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...."

Competition acts & antri-trust concerns on sustainability shift?

Khor Reports blog exclusive: Earlier, we reported on questions raised in Sarawak on the actions of dominant players seeking to affect market access. The palm oil industry is waiting for other large plantations to sign on to Wilmar's pledge or something similar. In the weeks surrounding November 2013, the big players were abuzz with talk of the Unilever Manifesto. It appears that Wilmar went bravely ahead with a high-end version on 5 December, while many palm oil players worried about implementation risks and sought a measured version; basically seeking time for more detailed studies. Announcements were awaited in January and early February, but the big plantations have been so far quiet. We hear from sources that issues behind a hold-up are due to a) NGO insistence on higher-end promises and also due to b) corporate lawyers having to check on anti-trust issues i.e. is this an economic cartel? Having the top 10-20 players all sitting down together and planning a big move that would impact the palm oil supply chain in Indonesia and Malaysia clearly raises legal antennae! Both countries have Competition Acts. Palm oil sustainability has entered a heightened phase, with the entry of new players, The Forest Trust (TFT; associated with Greenpeace via its program with Golden Agri / Sinar Mas) and Climate Advisers. It is following the strategy outlined by the WWF commodity "roundtables" programs to get big buyers, big processors/traders and big producers to sign on, in order to effect rapid change in commodity supply-chains.

4.15pm update: Got an alert from a reader that wording was changed on an earlier draft to get past the cartel problem. If so, the hold-up in Manifesto announcement could be due to other issues.

Since it's a long time since we studied "industrial economics 101" at university, we can look at the Wikipedia definition of a cartel ( "A cartel is aformal (explicit) "agreement" among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production.[1] Cartels usually occur in an oligopolistic industry, where the number of sellers is small (usually because barriers to entry, most notably startup costs, are high) and the products being traded are usually commodities. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members' profits by reducing competition.... One can distinguish private cartels from public cartels. In the public cartel a government is involved to enforce the cartel agreement, and the government's sovereignty shields such cartels from legal actions. Inversely, private cartels are subject to legal liability under the antitrust laws now found in nearly every nation of the world. Furthermore, the purpose of private cartels is to benefit only those individuals who constitute it, public cartels, in theory, work to pass on benefits to the populace as a whole....."