In a speech streamed live to a global audience overnight (27 March 2019), David Rynne, Director of Economics, Policy and Trade at the Australian Sugar Milling Council (ASMC), highlighted the challenges the Australian sugar sector is addressing to avoid being left behind by its competitors.
Speaking in London at the Global Sugar Summit organised by independent news site, Sugaronline, Mr Rynne explained how an Industry-Government Strategic Plan is needed to ensure the domestic industry makes full use of all Australia’s competitive strengths.
“We are geographically close to burgeoning Asian markets and our strong relationships have enabled us to tailor our product to satisfy our customer requirements.
“We are close to the lowest cost manufacturer of raw sugar globally because our exposure to competition has spurred innovation and supply chain efficiencies,” Mr Rynne explained to over 250 international delegates at the venue and those watching live online.
Mr Rynne told the Summit that global sugar prices have been falling in real terms year on year, and unlike competitors Thailand and Brazil, the Australian industry is more vulnerable because it has relied almost exclusively on the sale of raw sugar.
“Price cycles are a feature of raw sugar markets, but we are facing deeper and longer price troughs caused in part by subsidised production in countries such as India that breach World Trade Organisation rules,” noted Mr Rynne.
“In response, we have not been able to diversify our revenue streams substantively, and prolonged uncertainty around national energy policy has also limited any increase in co-generated renewable power production, despite the significant potential.
“And with demand in its infancy, expansion of the market for bioethanol has yet to be realised,” Mr Rynne added.
The Brazilian and Thai sugar industries have successfully managed to diversify risk, add value and increase revenue in recent years. Both counties are pursuing multiple strategies, supported and driven by government and industry.
“ASMC believes Australia urgently needs to develop an industry-government revitalisation agenda,” Mr Rynne explained.
For the Australian sugar sector to remain sustainable in the medium to long term, ASMC has identified three main pillars of focus:
- achieving more land acreage under cane or alternate crops for co-generation
- improving sugar yields by improving cane per hectare or higher sugar content in the cane, and
- adding value by diversifying revenue streams to spread exposure to raw sugar global price fluctuations.
ASMC plans to meet industry stakeholders and government over the coming months to discuss how best to shape the sector’s journey for the next decade and beyond.
“To secure our future, we need to consider alternative pathways and to pursue multiple commercial and government policy reforms” concluded Mr Rynne.
28 March 2019