Growers must raise $170k to challenge sugar levy
IF THERE is $170,000 in a Mackay law firm's trust fund account by Tuesday morning, growers and Mackay Sugar Limited are going to have a fight.
Those were the conditions thrown down to Mackay Sugar suppliers overnight as four growers - Rex Stroppiana, Richard Galea, Andrew Barfield and Gary Parkinson - attempted to rally a force to challenge the milling company's proposed $2 a tonne levy.
Inside the Mirani State High School hall sat about 300 people; a cross section of the sugar cane community, some were old, others young and all from different sized farms.
None were happy about the agreement made last week by bargaining agents Canegrowers and Australian Canefarmers Association.
Those organisations agreed to the levy - that the company has agreed to review after two years - on behalf of their growers off the back of two surveys.
The surveys found the majority of growers, only by 1%, in favour of a levy, believed to cost the average grower about $10,000 a year.
Wallace and Wallace Lawyers partner Greg Smart was there to outline the plan to block these changes to the growers' cane supply agreement, which included the thorn in their side - the levy - the changed Annexure D.
Mr Smart told growers the agreement to review the levy after two years was "at best a gentleman's agreement".
"There is nothing to say what the review means and what it is against," he said. "There is no security here for this payment at all."
He went one step further to say growers would be the last to receive any money back from the levy if Mackay Sugar became insolvent and growers would have a better chance if they just loaned the milling company money.
But the challenge won't be cheap and can't be slow.
In the breakdown of the costs Mr Smart explained he charged $5000 for a day in court and would require another $5000 for a day of preparation. A barrister would likely cost the same.
He predicted it would cost $40,000-$60,000 for declaration proceedings against Mackay Sugar.
Then if there was an injunction it was expected to cost $30,000-$40,000.
And in the event the group lost there needed to be a contingency fund of $70,000 to also pay for Mackay Sugar's legal costs and overruns.
Mr Galea and Mr Stroppiana had calculated as minimum contribution costs for each grower based on tonnage of cane produced each year.
Growers that produced up to 5000t were asked for $800; 5000-10,000t for $1000; 10,000-20,000t for $1500 and more than 20,000t for $2000.
Mr Parkinson was confident of a successful challenge against Mackay Sugar because it "loses more often than it wins" and "the odds were in (his) favour".
Another grower, who produces 10,000t meaning a levy would cost him $20,000 a year, said that he wouldn't notice the extra $1000.
Former Mackay Sugar director and Farleigh Mill manager Barry Sheedy stood up wearing a flat cap and said he wasn't a grower but would chip in $1500.
Mr Smart said they had to act quickly to block the levy through the courts by June 19 or paying the $2 levy would become status quo and their challenge would be shot.
A statement from Mackay Sugar stated that it intended on implementing the $2 levy for those growers covered by the collective agreement amended with Canegrowers and ACFA.
"We cannot comment on the final outcome for those not covered by the collective agreement recently amended with Canegrowers and ACFA, as further negotiations are required, the outcomes of which cannot be anticipated," the statement read.
"The $2/tonne deferred cane payment agreed to with the bargaining representatives through amendments to Annexure D is effectively a reduction in expenses for Mackay Sugar, reducing the single largest expense item that the company pays for."
It continued: "This follows an effort by the company over many recent years to reduce expenses through all of the other areas including operations, maintenance and overheads. The deferred cane payment is not primarily a debt reduction tool. The debt reduction is brought about through the sale of cogeneration and repayment of bank debt. Both of these items will assist with generating profit in future years and therefore all are linked in some way, but the purpose of the $2/tonne deferred cane payment is to reduce expenses and affect the profitability and cash flow for the company."
The miller suggested affected grower groups would need to take their own advice "with respect to their individual situation, consider this advice and act on it appropriately".
Mr Smart said if the $170,000 was not in the account by Tuesday morning the challenge would be over.