Public consultation on the sunsetting review of the Sugar Code of Conduct has now closed. Further information on the review process can be found by visiting Reviewing the Sugar Code of Conduct or contacting sugarcodereview@aff.gov.au.
Overview
The Australian sugar industry produces both raw and refined sugar from sugarcane. Approximately 95 per cent of this production occurs in Queensland, with the remaining five per cent in northern New South Wales. The industry spans about 2,100 km of coastline stretching from Mossman in far north Queensland to Grafton in northern New South Wales. While a sugar industry was established in Western Australia’s Ord River Irrigation Area in the mid 1990s, operations there ceased in 2007.
The Queensland sugar industry was deregulated on 1 January 2006.
More than 80% of Australia’s l sugar produced is exported as bulk raw sugar, making Australia the fourth largest raw sugar exporter. In recent years, Asia has become a key focus with major export markets including South Korea, Indonesia and Japan.
In New South Wales, white and raw sugar predominantly is sold directly to the domestic market by the New South Wales Sugar Milling Co-operative.
Returns to producers are mainly determined by global futures prices, but are also influenced by movements in the Australian dollar, regional sugar premiums and the costs associated with marketing and transportation.
Queensland Sugar Limited publishes daily updates on world sugar prices, along with daily sugar market reports.
Additional international sugar market information, including reports and statistics, is available from the International Sugar Organisation (ISO).
The Sugar Industry Reform Program (SIRP) 2004 was established to support and promote comprehensive reform and restructure of the Australian sugar industry.
It followed an industry commitment to actively pursue long term economic, social and environmental sustainability by undertaking structural change, rationalisation and restructuring, and to investigate diversification, value adding and alternative use of sugar cane land. This commitment was captured by a Statement of Intent signed by industry leaders.
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- Reform of the Australian Sugar Industry - Statement of Intent (PDF 64 KB)
- Reform of the Australian Sugar Industry - Statement of Intent (DOCX 49 KB)
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An Industry Oversight Group was appointed by the Australian Government to oversee progress on the implementation of sugar industry reform, including refinement of reform priorities, developing a strategic industry vision and aligning regional plans with the industry vision.
The strategic industry vision can be found at:
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The Australian Government also established Regional Advisory Groups comprising local sugar industry and community representatives, supported by Sugar Executive Officers, to help drive local reforms.
The Advisory Groups were responsible for identifying the industry’s key challenges and the most appropriate solutions, which reflected each region’s unique circumstances within an overall industry strategic framework.
SIRP 2004 has been completed, with almost $335 million provided for a range of measures including:
- Regional and Community Projects;
- Sustainability Grants;
- Income Support (including business planning for income support recipients);
- Business Planning (growers and harvesters);
- Business Planning (mills);
- Re-establishment Grants (growers and harvesters);
- Grower Restructuring Grants;
- Retraining;
- Crisis Counseling; and
- Intergenerational Transfer.
ABARES has completed an evaluation of the program which reports on the impacts of the various elements and includes details on take-up and expenditure for each.
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- A report on the impacts of the Sugar Industry Reform Program (SIRP): 2004 to 2008 (PDF 2.7 MB)
- A report on the impacts of the Sugar Industry Reform Program (SIRP): 2004 to 2008 (DOCX 5.5 MB)
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On 20 September 2012, the Minister for Agriculture, Fisheries and Forestry, Senator the Hon. Joe Ludwig received a formal proposal from the Australian Sugar Industry Alliance (ASA) to restructure research and development arrangements for the sugar industry.
Under the reforms, the Sugar Research and Development Corporation and BSES Limited will be wound-up and their assets and R&D functions, along with the research coordination activities of Sugar Research Limited, transferred to the industry owned company, Sugar Research Australia Limited (SRA).
The proposal was subject to a formal six week objection period after receipt by government, as required under the Australian Government’s Levy Principles and Guidelines. This period ended on 1 November 2012.
After considering the ASA proposal, other options, the formal objections and other representations on the issue, the government decided that, on balance, the proposal represents the best mechanism for long-term delivery of research and development to the sugar industry. Industry also demonstrated strong support through a poll of all potential levy paying businesses run by the Australian Electoral Commission in August/September 2012.
The Sugar Research and Development Services Act 2013, the Sugar Research and development Services (Consequential Amendments-Excise) Act 2013 and the Sugar Research and Development Services (Consequential Amendments and Transitional Provisions) Act 2013 provide the mechanism to implement key elements of the reforms. These bills were introduced into parliament on 5 June 2013. This legislation was passed through parliament on 28 June 2013 and received royal assent on 29 June 2013.
