Appendix A

CONDUCT OF THE ASSESSMENT

BACKGROUND

In September 2000, the Commonwealth Government announced the Sugar Industry Assistance Package. The package consisted of up to $83 million of income support, interest rate relief and financial counselling. It followed a joint industry request from CANEGROWERS, the Australian Sugar Milling Council and the Australian Cane Farmers Association for Commonwealth assistance for the sugar industry.

In announcing the package, the Government recognised the importance of the industry to the Australian economy and the need to ensure its sustainability and competitiveness. It was acknowledged that over the previous three years the sugar industry had been seriously affected by a unique combination of adverse seasonal conditions, low world sugar prices and sugar content levels, orange rust, cane grub and rat plagues, which had led to a significant downturn in the sugar industry.

As a condition of the Sugar Industry Assistance Package, the Government asked CANEGROWERS to work towards positioning the industry to ensure its long-term viability and to present firm proposals for comprehensive industry-wide structural reform by June 2002. Additionally, funding was allocated to the Commonwealth Department of Agriculture, Fisheries and Forestry – Australia (AFFA) for a study of the future viability of the sugar industry, including options and needs for structural reform.

On 15 February 2002, the Federal Minister for Agriculture, Fisheries and Forestry, the Hon Warren Truss MP, made the following announcement:

AFFA02/16WT

15 February 2002

Truss announces independent assessment of the sugar industry

Federal Agriculture Minister Warren Truss today announced that the Federal Coalition Government has commissioned an independent assessment of the Australian sugar industry.

Mr Truss said the study, which will be headed by the Chair of the Sugar R&D Corporation, Clive Hildebrand, will examine the overall state of the Australian sugar industry, with particular reference to its key economic, social and environmental drivers.

"Mr Hildebrand has a strong mix of experience and expertise to undertake this landmark assessment, and is also held in high regard by all sectors of the sugar industry," Mr Truss said.

"The assessment will not only provide us with a comprehensive and timely report card on the state of this important industry, but also help identify the key challenges it is likely to be facing in the coming years and better plan for its future.

"With this in mind, I have asked Mr Hildebrand to consult widely with all sectors of the industry, and to also examine the role of government - State and Federal. I also call on members of the industry, particularly peak representative bodies to participate in the process as fully as possible.

"If the sugar industry is to remain profitable and sustainable in the long-term, and continue to earn valuable export income and sustain rural and regional communities in northern Australia, a close, cooperative relationship with government is crucial."

Mr Truss said that, as a condition of the Federal Government's 2000 Sugar Industry Assistance Package, the sugar industry agreed to develop proposals for comprehensive, industry-wide structural reform.

"I understand that these proposals are being developed and will be submitted to Mr Hildebrand as part of his overall study," he said.

Mr Hildebrand will be supported by a Secretariat, which will be based in the Department of Agriculture, Fisheries and Forestry – and must present his findings to the Government by mid-June 2002.

"This study is an excellent opportunity to obtain a thorough overview of the sugar industry and closely examine the key issues it will be facing in the years ahead," Mr Truss said. "It also demonstrates this Government's strong commitment to working closely with our rural industries to help boost their long-term profitability and viability."

Minister Truss subsequently issued the following terms of reference:

Terms of Reference for an independent assessment of the sugar industry's viability and restructuring needs

1. An Independent Assessment of the sugar industry's viability and restructuring needs will be conducted, pursuant to a component of the Sugar Industry Assistance Package announced by the Commonwealth Government on 1 September 2000, with a view to providing the Government with a sound basis for future interaction with the industry and to enhance its long-term sustainability and profitability.

2. An eminent Independent Person will be appointed to undertake the Assessment and present findings and recommendations to the Commonwealth Government and the Australian sugar industry by mid-June 2002.

3. The Independent Person will be appointed by the Minister for Agriculture, Fisheries and Forestry and will be supported by a Secretariat, to be based in the Department of Agriculture, Fisheries and Forestry - Australia.

4. The Independent Person will consult as appropriate with the sugar industry and related organisations, and local, state and Commonwealth government stakeholders during the Assessment. Additionally, the Independent Person will invite submissions from stakeholders as appropriate.

