Trade Resources Market View Australian Cane Industry Is Helped by an Increase in Foreign Investment

Australian Cane Industry Is Helped by an Increase in Foreign Investment

Australian Cane Industry Enjoying a Period of `Rejuvenation'

The Australian cane industry is enjoying a period of rejuvenation, helped by an increase in foreign investment. Picture: Lyndon Mechielsen Source: The Australian

This year's Australian sugarcane harvest has started in north Queensland amid a reversal of previous trends for cane fields to be taken out of production.

The failure of managed investment scheme tropical tree plantations such as mahogany and teak has opened up opportunities for the expansion of cane farming north of Mackay, as export prices look brighter due to the fall in the value of the Australian dollar.

The move has been hastened by the new trend of cane fields to be bought by sugar mills, most of them now owned by foreign conglomerates.

Around Tully, Chinese government mill owner the Chinese Oilseed and Food Corporation (COFCO) has been snapping up failed MIS tree scheme land and resowing it to sugarcane, after buying and privatising Tully Sugar in 2011.

Over the past decade, cane plantings declined by 17 per cent from a record 450,000ha harvested in 2002.

For the first time, this year has seen a rebounding of previous declines, with 400,000ha of cane set to be harvested down the east coast of Australia between Mossman and Ballina between now and October.

A report by Rabobank sugar analyst Tracey Allen released yesterday described the Australian cane industry as enjoying a period of "rejuvenation" with an injection of offshore investment and consolidation across milling assets and cane supply.

The report predicts that by 2020 Australia could be sowing 500,000ha of sugarcane annually -- up 25 per cent on present levels -- as demand for sugar from China and India soars.

Ms Allen said the underutilisation of Australian milling capacity in the past 10 years had led millers to provide growers with a range of incentives to replant cane and bring new areas under cultivation to better maximise cane throughput and reduce idle mill capacity.

"Elevated sugar prices over the past couple of seasons and a wave of foreign investment have provided incentives to lift and maintain Australian cane area at more 'normal' levels," Ms Allen said. "Cane produced on miller-owned land currently constitutes only a small proportion of overall cane supply; however, we expect miller-owned and leased farms to be more of a prominent feature in the future."

Canegrowers Association chairman Paul Schembri said this week that the 2013 crop was likely to yield 30.5 million tonnes of cane, valued at almost $2 billion.

Sugar mills in the Burdekin region in north Queensland were the first to start crushing at the beginning of this month, followed quickly by mills on the Atherton Tablelands, Herbert River, Tully and Innisfail.

The crop forecast was downgraded from 31.5 million tonnes of cane because of an outbreak of yellow canopy syndrome, and floods around Bundaberg and Isis. 

Source: http://www.theaustralian.com.au/business/markets/australian-cane-industry-enjoying-a-period-of-rejuvenation/story-e6frg916-1226665259737
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Australian Cane Industry Enjoying a Period of `Rejuvenation'