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Significant decline in sugar profitability
15 Sep 2008
The combined effects of a 25 per cent fall in sugar cane prices and higher costs for farm inputs, such as fertilisers, fuel and contractors services, have led to a decline in profitability of sugar cane in 2007-08 says ABARE. The average gross margin of sugar cane production (the difference between price and cash costs of production) is estimated to have been around $3 a tonne in 2007-08, well below the 2006-07 levels of slightly more than $11 a tonne. The decline in sugar cane profitability is estimated to have resulted in the number of sugar cane growers falling from 4,800 farms in 2005-06 to around 4,100 in 2007-08. In 2007-08 growers producing more than 50,000 tonnes of sugar cane per farm realised an average gross margin of $6.30 a tonne compared with $1.24 a tonne for producers growing less than 7,500 tonnes per farm. The ABARE survey of sugar cane growers was commissioned by the Sugar Industry Oversight Group (IOG), in collaboration with CANEGROWERS, and funded by the Department of Agriculture, Fisheries and Forestry through the Sugar Industry Oversight Reform Program 2004.
ABARE, 15/09/2008
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