Australia sugar marketing tussle: producer QSL versus foreign-owned processors

More on the producer versus processor tussle in Australia sugar. Call to legislate on "growers economic interest."

Export marketer Queensland Sugar Limited calls for legislation to formalise 'growers economic interest' QLD Country Hour – Craig Zonca  Updated Thu at 9:37am, ABC Rural; "... The inquiry was prompted by the decision of foreign owned milling companies, Wilmar, MSF and Tully Sugar to sever ties with the QSL-operated export marketing system in 2017... "Market failure is here," said QSL chief executive Greg Beashel. "Monopoly powers are being used to try to force marketing services onto growers... Growers won't accept that and neither will QSL... The best solution would have been for the industry to work this out commercially, we haven't been able to get that done so we now have the view the only option is legislative intervention."... In its submission to the senate inquiry, QSL argues for legal recognition of the long-held convention that farmers have an 'economic interest' in over two-thirds of the raw sugar produced by milling companies... The model is currently acknowledged in commercial agreements between cane growers and millers to set out the exposure farmers have to the raw sugar price. QSL believes that if 'growers economic interest' was formalised, growers would then have more power to choose how the sugar produced from their cane is marketed.

Audio [5:11]QSL's Greg Beashel calls for government action to break sugar industry 'stalemate'

Other news links:

Australia's largest sugar miller argues reregulation would be 'retrograde' step, QLD Country Hour – Craig Zonca  Updated Thu 23 Oct 2014, 4:34 PM AEDT; "Wilmar argues reregulaton of the sugar industry would be a retrograde step.... Australia's largest sugar miller, Wilmar, remains resolute in its bid to market its entire sugar production from 2017. The Singaporean-based company started a bitter battle in the industry when it announced in April that it will sever ties with the century-old pool marketing system operated by Queensland Sugar Limited (QSL)..."

Cane growers welcome inquiry into sugar marketing changes, ABC Rural – Suzannah Baker  Updated Fri 5 Sep 2014, 4:03 PM AEST; "A senate inquiry has been announced into the sugar marketing issue that's been labelled as anti-competitive.... A Senate committee inquiry will examine the current bitter marketing battle that has divided the Australian sugar industry... It comes as rural lobby group Canegrowers fights for government intervention into the sugar marketing battle that has put a huge question mark over the future of the century-old, industry-owned sugar marketer, Queensland Sugar Limited (QSL).... At the centre of the debate is Australia's largest sugar miller, Singaporean-owned Wilmar, which is severing ties with QSL to instead market its two million tonnes of sugar in-house... Other sugar millers, the Thai-owned MSF and Chinese-controlled Tully Sugar, will follow suit and withdraw their share of sugar from the QSL pool at the end of the 2016 season.
Under the inquiry's terms of reference, the Rural and Regional Affairs and Transport Committee will consider growers' claim to sugar ownership, supply chain issues including equitable access to infrastructure, the impacts of foreign ownership and whether there is a need for stronger competition laws...."

Forrest pushes Australia-China 100 year agriculture - food partnership (update 1)

3 August 2014:

Khor Reports: Australia to go for uniform marketing for its agribusiness (mostly meat, dairy, grain, and also sugar) competitive strength. Forrest argues for strength in uniformity under a new set of agreed policies on quality, food safety etc . He compares this approach as being more favourable than what he experienced in the iron ore sector where producers competed against each other. He notes that this resulted in Japan taking a view that Australia iron ore was not so reliable and it subsidized Brazil instead, to Australia's disadvantage. Quality is a major issue for this upcoming China-Australia FTA deal; with a goal to "get it right" by the end of 2014. He notes that China wants food security. He wants Australia agribusiness to collectively come together and market under one Australia brand. Some backlash to this idea, including concern of who comes to control the supply-chain i.e. widespread consolidation and fear of foreign ownership of land. New Zealand has done better on dairy - but some say that Fonterra is regarded as New Zealand "picking a winner" and will the same happen in Australia agribusiness? Forrest reckons that his ASA100 will give Australia farm investors confidence to invest, including in water supply. Forrest argues that foreign investors are more interested in the farm-gate to table / wardrobe supply-chain segment and in any case, you cannot take away land. Australia's goal should be the "prettiest girl on the dance floor" and a "friend to all" in terms of international business.

