Progress appears to have been made on the current impasse between Wilmar and Queensland Sugar Limited (QSL) over an on-supply agreement (OSA) for 1500 canegrowers, however, the term of the agreement remains a sticking point.
The two entities have failed to come to terms on an OSA which allows growers a choice on a marketing agent for their sugar.
The impasse prompted a visit from Deputy Prime Minister Barnaby Joyce who, together with Queensland LNP heavyweights, hosted grower meetings at Ingham and Ayr earlier this month, where around 1000 growers voiced their concern.
Despite a planned meeting between the two failing to go ahead Monday, both QSL and Wilmar say they have agreed on some elements of the OSA.
QSL managing director Greg Beashel said QSL had agreed in principle to Wilmar’s amended stance, with a number of caveats, regarding the price used to purchase GEI Sugar from Wilmar and indemnity for mill failures due to Wilmar’s negligence.
“We have rejected Wilmar’s proposed 10-year agreement term and incorporated three-year notification period as we are not willing to expose Wilmar growers to their current situation (that is, being locked out of forward pricing) again any time soon,” Mr Beashel said.
“Queensland growers need to be able to forward price up to three seasons out and the difficulty experienced in negotiating an OSA with Wilmar has proven that a three-year notice period is clearly insufficient.
“Given Wilmar’s strong opposition to marketing choice, we believe an ongoing term is the optimal contract style to deliver Wilmar growers the security of access to Marketing Choice due to them under law.
“However, in order to resolve this issue prior to the 2017 harvest, we have instead proposed a 15-year agreement incorporating a 5-year notification period (which would mean that a notice could not be given until year 10), which would enable growers to factor in future OSA negotiation periods when considering their forward pricing options and planting decisions.”
Wilmar EGM North Queensland John Pratt said while it was disappointing that there was no agreement on indeminity and term, Wilmar was pleased to learn that “finally we have agreement in principle on pricing”.
“Our proposal for the ICE #11 price on the day of sale has been accepted with some queries raised about implementation,” Mr Pratt said.
“It appears there will need to be some further discussion on the payment arrangements in relation to the processing of growers’ third party payments.
“QSL has some concerns which we have tried to allay and assure that these payments are entirely usual and manageable.
“Wilmar has historically provided a service to divert specified amounts or proportions of grower cane payments directly to third parties such as harvest contractors or owners of leased farms to facilitate grower commitments to those third parties.
“Under grower choice, Wilmar will continue to offer this service to growers.
“However, payment deductions based on a percentage of cane payments will now be managed by the grower's chosen GEI Sugar Marketer rather than the mill owner.”
Canegrowers Herbert River district manager Peter Sheedy said Monday’s announcement showed some progress was being made.
“What QSL is asking for in terms of the term of the agreement reflects the groundswell of opinion at both of those grower meetings,” Mr Sheedy said.
“There’s been some progress but we don’t know why Wilmar cancelled today’s meeting.”
A Wilmar Australia spokeswoman said Wilmar’s negotiating team was unable to “get together and fully understand” the latest QSL response ahead of the scheduled 12.30pm meeting on Monday.
“We offered to arrange another time within the next 24 hours,” she said.