Canegrowers chief executive Ian Ballantyne said growers were con-cerned that, given CSR's diversification into building products and aluminium, the sugar business "wasn't necessarily as well understood by the board as it should be".

"Some of the performance, some of the expectations of the growers of CSR in terms of the performance of their mills, was perhaps a bit wanting," he said. In June last year, the forced closure of CSR's Pioneer mill, south of Townsville, due to the collapse of some machinery, angered many growers who had argued that CSR had underinvested in its sugar infrastructure.

"Had a board been a sugar-focused board it would have seen the risks involved with that," Mr Ballantyne said.

But he said there were no plans at this stage to revive the offer made in 2000, when growers together with Canegrowers proposed paying CSR as much as $1 billion for its sugar business.

CSR announced its willingness to finally demerge the sugar business last week, ending a wretched run for the conglomerate. Its share price has spiralled downwards as its profitability has dwindled.

The demerger would create the second pure listed sugar company on the ASX and allow both companies to focus on their respective operations.

The CSR board is still to flesh out the details of the process, including how to allocate the parent company's $1.2 billion in debt, directors, managers and corporate names.

CSR managing director Jerry Maycock said the time was right to proceed with its long-held plan to separate its sugar and building products business.

The company proposes to create two separate listings on the Australian Securities Exchange (ASX) - one for its sugar and renewable energy business and another for its building products, aluminium and property business. CSR produces 40 percent of Australia's raw sugar and has a 75pc interest in refined sugar joint ventures.