Sugar mill strikes put Australia's cane harvest at risk

By Peter Hobson

CANBERRA, June 7 (Reuters) - Industrial disputes at factories that produce more than half of Australia's sugar could cause cane to be left unharvested if they are not resolved soon, threatening production and exports, people in the industry said.

Strikes over pay at eight mills owned by Singapore's Wilmar International that produce over 2 million metric tons – worth around $1 billion - of sugar a year have delayed the start of cane crushing operations by between two and 13 days, the company's Australian subsidiary said.

A ninth mill, owned by Chinese conglomerate COFCO , said it had also delayed its start due to strikes and adverse weather.

Australia is the world's fourth-largest sugar exporter, shipping around 3.5 million tons a year to markets mostly in Asia. A small reduction in Australian production would tighten supply in Asia but likely have little impact on global prices.

But the hold-ups are worrying growers who lined up labour to deliver cane but do not yet threaten overall sugar production in a crushing season that lasts from June to around November, when rains dilute the cane's sugar and make it difficult to harvest.

However, longer delays could shorten the processing season and the time available to bring cane from fields.

"Everyone's worried about it," said Greg Beashel, CEO of exporter Queensland Sugar. "The cane has to be crushed in a fixed window otherwise you lose sugar content and have weather risk at the end of the year," he said.

Start-of-season delays are not unusual and buyers should not yet be alarmed, Beashel said. "But it needs to get resolved pretty soon," he added.

Spokespeople for Wilmar Sugar and Renewables, also a major generator of renewable energy from biomass, and for COFCO's Tully Sugar said long strikes would disrupt the crush but hoped pay deals could be struck before that happened.

"I am hopeful," a Tully spokesman said. "We need to kick off as soon as possible."

Unions at Wilmar are asking for an 18% pay rise over three years and those at Tully want 21%, union officials said.

They said they had lowered their requests to help reach deals without disrupting the crush and workers deserved the rises after a period of high inflation and high sugar prices.

A former Wilmar worker employed for decades at a mill just south of Townsville said many mill workers did 12-hour shifts in a hot and humid environment, where boilers ran 24 hours a day for most of the crushing season feeding heat and energy to machinery.

"There's hot water everywhere. It's hot, noisy and steamy," he said, adding that workers would hold out for higher pay. "People have had enough," he said.

Wilmar has offered its workers 14.25% over three and a half years with a signing bonus and Tully 14.25% over three years, the companies said.

Unions at Wilmar have suspended industrial action until a vote on June 10-11, when they say the offer will be rejected. Wilmar said it has been informed that strikes will resume after the ballot.

Tully said its workers would ballot in the week of June 17. The unions, which oppose Tully's offer, have announced work bans next week, the company said, adding that it intended to suspend employment of any worker who takes part in such actions.

Tully plans to start crushing next week and Wilmar will start its first mill on Monday, the companies said.

Meanwhile, the sugar industry watches and waits.

"It's a headache," said Owen Menkens, a farmer and chairman of the CANEGROWERS industry association. Every mill around Menkens' farm near Townsville is owned by Wilmar.

"We've got harvesting crews, casual labour coming in," he said. "The whole community revolves around the mills."

"If the delay gets any longer, it's going to be difficult. When the harvest isn't happening, there's no money coming into the district. Every day is crucial." (Reporting by Peter Hobson; Editing by Michael Perry)