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Ailing businesses fail in sugar towns as industry's income crisis hits home.



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CANEGROWERS 190-194 Edward Street Brisbane 4000

Harvesting the natural energy of life GPO Box 1032 Brisbane 4001

Phone (07) 3864 6444 Fax (07) 3864 6429

Attention News Editor Media Release No.2002-21 for immediate release 24 May 2002

Ailing businesses fail in sugar towns as industry’s income crisis hits home

Australia’s sugarcane harvest will get under way in earnest over the next few weeks but CANEGROWERS, the peak body representing sugarcane growers, is concerned at the effect that low world sugar prices and widespread drought conditions will have on the income stream which normally flows to cane farming families, harvesting contractors and businesses in sugar communities.

Ian Ballantyne, General Manager, CANEGROWERS, said that the lost revenue would have a crippling impact on cane communities in coastal Queensland and could seriously reduce the industry’s capacity to replant for next season.

“CANEGROWERS is working hard on numerous fronts to help the industry get through this extremely difficult period. We have been, and continue to be, heavily involved in representations to the Federal and State Governments seeking an immediate cash injection for growers who have exhausted their reserves and access to further debt in addition to the development of industry strategies aimed at improving

“From advice provided by financial institutions CANEGROWERS has calculated that if the current severe downturn carries into next year, up to 500 cane growing businesses are likely to fail. Many normally sound cane farming enterprises have used up their financial reserves and are unable to secure additional loans. The situation is particularly bad in regions where drought conditions and water shortages have greatly reduced potential cane and sugar tonnages and, where water is available, irrigation bills have soared.”

Although dry conditions had given some respite to North Queensland producers from years of excessive wet weather, the failure of the normal Wet Season in central and southern Queensland had taken a heavy toll on crops. The crop estimate for Bundaberg had dropped from 3.5 million tonnes of cane to 1.9 Mt and was still falling while at Sarina the initial 2 Mt estimate had fallen below 1 Mt.

Mr Ballantyne said the economic downturn was not just a concern for cane growers; it would have a massive flow-on effect to the entire community.

Queensland Cane Growers Organisation Ltd ACN 089 992 969

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“Many businesses in sugar towns and cities have already closed and the majority of the survivors are in deep economic trouble. Unless something can be done to improve this season’s financial returns to growers and millers, the damage done to sugar dependent communities could be catastrophic. Many small and not-so-small communities are literally facing a social calamity in terms of income foregone and jobs lost.

“Several regional communities are planning public displays of support for the sugar industry to highlight their economic vulnerability e.g. in Mackay next Friday and in the Burdekin on 8 June. This outpouring of public concern reflects the fact that a profitable sugar industry is the economic lifeblood of these communities.”

He said senior CANEGROWERS representatives would be talking to government again in Canberra next week. This was the latest in a string of meetings with the Federal and State Governments at the highest level at which CANEGROWERS had stressed the importance of both short-term financial assistance in addition to longer term rationalisation to address the challenges of a distorted international trade arena.

“World sugar prices have been short to pieces by the production surge in Brazil, exacerbated by the outrageously blatant protectionism demonstrated by the United States in its new Farm Bill and the ongoing market distortion by the EU and Japan. Our growers and millers are world leaders in efficient, sustainable production of cane and sugar but it is almost impossible to compete in a market where the government intervention has totally corrupted the normal rules of supply and demand.”

Mr Ballantyne said that this year’s sugar price would be below breakeven, even for very efficient producers. It could be down by up to 25% on last year’s result.

“Combine low prices with drought, high input costs, and damage from pests and diseases and you’ve got a perilous situation where the industry’s capacity to recover when the price does eventually improve has been severely compromised.”

He said that programs such as the BSES’ Prosper initiative were essential to industry recovery but without adequate cash flow growers would not be able to take full advantage of their potential.

“CANEGROWERS fully supports the Hildebrand study of the industry and the joint departmental task force established by the Queensland Government. We have been working closely with these bodies and other industry groups to identify ways the industry can improve its long-term productivity and sustainability. Unfortunately, these initiatives will not help put bread and milk on kitchen tables in the short-term. CANEGROWERS will continue, through a range of activities, to ensure that government and financial institutions have a clear understanding of the industry’s situation, and we will continue to push for immediate government intervention to preserve the industry’s productive potential.”

For further information please contact Mr Ian Ballantyne, General Manager, CANEGROWERS on (07) 3864 6444, mobile 0418 781 011 or a/h (07) 3374 2582 or Mr Jim Pedersen, Chairman, CANEGROWERS on (07) 3864 6444, mobile 0417 601 445 or a/h (07) 4950 3741.