Independent arbitrator appointed in Tully sugar dispute

The federal government has appointed the arbitrator to end the deadlock between Tully Canegrowers and Tully Sugar Limited, the first appointment of its kind under the Mandatory Sugar Code of Conduct introduced in 2017.

The appointment comes after the two parties failed to agree on the terms of a cane supply contract for the 2020 season and beyond despite more than a year of negotiations.

At the heart of the dispute is a proposal that the Tully Sugar Mill, owned by Chinese agricultural giant COFCO, would transfer a harbour cost for sugar shipments on to growers, along with plans to extend the crushing season.

Tully Canegrowers chairman Jamie Dore welcomed the appointment and said negotiations had been ongoing for more than 12 months.

"Canegrowers Tully members seek certainty, in the form of a workable and fair cane supply agreement, before planning for the 2020 harvest begins in earnest," Mr Dore said.

"Such an agreement is in the best interests of growers and the mill.

"We initiated this arbitration process on behalf of our grower members after a year of discussions with the mill were unable to reach an acceptable agreement.

"It is now time for an independent arbitrator to step in and we look forward to continuing to work towards a resolution.

"We feel like we've got no other alternative to sort this out."

Mr Dore said the harbour dues issues was a major concern for growers.

"The proposal is, unlike in the past where Tully Sugar has borne a portion of the harbour dues and the growers bear a portion of harbour dues, to now make the grower bear all the harbour dues," he said.

"This cost would be in the order of $400 to $500 thousand to the growers ... growers will be out of pocket for that sum every year unless it can be rectified."

Also of concern to growers is the proposal to extend the crushing season further into the wet season, with growers concerned about the effects an extended crushing season historically has on yield and sugar content.

Retired Tully Canegrowers chairman Tom Harney, who runs his own 202 hectare cane farm, said COFCO had previously made a contractual commitment to increase crushing capacity at the mill if growers expanded the area under cane.

"So growers did that and expanded by some 4000 to 5000 hectares, expecting that Tully Sugar would expand their crushing capacity," he said.

"They didn't do that."

Mr Harney said cane supplied in the latter part of the proposed extended season would not be of the same quality of cane supplied earlier.

"If you ratoon cane beyond the middle of November the productivity just isn't there," he said.

"If we were all lucky we could start the crush in May but historically we are unable to start before about June 15 because there's always rain in May and then in the later part of the season we're coming into an unfortunate time but traditionally if the season has gone long there have been compensation rates.

"The mill wants to remove those compensation payments by extending the season."

Mr Harney said the last cane supply contract with the mill was signed to secure a choice of sugar marketer for growers but details of harbour dues weren't specified in the contract and instead were passed directly on after the fact.

"Those harbour dues, along with an extra administrative fee that was added, have cost canegrowers $3 million in the last three years," he said.

"Growers are sick and tired of the mill just taking our profits off us."

Arbitration will start on January 17, 2020 with a decision then due within 30 days.