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Opportunities to Diversify

28 June 2019

 Diversifying Sugar Revenues – a Case for Optimism

 A new report funded by Sugar Research Australia (SRA) has completed an in-depth investigation into possible ways to add value to the raw sugar supply chain.

The authors of the report, Lazuli Consulting, tapped into the expertise of staff at Australia’s sugar mills to explore the market, investment and technology barriers to existing and new product revenue streams such as densified biomass, biofuels and speciality chemicals.

“Lazuli Consulting’s report is a timely and valuable input to the industry’s thinking” said David Rynne, Director of Trade, Policy and Economics at the Australian Sugar Milling Council (ASMC).

“With world raw sugar prices returning less than the cost of production, and with margins being eroded, Australia needs to reassess its heavy reliance on raw sugar (see below*).

“ASMC is in the early stages of developing a revitalisation strategy (see below**) for consideration by other industry stakeholders including government, and diversification is one of the key pillars of work” Mr Rynne added.

“This report demonstrates the array of possibilities available – to add value and shore up the viability of the sugar industry while delivering substantial environmental objectives” said Mr Rynne.

“The report also demonstrates the array of obstacles our members face” he added. 

One of the Lazuli report’s key findings was that sugar mills need policy confidence to invest.

“Inconsistent and uncertain policy settings prevent sugar mills fully understanding the likely revenues and costs of such sizable investments” said Mr Rynne.

“Our major competitors in Thailand and Brazil are currently adding significant value via electricity cogeneration and biofuel production in no small part due to the fact that both countries benefit from supportive government policy frameworks and have well-articulated diversification strategies in place

“Australia needs to follow their lead” concluded Mr Rynne.

 

*Over 85% of Australia’s sugar industry revenues are currently derived from the highly competitive and distorted global raw sugar market.

** Overview of an industry-government revitalisation agenda

 

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