CANEGROWERS Media Release

21 December 2011:  Sugar shaker: state of play Australian sugarcane industry 2011

 

Quick Facts: Aussie sugarcane Australia’s sugarcane industry is recognised as one of the most clean, green and progressive in the world $1.5 - $2.5 billion value of production 80% exported 2nd largest agricultural exporter in Queensland (7th in Aust) 3rd largest raw sugar supplier in world 32-35 Mt cane 4.5-5 Mt sugar 4000 cane farm businesses 24 sugar mills  6 bulk storage ports

Tough times, resilient optimism:

The industry is surprisingly upbeat about future seasons, despite the aftermath of the horror wet season that was 2010, followed by flooding, cyclones and prolonged dry in 2011.

“In the face of the worst season on record followed by floods and cyclones – cane growers have been widely reported to be planting out extra area to cane, buoyed by the better prices on offer and a positive outlook for coming seasons,” says Steve Greenwood, CEO of peak sugarcane group CANEGROWERS.

“This is particularly surprising news as it is no secret that it has been a tough couple of years for sugarcane growers with record sugar prices, but profitability washed away by extraordinary prolonged rainfall,” he says, continually amazed at the resilience of the cane growing community.

“Despite the conditions experienced this year with wet weather, growers continue to look forward with resilient optimism to improving farm management practices, productivity, delivering on research capacity and getting some long awaited recognition for the enormous changes they have implemented on-farm over the past decades.”

Australian sugar resurgence

The intense interest in milling assets by large international players is telegraphing the message broadly that there is a real future in Australia’s sugarcane industry – one worth investing in.

The Australian sugar industry is undergoing an extensive resurgence. Large international corporations are investing billions and world sugar prices are at all-time highs. Now in a new growth phase, the industry is again coming to the fore as a major economic driver of regional Queensland.

“The intense interest in milling assets by large international players is telegraphing the message broadly that there is a real future in Australia’s sugarcane industry – and one worth investing in,” says Greenwood.

Harvest 2011 wrap up

The Australian sugarcane harvest drew to a close in the week leading up to Christmas, bringing in a crop just shy of 28 Mt (27,913,417 Mt). This is a smidgeon up on the 2010 harvest of around 27.5 Mt – the worst harvest on record due to an unseasonal big wet which marred production. “Weather dependent, the initial estimates for 2012 could well put Australian production back up at around the 31-32 Mt mark,” says Greenwood.

Reports of the best crush on record in the Burdekin seem at odds with the general state of play in the Australian industry this year. “The Burdekin bought in around 9.5 Mt – but it is important to note that that includes a good whack of cane which could not be harvested due to poor weather conditions in 2010, left to standover to this year.”

While actual planting data will not be known until March next year, indications from sugarcane areas across Australia suggests plantings may be up as much as 20%, but it is important to note that this year’s planting includes replacing cyclone, flood and smut damaged ratoons, as well as some additional area being put back into cane.

GRAPH 1: Weather dependent – initial estimates for 2012 could well put Australian production back up at around the 31-32 Mt mark.

How the season played out

Starting from a wet base: Torrential downpours on the eastern-seaboard washed away hopes of a record season in 2010, and continued to cause adversity in the field in 2011. Boggy fields had kept heavy harvest machinery from being able to bring in the in 2010 crop, leaving up to 18% of the crop unharvested, left to standover until the 2011 season. Adding insult to injury, the big wet left growers unable to replant their 2011 season’s quota, which together with fields damaged by heavy machinery trying to salvage cane wherever possible, and the lower profitability from standover cane, saw a continued dampening of productivity and profitability in 2011.

Followed by flooding: Extraordinary rainfall in the southern region of Queensland and northern New South Wales ravaged the plant cane in early 2011, flooding out large tracts of cane area, washing debris through paddocks and playing its part in keeping sugar content in the cane low – and less profitable to mill.

Followed by cyclone: Cyclone Yasi’s impact is only now being truly measured. Debris strewn in paddocks was still a major problem for many growers in cyclone-hit regions during this year’s harvest. The cane that was broken and battered during the cyclone had, in many cases, not reached full growth – further reducing cane supply.

