Supply contracts in time to capitalise on ‘hungry market’
WILMAR and Canegrowers met last Wednesday at Home Hill to discuss proposed cane supply agreements for the 2017 season and beyond.
Wilmar, in a statement to growers after the meeting last week, claimed its proposal would offer "better service, greater flexibility and security". Canegrowers Proserpine Manager Mike Porter responded by stating the proposed agreements would "certainly... protect Wilmar sugar to a greater degree".
"The new suite of contracts are certainly developed in Wilmar's favour but they do contain the usual cane supply arrangements," he said.
Since the introduction of the Sugar Industry Amendment Bill in December last year, Wilmar has been forced to provide growers with a choice of who markets their sugar.
Currently the choice of marketers for local growers is Wilmar, Australia Sugar Trading and perhaps QSL, Mr Porter said.
Wilmar is offering grower incentives for growers who use it as their GEI marketer including "competitive packages".
Growers are now making decisions about what quantity of cane they will be supplying to the Wilmar mill in 2017 and are anxious to lock in agreements now, Mr Porter said.
"They (growers) will be feeling very uncertain about the way Wilmar want to conduct sugar marketing operations and how they are going to handle the legislation," he said.
The sugar price has escalated significantly during the last couple of months to a "very favourable" price.
"In 2017 and 2018 growers would like to capture some of those prices."
The price of sugar has been operating in a depressed market for some years, hovering around $400 a tonne, but this year the price has skyrocketed to almost $600 a tonne.
"Growers can suddenly make a little bit of money. They are making decisions right now based on the price of sugar," Mr Porter said.
Mr Porter said based on this growers would be investing heavily in fertiliser and irrigation to try and take advantage of the current sugar price.
Once a forward pricing and cane supply agreement is in place growers will be "going hell for leather to try and produce that crop," Mr Porter said.
Wilmar executive general manager John Pratt told growers: "we have strong prices and a hungry market for our sugar".
"It's time to get on with it," he said.