CANEGROWERS Questions Motive For Terminal Move

Peak sugarcane industry body CANEGROWERS is calling on Sugar Terminals Limited (STL) to explain the reasoning behind its decision to abandon a long and successful commercial partnership with Queensland Sugar Limited (QSL) for the operation of the state's bulk sugar terminals.

CANEGROWERS Chairman Owen Menkens said the bulk sugar terminals, which give Australian sugar a competitive edge over other sugar exporting nations, were built on the back of investment by growers, but STL had failed to consult growers before announcing its decision.

"These terminals are industry assets, and they remain one of our main competitive advantages, allowing Australian sugar to be traded as a reliable, high quality, sustainable product into our most valuable markets in a timely manner," Mr Menkens said.

"There seems little justification for this change and it appears to be more about corporate manoeuvring."  

Mr Menkens also questioned why STL had not made clear in its public statements that the current operating agreement with QSL requires a three-year notice period.

"STL have not consulted with anyone in industry about this matter and they have chosen not to make it clear that their agreement with QSL has a three-year notice period," he said.

"While technically CANEGROWERS has no say in this agreement, given their stated intent, we call on STL to clearly explain to growers why they are determined to take this course of action."

There is no disputing that QSL has operated the terminals safely and efficiently, and its performance has been highly scrutinized.

Mark Gray, Chair of STL, stated: "In an effort to reduce costs, increase efficiencies and eliminate conflicts of interest, STL has decided to terminate its Operating Agreement with Queensland Sugar Limited (QSL). This move positions STL to better serve the industry in the future. As STL is already responsible for all operating costs and capital investment funding, it makes sense for us to operate the BSTs directly. A simplified structure will streamline operations, remove duplicated efforts, and clear up any conflicting interests in the current outsourced agreements."

Gray continued: "The duplication of costs from the QSL Board, Executive, support functions, insurance policies, and auditing requirements are unnecessary. Eliminating this duplication in corporate overhead costs will provide a permanent reduction in expenses, clarify accountability and responsibilities, and increase transparency, leading to potential additional cost savings for the sugar industry."

CANEGROWERS is now calling on STL to make clear:

1. how they intend to operate the terminals to deliver lower operating costs and an improvement in efficiency

2. how these cost savings will flow through to growers

3. what the forward operating strategy is for the terminals

4. how STL will ensure this strategy is used to benefit the Australian sugarcane industry and not be distracted seeking alternative business models driven by a focus on shareholder returns

"The successful operation of these terminals is vital to the overall success of Australia's sugarcane industry," Mr Menkens said.

"QSL's smooth and efficient operation of our terminals has ensured the industry maintained a competitive edge. This move by STL is threatening that competitive advantage and growers are rightly concerned. They deserve an explanation."

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Caption: Sugar Terminals Limited has announced it has decided to in-source the operations of its Bulk Sugar Terminals, located at Cairns, Mourilyan, Lucinda, Townsville, Mackay and Bundaberg. Image: Mackay Bulk Sugar Terminal

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