Farmers prepare to fight Asian tycoon over sugar marketing

The tranquil green fields of Australia’s biggest sugar growing district have become the unlikely battlefield between cane farmers and one of Asia’s richest men.

Cane farmers are seeking better bargaining powers with millers. Picture: Brendan Radke.

The tranquil green fields of Australia’s biggest sugar growing district have become the focus of a battle between cane farmers and one of Asia’s richest men.

At stake farmers say is how they will be paid for their crop by mills owned by Robert Kuok’s giant Wilmar Sugar when new marketing arrangements are introduced in 2017.

The escalating conflict comes as the Federal Government considers a mandatory code for the sugar industry that would give farmers greater rights to dispute contracts with millers.

Wilmar and other foreign millers last year announced they would pull out of a long-standing arrangement whereby most sugar was marketed through the not-for-profit Queensland Sugar Ltd (QSL) and deal directly with farmers.

Fearing Wilmar will use its market power to push prices down, Burdekin farmers last year formed their own company to allow them to better negotiate with the huge agribusiness that owns eight mills in central and north Queensland.

With the global sugar market in the doldrums, Wilmar argues its international reach means it is able to get the best price for farmers as opposed to QSL. The company’s mills produce more than half of Australia’s raw sugar.

Farmers complain that by pulling out of QSL, they will be forced to accept Wilmar’s prices with little right to object. Mr Kuok, Malaysia’s richest man with an estimated fortune of US$11 billion ($A14 billion), has interests in agriculture, property and media throughout Asia.

Burdekin District Cane Growers manager Julie Artiach said growers last year approached Wilmar about a voluntary code of conduct that would give farmers a greater say in contract negotiations but were rejected.

After being rebuffed, Ms Artiach helped put together a draft mandatory code that was last week released by the Federal Government’s sugar marketing taskforce for industry comment.

“Initially, Wilmar put forward a marketing model that was a partnership with growers,” Ms Artiach said. “Its position has now changed and it is going for broke by seeking to control the whole of the supply chain from milling to marketing. This is not acceptable to growers.”

She said the draft code does not seek to regulate the whole of the commercial relationship between the miller and growers, but to even out the bargaining powers of the parties. That included allowing farmers access to mediation, arbitration and a choice of marketing services.

Burdekin canegrower Allan Parker said growers did not want any more protections, merely a level playing field against a well-resourced mill owner. He said growers had felt more comfortable when dealing with QSL as it was a not for profit company.

Mr Parker credited Wilmar with investing in the region’s mills and bringing them up to a high standard but he was concerned they would have the upper hand in contract negotiations.

Wilmar claims it can achieve better results for farmers on sugar sales than QSL. In the 2012-2013 season, Wilmar says its net sugar price was $45 per tonne higher than QSL, equating to an additional $40,000 per year for the average farmer.