GRAPH 2: Restructure steadies – cane growers are using the latest technology and research findings to increase their productivity, profitability and sustainability.

 

After a period of rapid rationalisation and restructure which saw the number of cane grower’s drop by 40% over the past two decades, the pace of restructure has started to stabilise.

There are currently around 4000 cane farming businesses in Australia. The typical cane farm is family owned and operated, and employs an impressive mix of the latest technology and management practices to help increase farm profitability and sustainability. Many farm businesses have bought cane land from retiring neighbours, partially accounting for the dramatic drop in farm numbers but only slight drop in total production.

“Growers are using the latest technology and research findings to increase their productivity, profitability and sustainability. Sugarcane is an international commodity, and Australian cane growers have been at the forefront of the wave of change needed to stay competitive in the increasingly international marketplace,” says Greenwood.

GRAPH 3: Investors back a bright future for Aussie sugar.

Large commercial investors are certainly seeing a future worth backing, with the takeover of Sucrogen (previously CSR Sugar) by Singaporean agribusiness giant Wilmar, followed by the purchase of Mulgrave and Bundaberg Sugar’s far north Queensland mills by Maryborough Sugar Factory. MSF has subsequently bought about the closure of the Babinda mill, and Thailand’s biggest producer of sugar, Mitr Phol, has stepped up its stake in MSF. Chinese company COFCO has taken the controlling interest in Tully mill and after a prolonged bidding war, Sucrogen has a contract on Proserpine Mill.

“These international interests are not perturbed by recent seasonal performance and vagaries of the weather. If their intense interest in Australia’s sugar industry is anything to go by; the future is bright indeed,” says Greenwood.

GRAPH 4: Record sugar prices - the current prices on offer for sugar are being kept at higher levels due to increasing demand for sugar worldwide. Around 80% of Australia’s sugar crop is exported.

 

Growers started the year on a sugar high, more buoyant about the industry than they had been in decades, as sugar prices spiked to 30 year highs.

“Whilst prices came off those highs, the shocking weather being experienced – with droughts to floods in sugar producing regions across the world – looks set to potentially keep prices at these higher levels, at least in the short term,” says Greenwood.

“The impact of the global financial crisis on crop re-investment has seen a drop-off in production by some of the world’s major sugar producers – notably Brazil.”

Hard hitting year of issues

It’s not only the weather which has been torrid - it has been a hard-hitting year all-round; with big issue followed by big issue. Every corner of the sugarcane industry seems to be undergoing a shakeup, with large-scale reviews of everything from marketing to research to our very right to farm.

All these changes have implications down the chain for sugarcane growers across Australia, whose wants and needs must be constantly re-examined to ensure that the industry is ready to equip itself to move with the times and to position the Australian industry to fill looming global shortages. While not without pain, the reviews have been necessary and have set forward the clear intention of building the most robust sugarcane industry.

Marketing review

Transparency of sugar marketing is in the cross-hairs, with growers leading the charge to ensure that the export-desk arrangements in place through Queensland Sugar Limited are retained and strengthened for the benefit of the entire sugarcane industry.

Grower and miller owned company, QSL, remains the only truly transparent sugar marketer on behalf of industry. It currently markets the vast majority of Australia’s sugar to our burgeoning international customer-base, achieving excellent results for Australia through the tonnage it commands.

Increasing international ownership within the Australian milling sector could ultimately see these international groups undertake their own pricing, lessening the tonnage and marketing power of QSL. Being independently owned, these companies would not be required to afford growers the same level of transparency of operations and profit taking as currently enjoyed through arrangements with QSL.

“Maintaining the strength of an industry-owned marketing company ensures continuation of the assurance that any profits made, come squarely back to the Australian industry and economy,” says Greenwood.

This year QSL embarked on a comprehensive review of its marketing strategy which had been called into question after one of the worst seasons on record debilitated production in 2010. The lower tonnages were so unexpected, that Australia was left unable to meet its commitments and had to cover a bill of $105 million.

