SUGAR INDUSTRY: by Patrick J. ByrneNews Weekly
Ethanol coming: but nothing for farmers
, July 30, 2005
United service stations in Victoria have begun selling unleaded petrol with 10 per cent ethanol (E10) blends, supplied by CSR. Unfortunately, writes Pat Byrne, even if the Federal Government were now to mandate ethanol in fuel, it would do nothing for the welfare-dependent sugar industry, since National Competition Policy has denied cane-farmers compulsory arbitration with sugar mills.United service stations in Victoria have begun selling unleaded petrol with 10 per cent ethanol (E10) blends, supplied by CSR. Unfortunately, there is nothing in it for cane farmers.
For the first time since the 1920s, this year sugar-cane farmers have been denied compulsory arbitration with sugar mills. Under National Competition Policy, a joint agreement between the Federal and Queensland governments saw the cane bargaining system deregulated - i.e., abolished - in January 2005.Deregulation
Under deregulation, farmers in each mill area now sign off on an individual basis to any agreement with the local cane-processing mill, but without the benefit of compulsory arbitration.
In the case of CSR and Bundaberg Sugar mills, management resolutely refused to include in the 2005 mill supply contracts any clause that would allow farmers to benefit from value-adding. The mills gave farmers a basic price based on a percentage of the sugar content in their cane alone. For most of these farmers, this has meant proportionally less for their cane this year than for previous years, based on additional clauses in the agreement.
Hence, even if the mills now begin processing sugar cane for much more profitable ethanol, other industrial products, bio-pharmaceuticals, or for burning waste cane fibre for electricity generation, the farmers have been refused the right to claim a share in this valuable value-adding.
The promises from government that growers would share in the value-adding after deregulation have apparently been forgotten.
While negotiations were taking place, it had been rumoured for some months that the Federal Government was moving towards requiring ethanol/fuel blends. Country after country has announced major moves into ethanol production because of insecurity in the Middle East and the rising price of crude oil.
Negotiations between farmers and millers were intense over several months. "In the end, farmers were dudded," according to Margaret Menzel, a sugar industry advocate.
Hence the timing of the United fuel and CSR E10 launch is interesting. It comes only weeks after all the sugar mills have completed their negotiations with farmers on a price for their sugar cane and just after the cane harvest season opened.
So, while the race for fuel ethanol is on around the world, Australian sugar-cane farmers, betrayed by National Competition Policy, will receive no financial benefits from the mills moving into ethanol production.
In contrast, US ethanol is delivering big returns to farmers. In the US, ethanol is largely made from maize. In the maize belt, ethanol production is proving so profitable that the regional towns are rebuilding their schools, hospitals and other infrastructure.
However, without a change in policy direction from government, Australian cane-farmers are destined for more welfare and further farm losses. Once again, economic rationalist policies benefit the big corporations at the expense of the family farmer.