5. In undertaking the Assessment, the Independent Person will examine the state of the Australian sugar industry, particularly its key economic, social and environmental drivers, to identify opportunities for change that will lead to new innovation and investment, and enhance the long-term profitability and sustainability of industry participants and dependent communities.

6. In undertaking the Assessment, the Independent Person will

  • have regard for the domestic and global market in which the industry operates, including community, environmental, production, regional, regulatory, research, transport, social, and other relevant issues;
  • identify and assess relevant initiatives relating to the future of the sugar industry, including available industry data, and commission additional work as required;
  • identify constraints and opportunities to enhance the long term impact on industry and community sustainability and profitability of possible economic, social, environmental and structural adjustment measures; and
  • produce a final report, including key findings, with a focus on methods of achieving specific, tangible, balanced and practical outcomes for industry – both through the actions of industry and of governments.

7. As a condition of the Sugar Industry Assistance Package, the Commonwealth Government requested the sugar industry present proposals for comprehensive industry-wide structural reform by June 2002. In undertaking the Assessment, the Independent Person will use best endeavours to work with the industry as these proposals are developed.

OVERVIEW

The Assessment was conducted in an open and transparent manner, with all stakeholders given opportunity to participate and contribute. Throughout the process, all material (electronic and physical) remained exclusively and securely within the confines of the Assessment, to maintain the integrity and genuine independence of the exercise.

Key Assessment activities included:

  • arranging communications and secretariat infrastructure immediatelyafter the Assessment was announced;
  • collating a comprehensive reference library;
  • advertising widely to encourage public submissions;
  • creating and maintaining an internet site ( with information on the Assessment;
  • circulating contact details for the Assessment, including a dedicated email address (), which received over 1,000 emails during the Assessment;
  • disseminating media releases and Assessment updates to keep stakeholders informed of progress; and
  • undertaking ongoing consultation with stakeholders and relevant parties throughout Australia, including over 100 public and private meetings, and numerous telephone enquiries to clarify points in submissions.

CONSULTATION

Consultation was to be a key component of the Assessment. The independent person was required to consult as appropriate with the sugar industry and related organisations, and local, state and Commonwealth government stakeholders during the Assessment.

Meetings were conducted throughout the sugar regions of Australia. The areas visited included: Brisbane, Bundaberg, Mackay, Townsville, Cairns, Condong (NSW) and the Ord (WA). In each location meetings were held with farmers, millers, industry organisations, government and other interested groups and individuals. Between February and May, over 100 public and private meetings were held, including with the following:

  • Industry representative organisations – including CANEGROWERS, Australian Sugar Milling Council, Australian Cane Farmers' Association, and the Cane Harvesters Association.
  • Representatives of local industry groups from Bundaberg, Mossman, Mackay, Tully, the Atherton Tableland, Gordonvale, Innisfail, South Johnstone, Cairns, Townsville, the Ord, and Condong.
  • Representatives of milling companies and cooperatives, including CSR Limited, Bundaberg Sugar Limited, Mackay Sugar Cooperative, Tully Sugar Limited, WH Heck & Sons Pty Limited, Proserpine Cooperative Sugar Milling Association Limited, Mulgrave Central Mill Company Limited, Mossman Central Mill Company Limited, Maryborough Sugar Factory Limited, Isis Central Sugar Mill Company Limited, NSW Sugar Milling Cooperative Limited, and CJ Ord Sugar Pty Limited.
  • Commonwealth Government departments, including Environment Australia, Treasury, Foreign Affairs and Trade, Transport and Regional Services, and Agriculture, Fisheries and Forestry – Australia.
  • Queensland Government departments, including Primary Industries, State Development, the Environmental Protection Agency and Natural Resources and Mines.
  • Other individuals, groups, and organisations, including Commonwealth Scientific and Industrial Research Organisation, CRC for Sustainable Sugar Production, CRC Reef Research Centre, World Wide Fund for Nature Australia, Great Barrier Reef Marine Park Authority, the Queensland Local Government Association, Agriculture WA, FNQ Sugar Taskforce, Queensland Sugar Limited, Australian Workers Union, Minister Truss, the Federal Member for Dawson, De-Anne Kelly, Queensland Member for Hinchinbrook, Mark Rowell, Queensland Member for Mirani, Ted Malone, Kimberley Land Council, Case Austoft, Cameco, representatives from several banks and representatives of several sugar municipalities and local governments.

