Robb faces criticism over Queensland sugar regulation

Australian trade minister Andrew Robb has reportedly faced criticism during a visit to Singapore over the passage of legislation through Queensland Parliament which effectively re-regulates the state’s sugar industry.

Major Singapore-based business Wilmar, which has invested roughly $2.5bn into its Queensland businesses, gave the trade minister a ‘dressing down’ on the sidelines of trade talks in Singapore recently, according to the AFR.

Robb was visiting Singapore to advance progress of the Australia-Singapore Comprehensive Strategic Partnership.

But Wilmar was reportedly more interested in talking about regulation passed in Queensland in December.

The Sugar Industry (Real Choice in Marketing) Amendment Bill 2015 was proposed by Katter’s Australian Party, and supported by the LNP and Independent member for Cook, Billy Gordon.

KAP member Shane Knuth said the bill would provide cane growers “with the right to have real choice over who sells and prices grower economic interest sugar”.

The member for Dalrymple told parliament early in 2015 the amendment bill would address the imbalance in the market powers that he said currently exist between mill owners and growers.

“The imbalance and the power of the regional monopolies enjoyed by each mill in the market for sugarcane was first recognised in Australia in the early years of the 20th century, when sugar industry regulations were introduced to prevent mills from exercising their ability to squeeze the primary producers.

“Those regulations recognised the interdependence of the growers and the millers, to ensure growers and mills shared the market rewards and the risks from the sale of sugar. Although not described as such, the concept of grower economic interest (GEI) sugar, was given effect.”

The sugar market in Queensland was replaced by voluntary structures in 2005, at a cost of roughly $500 million in levies to consumers.

But Knuth argued recent happenings in the sugar market gave good reason for re-regulation.

“In April 2014, Wilmar issued a public statement and indicated its intentions to exit the current sugar marketing arrangements from the end of the 2016 season,” he recalled.

“Shortly afterwards, two other milling groups, MSF Sugar, which is owned by Thailand’s Mitr Phol Group, and Tully Sugar, which is owned by China’s COFCO, also announced their intentions to exit the current marketing structure from the end of 2016, giving uncertainty to sugar marketing.

“That decision of the unilateral mills will deny growers any choice in how their share of production, their GEI sugar, is marketed in the future.

“Unless addressed, those anti-competitive actions will restore the monopoly position of mills in the market for sugarcane, with ramifications across the whole industry.”

Wilmar is now said to be upset with the change, which it claims contravenes the Singapore-Australia Free Trade Agreement.

The ACCC is looking into the legislation on competition grounds.