As a result of the review there will be changes to pricing arrangements for millers and growers. As part of a push towards a genuine tripartite relationship between millers, growers and QSL, CANEGROWERS has been made privy to the supply agreement between QSL and the mills which supply it. This is important for growers as they renegotiate their own supply agreements with their local mill.

 

Research review

Ensuring the Australian industry remains at the forefront of sugar production on the world stage is the key motivator which has seen BSES Limited, ASMC, CANEGROWERS and QSL partner to complete a large-scale project to overhaul research, development and extension for the Australian sugarcane industry.

Originally sparked by research provider BSES Limited’s severe funding shortfalls, principally stemming from declining crop tonnages (on which levies are set) together with ever-increasing industry expectations, the industry quickly saw the opportunity for rejuvenation of its research, development and extension function.

The review kicked off with a full review of BSES and industry research structures. The review was broad-reaching looking into effectiveness of every organisational structure and service provider.

Initial findings were released early in 2011. These will now be implemented over 2012/13.

“The next few years will be critical to strengthening both our industry and our place within a strong, internationally recognised Australian agricultural sector. We need to capitalise on favourable market price opportunities and back ourselves by ensuring that a strong research and development function is in place, so that in another 10 years we are still held up internationally as front-runners in agriculture,” says Greenwood.

“Australia wants to continue to lead the charge in sugar production on the world stage - and this will help give us the tools and direction to do just that. A strong RD & E function is mission critical to the success of the industry.”

More > Click here to see the latest news on the research reform initiative


Carbon review

A year to the day after a commitment not to introduce a carbon tax, the introduction of carbon tax for Australia was announced. While the agricultural sector was excluded from the proposed ETS as a result of detailed analysis and lobbying from the National Farmers’ Federation (NFF) and CANEGROWERS, the industry was not practically speaking excluded. Farming relies on a range of inputs, all of which would come under the scheme, and all of which would face price hikes as a result of it.

The federal government has since announced sweeteners such as the Carbon Farming Initiative and Biodiversity Fund, and CANEGROWERS is working the best mechanisms for cane growers to access relevant funds.

Regulation review

The current layers of green-tape and unnecessary scrutiny are an unacceptable environment for sugarcane growers to operate in, and CANEGROWERS will be making clear the changes we need to continue to be a world-class business.

CANEGROWERS was heavily involved in moderating the Queensland Government’s unworkable approach to regulating the cane sector with reef regulations, exerting strong influence to make them more reasonable and practical.

CANEGROWERS was able to achieve scaled back regulatory requirements for unworkable regulations, including a 5 metre buffer for chemicals as an alternative to the 20 metre buffer for regulated chemicals which would have reduced some farmers’ arable land by up to 40%.

But one of the biggest wins as far as growers were concerned, was CANEGROWERS practical influence on the Environmental Reef Management Plan document, to simplify what was an unduly onerous and complex process. CANEGROWERS successfully pushed for trials to review the Queensland Government’s method of determining appropriate rates. It also successfully challenged the unworkable method to determining the optimum amount of fertiliser and was able to achieve a number of amendments to the regulation.

“The current layers of green-tape and unnecessary scrutiny are an unacceptable environment for sugarcane growers to operate in, and CANEGROWERS will be making clear the changes we need to continue to be a world-class business,” says Greenwood.

Diuron review

The fight to bring science to the diuron debate will ramp up early next year. CANEGROWERS is angry over a proposed ‘window’ of non-use being proposed over the wet period, when the science says that the latest cane farm management practices have delivered outcomes.

A review under way by the APVMA, sparked by green groups who called for permanent suspension of the important farm management tool, is ongoing as the sheer quantity of research information tendered by CANEGROWERS and its strategic partners was too much to get though in the original timeframe given.

