MAY 23, 2014 12:00AM
AUSTRALIAN canegrowers are outraged by Singapore-based agribusiness and food giant Wilmar’s decision to withdraw all sugar processed in its eight Queensland mills from the collective export marketing pool, Queensland Sugar Limited, within the next three years.
Wilmar instead plans to market its two million tonnes of raw sugar — nearly half of Australia’s annual production — directly through its own international trading arm, which currently sells five million tonnes of sugar globally each year.
The withdrawal by Wilmar, Australia’s biggest sugar processor, will break the link of the past 102 years that has seen Australian canegrowers guaranteed two-thirds of the profits from all sugar sold through QSL’s virtual central desk, which currently markets 90 per cent of Australia’s 3.2 million tonnes of export sugar on behalf of growers and processors.
Wilmar claims its decision to go it alone in marketing its own sugar instead of using QSL will deliver higher returns and profits to its 1500 canegrowers, because it can better leverage its global market power and sugar marketing expertise to secure higher sugar prices than QSL can.
At angry meetings across central and north Queensland in the past three days, canegrowers have unanimously rejected Wilmar’s non-negotiable move to cease selling its sugar via QSL from 2017.
They fear that the loss of Wilmar’s two million tonnes of sugar from the QSL system — about 60 per cent of export sales — will leave the collaborative export body a mere shell of its former self, with none of the marketing power it enjoys now as the seller of 90 per cent of Australia’s $2 billion raw sugar output.
Wilmar general manager of marketing David Burgess told The Australian last night that the company would not be budged from its decision to leave the QSL export marketing mechanism.
“It’s an outdated model; as a single desk it had a very important role 15 to 20 years ago, but now QSL has become less dominant globally, it has become a price-taker, not a price-maker,” Mr Burgess said.
“And we are not proposing to break the nexus between farm cane prices and world sugar prices or take the exposure of canegrowers to world markets away.”
The dominant organisation representing growers, the Canegrowers Association, is not convinced.
After Wilmar announced its decision this week, the association wrote to the Australian Competition and Consumer Commission chief Rod Sims, expressing its concern that growers would be deprived of the benefits of true competitive pricing if Wilmar took advantage of its regional sugar milling monopolies and its global dominance.
Wilmar Sugar operates eight sugar mills, including Australia’s two biggest near Ingham and Ayr.
Canegrowers’ chief economist Warren Males said: “We are concerned growers are being denied the choice they have now about how their sugar is priced and sold.
“The real issues are around transparency. Wilmar International is a very vertically integrated company with its own processing, shipping, trading and marketing arms. All its Australian sugar will be sold to its trading house and we ask how the grower will ever be able to tell what real price their sugar is selling for on world markets.”
Mr Males said the Foreign Investment Review Board might also be interested in Wilmar’s decision to abandon QSL.
When FIRB approved Wilmar’s purchase of Sucrogen and its seven mills from CSR in 2010 for $1.75 billion, the company said that “at the current time”, it didn’t intend to leave the QSL system. Mr Males believes this “undertaking” was fundamental to FIRB’s green light for the takeover.
Mr Burgess said that statement was made four years ago, had never been a guarantee, and that he did not believe FIRB would be concerned.
He said Wilmar Sugar had also conferred with the ACCC this week.
SUE NEALES THE AUSTRALIAN MAY 23, 2014 12:00AM
AUSTRALIAN canegrowers are outraged by Singapore-based agribusiness and food giant Wilmar’s decision to withdraw all sugar processed in its eight Queensland mills from the collective export marketing pool, Queensland Sugar Limited, within the next three years.
Wilmar instead plans to market its two million tonnes of raw sugar — nearly half of Australia’s annual production — directly through its own international trading arm, which currently sells five million tonnes of sugar globally each year.
The withdrawal by Wilmar, Australia’s biggest sugar processor, will break the link of the past 102 years that has seen Australian canegrowers guaranteed two-thirds of the profits from all sugar sold through QSL’s virtual central desk, which currently markets 90 per cent of Australia’s 3.2 million tonnes of export sugar on behalf of growers and processors.
Wilmar claims its decision to go it alone in marketing its own sugar instead of using QSL will deliver higher returns and profits to its 1500 canegrowers, because it can better leverage its global market power and sugar marketing expertise to secure higher sugar prices than QSL can.
At angry meetings across central and north Queensland in the past three days, canegrowers have unanimously rejected Wilmar’s non-negotiable move to cease selling its sugar via QSL from 2017.
They fear that the loss of Wilmar’s two million tonnes of sugar from the QSL system — about 60 per cent of export sales — will leave the collaborative export body a mere shell of its former self, with none of the marketing power it enjoys now as the seller of 90 per cent of Australia’s $2 billion raw sugar output.
Wilmar general manager of marketing David Burgess told The Australian last night that the company would not be budged from its decision to leave the QSL export marketing mechanism.
“It’s an outdated model; as a single desk it had a very important role 15 to 20 years ago, but now QSL has become less dominant globally, it has become a price-taker, not a price-maker,” Mr Burgess said.
“And we are not proposing to break the nexus between farm cane prices and world sugar prices or take the exposure of canegrowers to world markets away.”
The dominant organisation representing growers, the Canegrowers Association, is not convinced.
After Wilmar announced its decision this week, the association wrote to the Australian Competition and Consumer Commission chief Rod Sims, expressing its concern that growers would be deprived of the benefits of true competitive pricing if Wilmar took advantage of its regional sugar milling monopolies and its global dominance.
Wilmar Sugar operates eight sugar mills, including Australia’s two biggest near Ingham and Ayr.
Canegrowers’ chief economist Warren Males said: “We are concerned growers are being denied the choice they have now about how their sugar is priced and sold.
“The real issues are around transparency. Wilmar International is a very vertically integrated company with its own processing, shipping, trading and marketing arms. All its Australian sugar will be sold to its trading house and we ask how the grower will ever be able to tell what real price their sugar is selling for on world markets.”
Mr Males said the Foreign Investment Review Board might also be interested in Wilmar’s decision to abandon QSL.
When FIRB approved Wilmar’s purchase of Sucrogen and its seven mills from CSR in 2010 for $1.75 billion, the company said that “at the current time”, it didn’t intend to leave the QSL system. Mr Males believes this “undertaking” was fundamental to FIRB’s green light for the takeover.
Mr Burgess said that statement was made four years ago, had never been a guarantee, and that he did not believe FIRB would be concerned.
He said Wilmar Sugar had also conferred with the ACCC this week.