ORGANIC SUGAR PRODUCTION IN AUSTRALIA

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ORGANIC SUGAR PRODUCTION IN AUSTRALIA
G Antony, DM Smith, J Biggs, S Park, M Renouf
and T Webster
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Outline

• Sugar-industry situation
• Organic sugarcane growing in Australian industry
  reform
• Challenges and solutions in organic canegrowing
• Sustainability implications of organic
  canegrowing

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The Australian sugar industry
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Sugar production system in Australia
Sugar marketing
Sugar marketing
Cane growing
Cane harvesting
Cane milling
Cane transport
Material flow
Financial flow
Environmental impact
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The conventional supply chain
Lack of integration along supply chain
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An industry in crisis external factors

• The most corrupted international commodity
• - protectionist US farm policy restricts market
  access
• - protectionism and predatory dumping by the EU
  reduces international price
• Increasing competition
• - revolutionary changes in Brazil in the 1990s
  result in increased production and exports
• Domestic squeeze
• - pressure over environmental performance by
  society
• - declining government sympathy for an industry
  accustomed to regular financial assistance

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An industry in crisis internal factors

• Ossified institutions
• - socialist practices pre-dating the Soviet
  Union full regulation of production/prices at
  every stage of the supply chain plus
  government subsidies
• - passive, conformist industry culture in lieu
  of innovativeness all along the supply chain
• Unsustainable practices
• - cane monoculture farming practice results in
  yield decline
• - financial losses since the late 1990s (bad
  weather, but also loss of international
  competitiveness)

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The organic value chain
raw materials
Farming
financial flows
cane
A pure farmer initiative
products
Harvesting/haulage
The conventional sugar industry is not
interested
Cane transport
Organic farmers are forced to manage the
supply chain
Mill processing
by-products
raw sugar
Sugar transport
Marketing
Domestic refining
Domestic retail
Food manufacturing
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Seeking solutions organic production

• Textbook case of induced innovation (Hayami and
  Ruttan)
• - to ensure long-term sustainability of farm
  resources (to avoid declining factor
  productivity land resource more highly
  valued than by conventional cane farms)
• - expectations of better financial returns
• A grass-roots initiative
• - despite general industry indifference and
  derision
• - no external support by government or industry
• - no proven technologies to use (most intensive
  tropical field-crop enterprise without
  agrochemicals!)

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Innovations in organic production

• Revolutionary farming systems
• - agricultural research from first principles
  (farmer experimentation in situ like the
  olden days)
• - the highest-yielding cropping system adapted
  to organic production in a developed country
  (90-150 t/ha of cane yield every year)
• - yield dip during organic conversion (gt3 years,
  using certified organic techniques but crop is
  not yet sold as organic a gap between costs
  and income)

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Challenges and solutions

• The expected
• - must create new farming system that is
  suitable for organic certification
• - new techniques needed for nutrient supply and
  pest/disease control without agrochemicals
• The unexpected
• - having to manage the whole supply chain,
  including cane processing and sugar marketing
• - relations with the sugar mills a source of
  conflict
• - regional approaches to marketing relate to
  social differences between the two case-study
  regions (age, background, farm size,
  entrepreneurial spirit)

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Outcomes financial sustainability

• Better returns not without costs
• - large marketing effort needed to realize price
  premium
• - expensive organic conversion (income gap)
• - expensive experimentation (failed experiments
  mean lost cane yield and lost income, but
  costs still incurred)
• - increased risk of pests/diseases due to less
  ability to control them
• - no outside help to provide financial subsidy
  or insurance farmers must pay their own way

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Outcomes ecosystem impacts

• On farm
• - analytical method cropping-system simulation
• - improved resource sustainability through the
  build-up of soil organic matter from organic
  fertilizers
• - anecdotal evidence of improved soil biological
  activity (an essential source of positive
  production feedback)
• Off farm
• - analytical method Life-Cycle Assessment
• - increased mechanical weed control causes
  higher CO2 and particulate emissions
• - better N retention reduces nitrous emissions
  to air
• - no data on leaching, but expect reduced water
  pollution

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Conclusions

• Organic cane - a promising innovation
• - made possible by motivated, entrepreneurial
  and polymath farmers
• - improved sustainability of farm finances and
  resource base in the long run, at a short-term
  cost
• Not quite as expected
• - off-farm environmental impacts not all
  positive
• Further work needed
• - research of water-borne pollution effects
• - improvements to farmers marketing skills