Sugar yet to find a sweet spot

World events conspire to squeeze sugar profits from NSW milling co-operative

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Harwood Island sugar cane farmer Richard Miller lights up his two year old cane crop with neighbours' help.

Harwood Island sugar cane farmer Richard Miller lights up his two year old cane crop with neighbours' help.

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A tough year for a sweet commodity forces a focus on alternative markets for NSW grown sugar.

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This year's annual general meeting of the NSW Sugar Milling Co-operative, held at Ballina on Friday, was a puritan affair thanks to COVID-19, with social distancing measures in place and no refreshments available of any kind - not even a cup of sweet tea.

It set the mood for a sober assessment of a sector struggling in a world-wide excess of supply, with commodity prices below the cost of production.

Profits are down for all of Australia's sugar milling enterprises with Queensland millers shouldering the worst of it. Mackay Sugar shows a profit on paper but a real life assessment proves otherwise. Isis, Bundaberg and Maryborough are exposing significant losses.

In NSW, the co-operative branding itself Sunshine Sugar is holding its own - in spite of the turbid year.

The spot price is just below 15 cents a pound on the Chicago ICE index and while that looks encouraging, after coming up from 12c/lb last year, it is a long way from helpful with future bids dropping back to 13c/lb.

Meanwhile, spent sugar cane ratoons are not being replanted across vast swathes of Qld near Bundaberg to the point where mills at Maryborough and Bingera have shut down for good. Finasucre, which owns Bundaberg Sugar Limited, is investing heavily in local macadamia production.

On the NSW Northern Rivers macadamias have encroached into all three valleys after floodplain production proved itself. Macadamias at record prices return ten times the value of sugar at the moment.

The enthusiasm to take part is driving up the price of land by a third on the Lower Clarence, as offers come in from keen investors.

On top of that there are early concerns about the ability of the three Sunshine Sugar mills to continue to produce using a declining feedstock, but that is not a worry for the moment.

Co-op CEO Chris Connors admits on-going work to improve transport efficiencies, continuing right through COVID in spite of the downturn, was a move critical to their survival.

"We wouldn't be here if not for that," said Mr Connors, citing details like four axle trailers and the ability to carry more load as key. A new freight and logistics warehouse at Harwood with immediate highway access is already paying for itself.

The decision to improve that part of the business proved itself this year to the point that the co-operative was on track to make a modest profit until COVID-19 when sales to wholesalers and retailers slumped 25 per cent during July and August. Profit and loss are now in fine balance.

To sell Sunshine Sugar as a point of difference the co-operative's marketing arm has worked hard to create new products, like low glycemic index sugar, popular in Malaysia before that country modified the recipe and made the product locally.

Aldi has recently show interest in stocking the low GI product, produced at the Condong mill.

However, the large supermarket chains generally do not return a price that is sustainable.

"We make nothing out of them," Mr Connors said.

Thus the push to find alternative markets and to increase efficiencies continues into 2021.

One pilot project will take green cane leaves at harvest and mill them into livestock feed pellets. An offshoot of the process will turn cane "trash" into value added cellulose packaging.

A project marketing botanical water will also come in to full production at Condong for the 2021 season with a redesigned plant expected to produce at least 10million litres of absolutely pure water from the sugar cane extraction process.

The AGM was also used to pay respect to the loss of two great leaders in the NSW industry.

Wayne Rogers, Pimlico, lost his life earlier this year in a tractor accident and was remembered for his role as an early adopter of best practice. In his honour a new harvest training program will bear his name. Another respected farmer, local member and minister, Ian Causley, Warregah Island, was remembered in his passing, with his name now adorning the new freight warehouse at Harwood.

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