About the industry

About the industry

Sugarcane is an important industry for the australian economy

Growing of sugarcane for processing into raw sugar is one of Australia’s largest and most important rural industries.

Australia is a low-cost producer and major exporter, with the capacity to produce more than 4.75 million tonnes (mt) of sugar annually. Depending on prices, the industry generates direct revenue of around $1.5 - $2 billion, including $1.2 billion in exports. The flow on to the regions increases these numbers many times over. 

Around 80% of Autralia's production is exposed to the world market price. It has no tariff protection for the 20% of its output sold on the domestic market.

Internationally competitive

The industry's focus is squarely on international competitiveness.   Because most sugar is exported and there is no domestic support price or subsidies. Success has been built on world's best practice in production, handling and marketing and a reputation for quality, supply reliability and service.  At the farm gate, Australia has maintained export competitiveness by adopting innovative practices, particularly through mechanisation, new farming practices and diversification.

Queensland's capacity to store over two million tonnes of sugar in a network of bulk port terminals allows it to supply customers throughout the year. Major customers include Japan, Korea, Malaysia, New Zealand, Canada and the USA.

Australia is one of the lowest cost sugarcane and raw sugar producers in the world.  Australian cane growers are world renowned as efficient, innovative producers who have demonstrated a capacity to respond to changing conditions. The productivity on their farms is among the highest in the world. Cost efficiencies have been achieved largely through mechanization and adoption of innovative practices.

Queensland sugarcane is primarily grown for processing into raw sugar, which is sold directly to refineries, not through trade houses.

Exports

Virtually all of Australia’s exports come from Queensland, which exports around 80% of its output. Queensland raw sugar is sold to final users on a cost, insurance and freight (cif) basis.

Although there are larger producers, Australia is one of the world’s second largest exporters of raw sugar. Major export customers include Japan, Korea, Malaysia, Saudi Arabia, New Zealand, Canada, USA and Taiwan.

Pricing & Marketing Sugar

Up until 2006, Australia enjoyed a ‘single desk’ arrangement where all sugar was compulsorily acquired by sugar marketer, Queensland Sugar Ltd.  This was degregulated on January 1, however  the majority of growers retain group marketing arrangements with QSL, which uses the bulk marketing power to leverage better deals for Australian sugar on the international market.

The sugar industries in Queensland, NSW and Western Australia manage their own marketing arrangements. NSW production is sold mainly on the domestic market while Ord sugar is exported to Indonesia.

Australia has no domestic support price, unlike most other countries which regulate prices, often far above world market values. Its success has been built on world’s best practice in production, handling and marketing.  Many of the world’s major sugar importers prefer to source their requirements from Queensland because of its reputation for quality, innovation, reliability and service. The industry’s high market share and long-standing customer relationships reflect its efficiency, reliability and cost competitiveness.

Milling & transport

Around 4500 business enterprises around Australia supply more than 35 mt of cane to 25 sugar mills.  Most mills crush an average 10,000 tonnes of cane daily and employ around 150 people during the season. Cane is transported to the mills on cane railway and road systems.  Millers, growers and harvesters determine harvesting and transport schedules that ensure cane is crushed as fresh as possible.  Average cut to crush time is less than 12 hours.

Most sugar mills have been established for more than 100 years. The juice mill that began operating near Mareeba in 1998 was Queensland’s first new mill in 73 years.

Industry bodies

CANEGROWERS, the Australian Sugar Milling Council, BSES Limited (which conducts research into the sugar industry) and Queensland Sugar Ltd (which markets Queensland’s sugar), are generally recognised as comprising the Queensland Sugar Industry. 

Where it is grown

Cane growing and sugar production underpins the economic stability of many coastal communities.

Most of Australia’s sugarcane is grown in high-rainfall areas along the coastal plains and river valleys on 2100 km of the eastern coastline between Mossman in Far North Queensland and Grafton, NSW. Cane growing and sugar production is one of the most important agricultural industries in the State of Queensland accounts for about 95% of Australia’s raw sugar production. Nearly 5% is produced in Northern New South Wales and the remainder in Western Australia’s Ord River Irrigation Area.  Click here to see a map of sugar areas in Queensland

Australian cane growers

Australia has approximately 5000 cane growers who are part of around 4500 cane farming business operations.  

