The sugar industry is mainly concentrated in the coastal portions of north-eastern
Australia (ranging from the Atherton Tableland in the north to northern New South Wales)
where it underpins local economic activity and employment. The industry provides basic
regional infrastructure and generates significant wealth from a part of Australia where
natural resources have limited alternative uses. It directly employs about 22,000 people
at various centres along the coast and about five times that number in ‘upstream’ and
‘downstream’ economic sectors dependent on the industry. There are currently about 7,000
canegrowers in Queensland, New South Wales, and the Ord River Irrigation Area in Western
Australia, with the overwhelming majority of holdings being family businesses. Cane is
currently supplied to 28 sugar mills.
With up to 85% of raw sugar production being exported, maintaining and improving the
competitiveness of the Australian sugar industry in the global market place is a constant
and major challenge. The sugar industry’s mainly coastal location, adjacent to
environmentally sensitive areas of international significance (the Great Barrier Reef,
rainforests, and coastal wetlands), places particular responsibility on the industry to
ensure that its practices are environmentally sustainable.
In recent years, the sugar industry has faced increasingly difficult times with reduced
sugar yields and low industry profitability. This has been associated with a combination
of adverse internal factors (eg supply problems caused by natural hazards, particularly
high climatic variability and disease, and the rigidities of the current structure and
culture of the industry) and external factors (eg the sharp downturn in world prices for
sugar, changed relativities in world currency exchange rates, and disappointing returns on
capital and low profitability throughout the industry value chain).
When the previous R&D Plan 1999-2004 was being developed, Australian sugar production was
4.9 million tonnes, down from the record 5.6 million tonnes in 1997/98. Production was
expected to return to 5.2 million tonnes in 1999/00 and to be more than 6 million tonnes by
2003/04. Production did in fact increase to 5.4 million tonnes in 1999/00, but fell
dramatically to 4.2 and 4.6 million tonnes respectively in the next two years. The decline
was due to sharp reductions in sugar yield per hectare (see chart below) from the record of
13.9 t/ha in 1994/95. In 2001/02, the sugar yield of 10.3 t/ha was 16% below the mean
yield for the past 10 years of 12.4 t/ha. The area of cane harvested increased rapidly
during the 1990s as shown in the chart below, but expansion ceased by 1999/00 at a level of
about 445,000 ha.
The economic health of the industry has been further eroded by lower world sugar prices.
World market prices averaged over 10 US c/lb from 1990-98, but only 7.3 US c/lb from 1999
to date. This reflects not only an oversupply of sugar on the world market, but also the
increasing dominance of Brazil in supplying the world market. Returns to Australian sugar
producers are expected to be less than AUD 270/t in 2002/03 compared to more than AUD 350/t
in 1997/98.
The economic downturn of the industry has impacted strongly on the social sustainability of
the coastal communities that are dependent on it. Additionally, the industry has come
under increasing scrutiny with respect to its potential environmental impacts on the Great
Barrier Reef Lagoon.
In addition to competition and globalisation, other key forces or drivers impacting on the industry are:
“Triple bottom line” thinking (incorporating economic, environmental, and social dimensions) is being increasingly adopted by other industries and public companies.
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Last Updated 31/07/2003 |