A series of public meetings was held in the week of 29 April – 3 May in Innisfail, Bundaberg, Mackay and Townsville. These meetings ran for several hours, with attendees provided with the opportunity to state their views on the Assessment, the current state of the sugar industry, and any other relevant issues. Collectively, these public meetings were attended by over 1,000 people.

The independent person also attended several formal and informal industry forums, including a meeting of the Sugar Industry Development Advisory Council (SIDAC), the ASMC annual general meeting, a (joint CSR-CANEGROWERS) meeting of the Burdekin, Herbert and Plane Creek Regional Industry Boards, and a roundtable on the Brazilian industry convened by the Queensland Department of Primary Industries. A number of the above stakeholders were present at these.

The independent person also undertook a number of informal follow-up consultations with many of these stakeholders.

CONSULTANCIES

The Assessment terms of reference required that the independent person “commission additional work as required”.

The Australian Bureau of Agricultural and Resource Economics (ABARE) was commissioned to update and run its “SUGABARE” model, to include latest data and prepare a baseline for running different scenarios which might impact on world sugar markets.

Queensland Sugar Limited (QSL), which with CSR co-owns the Centre for International Economics’ (CIE) “Global Sweeteners” model, offered to have the model updated and run to conduct long-term price scenarios and price risk analysis for the decade ahead. The offer was accepted, and model results and a verbal presentation were provided to the independent person.

The Bureau of Rural Sciences (BRS) was commissioned to undertake a desktop study of existing material and provide a sugar industry ‘atlas’, showing major geographical concentrations of cane farmers, identification of the major sugar industry-dependent towns and communities, and socio-economic profiles of sugar regions, including labour force by industry.

Agtrans Research was engaged to work as required with the independent person on key economic aspects of the Assessment.

Legal advice was also obtained on issues relating to cooperatives.

The results of the BRS work are at Appendix G. Full results of the ABARE and CIE work have been provided to the Commonwealth and industry bodies.

(The independent person also met with several other consultants, although none were engaged.)

SUBMISSIONS

The independent person chose to call for submissions from all interested parties, to allow maximum input to the exercise. Accordingly, in early March advertisements were placed in the national and local press calling for submissions to the Assessment. Over 200 submissions were subsequently received from a wide cross section of stakeholders. Those submitted after the advertised due date of 5 April were all considered to the extent possible in whatever time remained. Upon receipt, all submissions were treated as confidential, authors were then approached for permission to make their submission public. Over 100 submissions have subsequently been made available on the internet site, including:

