Australia's sugar industry re-regulated after law passes, undermining plans of multi-nationals

Australia's largest sugar producing state has passed legislation allowing growers to choose who sells their sugar, undermining plans of multi-national sugar producers to use in-house marketing arms to sell the sweetener.

Australia's largest sugar producer Wilmar International Ltd, Thai owned MSF Sugar and the Australian arm of COFCO Corp had planned to stop selling sugar through the industry-owned Queensland Sugar Limited (QSL) marketing body from 2017.

However the plan proved highly unpopular by Queensland's 4,500 cane growing families who, prior to the legislation passing, didn't have rights to decide who sell their sugar after it had been milled.

The three multi-nationals who account for the majority of sugar produced in Australia, the world's third largest exporter, claim bypassing the industry marketing body will maximise revenue while controlling their supply chain.

Late on Wednesday, Queensland parliament passed the controversial legislation with the support of the opposition parties and a crucial independent vote.

The win has been heralded by Queensland's two billion dollar sugar industry, claiming it will bring greater competition after attempts to seek a resolution to the impasse since the multi-national's announced their moves though arbitration, hence seeking a political solution.

"A voice of grievance came out of the cane fields of Queensland... what we didn't want to see was the rights of growers to be stripped and taken away from us and what we've been able to achieve tonight is basically a balance of negotiating power," QLD Canegrowers chairman Paul Schembri said.

However the ruling Labor party immediately wrote to Australia's consumer watchdog (ACCC) insisting aspects of the bill breached anti-competition laws.

QLD state deputy premier Jackie Trad told the state parliament on Thursday the imposition of new regulations in the industry, which she described as "economic lunacy", would have grave consequences for crucial foreign investment and have possible implications on trade relationships.

"At a time when both sides of the federal parliament are pursuing new international trade deals, this bill is likely to put Australia in breach of our existing international trading agreements," Trad said.

"In fact, any or all of the international firms investing in Queensland's sugar industry could now approach their national government and seek to initiate the Investor-State Dispute Mechanisms under provisions in the Free Trade Agreements between their country and ours. This is a matter of grave consequence."

The industry body representing Australia's sugar millers have said they will challenge the legislation through the courts. Endit