DJ Queensland Sugar Appoints New Commercial, Smaller Board

CANBERRA -- Australia's Queensland Sugar Ltd. Tuesday named three directors - Nicole Burrell, Guy Cowan and Mark Sage - to join Alan Winney, who took over on Jan. 1 as the chairman, as members of the marketing concern's new commercially-focussed, trimmed-down board.
The three new directors have extensive experience in commodities, marketing and finance, and are people who don't have a sugar industry background and so aren't encumbered with industry politics, Winney said.
With three directors in place, the new board can now operate in line with a concept approved by millers and cane growers to restructure Queensland Sugar's export marketing role, he said in a statement.
Under arrangements agreed by the industry in 2008, the new 4-member board replaces an unwieldy 12-member board that comprised grower and miller representatives, and independents.
Queensland Sugar, which is still owned by millers and growers, collectively markets around 95% of raw sugar produced in Queensland under voluntary agreements with all but a few small millers.
Major millers include CSR Ltd. (CSR.AU), Mackay Sugar Cooperative Ltd. and Bundaberg Sugar Ltd., a unit of Belgium's Finasucre SA.
Australia, through Queensland Sugar, is usually a major supplier of the sweetener to Asian nations, including Japan, South Korea and Malaysia, in annual trade valued at around A$1 billion a year.
Winney said Queensland Sugar's new board faces a number of key challenges including the preservation of a strong single face to the market for the export of bulk raw sugar, the development of new products to send clear price signals to cane growers and sugar producers, and the delivery of ongoing operational improvements to maximize returns.
Winney is also the chairman of Emerald Group Australia, one of 21 accredited exporters competing in Australia's wheat export market that was liberalized on July 1, 2008, after more than 60 years.
Sugar cane farmers and millers considered "there's some benefit for them, and there are some premiums that can be extracted by exporting through one party," Winney told Dow Jones by telephone.
This includes logistics issues, such as freight control and management, and more broadly "the economies that come with a larger supply base," he said.
The voluntary collective marketing system is an approach the sugar industry as a whole decided was the way it wanted to move forward, he said.
"It is voluntary, and each year the various different parties will sit down and say this is good for us or not good for us, and if they don't want to go ahead they won't go ahead," he said.
Winney takes the helm at Queensland Sugar with the soft commodity outlook "pretty positive" over a three- to five-year timeframe.
In recent times, hedge funds have been forced to liquidate their positions in the sugar industry, weighing on the market and forcing values below justified by fundamentals, he said.
"There is the opportunity for some pickup in the first half of this year and with the Aussie dollar around current levels is positive for the industry," he said.
The fundamentals of many soft commodities are positive, with minimum stocks, an ongoing supply and demand imbalance, coupled with ongoing demand growth for more complex food products, of which sugar is a beneficiary, he said.