Mackay cane farmers and millers see high price undercut by input costs, supply chain woes

Sugar prices are hitting impressive levels and 2022 should be a picnic in the sun for cane farmers and millers, but the war in Ukraine and other factors are shrouding the outlook. Here’s why.

It is the best of times and worst of times for Mackay’s cane farmers and millers, with rising input costs and supply uncertainties undermining high sugar prices.

Canegrowers chairman Owen Menkens has been growing cane in the Burdekin since the 1990s and is well versed in the vagaries of the industry.

“There has definitely been a jump up in prices and going forward, the prices look pretty good,” he said.

“To qualify that, there is also going to be a big jump in input costs.

“We sort of need a higher sugar price to cover that.”

Sugar is currently trading at about $590 per tonne.

The war in Ukraine has unsettled fertiliser supplies, a key concern for growers as the crushing season approaches.

“It (the price of fertiliser) is probably two and a half times what it was last season,” Mr Menkens said.

“That’s a massive increase and a big burden on growers moving forward.”

Mr Menkens expects a sugarcane crop of some 30 million tonnes this year, though production volumes are dependent on the weather and May’s rain has already delayed the start of crushing by about a week.

Wilmar Sugar’s Plane Creek mill in Sarina will likely start crushing on June 14 and its Proserpine mill will begin on June 21.

The company’s Mackay regional operations manager Craig Muddle expects the Sarina and Proserpine mills to process crop volumes roughly comparable to 2021 levels.

“Our pre-season crop estimate for Plane Creek is 1.3 million tonnes, slightly down on last year’s 1.37 million tonnes,” he said.

“The Proserpine crop estimate is 1.64 million tonnes, up on last year’s throughput of 1.56 million tonnes.

Australian Sugar Milling Council CEO Rachele Sheard confirmed rising input costs were also a key concern for millers.

“Like many industries we have faced rising input costs as well as supply chain challenges,” she said.

“This has been under way for a number of years now as the impacts of Covid flows through different global supply chains.

“Our mills have worked hard to minimise disruptions and identified these challenges early, putting in place plans to address this through structuring of maintenance works and use of local manufacturing workshops within the mills themselves.”

Mrs Sheard added a wetter than average weather report for the coming months could create additional pressures as the season progresses.

She also said skills shortages and an international market distorted by subsidies and supports created a “tough playing field” for Australian sugar.

In the Mackay region alone, sugar is a nearly $1bn industry and supports 5000 full-time jobs.

The mills in Farleigh, Marian, Plane Creek and Racecourse contributed $754.6m across 2020-21 in wages, business activity, cane payments and local government payments.