23 September 2020 | The Australian Sugar Milling Council (ASMC) left a meeting with the Queensland Government this week remaining optimistic that political consensus for irrigation water price cuts can be achieved to boost regional Queensland’s COVID-19 recovery.
The LNP and Katter Australia Party have made policy commitments ahead of the election to cut irrigation water charges by almost 20% and 25% respectively. A water price cut would boost productivity and provide an economic stimulus for communities that rely heavily on the sugar industry.
Meanwhile, the Queensland Government has frozen irrigation water prices until May next year while it considers a recommendation by the Queensland Competition Authority for further substantial price increases in water charges.
ASMC Chief Executive Mr David Pietsch said milling representatives delivered a clear message to the Queensland Minister for Natural Resources, Mines and Energy, Dr Anthony Lynham at the meeting.
“We have laid out a compelling case for the Government to invest in lower water charges to help regional Queensland back on the road to recovery and support the Premier’s focus on job creation,” Mr Pietsch said.
“The Minister was certainly sympathetic to the challenges facing the sugar industry now and into the future, however the Government has yet to commit to the certainty the industry requires on water charges,” he said.
Mr Pietsch said an independent study commissioned by the ASMC found a 25% reduction in irrigation water charges would cost $68 million over four years but generate an extra $220 million in economic value – a return of $3.20 for every $1.
Wilmar Sugar Australia, the nation’s largest sugar manufacturer with four mills in the Burdekin region alone, said ASMC’s proposal made strong economic sense.
“The viability of our mills hinges on a secure supply of sugarcane, and that is directly linked to affordable irrigation,” General Manager Operations Mike McLeod said.
“The Burdekin is one of the most productive sugarcane growing regions in the world and water is a key input.
“Without affordable irrigation water, productivity will fall. That would put both the growing and milling sectors under pressure,” concluded Mr McLeod.
Mackay Sugar, Australia’s second largest sugar milling enterprise, said ASMC’s proposal made strong economic sense.
“As water prices go up, growers use less water 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,” said Mackay Sugar Executive Director, Mr Mark Day.
“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” said Mr Day.
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.