Sugar bail-out less than sweet

A federal government bail-out of the Australian sugar industry was under threat on Tuesday after business and opposition groups,in particular food manufacturers, objected to a three cent a kilogram levy to fund the $120 million plan (€67.7m), Industry Search.com reports this week.

Agriculture minister Warren Truss announced on Tuesday that all domestic sales of sugar would be subject to the three cent levy for the next five years.

"The levy will be placed on all domestic sugar sales (for manufacturing, food service and retail uses) at three cents a kilogram for approximately five years,"​ Truss said.

According to the IndustrySearch.com report, the levy would pay for $36 million in emergency income support for cane growers, exit payments of $45,000 for farmers wishing to leave the industry, interest rate subsidies of 50 per cent on loans of up to $50,000 for replanting, and funding for regional initiatives.

But the levy will require legislation, which could be blocked by the opposition, minor parties and independents in the Senate. Australian Food and Grocery Council chief executive Dick Wells appealed to Senate parties to block the levy, labelling it a threat to jobs in the processed food industry which employs 165,000 people.

"It is bad policy. Ultimately it will cost jobs now and jobs in the future,"​ Wells said. "There is already investment flowing elsewhere in the processed food industry, like New Zealand, and this is a further disincentive."​

The levy would force up the cost of Australian-made goods containing sugar, such as jam or chocolate, while not affecting imported foods.

Australian Chamber of Commerce and Industry chief executive Peter Hendy called the levy an unnecessary tax and a threat to jobs. "The Australian food manufacturing industry uses 85 per cent of sugar sold domestically and will therefore be paying for the majority of the assistance package for the sugar industry,"​ Hendy said.