What should you take into consideration when choosing a GEI marketer for your GEI sugar?
The short answer is that you should choose the GEI marketer you believe will give you the best price for your cane.
The price you receive for your cane is made up of a number of components.
The sugar price and associated foreign currency exchange (FX) make up the majority of the final return. Pricing may be done by GEI marketers or growers. Each season, more growers are choosing to take control of their sugar pricing through ‘self-managed’ products offered by GEI marketers.
Growers do not, however, have any control over returns associated with the sale and delivery (marketing) of priced sugar to customers – other than through their choice of GEI marketer.
Marketing returns include the premiums available from specific markets and the costs of sugar sales (e.g. storage, handling and freight costs). Costs also include the marketer’s operating expenses, such as staff, financing, systems and governance. These returns enhance or detract from the sugar price, depending on the net value of premiums and costs. If the premiums earned are higher than the costs incurred, the marketing return will be positive – and if costs are higher than premiums, the return will be negative.
Marketing returns are collectively known as the GEI marketer’s ‘shared pool’ price, and are applied to every tonne of sugar marketed, regardless of whether the sugar has been forward priced, priced in season, priced by you or priced by your marketer.
In short, the ‘shared pool’ return reflects how hard — and smart — a GEI marketer works, both on the physical sale and delivery of priced sugar and in the business model under which they operate.
The bottom line? The same pricing decisions made by a grower with different marketers can result in a substantially different overall return, once the shared pool is applied to the contract price.
FIND OUT MORE
Contact QCS Grower Services Officer Arthur Douglas on 0447 534 791 or via email.