Forging a future through diversity

This is not to say Northern Rivers’ producers aren’t well paid.This year the in-field 1.9 million tonne cane crop will bring $36/t with up to 150 tonnes/ha delivered to mills at Harwood on the Clarence, Broadwater on the Richmond and Condong on the Tweed.

That’s good money, considering the world price is around $26/t.

But CEO Chris Connors says the chances of repeating price success year in and year out is not an easy task. We have a policy of looking to hedge prices to take out the volatility of the sugar market but that is not always possible.

That is why we need a business plan that can deliver alternative income streams so that growers and the business are not faced with the historical boom times and bust.

At the moment Australia consumes a million tonnes of the sweet stuff every year while growers and refiners produce 400,000 tonnes more than that.

“The domestic market is very competitive,” explained Mr Connors. And, with the likes of Singapore-based Wilmar directing traffic on the export market, the sale of refined white sugar is up against a sour ceiling.

“We are significantly  impacted,” he admitted. “For many years we have just weathered the storm and we have undertaken some extraordinary actions to keep the growers and the business sustainable.

“However there are not too many more rabbits left in the hat. The economics of exporting raw sugar doesn’t stack up. Transport to Brisbane wharf alone would be another $30/tonne and Australian ports are notoriously expensive.”

Mr Connors said the recent ‘Japan deal’, in which three shipments of 30,000 tonnes were forward sold above $540/t, certainly helped cushion grower pain against current export returns.

“But we can’t rely on deals like that,” he said. “We can’t just sit here and do nothing different. We have to diversify.”

As a result the co-operative has been researching new ways to sell the lot –  from fibre and trash to juice, liquor, sugars, molasses and syrups.

Their partnership with Manildra is seen as favourable by Rabobank, which has made $30m available on loan, provided  each project is separately assessed.

“Our strategic business plan has 32 different action plans and a key part of the plan is our diversification projects,” Mr Connors said. “There are currently 10 diversification projects being independently assessed by teams from within the organisation all of whom report back to the board for scrutiny.

“Along with this expansion of ideas there has been cultural change involving staff at all levels. We are involving people that have knowledge and we are looking at continuous improvement from the farmer to the harvesting crew and right through the mill.”

Mr Connors is an advocate of short-term change, and works on a three to five year timeline.

“A ten year payback is too slow if you want to change the business,” he said.

The first project under this new approach paid back in less than 12 months and it was self-funded: A castor sugar plant which doubled capacity and found ready markets as identified in the field by Sunshine Sugar’s sales guys.

The second initiative out of the blocks is a low glycemic index sugar plant producing “Nucane” out of the Condong mill in partnership with a company called Nutrition Innovation, which in turn is involved with Sydney University.

The process converts raw sugar to a low GI level of 55, retaining the organics, antioxidants and polyphenols that naturally occur in sugar cane.

“Our unique process ensures we have a product that is less processed, less refined and low GI based on World Health Organisation standards,” said Mr Connors.

“Our technology ensures Nucane is very precise and consistent which enables industrial customers to use it in their brands as we can guarantee the exact specification every-time from any mill.”

Just six months after launch Sunshine Sugar has 40 customers trialing Nucane in fruit juice, canned products, flavoured milks, soy milk, yoghurts, breads, baked goods, ice-cream, confectionary, chocolates, sauces and quick service restaurants.

The next project to impact the market will be explosives suitable for the mining industry –  environmentally friendly, inert until mixed on-site, and waterproof –  not what you’d expect from sugar. This ‘more bang for the buck’ product will be up in 12 months and could potentially  absorb 10-20 per cent of NSW production.

Not much further down the track Sunshine Sugar s looking at a boutique rum and gin distillery at the Broadwater mill, using either molasses, sugar syrup or cane juice.

“The local council is very supportive of the plan but, like all our ideas, it must meet our business criteria,” said Mr Connors.

Cane juice also has a market as a niche health tonic and Sunshine Sugar is working with green juice producers Botanica to develop a range with a shelf life beyond 100 days.

Sugar also has a role in digesting sewage, with custom liquid recipes designed to fed particular microbes. This syrup is already being trialed in two treatment plants in the Hunter and Mr Connors says the nation-wide potential is enormous.

Molasses has always been a product held in high esteem by people running livestock and now the Australian owned business is marketing its premium range into China as a women’s health supplement. It is likely that the price of molasses will increase as a result.

“This is a positive in ensuring the bottom line and the return to growers,” said Mr Connors.

When it comes to cane trash the co-operative is investigating its use as a feedstock for methane digesters, or biogas plants capable of producing electricity. Already the three mills are connected to the grid and deliver more than 100 megawatts of power by burning cane trash or bagasse in specially designed boilers, although profits from those designated plants no longer flow into the co-operative’s coffers.

Mr Connors said the next two years were shaping up to be a challenge, with predicted tonnage down 10 per cent to 1.8m tonnes as a result of a cold and damp spring plant which followed the extremes of wet and dry.

“It is so important that we target the next two years,” he said.

“Forward selling of our excess production has worked in the past but now with a low-forecast crop and the market down we need a program in place to get prices for producers up. This reinforces the message that we’ve got to do something else.”