The China-Australia FTA has been long in discussion and a sticking point has been the agricultural sector and China seeking investment in the dairy sector. "Canberra hopes to replicate the dramatic increase in diary exports to China enjoyed by New Zealand since it signed an FTA with China in 2008. NZ exports, of which one third is diary, have more than doubled since the deal was signed..."

This comes alongside changes under the Abbott administration in Australia that repealed its carbon tax (; putting Australia back in the US and Canada camp and further isolating the EU approach) and is going ahead with projects criticized on environmental grounds: The Great Barrier Reef and the coal mine that could kill it,

Australia agribusiness to market a single brand to improve competitiveness

Agribusiness set to drive Australia's economic future By Ticky Fullerton Updated Fri at 3:15pm; "Australia's agricultural soul is stirring in a way it has not done since the end of the great wool years, and the drive is coming from business. Big business.... Forrest and the Business Council of Australia, which brought together an A-list of food power: Federal Agriculture Minister Barnaby Joyce; state agriculture ministers; top bureaucrats; peak body leaders; and industry chiefs including Wesfarmers' Ian McLeod, Anthony Pratt from JBS, AA Co's Jason Strong and, yes, Harold Mitchell.... What emerged was an agreement that Australian governments and producers will form a single brand to broaden the nation's competitive markets in China.... "That brand is going to be synonymous all over Asia and particularly in China with quality, food safety, reliability, friendliness, adequate quantity, with everything you need if you're sitting looking after a billion-plus people and wondering how to feed them and Australia can give you an answer," said Andrew Forrest...."; Andrew Forrest interview here: Barnaby Joyce interview here (noting the farmer getting less and less of the value-add share):

Herd mentality missing from Australian agribusiness: Forrest, PUBLISHED: 01 Aug 2014 00:05:25  | UPDATED: 01 Aug 2014 04:54:03; "Billionaire Andrew Forrest says Australia’s agricultural businesses need uniform marketing, not increased scale, to be internationally competitive....
Mr Forrest's comments follow the inaugural meeting of his 100-year Australia-China agricultural partnership group (ASA) in Sydney on Thursday, which agreed to market Australian agriculture under one brand.... The meeting was hosted by the BCA and attended by Agriculture Minister Barnaby Joyce and representatives of all state agriculture ministers.... The ASA will comprise 50 members from each country who will initially meet bi­annually and then annually. Members will include state and federal government ministers, business leaders and major food producers and distributors..... Trade and Investment Minister Andrew Robb said he welcomed efforts to promote Australian agriculture and bolster trade ties with China.... "Agriculture is one of our great strengths and we have an enviable and growing reputation for 'clean, green and healthy' produce. We should look to leverage the premium 'brand Australia' at every opportunity," he said....."

List of China FTAs and negotiations:

1 August 2014:

Three of Asia's leading agribusinesses have joined iron ore magnate Andrew Forrest in what he described Thursday as an "unprecedented" 100-year partnership to position Australia as China's food bowl.... Forrest said China's New Hope Group and COFCO Corp., and Singapore-listed Wilmar International, had joined the Australia-Sino 100-Year Agricultural and Food Safety Partnership, known as ASA 100.... "This is an all-of-country response," Forrest, the founder of Fortescue Metals Group who has more recently turned his attention to agribusiness, told The Australian newspaper.... "I would like Australia to be seen as China's friendliest, largest, most reliable, highest quality, most competitive, most efficient food and agricultural products supplier."

Khor Reports comment: This isn't about palm, but it's worth mentioning this interesting move by Australia, led by Andrew Forrest (the mining magnate and writer of radical welfare reform reports). A very senior Australian academic tells me that "Forrest is becoming very important" - so look out for info on the Australia-Sino 100-year agriculture partnership. I had lunch with a senior regional plantation analyst today and we were wondering if this meant off-take agreements and the like. Wilmar is big in sugar processing in Australia. Starting out mostly in palm oil and expanded in 2007 with a merger with Kuok Oils and Grains, it has large processing facilities in China and Indonesia and it is building itself into a diversified global agro-commodity processor.

