A sugar sweetener for big boys
by Jules Andrews Australia's cane farmers are doing it tough — four bad harvests and rock- bottom world sugar prices have plunged them heavily into debt and rendered their farms almost worthless. And just when they thought things couldn't get worse, the Howard Government announced it was going in to "rescue" them... "Australian consumers appreciate the fact that to enjoy the privilege of having the cheapest sugar in the world they must have a viable local industry," said Agriculture Minster Warren Truss. In typical Howard Government style, Mr Truss then announced that the best way to make an industry efficient was to kill off the small players and deregulate. The price on each cane-grower's head is $45,000, tax-free of course, and it is hoped that up to 2,000 farmers will line up for the chop. A similar "restructuring" and deregulation of the dairy industry in July 2000 instantly wiped out 300 small farms and 15,000 rural jobs. Control over Australia's milk supply was then neatly delivered into the hands of transnational agribusiness companies and supermarket chains. Altogether the Government is offering $150 million to the sugar industry, though it has released few details on how the money will be spent. The package will be paid for by an estimated 18 cent levy on every kilogram of sugar. So the price of sugar in the supermarkets will go up by that amount as will the price of many other commodities that use sugar. Another tax This is just another tax on consumers. Such special taxes is becoming a favoured way by which the Federal Government increases its tax income. The slug on air travellers to meet costs associated with the Ansett collapse is another example. There has been little positive reaction to the announcement of the Government's sugar plan. "Nobody in any industry is going to walk away from their properties for $45,000; there's nobody out there buying properties anyway," said Ian Ballantyne, General Manager of the Australian Canegrowers' Council. Seemingly exasperated, Mr Ballantyne continued: "You can't throw $150 million at a $10 billion industry and tell it to rationalise in 18 months. We're not fairies at the bottom of the garden". In another shonky policy move, the Federal Government also announced last week that it was placing a 38.24 cents excise tax on ethanol fuel, and simultaneously providing a 38.24 cent subsidy for domestic producers. (In the pre-WTO days, this would just have been called a 38 cent tariff on imports.) The Federal Government has trumpeted its decision as not only a boon for the sugar industry, but also demonstrating concern for the environment. Ethanol fuel has two clear advantages over petrol: it offers greatly reduced "greenhouse gas" emissions; and it is a renewable resource, produced from crop waste such as cane molasses and grain. However, it has been revealed that the major beneficiary will not be the local sugar industry, but a major financial donor to the Coalition. The Manildra group of companies produces 90 per cent of ethanol in Australia, and would therefore be the biggest beneficiary from the import tariff. Deputy Prime Minister John Anderson admits he consulted Manildra on the move, but purely because they are stakeholders in the industry. The fact that Manildra pumped $90,000 into Coalition coffers over the last two years is completely unrelated, he said. It is perhaps also a coincidence that a Manildra competitor, Trafigura Fuels, has a shipment of imported ethanol on its way to Australia at this moment. Due to the Federal Government's "instant excise" announcement, the shipment has cost Trafigura an instant $5 million extra. And further still, the 12-month excise rebate for local producers does not offer a silver lining to the cane-farmers — 90 per cent of ethanol produced by Manildra is made not from sugar, but wheat.