Member Notice – A Message to Growers – Wilmar Proposal

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Dear Kalamia Members,
Please find below a message from Greg Beashel QSL CEO regarding Wilmar’s proposal.

A message to Growers – Wilmar proposal

Dear Grower,

In response to Wilmar’s communication today to growers regarding the current OSA negotiations with Wilmar, we whole-heartedly agree that it is unusual to hold negotiations via the media. That is why we were surprised that Wilmar decided to do just that last Friday without informing QSL of its apparent intention to cease negotiations. Once that had occurred, QSL considered it was important to clarify the misinformation published by Wilmar and will continue to do so given what is at stake for the Queensland sugar industry.

While QSL welcomes Wilmar’s partial disclosure today regarding their current OSA proposal, there are other unreasonable terms contained within Wilmar’s current proposal which they continue to not disclose to their growers. Unfortunately Wilmar has still not advised us directly that negotiations have ceased, nor have we called for negotiations to end, and so QSL continues to regard itself as bound by confidentiality not to disclose the full terms of what Wilmar proposed. But Wilmar has made much in its recent communications about their concession to provide a Free-In-Store (FIS) proposal to QSL, so QSL believes we should provide some context to this key issue.

Unlike standard FIS title arrangements, Wilmar’s quasi-FIS terms would have QSL pay in full and accept title for the growers’ economic interest in sugar (GEI Sugar) when it arrived at the terminal, but Wilmar would retain the control of that sugar until it was exported. In short, while QSL would own the growers’ GEI Sugar it would have no control over that sugar’s management while it is in that terminal. It’s like buying a car but being told by the salesman when and where you can drive it. We reject Wilmar’s contention that controlling sugar owned by QSL is necessary because QSL is the operator of the terminals – we have a long and successful track record of serving multiple marketers.

This is just one of a number of aspects of the current proposal that is unacceptable to us and that has consequences for the growers who would use such a system to market with QSL, and as a result, assume the risks and costs associated with it. As such, we think it is absolutely appropriate for growers to have access to the full terms of Wilmar’s current proposal so that they can seek certainty over the terms on which Wilmar will deal with GEI marketers (who are Wilmar’s competitors for providing marketing services such that Wilmar is incentivised to treat potential GEI marketers unreasonably, as it is currently doing).

Should Wilmar choose not to accept this request, we see no impediment to growers seeking to include the terms of the OSA in their Cane Supply Agreement (CSA) on the basis that the Marketing Choice provisions of the Sugar Industry Act do not prescribe the form of a CSA or the OSA to be entered between the mill owner and the GEI marketer.

Our position on Wilmar’s current proposed contractual terms has been made clear to Wilmar and has been put in writing to them. QSL is not closing the door on negotiations with Wilmar, but we question the purpose of these ongoing missives if they aren’t prepared to give growers the full story.

Yours Sincerely,