Fed: A government and industry defying the world of sugar

AAP General News (Australia)
04-30-2004
Fed: A government and industry defying the world of sugar

By Shane Wright

BUNDABERG, Qld, April 30 AAP - The land along the northern coast of Australia has been
largely devoted to sugarcane for almost 130 years.

And along the way, cane has played a vital economic, political and cultural role in
the development of Australia.

First it was the opening up of northern Australia economically - for which cane was
largely responsible.

Author Ray Lawler drew on canefarmers in his seminal work, Summer of the Seventeenth Doll.

Now George W Bush, United States president, has played a further role at a cost to
Australian taxpayers of $444 million.

It's a long way from the canefields of Mackay and Bundaberg to the White House.

Yet Washington was where the genesis of this week's latest sugar industry rescue package
was born.

Australia hoped to prise open the heavily protected American sugar market as part of
the free trade deal between the two countries.

Despite months of huffing and puffing, it came to nothing.

Of the expected $4 billion in benefits thought to accrue to Australia from the deal,
free trade in sugar was supposed to be worth around $700 million to the nation's cane
farmers.

The US is not the worst offender when it comes to protecting its sugar producers.

The European Union, against which Australia and Brazil are taking World Trade Organisation
action, spends literally billions of dollars propping up its sugar beet producers.

But it was the US free trade deal that the government, and sugar farmers, pinned their
hopes upon.

The problem is twofold.

Alwyn Heidke, whose family has grown cane near Bundaberg for more than a century, said
it was near impossible to survive on the current world price.

"You just can't survive on US six cents a pound," he said.

Six cents a pound (0.45 kg) is the going world price for sugar. It has been for some
time, and there's no sign yet of any change.

American sugar farmers, through subsidies, get paid around US21 cents a pound. European
sugar beet producers are getting close to US40 cents a pound.

The industry believes the various programs announced in this week's latest federal
government rescue package will attract about 1,000 farmers who want to give up canegrowing
altogether.

But general manager of Queensland peak body Canegrowers, Ian Ballantyne, said that
without any substantial price increase - in the order of 20 per cent - up to 6,000 farmers
may want to walk off the land.

There are just 7,000 Australian sugarcane farmers.

The lean seasons of recent years has left many farmers on the brink of financial ruin.

Behind these farmers stand tens of thousands of people in towns like Bundaberg, Mackay
and Mossman who depend on the jobs supplied by sugar mills, through harvesting operations
and in the transport sector.

Without cane, the mills will close. Then the jobs in harvesting and transport will go.

There is also the political imperative.

Federal seats such as Hinkler, Herbert and Richmond in NSW are all marginal government
seats - and all have a lot of sugarcane growers in them.

Chairman of the Australian Cane Farmers Association, Ross Walker, believes the government's
package has, in part, been driven by short term imperatives.

Most of the money that will got to farmers will flow in June this year and January next year.

The money, for farmers to effectively just grow sugar cane, will cover the election
campaign and aftermath and the coming planting season.

But Mr Walker wants to know what will happen in a year's time.

"In 12 months time we're still going to have the same problems, the same low prices,
and the government help will be finished," he said.

But Prime Minister John Howard is much more upbeat.

He believes the one year window for funding will result in farmers changing their ways.

"It's very generous that, it's a total of $146 million (in direct grants) and it will
stabilise the situation for a year and then they can plan for the future," he said.

That point made, another issue is that this is the fourth industry bailout in the past decade.

While the government has said it has no financial role to play in the Mitsubishi saga
playing out in Adelaide at present, it's gone out of its way to look after sugar farmers.

Indeed, $94 million of the $444 million is left over from the 2002 sugar industry rescue
package which is being financed by a tax on sugar sales.

By any measure that package, and the ones the preceded it, have been failures.

Mr Howard has gone out of his way to play up the importance of saving sugar farmers.

"I think it strikes the right balance between the obligation we have to the Australian
taxpayer to spend his or her money wisely but also a special obligation to have a group
of decent, hardworking Australians who are doing it tough," he said.

Apart from the 3,000 Mitsubishi workers others - such as those in tobacco - must wonder
where the government spending was when they needed help.

Even the government recognises in its package that farmers will leave the industry.

The question is will this, coupled with greater efficiency and diversification, be
enough for an industry to survive what global trade analysts concede is the world's most
corrupted commodity.

The $444 million is a big financial investment into an industry which has had plenty
of previous opportunities to change - but hasn't.

Mr Heidke said it is make or break time for farmers and the communities which they support.

"Let's just hope it all works," he said.

The federal government must be thinking the same thing.

AAP sw/cjh/de

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