The Land

Sugar high as ducks align for industry

Harvesting one-year-old sugar cane on the Tweed. File photo.
Harvesting one-year-old sugar cane on the Tweed. File photo.

This is branded content for Sunshine Sugar.

Record sugar prices have been locked in for the next three years by Sunshine Sugar marketing staff and for the first time in decades demand for new acreage to grow the sweet crop is burgeoning.

The NSW Sugar Milling Co-operative has ridden the trying times, with low prices and competition for land from alternative crops like macadamia nut trees. However the recent wave of optimism, fed by raw sugar prices touching $1000 a tonne on the US futures market (Intercontinental Exchange), have led to a huge upswing in interest for the resilient, sweet grass.

One corporate property on the Bungawalbyn plans to shift 600 hectares of country from tea tree to sugar while another 1000ha of combined smaller holdings is keen to move into the space, with excellent profits forecast for the near future.

According to Chris Connors CEO of Sunshine Sugar, the brand name of the milling co-operative, now is the time to take advantage of "real opportunities" in the industry.

"We have had a lot of inquiry," he said.

Part of the change-over process is about fitting in to the sugar crushing cycle, with transport costs shared among growers in a true co-operative style.

"This is positive for us," said Mr Connors, who noted about 4000ha of cane land has exited the industry, while immediate price rises have seen acreage clawed back, with more demand looming.

"Sugar prices are the key to it, with cane growers getting $60/t locked-in for three years," he said.

The cost of growing the crop is about half that figure, with the best returns promised to growers in decades - despite increased input costs.

For many producers in the flood affected valleys, particularly on the mid-Richmond, tonnage is significantly down and because the majority of crop south of the Tweed is two-years old before harvest, that ability to capitalise on high prices will be compromised, but Mr Connors says the good news should prevail into the medium term.

"We think the market will move up slightly but we have decided to lock-in prices slightly lower so that growers can do their financial planning based on real viability," he said.

The co-operative has hedged a portion of its raw sugar sales in the order of $780/t with demand outweighing supply on a global scale, while investors have lately pushed the raw sugar price to astronomical highs on the ICE #11 US futures market.

Resilient sugar cane is a grass species that can tolerate drought and flood better than other crops. File photo.
Resilient sugar cane is a grass species that can tolerate drought and flood better than other crops. File photo.

By comparison, the 2020 price was $450/t.

"At these prices sugar growers are going to make money," Mr Connors said.

The Co-operative has been active in the futures market selling a portion of projected tonnage for many years, and even with the price increasing in recent times the previous hedged product has been accounted for.

"This price that we have locked-in takes into account earlier market positions and it is a little below the market at the moment but our benchmark is better than most sugar mills in Australia," Mr Connors said.

"We could sit and wait and get better prices but we may not - that's what sugar markets are like."

Mr Connors said investor interest above the physical demand had lifted sugar prices to their recent highs while world wide consumption is forecast to be one to two million tonnes more than production.

"That's not a big number on the physical side so it is clear that investor groups are playing games," Mr Connors said.

No new money will be spent on the three sugar mills, one in each of the three Northern Rivers valleys that grows the crop. All facilities had various amounts of flood damage after 2022 with Broadwater mill on the mid-Richmond sustaining the most set-back.

New equipment and more efficient lay-outs as a result of repairs are translating into better running plants, with Condong on the Tweed - the co-operative's most modern mill - recording a recent week with just half an hour of down-time.

"I've never heard of that in the industry," Mr Connors said, noting a figure 20 times that amount used to be normal.

While tonnage of cane is down due to prior flood damage, the current dry season is helping to deliver crop with a higher concentrated sugar percentage and lower impurities leading to more money for the volume.

At the same time new varieties developed for Australia's southern-most sugar growing district are proving their worth.

"If there is a down-side at the moment it is that seed cane and planting equipment is in short supply," Mr Connors said.

Sunshine sugar at a glance:

Long History: Sugarcane has been a staple crop in the NSW Northern Rivers region for over 150 years. It has played a vital role in supporting farming families and creating job opportunities in the local community.

Sugar production has been a major industry in the Clarence, Richmond and Tweed Valleys for over 150 years, with the Harwood Mill being the longest continuously running sugar mill in Australia.

Sunshine Sugar is a 100 per cent Australian owned partnership between the grower-owned NSW Sugar Milling Co-operative and the family-owned Manildra Group.

The NSW Sugar Milling Co-operative is comprised of some 500 cane farming families in the Northern Rivers region of the state. The Manildra Group is an international agribusiness owned and operated by the Honan family in NSW.

Sunshine Sugar owns and operates sugar mills at Harwood, Broadwater and Condong and a refinery co-located at Harwood.

Cane growers on the Northern Rivers are fortunate to have access to the best in soil and water resources for cropping. They also enjoy close proximity to the coast, beautiful natural surroundings and a temperate climate. The six-month on and six-month off season provides an unmatched business and lifestyle balance.

The NSW sugar industry is supported by more than 500 farming families. The farming footprint covers some 34,000 hectares, with up to 2.4 million tonnes of cane harvested each year.

Resilience: Despite facing numerous challenges and fluctuations in agricultural commodity prices over the years, sugar cane has proven to be a remarkably resilient crop. Even during catastrophic floods in 2022, most growers were able to harvest their crops.

Price Surge: The recent surge in sugar prices has boosted the strength of the NSW sugar industry. Growers are set to receive favourable prices of over $55 per tonne of sugarcane for the next three seasons.

Renewed Interest: The combination of high sugar prices, crop resilience, a positive outlook for the sector, and farmers seeking diversification opportunities has led to a surge in interest from both existing and prospective sugarcane growers.

Expansion: The Sunshine Sugar Board has approved applications for more than 1000 hectares in the Richmond Valley area to transition to sugarcane cultivation. This expansion reflects the opportunities the local sugar industry offers.

Support and Information: Those interested in sugarcane cultivation in the Northern Rivers region are encouraged to reach out to local sugar mills or contact the Sunshine Sugar corporate office for information and support.

Sunshine Sugar: Sunshine Sugar is a noteworthy player in the industry, being the sole 100pc Australian grown, made, and owned sugar manufacturer. It operates in partnership with the grower-owned NSW Sugar Milling Co-operative and the family-owned Manildra Group.

Beyond its traditional role, sugarcane has gained prominence for its versatile applications in renewable food, fuel, and fibre production. This exceptional plant yields not only all-natural crystal sugar and wholesome syrups like molasses but also boasts a wide array of components that can be harnessed in various ways. From powering sugar mills to providing substrate for mushroom cultivation, from producing ethanol and aviation fuel to manufacturing packaging materials and paper products, sugarcane's potential is truly multifaceted.

Unsurprisingly, this multifunctional nature of sugarcane has sparked keen interest among the next generation of farmers seeking a sustainable and profitable long-term agricultural pursuit.

A surge in interest can be attributed to a combination of factors, including attractive sugar prices, the robustness of the sugarcane crop, the industry's resilience, and a positive outlook for the sector. The latter is bolstered by the presence of renewable fuel and fibre programs that maximise the utilisation of sugarcane by-products.

This is branded content for Sunshine Sugar.