Some links to news about Andrew Forrest:

    Background info on Australia-China investment and trade
    Australia’s mineral investment boom running out of luck 10 January 2014  Author: Luke Hurst, ANU
    "The Australian minerals boom appears to have peaked, as commodity prices eased back after 2011 and investment has begun to taper. Currently there are 37 mineral resource projects in Australia, worth around A$33 billion in total, which have funding committed. But there are a further 165 mineral resource projects in the publicly announced and feasibility stages, which are yet to finalise their financing. These projects are worth around A$174.5–202.5 billion in total.... Yet Chinese investors have been seared by their experience in investing in Australia. The failure of the Rio Tinto-Chinalco tie-up and the massive cost over-runs of CITIC Pacific’s Sino Iron project—from around US$2.5 billion to US$8 billion—have sent a cautionary message to Chinese investors. These developments also revealed the complex connection between the economics and politics of international investment in Australia. The spill-over from these two big investment failures has been substantial. The delays and cost blow-outs associated with the CITIC Project precipitated the suspension of all Chinese magnetite investments in Western Australia as of 2011.... When Australian Treasurer, Joe Hockey, decided to block the sale of Grain Corp grain distribution business to American company Archer Daniels Midland, he noted that the Foreign Investment Review Board (FIRB), when considering Australia’s ‘national interest’, should ‘specifically have regard to the impact the decision on this proposal would have on broader Australian support for foreign investment and the foreign investment regime into the future’. This creates a dangerous precedent.... If managed properly, Australia’s minerals investment boom has much life left in it yet; and given that value of trade with China is equivalent to nearly A$15,000 to every Australian household, the continuation of its growth is most clearly in Australia’s national interest...."

    Politicians worry about WWF roundtables?

    More worries over trade control tilting against primary producers from Down Under...

    IN SENATOR Ron Boswell's last big Senate speech before his retirement next month, he takes a massive - if predictable - swipe at the World Wildlife Fund (WWF)....  "WWF: 'privatisating' production - SENATOR RON BOSWELL," 15 May, 2014 07:45 PM;; "There is a co-ordinated campaign by WWF and others to coerce industries into certification schemes... Time for producers to take control... Apart from my farewell next month, this is the last substantial speech I shall make in the Senate. I have thought long and hard about what I should say. What I want to do is leave all Australian primary producers with a warning: take action now to maintain producer control over the production and marketing of your product. I have been in the Senate for 31 years. All that time, I have defended and promoted primary producers. They are wonderful people, feeding and clothing our nation and many more people overseas, generating vital wealth for the benefit of all Australians. However, they are under threat. That threat comes in the form of a long-term strategy by a powerful and sophisticated combination of environmental zealots and major corporations that would effectively control primary production practices worldwide......"

    Other Australia worries about its primary producers versus NGOs here: /khorreports-palmoil/2014/04/australia-resource-industries-seek-ban.html

    Australia resource industries seek ban of market boycotts (update 1)

    3 May 2014:

    Ben & Jerry's referred to consumer watchdog over save-the-reef campaign;, Friday 2 May 2014 06.58 BST;; Ice-cream company’s ‘mistruths could cost jobs’, says Queensland LNP senator elect who has written to the ACCC; "Queensland LNP senator elect Matthew Canavan said he wrote to the Australian Competition and Consumer Commission (ACCC) on Tuesday to consider the company’s conduct... “Australia has strict laws to protect consumers against misleading and deceptive behaviour,” he said. “These mistruths could cost jobs and development in regional Queensland. It’s irresponsible behaviour from a company that should know better.”.. The Queensland premier Campbell Newman also said on Thursday: “The World Wildlife Fund can make such false assertions, so be it. But a company is bound by consumer law and can’t make false and misleading statements and they are making false and misleading statements when it comes to this.”...