There are around 500 cane farming operations in New South Wales and 18 in the Ord River area of Western Australia.  The vast majority, 4000 cane farming business, operate in Queensland, accounting for around 95% of cane produced in Australia.

The vast majority of cane farms are owned by sole proprietors or family partnerships. It is estimated that sugar milling companies own less than 2.5% of the total cane area.

Average farm size is 77 hectares but farms range from 30 to more than 250 hectares. Average yield is 98.9 t/ha of cane.

All sugarcane in Australia has been harvested mechanically since 1979 and all sugar handled in bulk since 1964.

Some 382 600 hectares of land was harvested in Queensland in 2005.  This comprised 141,068 ha in the region from Herbert north, 74,000 ha in the Burdekin, 114,880 ha in the central region encompassing Proserpine, Mackay and Plane Creek, and 52,661 ha in the southern region (mainly around Bundaberg, Childers and Maryborough).

Australian cane growers are world renowned as efficient, innovative producers who have demonstrated a capacity to respond to changing conditions. The productivity on their farms is among the highest in the world. Cost efficiencies have been achieved largely through mechanization and adoption of innovative practices.

In recent years growers have sought to maintain viability and world competitiveness in an increasingly tougher export market environment by adopting new farming practices which are more profitable and sustainable. There has been a steady trend towards larger farms and less dependence on labour.

Marketing sugar worldwide

The world has a sweet tooth!

International sugar market analyst Czarnikow Sugar has estimated that global sugar production in 2006-07 will be 153 million tonnes and world sugar consumption 151.2 million tonnes (any difference comes from stocks).

Nearly 70% of that sugar mountain will come from sugarcane and the balance from sugar beet. Australia is expected to produce around 5 million tonnes in 2005-06 season with exports worth $1.5-2 billion.

Australia was a net importer of sugar until 1924 but is now one of the world’s largest exporters of raw sugar. It has an enviable reputation as a reliable supplier of high-quality sugar and has developed consistent markets for sugar, even in times of world over supply.

Principal export markets include Japan, Korea, Malaysia, New Zealand, Canada, the USA and the Middle East.

Queensland Sugar Limited markets all of Queensland’s raw sugar production. It administers pool price arrangements, manages the industry’s seven bulk sugar terminals, and manages sugar price and foreign exchange exposure to optimise returns to growers and millers.

World sugar production has undergone massive changes since 1970, particularly the emergence of Brazil as a dominant force, the growth of the European Union as a subsidised producer, the growth of Thailand and the decline of Cuba.

Although the Australian industry developed under a regulated system which sought to match production with assured markets, it is now one of the least protected sugar producers in the world.

