Growers turn out for sugar inquiry hearings

17 March 2015

Senator O’SULLIVAN (Queensland—Nationals Whip in the Senate) (13:43): Without making light of the

contribution of the previous speaker, I too want to speak about a group of mammals—or mammalia, to use

a scientific term—that are under threat of extinction. That would be the cane farmers of my home state of

Queensland. It is now a matter of public record that significant changes are being proposed within the sugar

industry to do with the marketing arrangements that have been in place over the last 100 years. I will approach

my contribution very carefully, acknowledging that we currently have a live Senate inquiry into the question.

I will confine my references only to matters that have been taken in public evidence in the hearings that we

conducted recently in northern New South Wales, Mackay and Townsville.

With respect to those hearings, in order to bring to the attention of my fellow senators the depth of the anxiety

about this issue, some very seasoned senators who sat on the inquiry during a number of those days indicated

they had never seen crowds of the size of those that attended the public hearings. In Mackay, there were in

excess of 200 people from small, family owned farms attending. In Townsville, it is reported that the number

swelled to some 350. These farmers were very, very engaged in the process and provided me, as a member of

the committee, with a further opportunity to speak with them, as I have been doing over the last 12 months,

about this most vexed issue.

It was recognised in the very early stages of the development of the sugar industry in Australia, a national industry

which just happens to be confined largely to my home state of Queensland, that it suffered because of a perception

that the millers, the ones who processed the sugar cane, had an unfair advantage over the growers of the cane.

As a result, there was a royal commission, in 1912, I think, but certainly a bit over 100 years ago, that examined

this very important issue.

Whilst life moves on, and oftentimes legislation changes to keep pace with the issues of modern life, the issue at

the heart of this in the sugar industry has not changed. For those who might not be conversant with the production

of sugar, it is a crop that when propagated has an almost five-year economic cycle. That means that when a

farmer makes the decision to grow sugar cane their commitment, in terms of amortising the cost of production

and the net yield they might receive, is amortised over a five-year period. It is a crop that is harvested within a

very tight time frame at a particular time of the year. Farmers have only 11½ to 12 weeks to harvest the crop and

get it to the processors, because the cane starts to lose sugar content and cannot be harvested after a certain time.

It is at the point of harvest the real challenge occurs. Harvested cane is a very perishable commodity. It is unlike

any other soft commodity that we produce in Australia, in that its life in being able to yield content is measured

in hours—not days, not weeks but hours. It is not a commodity that can be stored. It has very limited options

with respect to its transportation from the point of production to the point of processing. Anyone who has driven

through sugar country will remember the image of the tens of thousands of kilometres of very light rail that is

owned by mills and the very light, open cane-carriages that the product is put in. If you were to plonk yourself

on top of a load of cane and take that little light-rail journey you would arrive at only one place—your mill. In

modern times, even if there were a mill close by—there is at least one geographic arrangement in Queensland

where growers do have an option between mills, and it is interesting that, recently, cane growers exercised that

option as a result of this issue in the industry—you may well arrive at another mill that is owned by the same

miller. We are talking about the market power of millers.

The royal commission decided that to offset the power of millers they would invest what is described as a growers’

economic interest in the product that they produce. We are not talking about ownership and equity; we are talking

about an economic interest, which has allowed the cane growers to have input into the marketing arrangements

for two-thirds of the yield of the crop that they deliver to their local mill. In effect, they hand a stick of cane,

as they have done for well over 100 years, to the miller. That is the miller’s reward for processing their cane.

Two-thirds of the output that comes from the processing remains, economically—at least its fortune is in light

—in the hands of the grower, the producer.

A long time ago, they decided to create what I refer to as an artificial single desk at what is currently Queensland

Sugar Ltd, which is owned between the millers and the growers, which means that they join as an industry and

they rise and fall on the decisions taken within the marketing environment. The industry was deregulated. I think

the issue that presents at the moment was an unintended consequence of deregulation. I am not an advocate of

reregulation—I think that there is only one policy worse than deregulation, and that is reregulation—but in this

instance we have an anomaly where a number of very powerful millers want to take the economic interest of the

grower. They want to extinguish the choice of the grower in deciding who will market their cane or their sugar

and the terms on which they sell their produce. These are foreign owned companies; I am not against foreign

ownership but I am against any corporate ownership within the agricultural processing sector that can make

decisions which will impact on growers and on the whole industry—where the industry is not taken into account.

The hallways here in Parliament House are full of lobbyists. Millers are going door-to-door trying to convince

some of us that the best thing to do this is to leave the market commercial arrangements to sort themselves out.

It is not a free market when you have only one buyer of your commodity or where you do not have the market’s

attention—

Senator Heffernan: I want to make sure they have not been to my door and they will not be coming.

Senator O’SULLIVAN: I think they would know better than to come to your door, Senator Heffernan. The fact

of the matter remains that, as a parliament, we have an obligation to four and a half thousand small and corporate

family farms, which happen to be in Queensland, and to all of the communities that rely significantly on the

outcome of this inquiry. It is not only of interest to the national economy but to the economies of hundreds of

small communities and districts in my state. I urge all fellow senators to keep a close eye on the process of the

inquiry and to have an input. I am sure common sense will prevail, and we will find a way to protect the interests

of these farmers, as we ought.