For further details on SRA please visit the SRA website.
On 4 September 2014, the Senate asked the Senate Rural and Regional Affairs and Transport Reference Committee to investigate current and future arrangements for the marketing of Australian sugar.
The committee finalised its report in June 2015. The report, which had one recommendation, is available at the Parliament of Australia website.
The Australian Government provided the following response to the report:
The Australian sugar industry produces both raw and refined sugar from sugarcane. Approximately 95 per cent of the sugar produced in Australia is grown in Queensland. Around 85 per cent of the raw sugar produced in Queensland is exported and generates over $2 billion in export earnings. The majority of Australia's domestic market is supplied by sugar cane grown in New South Wales.
In 1995, as a result of a review of the sugar industry, the Queensland Government repealed the Regulation of Sugarcane Prices Act 1915 and the Sugar Acquisition Act 1915 and replaced them with a new regulatory framework under the Sugar Industry Act 1999 (the Act). The Act continued the 'single desk policy', under which all raw sugar produced for export was vested in Queensland Sugar Corporation, which then arranged export marketing.
On 1 January 2006, following implementation of the Australian Government’s $334 million Sugar Industry Reform Program in 2004, the Queensland Government amended the Act to deregulate the sugar industry. The new legislation included two significant deregulation measures:
- the removal of restrictions on the marketing of raw sugar for export
- the ability of participants to negotiate contractual terms, including price.
At this time Queensland Sugar Corporation transitioned into the industry owned Queensland Sugar Ltd (QSL). QSL continued to operate a single desk export marketing function on a voluntary basis.
In 2014, three of Queensland’s biggest sugar milling companies announced that, from July 2017, they would no longer participate in the voluntary arrangements through QSL.
Growers in cane production areas linked to the exiting mills and their representative organisations, raised concerns that these new arrangements would remove the benefits of centralised marketing and result in milling companies retaining any marketing premiums achieved. In response to these concerns, the following actions were taken:
- on 4 September 2014, the Senate referred the matter to the Rural and Regional Affairs and Transport References Committee
- on 10 December 2014, the Federal Minister for Agriculture announced the formation of the Sugar Marketing Code of Conduct Taskforce.
On 25 June 2015, the Sugar Marketing Code of Conduct Taskforce finalised its report on the promotion of competition in sugar marketing. The Taskforce released a draft mandatory code of conduct under the Competition and Consumer Act 2010, the Competition and Consumer (Cane Sugar Processing Industry Code) Regulation 2015.
On 24 June 2015, the Senate Rural and Regional Affairs and Transport References Committee Report on ‘Current and Future Arrangements for the Marketing of Australian Sugar’ made a single recommendation:
The committee recommends the development and implementation of a mandatory sugar industry Code of Conduct, acknowledging that, provided appropriate stakeholder consultation is undertaken, the work of the Sugar Marketing Code of Conduct Taskforce may provide a foundation upon which a Code of Conduct may be established.
On 19 May 2015, a Private Member’s Bill was introduced into the Parliament of Queensland. The amendments made by the Sugar Industry (Real Choice in Marketing) Amendment Bill 2015 took effect on 17 December 2015. These amendments gave cane growers the right to require sugar milling companies to direct the sugar, for which the growers have price exposure, to third party marketers such as QSL. Typically, this is two-thirds of the sugar produced and is known as grower economic interest (GEI) sugar.
Following protracted negotiations over supply agreements, the Australian Government introduced a mandatory code of conduct for the sugar industry Competition and Consumer (Industry Code—Sugar) Regulations 2017. The code came into effect on 5 April 2017 and provides for pre-contract arbitration between mill owners and marketers, and between cane growers and mill owners. It also mirrors Queensland’s Sugar Industry Act 1999 provisions that allow growers to elect a marketing company for GEI sugar.
The Australian Government considered the committee’s recommendation and provided the following response.
Response to Recommendation 1
The Australian Government introduced a mandatory code of conduct for the sugar industry which came into effect on 5 April 2017. The code supports the development of mutually beneficial and timely cane supply and on-supply agreements.
A review of the Sugar Code of Conduct was required to begin within 18 months of the code commencing. The Department of Department of Agriculture, Fisheries and Forestry, with the Department of the Treasury, conducted the review between 4 July 2018 and 12 November 2018.
60 written submissions were received, and public consultations took place in Gordonvale, Innisfail, Ingham, Ayr, Mackay, Bundaberg and Broadwater. Face-to-face consultations with key industry bodies were also held.
