Cane growers sweet on $5 billion NAIF

The Northern Australia Minister and Queensland Nationals Senator said expanding and backing farm and food exports, produced and processed in Northern Australia, was a core priority of the NAIF that’s open for business.

“We’ve got the potential for a new golden era of agriculture, as (Agriculture and Water Resources Minister) Barnaby Joyce has said, over the next few years, and Northern Australia is well suited and well situated in particular to take advantage of that,” he said.

“It’s Asian facing and it has many development opportunities and a lot of water and if prices stay where they are, new investments - which are always kind of risky and require some confidence - will hopefully start looking good.

“It’s not just the public investment funds that we have to offer as a government but also the private sector and private investors.

“We need to get behind and back Australian agriculture and take a punt on the fact that Asian people are hungry and they need our quality food and will certainly pay good money for it, if their economies stay strong.”

Senator Canavan spoke out after meeting with sugar cane farmers in Queensland’s Mackay region yesterday at an annual general meeting, to hear demands for government backing, to help improve local processing mills.

CANEGROWERS Mackay Chair Kevin Borg said Senator Canavan attended the meeting of about 140 growers and outlined how the $5b NAIF could be utilised to support local productive capacity.

Mr Borg said last year’s cane crop started off small but after late season rain it ended up producing above the region’s average harvest size, for the past 10-12 years, aided by new sugar cane varieties capable of growing well through the winter months.

But he said infrastructure challenges also led to a loss of about $20 to $30 million as 500,000 tonnes of cane was left in the paddock, which would have returned up to $600 per tonne of sugar.

The local industry losses were also driven by poor milling performance that needs to be rectified, he said.

“We’d virtually come out of a drought and the crop wasn’t looking flash at start of the harvesting/crushing season but we had a lot of late season rain and that put us behind the eight ball in getting the crop off,” he said.

Mr Borg said an ongoing lack of investment in sugar processing mills meant the facilities were now “run down and incapable of crushing big crops”.

But he said the $5b NAIF could be used to arrest that decline and support other changes that would increase potential returns.

Mr Borg said there was talk of merging four mills into one “super mill” which could be built to serve milling needs for the entire Mackay and Plane Creek region.

He said that rationalisation would also need to be accompanied by an expansion of the land that’s currently under sugar cane production - requiring some to be released from restrictive native vegetation laws - and boosted by building dams in the region.

In outlining how the local industry could boost production and access government support programs, Mr Borg said Senator Canavan was up front and gave industry members “no false hope”.

“Matt says it as it is and has asked us to come back with a proposal,” he said.

“He’s not saying ‘we’ll sign off on this or we’ll sign off on that‘, because that’s not his style but he was very clear there’s a process that we need to go through.”

Mr Borg said “a whole raft of ideas” was under consideration but the local industry had to come together now to devise and refine project proposals that fit the government’s criteria for loans in the $5b NAIF.

“You’d hope the sort of modern technology that could be put into a new super mill would perform a lot better and you could also set it up for future expansion, if that was the case,” he said.

“But we’re not stuck on one particular project.

“We can put these proposals up but you do need to put in virtually 50 per cent yourself so you do need to partner with someone who has a bit of backing.”

Senator Canavan said he understood a need existed to upgrade processing facilities or invest in capital infrastructure for the agriculture sector and the government “stands open and ready” in considering applications for investment vehicles like the NAIF.

“I’ve said to those growers in Mackay, if you can put a business case to me to re-capitalise the mills, or build new mills, we have a $5 billion fund open for business and it is there to help develop Northern Australia,” he said.

“The sugar industry is an important part of the north Queensland economy so it could certainly qualify for funding from the Northern Australia infrastructure facility – but they have to have a case that stacks up.

“It is a loan and it needs to be repaid and while we can offer concessional interest rates and take longer terms than most commercial banks, as a government, there needs to be a proper case behind it.

“I’ve met with the CANEGROWERS Mackay Board today and they’re going to go away and have a look at that and get back to me with their ideas.”

Senator Canavan said, “We are serious about investing in infrastructure in the country and milling infrastructure is incredibly important to these communities”.

“We’ve just provided a $30 million loan to the Portland Aluminium Smelter which is a completely different industry but it’s all about maintaining jobs and maintaining port infrastructure in Victoria,” he said.

“Mills are incredibly essential infrastructure in north Queensland so I’m certainly open to consider any applications to reinvest in the sugar milling industry.”

Senator Canavan said all agricultural sectors could apply for the $5b NAIF so long as they met the program’s requirements.

He said the project or infrastructure needed a common use element and it was “not about investing in someone’s individual farm or in their individual business”.

“It needs to be infrastructure that’s used by lots of people, like a sugar mill or cotton gin or of course more traditional infrastructure, like a port or a rail line,” he said.

“All those things can be considered – particularly when you’ve got any infrastructure that’s grower-owned like Mackay Sugar.”

Senator Canavan said the Fund opened on July 1 last year and was headquartered in Cairns with the board considering a number of applications “in the pipeline” with room for more to come forward and access roughly $1b a year, for the next four and a half years.

“I can’t direct the board to invest in particular projects; they will make proposals to me and the government can either approve or reject those,” he said.

“We’ve given them a mandate they need to adhere to and that mandate requires investments to be made in assets which would be open to use for multiple users or to provide a wide economic benefit.

“We’re obviously trying to create more investments in projects that are game-changing for Northern Australian development

“We’re also seeking and looking for projects that require more than $50 million in finance.

“We haven’t said it can’t be below that threshold but we are trying to indicate that we’re looking for bigger projects and things like a new sugar mill could be in that category.”