    3 April 2014

    Australian government may ban environmental boycotts; Guardian Australia: Parliamentary secretary says there is 'an appetite' for removing environmental groups' exemption from secondary boycotts ban; Thursday 3 April 2014; "Coalition MPs and industry groups are using a review of competition laws to push for a ban on campaigns against companies on the grounds that they are selling products that damage the environment, for example by using old-growth timber or overfished seafood....  Groups including the Australian Forest Products Association and parts of the seafood industry are also preparing submissions to the review arguing that environmental campaigns against companies selling products made from native timbers or “unsustainable” fishing amount to a “secondary boycott” and should be unlawful....  But the new state Liberal government intends to undo the forest “peace deal”, expand sawlog production and stop environmental campaigns through tough new state laws aimed at protesters. It is also lobbying the federal government for a change to competition laws to stop market-based campaigns.... Colbeck said he would be suggesting a further change to competition law to increase the power of the Australian Competition and Consumer Commission to police general claims made by environmental groups about particular types of products “to ensure that they are truthful”.... “They can say what they like, they can campaign about what they like, they can have a point of view, but they should not be able to run a specific business-focused or market-focused campaign, and they should not be able to say things that are not true,” he said.... Groups like GetUp! and Markets for Change are currently exempt from section 45D of the Consumer and Competition Act which prohibits actions that stop a third person buying goods from another....

    Tasmanian forests set for logging as Liberals push ahead with repeal; State government unveils plan to tear up historic deal between industry and greens protecting 400,000 hectares of forest; Australian Associated Press;, Tuesday 8 April 2014;

    Khor Reports comment: Interesting to see a possible push back from Australia industry, state and federal government over market boycott campaigns by domestic NGOs. In contrast, palm oil has been facing significant market campaigns, but at a transnational level. Actions have been taken by palm oil producers in the French trade tribunal, for instance, but negative market actions continued and the number of products affected continued to rise. Also interesting that this is the second time in as many months that we read of a competition act possibly used in relation to the sustainability issue.

    Revisiting Brundtland Report 1987

    Khor Reports: The risks in unequal trade deals has long been recognized, even in the earliest days of the international push for change for sustainability in its broadest sense (inter-generational equity and more) . The UN’s "Our Common Future" / Brundtland Report of 1987 was still heavy on a government role and the principle of “sharing” and conflict mitigation between unequal institutions in the developed world and the developing world. This thinking seems of lower currency in the 2000s sustainability movement (or not highly practiced), including in the sector of palm oil sustainability, which has been narrowly driven on the basis of eco-certification or labeling. The narrower approach is associated with greater competition among NGOs for control of market share in eco-labels and market access policies, as seen across various agro-commodities. In palm oil, top Indonesia policy makers and industry associations are stepping up on regulatory changes and plans for national spatial landuse mapping. Is this the return of government to mediate the uneven negotiations of the big B2NGO2B deal phase? Also witness Australia state government moves to raise the standard on NGO claims and reduce the problem of market boycotts; /khorreports-palmoil/2014/04/australia-resource-industries-seek-ban.html.

    The Brundtland Report states: “Effective cooperation with transnational corporations (TNCs) is possible in creating equal conditions for all parties. This can be attained by a strict observance of the principle of sovereignty of the host country. For their part, many corporations have recognized the need to share managerial skills and technological know-how with host country nationals and to pursue profit-seeking objectives within a framework of long-tern sustainable development....But mutual suspicions still exist, usually because of an asymmetry in bargaining power between large corporations and small, poor, developing countries. Negotiations are often made one sided by a developing country's lack of information, technical unpreparedness, and political and institutional weaknesses. Suspicions and disagreements remain, particularly concerning the introduction of new technologies, the development of natural resources, and the use of the environment. If multinationals are to play a larger role in development, these conflicts and suspicions must be reduced.....Strengthening the bargaining posture and response of developing countries vis-a-vis transnationals is therefore critical. Where nations lack indigenous capacity to deal with large TNCs, regional and other international institutions should assist” (Brundtland and Khalid 1987, 76).

    Brundtland, Gro Harlem , and Mansour Khalid. 1987. "Report of the World Commission on Environment and Development: Our Common Future (Brundtland Report)." United Nations. Accessed April 12, 2014.