  • Agriculture, Fisheries and Forestry -
    Australia (NRM)
  • Agricultural Research Technologies
  • Ahern, Robert
  • Australian Cane Farmers' Association
  • Australian Cane Harvesters
  • Australian Environment International
  • Australian Greenhouse Office
  • Australian Sugar Milling Council
  • Baker, LM
  • Betteridge, EM
  • Blines, Devon
  • Bosanquet, Peter
  • Bosworth, Quentin
  • Burdekin Shire Council
  • Bureau of Sugar Experiment Stations
  • Camilleri, John
  • Campagnolo, Allan
  • Campagnolo, Aurora
  • CANEGROWERS
  • CANEGROWERS Atherton Tablelands (Regional Submission)
  • CANEGROWERS Innisfail (Regional Submission)
  • CANEGROWERS Kalamia (Regional Submission)
  • CANEGROWERS Mackay (Regional Submission)
  • CANEGROWERS Marian (Regional Submission)
  • CANEGROWERS Mulgrave (Regional Submission)
  • Cardwell Shire Council
  • Chapple, Errol
  • Childers & District Fruit & Vegetable Growers Association
  • Churchward, EH
  • Croatto, Mario
  • CSIRO
  • CSR Sugar - Herbert, Burdekin & Plane Creek Regions
  • Dadt, Florence
  • Deguaras, Sam
  • Department of Foreign Affairs & Trade
  • Dickson, Daryl
  • Dimarco, Vince
  • Dobbins Jack
  • Dorrian, John - Dorrian Farms
  • Douglas Shire Council
  • Durnsford, Les
  • Environment Australia
  • Fabrellas, Lawrence
  • Farquhar, Alan & Meredith
  • Federation of Australian Business & Agriculture
  • Fordyce, John
  • Galea, Joe
  • Germanotta, Vince
  • Great Barrier Reef Marine Park Authority
  • Greenwood, Kelso
  • Halliwell, NPF
  • Hanlon, David
  • Harris, Bill
  • Harris, P & Bugeja J & C
  • Harris, MJ & LA
  • Haywood, Richard
  • Haselton, Nev
  • Hatch, John & Judith
  • Hinchinbrook Shire Council
  • Hodgson, John (Personal Submission) - Mackay Sugar Cooperative
  • Inkerman Mill Supplier's Committee
  • Jenkins, Christine
  • Johnstone Shire Council
  • Katter, Bob (MP) - Member for Kennedy
  • Kelly, De-Anne (MP) - Member for Dawson
  • Kramer, Peter
  • Lamb, Mary
  • Lawson, David
  • Loizou, Lou - Loizou Farming Company
  • Long, Ian & Kerry
  • Lowrey, Ron
  • Mackay City Council
  • Mackay Sugar Cooperative
  • Mackay Tourism & Development
  • Malone, Ted (MP) – Queensland Member for Mirani
  • McAllister J, Grasby D & Finemore M
  • McClure, G
  • Muller, Michael & Ross
  • Muscat, Joseph
  • Nature Conservation Council of NSW
  • Nielsen, Les
  • Nirpadayatic Technical Consultants
  • Ord River District Cooperative Ltd
  • Paul, Gloria & Lester
  • Peoples, James William
  • Perna Family Trust
  • Pioneer Valley Water Board
  • Proserpine Cooperative Sugar Milling Association
  • Queensland Department of Primary Industries (QDPI)
  • Quagliata, Joe
  • Robke, G & Martin, M
  • Sarina Shire Council
  • Sartori, Bruno
  • Searle, Les
  • Sgroi, R
  • Sheedy, Barry
  • Stein, Paul
  • Stroppiana, RC & AR
  • Taifalos, Nicholas
  • Tyson, K
  • Tindall, David
  • Vassallo, Paul
  • Vella, Karen - CSIRO Sustainable Ecosystems
  • Ward, Bernie
  • WDT Engineers
  • Werner Farming
  • Wilkinson, Joe
  • Women in Sugar
  • World Wide Fund for Nature, Australia
  • Zunker, Barry & Carol

These submissions are themselves a positive outcome of the Assessment, and are a valuable resource for government and industry. It should be stressed that whilst not all of the diverse range of views contained within the submissions are specifically reflected in the report, all were analysed during the Assessment, and formed a key part of deliberations.

INDUSTRY’S PROPOSALS

In announcing the Assessment, Minister Truss sought the full support of industry as it was conducted. This support was clearly evident throughout the Assessment process, with individuals and organisations from the industry fully engaging with the independent person as the exercise was conducted, providing information as requested, and participating cooperatively and vocally throughout, at both representative and grassroots level.

In accordance with the terms of reference, the independent person wrote to the three industry organisations (CANEGROWERS, Australian Sugar Milling Council, Australian Cane Farmers' Association) requesting the proposals for industry-wide structural reform, which were a requirement of the Sugar Industry Assistance Package. This document was duly provided, with the initial qualification that it had been prepared by the organisations’ respective General Managers on a “without prejudice” basis, and without Board consultation or approval.

The General Managers also requested that the document not be published as part of this report. At the time of writing it is understood that Minister Truss has also been provided with the document and that it has received CANEGROWERS and ASMC Board approval, with the ACFA Board to consider it in early July.

COST

At the time of writing, indicative costs for the Assessment include:

Independent Person / $ 82,500
Consultants / $188,000
Travel and consultation / $ 35,500
Secretariat / $ 94,000