Mackay Sugar severs ties with QSL

http://www.abc.net.au/news/2014-02-27/shock-sugar-selling-deal-revealed-by-mackay-sugar/5288274

February 27, 2014 at 9:08 AM


The CEO of Mackay Sugar, Quinton Hildebrand, says about 150,000 tonnes will be marketed through the company, with 300,000 to continue being sold through QSL.

Mr Hildebrand says it's a fallback position not a backflip for the company, which is one of the last remaining Australian owned sugar companies.

Today's development is another seismic shift in the way Australia's $1.6 billion export raw sugar is sold.

We still believe in QSL. We like the model. What's transpired in the interim is other millers have got access to marketing their sugar and as Mackay Sugar doesn't have control over the future of QSL, we've had little option but to follow and set up a fall back position.

Mackay Sugar CEO Quinton Hildebrand

 

Mackay Sugar is the first of the milling groups - apart from Wilmar (which already had access to sugar) and MSF Sugar (which historically has done its own marketing) to sever ties with QSL.

"We haven't changed our mind, actually. We still believe in QSL. We like the model. What's transpired in the interim is other millers have got access to marketing their sugar and as Mackay Sugar doesn't have control over the future of QSL, we've had little option but to follow the industry trend and set up a fallback position."

"We still have more sugar going through QSL than the arrangement with Copersucar. We are following the same pooling structure so that our growers and Mackay Sugar get to share in the upside of the sugar marketing. This is really an insurance policy for Mackay Sugar and its growers."

Rather than undermining grower confidence in the future of the existing marketing pool, Mr Hildebrand says the deal with Copersucar underpins it.

I'd be lying if I said I wasn't nervous about what has been happening but we have made our position very clear that we think there's been a line drawn in the sand.

Paul Schembri, chairman of the peak body, CANEGROWERS

 

"Everyone's making decisions today to invest in the crop cycle that'll be five or six years and in order to make that commitment, you want to know that either your sugar is going through the transparent marketing arrangement of QSL or, in the absence of QSL, a transparent marketing arrangement that Mackay Sugar can offer so it will bring long-term stability to the decision making of the growers."

Canegrowers chairman Paul Schembri has denied the peak lobby group is at risk of being left behind as milling groups shore up their own selling arrangements outside of the marketing pool preferred by growers.

"There is a view within the industry that QSL does still represent a value proposition and is obviously the ideal vehicle to manage grower risk and obviously grower marketing and that is the basis of ongoing discussion."

"But look, I'd be lying if I said I wasn't nervous about what has been happening, but we have made our position very clear that we think there's been a line drawn in the sand."

"The reality is grower confidence is contingent upon stable marketing arrangements and the mills currently are still sitting down with us trying to find a pathway clear to ensure that we can still retain a critical mass for a marketing agency under the banner of QSL."

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