Chronology

• 1788    First Fleet brings sugarcane to Australia.
• 1821    Unsuccessful attempts begin to grow sugarcane commercially at Port Macquarie, NSW.
• 1828    Cane plants grown in Brisbane Botanical Gardens.
• 1842    First sugar refinery built in Sydney to refine imported sugar.
• 1862    Capt. Louis Hope and John Buhot establish sugarcane plantation at Ormiston near Brisbane and makes first granulated sugar from cane.
• 1864    Hope operates Australia’s first commercial sugar mill. The following year he introduces island labourers (Kanakas) to his Ormiston Plantation.
• 1870    Colonial Sugar Refining Company (now CSR Ltd) introduces system of large central sugar mills, supplied with cane by independent farmers, in northern New South Wales.
• 1885    Many small sugar mills close due to depressed state of sugar industry.
• 1888    First cooperative central mill opens in Queensland; first mechanical cane harvester patented in Brisbane.
• 1890    World’s first mechanical cane harvester built in Bundaberg.
• 1895    700 tonnes of Australian raw sugar exported to Canada.
• 1901    Protective import duties placed on sugar; Federal Government bans arrivals of Kanakas after 1904 and requires deportation by end of 1906, ending 40 years of indentured labour in the cane fields.
• 1906    Federal legislation exempts some islanders from deportation; Australian Sugar Producers Association formed in Townsville.
• 1914    United Cane Growers Association formed in Mackay.
• 1915    Queensland Government passes Sugar Acquisition Act and Regulation of Sugar Cane Prices Act; first sugar agreement negotiated between Commonwealth and Queensland Governments; embargo placed on sugar imports.
• 1923    Federal Government gives control of Queensland sugar industry to the State Government; the Sugar Board established under Sugar Acquisition Act; first small exports of raw sugar to UK and New Zealand.
• 1924    First large shipments of raw sugar from Australia - 74 000 tons.
• 1925    Queensland legislation establishes basis for CANEGROWERS organisation.
• 1926    New Act establishes farmer bodies on a commodity basis, a format which lasts for 75 years.
• 1929    Mill Peak scheme introduced.
• 1937    First International Sugar Agreement (ISA) negotiated but does not begin due to World War II.
• 1951    Commonwealth Sugar Agreement signed with UK.
• 1953    First post-war ISA negotiated, with quotas for exporters.
• 1954    Bulk handling of raw sugar introduced; first exports to Japan.
• 1960    Mt Bauple Mill closes.
• 1961    First sugar exported to USA
• 1962    Australia exports 1 Mt for the first time; first exports to Korea
• 1963    Queensland Government committee recommends industry expansion.
• 1967    First sugar exported to Singapore
• 1968    Australia exports 2 Mt of sugar.
• 1969    ISA begins operation for 5-year term.
• 1972    First long-term contract negotiated; first exports to China and Russia.
• 1974    Commonwealth Sugar Agreement and US Sugar Act terminated; record high world free market price of US 66 c/lb.
• 1975    Gin Gin Mill closes.
• 1978    New ISA begins operation; Industries Assistance Commission inquiry into sugar industry.
• 1982    Ceremony at Mackay marks 25 years of bulk handling.
• 1983    Second IAC enquiry into sugar industry.
• 1984    ISA expires.
• 1985    Record low world price of US 2.5 c/lb.
• 1986    Queensland, New South Wales and Federal Governments agree on 3-year sugar industry assistance/restructure package; Qunaba Mill closes.
• 1987    Goondi Mill closes, Mackay Sugar Co-operative formed; NSW Sugar Milling Cooperative formed to buy CSR’s three NSW mills.
• 1988    North Eton Mill closes.
• 1989    Commonwealth Government Sugar Agreement lapses 1 July 1989; embargo on sugar imports lifted and tariff put in place; Senate Standing Committee enquires into tariff levels on future imports; Harwood refinery built.
• 1990    Cattle Creek Mill closes; grower numbers fall to lowest level since pioneering days; Queensland State Sugar Industry Working Party makes recommendations; Sugar Research and Development Corporation formed to coordinate research.
• 1991    Glanville refinery closes; import tariff reduced from $115 to $76 per tonne; Industry Commission inquiry into Queensland’s production, institutional and regulatory arrangements; Queensland Sugar Corporation replaces the Sugar Board and Central Sugar Cane Prices Board; Sugar Acquisition Act and Regulation of Sugarcane Prices Act repealed; canegrowers adopted as common name for growers’ organisation; first Australian Sugar Convention; Tate & Lyle acquires Bundaberg Sugar; AWU and Queensland cane sector negotiate Australia’s first collective enterprise bargaining arrangements for an entire industry.
• 1992    Hambledon Mill closes; Mackay Sugar announces new refinery; Industry Commission final report released; Sugar Industry Taskforce established.