The review found that the industry is working together on a number of challenges. However, the relationships between some parties remain tense, which impacts their ability to reach commercial terms of contracts without regulatory support. The review recommended the code should be retained to continue to provide certainty for growers and millers regarding their arbitration options while they conclude their adjustment to commercially negotiated cane supply contracts.
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The report made six recommendations for consideration and response by government.
The Australian Government provided its first response to the review in December 2018 and an updated response to the review in October 2021.
2018 - government response to the 2018 Review
The Australian Government provided the following response to the review:
The Australian Government has an interest in maintaining the sustainability and effective operation of Australia’s raw sugar export industry, which contributes $2 billion to Queensland’s economy each year, and supports rural and regional communities.
On 5 April 2017, the Australian Government introduced a mandatory code of conduct for the sugar industry (Competition and Consumer (Industry Code—Sugar) Regulations 2017 (the code).
The code was introduced to regulate the conduct of growers, mill owners and marketers (of grower economic interest sugar) in relation to contracts or agreements for the supply of cane or the on-supply of sugar, including establishing a process for pre-contractual arbitration where the parties fail to agree to terms of contracts or agreements.
In November 2018, the Department of Department of Agriculture, Fisheries and Forestry, with the Department of the Treasury, finalised its review of the code.
The Australian Government has considered the review and supports the following recommendations:
1. The code should be retained to continue to provide certainty for growers and millers regarding their arbitration options while they conclude their adjustment to commercially negotiated cane supply contracts.
2. The code should be amended to make clear that pre-contractual arbitration applies to raw sugar only and not to any other product obtained from sugar cane. This will provide millers with regulatory certainty and facilitate investment in milling assets and development of innovative products. [The Australian Government’s support for this recommendation was withdrawn in October 2021 – see below].
5. The Australian sugar industry representative bodies should work collaboratively to develop a long-term strategy to address shared future challenges.
6. All industry parties should focus on the longer term and fundamental issues jeopardising the industry’s future.
The Australian Government supports the following recommendation in principle and will review the code in four years:
4. The code should be reviewed in two years to assess whether commercial relationships between the parties have matured and whether the code is still needed. [The Australian Government’s support for this recommendation was withdrawn in October 2021 – see below].
The Australian Government does not support the following recommendation:
3. The provision that allows growers to choose their marketer should be repealed from the code. It is inconsistent with the objectives and benefits of the recent evolution of the industry’s regulatory arrangements, and duplicates obligations already contained in the Sugar Industry Act 1999.
The Australian Government will consider the recommendations by the Australian Competition and Consumer Commission (ACCC) in relation to penalties and investigative powers at the next review to determine if further ACCC involvement is needed.
2021 - updated government response to the 2018 Review
In October 2021 the Australian Government withdrew its support for recommendations 2 and 4 of the 2018 Review. The code would not be amended or reviewed at this time.
The government’s response to the remaining four recommendations remains unchanged.
Post Implementation Review - Competition and Consumer (Industry Code—Sugar) Regulations 2017 (Sugar Code of Conduct)
In 2021 the department completed a post-implementation review of the sugar code. The Office of Best Practice Regulation assessed the review as compliant with the Australian Government’s Best Practice Regulation requirements on 10 December 2021.
Key findings of the review noted that the code delivered a net benefit to the Australian sugar industry because it provided a mechanism for resolving potentially lengthy and costly negotiation deadlocks, but the code introduced a financial cost to the industry.
There was not a consistent view about the impact of the code across the sugar industry. Growers reported that the presence of the code had helped resolve negotiations before reaching a point where the code would need to be used. Millers reported that the code had added uncertainty, complexity and cost to sugar industry operations, deterring investment and undermining competitiveness.
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- OBPR 23371 – Certified PIR Sugar Code of Conduct (PDF 765 KB)
- OBPR 23371 – Certified PIR Sugar Code of Conduct (DOCX 1.1 MB)
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The sunsetting review of the Sugar Code of Conduct was announced by Assistant Minister Chisholm on 5 May 2026.
As a regulatory instrument, the Code is scheduled to sunset on 1 October 2027 unless the Australian Government makes a decision to remake it.
The review is seeking stakeholder views on whether the Sugar Code remains necessary, how it has operated in practice, and whether changes may be required to improve its operation.
The first stage of the review involved a public call for submissions via the department’s Have Your Say platform from 5 May to 16 June 2026.
The department is currently conducting targeted consultations, both in person and virtually.
Following consultation with stakeholders, the department will analyse the feedback provided and develop a report for the Assistant Minister.
The report will include recommendations regarding the future operation of the code.