MSF, formerly the Maryborough Sugar Factory, operates four mills in Queensland, North-East Australia.
The Bangkok-based, privately-owned sugar giant already held a 40% stake in the company and this latest push has now secured a controlling interest.
Mitr Phol said in its Bidder’s statement that it intends to “undertake a detailed review of MSF’s assets, strategy, operations and employees to evaluate performance, profitability and prospects.”
This acquisition marks a shift in the foreign ownership of the Australian sugar sector with Queensland-based Mackay Sugar now the only remaining significant, locally-controlled sugar miller.
Bernard Milford, chief policy officer at Canegrowers Australia, a representative body for over 80% of sugarcane suppliers in Queensland, gave a cautious welcome to the latest acquisition.
“Large amounts of foreign investment shows that the Australian sugarcane industry is a viable and dynamic industry with a bright future,” Milford told FoodNavigator-Asia.
But while foreign investment holds many opportunities, there are also many potential downfalls for the long-term future of the industry, he added.
Current operations need to be maintained
If current operations, transparent supply contracts and research and development prospects are continued and supported by foreign investors, acquisitions have the potential to benefit the industry.
He explained that currently “growers and mill owners engage in commercial negotiations to reach agreements for the supply of cane…Growers are obliged to supply all cane grown to a mill owner for crushing and the mill has an obligation to accept the cane.”
“To ensure the long-term viability of the industry in Australia, foreign interests need to understand and respect the cooperative nature of current industry arrangements,” he added.
There are some reservations on expanded investments from state-owned enterprises, Milford said, as there are concerns that industry will be unable to have a voice if milling assets are controlled by a foreign government.
String of Asian investments
In July 2011 China’s state-owned group COFCO (China Oil and Food Company) bought out Tully Sugar for A$136m, successfully beating US-based agribusiness giant Bunge and local Australian player Mackay Sugar.
This latest acquisition of MSF follows a string of buy-outs over the last year including Singapore agribusiness Wilmar’s buy-out of Australian sugar giant Sucrogen for A$1.75bn and Queensland Cotton by another Singapore business, Olam.
It is unsurprising that FDI is coming from the Southeast Asian region, Milford said, as they are key export markets for Australian sugar and are thus already heavily investing in the sector.
Milford said that “Canegrowers is keen to work with Mitr Phol to ensure the smooth operation of the value chains in the MSF areas and the continuation of commercially important arrangements for the entire Queensland sugar industry.”