• 1993    Sugar Industry Taskforce reports; joint Commonwealth/State Sugar Industry Package includes deferral of further tariff cuts until at least 1977, a $40m government infrastructure commitment, retention of acquisition and assignments, and phased reduction of pooling premium; raw sugar production exceeds 4 Mt for first time; Tate & Lyle’s bid for Tully and South Johnstone Mills rejected; Trade Practices Commission blocks amalgamation of refining activities of CSR Ltd and Mackay Refined Sugars; Sugar Industry Act revised; availability of additional cane assignment exceeds demand for the first time.
• 1994    Queensland becomes world’s No 1 raw sugar exporter; $117m Sugar Industry Infrastructure Package begins; first change in cane price formula in 40 years; BSES plants world’s first genetically engineered sugarcane; Mackay refinery commences; CSR announces plan for mill in Ord River area; record prices for cane land in Burdekin Irrigation Area with 100th farm sold at auction; record No 1 Pool price of $392.42 per tonne 94 nt.
• 1995    ASMC and canegrowers develop Vision 2000 to guide industry development; review begins of Sugar Industry Act and import tariff in the context of National Competition Policy; world’s largest shipment of raw sugar (61 300 t) shipped from Townsville to Dubai; canegrowers commissions independent environmental audit of Queensland industry; Cooperative Research Centre into Sustainable Sugar Production commences; sugar surpasses beef production as Queensland’s largest rural industry; sugar revenue exceeds $2 billion for first time.
• 1996    Shipments through bulk terminals exceed 100 million tonnes; highest grower numbers since 1980s; all cane in Australia insured under canegrowers Crop Fire Insurance Scheme for first time; Sugar Industry Review Working Party recommends removal of tariff from 1 July 1997.
• 1997    Sugar tariff ends; record Queensland cane production for 6th consecutive year and record sugar production of 5.4 Mt; over 60% of Queensland crop harvested green; Sugar Industry Review Working Party makes recommendations.
• 1998    CANEGROWERS holds first Sugar Environment Forum in Mackay; Code of Practice for Sustainable Cane Growing adopted; CSR and Mackay Refined Sugars establish joint refining venture; negotiations begin for transfer of ownership of bulk terminals to industry; sugarcane smut discovered in Ord, Tableland Mill begins crushing; Sugar Terminals Ltd established (begins full commercial operations August 2000).
• 1999    World prices collapse and growers seek Exceptional Circumstances funding.  New Sugar Industry Act (effective 1 Jan.2000) revises framework for management of Queensland industry including individual and collective agreements, Cane Production Area and Cane Production Boards but compulsory acquisition and Single Desk arrangements unchanged. Primary Producers’ Organisation and Marketing Act 1927 replaced by Primary Industry Bodies Reform Act resulting in CANEGROWERS losing its compulsory levy capacity.
• 2000    Commonwealth Sugar Assistance Package provides short-term assistance for cane growers (eventually $60m paid in income support, interest subsidies on planting and general interest subsidy); Queensland Cane Growers Organisation Ltd formed and 96% of growers sign up; Australia initiates Global Alliance for Sugar Trade Reform and Liberalisation; orange rust forces industry to begin replacing its main cane variety; BSES celebrates its centenary; closure of Moreton Mill.
• 2001    Federal Government extends income support; title to bulk sugar terminals transferred to the industry; growers move towards full voluntary membership; revival in ethanol interest.
• 2002    Federal Government commissions an independent assessment of the sugar industry (the Hildebrand enquiry); CANEGROWERS and ASMC make joint proposal; the Federal and Queensland Governments, under a Memorandum of Understanding, agree to fund $150m Sugar Industry Reform Program over four years while industry undertakes reform.
• 2003    CRC for Sugar Innovation through Biotechnology established; continuing dry weather and low prices force growers to seek further emergency financial assistance; State Government commissions CIE to undertake impact assessment analysis of legislative change; CANEGROWERS commissions separate report by Boston Consulting Group; growers hold public rallies.
• 2004    Joint CANEGROWERS/ASMC submission on structural adjustment presented to Federal Government; the two peak bodies also commit to a Heads of Agreement with the Queensland Government and a Statement of Intent to the Federal Government; Prime Minister announces revised $444.4 million Sugar Industry Reform Program.
• 2005    Closure of Fairymead Mill.
• 2006    Deregulation of sugar marketing.