On a pleasing note, cane growers were recognised for their good work in scaling back use to just half that of the current label recommendations; and this reduced rate may form part of the new label when it is released mid-year. “CANEGROWERS is levelling its efforts squarely in saving diuron from permanent suspension. There are no other management tools available and this would be a perverse outcome for growers and the environment alike,” says Greenwood.

Despite pressure from green groups calling for immediate withdrawal of this important on-farm management tool, CANEGROWERS has made significant inroads into the debate to keep diuron, by using science at every turn to dispel myths around this emotive topic. Independent research into use at current levels and its effects on water quality has confirmed that it is not in fact causing damage to the reef, and is an important farm management tool.

Input cost review

At the farm gate, the future is not only focussed on increasing productivity, but putting the screws on the price hikes in the inputs which are needed to run a farming business. From labour, to fuel, to water, to transport, to fertiliser - just to name a few – it has been another whirlwind year and CANEGROWERS continues its work on ever-increasing input costs, working actively on a number of fronts to develop more clever strategies to keep a lid on input costs.

Water
Expect the gloves to come off in 2012 with regards to water pricing. Distribution schemes look set to be hit hard with severe price hikes, and growers who can ill-afford to take on the extra imposts, are gearing up for a very vocal fight for fair water access – which they must do before the plans become legislation, mid next year.

This is in direct contrast to the wins on water earlier in 2011, when, after months of intense lobbying by CANEGROWERS and irrigators, the Queensland Government has made the sensible decision to withdraw from imposing huge and largely unjustified increases of up to 400% to rural irrigators’ water bills. The government’s proposed water pricing increases, such as the rate of return sought for dams built decades ago, would have left some farm businesses unprofitable, and CANEGROWERS praised the Minister for Natural Resources, Mines and Energy, Stephen Robertson, for responding to the concerns raised by CANEGROWERS, and praised his resolution to withdraw from imposing these price hikes.

“CANEGROWERS will continue to lobby work in the area of water prices, which will directly impact on cost of production for a large proportion of growers who are already meeting increased energy and fuel costs,” says Greenwood.

Ravensdown Fertiliser Australia
Three years down the track and the benefits of bringing another fertiliser supplier to the south eastern seaboard is showing real-time benefits for growers – really stepping up pressure on skyrocketing input costs.

It is hard to believe that it has been three years since skyrocketing fertiliser prices eroded grower profitability so greatly that government inquiries into its supply and pricing were triggered. CANEGROWERS drove a high-level examination of direct imports options, and rejected the hit and miss one-off import options, which in recent years across the agricultural sector, had missed more often than they hit.

Instead, it backed a sustainable, transparent, grower-owned long-term solution. And CANEGROWERS heralded-in a strategic alliance with New Zealand fertiliser supply Ravensdown, which is helping to bring transparency and competition to the market.

“The presence of Ravensdown, a company based on values similar to our own as a grower-owned business, is expected to make a long term difference, and is an excellent example of where CANEGROWERS has taken a difficult but necessary step to secure the strategic foundations of the industry,” says Greenwood.

“More clever ‘Ravensdown fertiliser’ type schemes are the order of the day for the Australian sugarcane industry.”

Information to the masses

CANEGROWERS has ramped up information networks across the board – from marketing information to growers to give a better grounding to forward-price their crop, to the introduction of social media for stakeholders and media.

“We have been surprised by the quick take-up of Twitter and Facebook, particularly by media and younger players in the sugar industry. Whilst our flagship firmly remains the fortnightly Australian Canegrower magazine, it has proven important to also get on board with latest social media platforms to drive the messages of the sugarcane industry as far and wide as possible,” says Greenwood.

“Better information flow is also key to a successful industry and an area which can always be improved; not only to our grower members - but to the community, the government and the media.

“In this information age, growers and the public are being overwhelmed with data, statistics and research. As far as the business of growing cane is concerned, we will look into systems of getting growers and the public what they need, when they need it – so our growers can get on with the business of running their farming business.”

Gearing up for Queensland Government election

With a state election in the wings, CANEGROWERS has moved to consolidate the most critical issues on the Australian sugar industry’s agenda. When the election is called, we will be at the ready with a coordinated, hard hitting campaign aimed at making our voice not only heard but amplified.

