Outlook sweetens for sugar cane farms

AUSTRALIA’S sugar farms have been in the doldrums since 2000. The price of sugar collapsed to US5c a pound, farmers struggled or went broke but couldn’t sell because there were few buyers. Properties stayed on the market for 12-18 months and often sold only at a loss. Many farmers wanting to leave the industry hung on to their farms just hoping the market might pick up enough for them to get out with some equity.

It has, thanks – oddly enough – to oil prices and a technology from Brazil.

Australia produces about 5 million tonnes of sugar a year; Brazil produces 350 million tonnes. Brazil dominates the world market not only because of its size, but also by a technological innovation that gives it two more advantages. All Brazilian sugar mills are dual purpose: they can produce sugar but they can switch and produce ethanol.

In a normal season, Brazilian mills use early-season sugar for ethanol, selling only fine white sugar on to the market. Australia cannot do this: our sugar is of mixed quality and 80 per cent of our sugar goes to export and must compete with Brazil’s.

The Australian