The Australian Sugar Milling Council is optimistic of gaining political support for its irrigation water price decrease.
The Australian Sugar Milling Council is optimistic of gaining political support for its irrigation water price decrease.

Pollies line up to back cane farmers on water prices

THE Australian Sugar Milling Council is hopeful it will secure commitments across the political divide for irrigation price cuts.

Ending a regional tour in Mackay on Wednesday, ASMC chief executive David Pietsch the cost of water remained a significant barrier to boosting growers' confidence.

Mr Pietsch said the council had commitments from the LNP and Katter's Australian Party to slash irrigation water prices, and was optimistic the State Government would consider a similar move after meetings this week.

"There's certainly a bit of momentum behind it," Mr Pietsch said.

The ASMC commissioned an independent study that found a 25 per cent reduction in irrigation water charges would cost $68 million over four years, but generate an extra $220 million in economic value.

That, Mr Pietsch said, was a $3.20 return for every $1 which was the "sort of economic stimulus" that would flow on to the wider community.

"We're in discussions with the government and met with (Minister) Anthony Lynham virtually on Monday, and he's certainly sympathetic to the plight of the sugar industry," Mr Pietsch said.

 

Australian Sugar Milling Council chief executive David Pietsch.
Australian Sugar Milling Council chief executive David Pietsch.

"But at this stage we don't have the commitment from the Labor Party we are seeking."

The State Government has frozen irrigation water prices until May next year while it considers a recommendation from the Queensland Competition Authority for further substantial price increases in water charges.

Mr Pietsch said the cost of water remained a "significant barrier" for cane growers who were also battling depressed global prices.

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"In Mackay collectively at the mills we process around five million tonnes a year but no doubt that could be much higher," he said.

"One of the important factors is the cost. The sugar industry has a number of challenges that are very cyclical including depressed global sugar prices because we export more than 80 per cent of the raw sugar (produced.

"Subsidies that the Indian government pays to its industry means it is overproducing and essentially dumping on the global market, depressing prices for all countries including Australia.

 

Calls for lower irrigation water prices are gaining political momentum.
Calls for lower irrigation water prices are gaining political momentum.

"And in many regions we're still suffering the effects of the drought.

"That has put a big dent in confidence."

Mackay Sugar executive director Mark Day said cane farmers were using less water as prices increased.

"So it directly impacts on them and their productivity and on our profitability in the factories, so for a sugar mill business like ours, we need every tonne of cane we can get every year," Mr Day said.

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"If we were able to get another 600,000 tonnes of cane, it's about another $40 million worth of revenue, now that revenue goes into our workforce, into the harvesting crews, and goes into the growers and basically stays in this community so while the growers are using less water we're not getting that extra revenue."

Mr Pietsch said the Queensland sugar industry generated more than $4 billion for the Queensland economy each year and supported more than 23,000 jobs throughout the state, but the industry faced significant challenges from increasing overseas competition and depressed global sugar prices.


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