The six ‘Rs’ for rebuilding the strength of regional Queensland:
1. Reinvest: in research & development
2. Remove inefficient regulatory costs: water & electricity
3. Reduce green tape: accelerate innovation
4. Reinvigorate: growth
5. Retain and enhance: biosecurity measures
6. Retention and reskilling: workforce

More > Click here to see more information about CANEGROWERS’ advocacy positions for the state election

Long overdue recognition

Australian cane growers are leading the way world-wide with new approaches to farm management practices that are practical and economically sustainable. Not only are they doing this and doing it well, but they are being recognised for their efforts and advances.

Despite hurdles created by the vagaries of the weather, growers continue to work hard to be as environmentally responsible as possible.

“Our clean, green credentials are something for which we are finally getting some long awaited recognition. Over the past year we have seen a variety of growers from every cane growing district recognised for the enormous changes they have implemented on-farm over the past decades,” says Greenwood.

Just some of those recognised were North Queensland sugarcane grower, Bryan Granshaw (Burdekin), with the first ever sugarcane Nuffield scholarship; Mario Raccanello (Tully), Col Taylor (Isis) and Ashley Petersen (Maryborough) with their national Kondinin awards; and Ray Vicarioli (Cairns Region) who picked up the overall CANEGROWERS Sugarcane Grower of the Year Award.

Fourteen cane growers from every cane growing region in Australia were also recognised with local best management practice awards.

“These growers are just a handful of the many sugarcane growers across Australia who are doing clever things on farm,” he says. “We will be unearthing a legion of growers in the coming year: 2012 Year of the Farmer. The year will give us a platform to showcase the modern farm – a bit of connectivity between urbanites and the bush will go a long way towards a better understanding of technology and our environmental husbandry. It is a great chance to show the breadth of expertise on Aussie cane farms.”

In a sign of a change of the times, the most visited page of the CANEGROWERS website was the movie page which featured short movies of cane growers on farm talking about how they implemented the latest practices and technologies on farm. And the second most visited? A page with a short movie and brochure covering the paddock to plate of Australian sugarcane – aimed at kids but just as commonly read by members of the general public.

 
Sugarcane in 2012: Year of the Farmer

Let’s face it, cane has come under the microscope over the past two decades, and growers have risen to the challenge. But they haven’t told anyone - they just get in and do what needs to be done - or in many cases more than what needs to be done.

The next few years will be critical to strengthening both our industry and our place within a strong, internationally recognised Australian agricultural sector. We need to capitalise on favourable market price opportunities and back ourselves by ensuring that a strong research and development function is in place, so that in another 10 years we continue to be held up internationally as front-runners in agriculture.

“Australian cane growers are recognised world-wide for being at the forefront of cutting edge technology and practice adoption. But not so on home soils,” says Greenwood.

“Let’s face it, cane has come under the microscope over the past two decades, and growers have risen to the challenge.

“But they haven’t told anyone - they just get in and do what needs to be done - or from what I can see from the time I’ve been here - more than what needs to be done.

“This is certainly an area on which CANEGROWERS could benefit by placing a lot more focus - telling the story of cane to our local communities, to our schools and to our urban dwelling neighbours. We are part of a leaner, greener and iconic Australian industry.

“We need to stand up and show just how far we’ve come - and just as importantly - where we are going.”

At the end of the day CANEGROWERS is a grower body and says their focus for the coming year will remain on the multitude of issues facing cane growers. “From moderating the Queensland Government’s unworkable approach to regulating the cane sector with reef regulations, to continued access to critical farm tools like diuron, to working on a fairer approach to water pricing, to bringing pressure to bear on our milling and marketing systems to ensure they are structured in a way to best deliver benefits to growers - these issues are just the tip of the iceberg.”

Media comment: Steve Greenwood | CANEGROWERS CEO | 0488 721 156
More information: Suzi Moore | CANEGROWERS Communications | 0427 641 239 or 07 3864 6444

 

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