By Colin Packham
SYDNEY, Dec 3 (Reuters) - Australia's largest sugar producing state Queensland on Wednesday passed legislation allowing growers to choose who sells their sugar, undermining plans of several of the world's largest sugar producers to sell the sweetener via in-house marketing arms from 2017.
Wilmar International Ltd WLIL.SI , MSF Sugar, owned by Thai sugar giant Mitr Phol, and the Australian unit of Chinese agribusiness COFCO Corp had planned to stop selling sugar through the industry-owned marketing body from 2017.
But the plan was unpopular with sugar farmers in Australia, the world's third largest exporter of raw sweetener.
Late on Wednesday, a bill backed by local growers, secured a crucial independent vote to pass through the state's parliament. As a result, sugar farmers have the right to decide which entity sells their cane after being processed by a local mill.
Growers welcomed the vote, which it said will herald greater competition in the space.
An industry body, however, representing the country's sugar millers said they will continued to challenge the legislation through Australian courts on the grounds of contravening competition law.
"They have voted to lock the sugar industry into a long and protracted legal quagmire," said Dominic Nolan, chief executive officer of the Australian Sugar Millers Council.
The three sugar millers, which account for the majority of sugar produced in Australia, say bypassing the industry marketing body will allow them to control their supply chains and maximise revenues.
Australia sugar production during the 2015/16 season is expected total 5 million tonnes.