Sugarcane

GVP $85 million est. Up 15% year-on-year.
Global sugar prices up 32% year on year to average A$579 per tonne in 2021-22.
Repeated flooding has impacted production in both 2021 and the current 2022 season.

The 2021 crushing season, which typically runs from June to December in NSW, saw production decrease 4.4% year-on-year, with 200,852 tonnes of sugar (ISP)^d produced. A total of 13,923 ha was harvested which was 5% lower on the previous year, while cane yield was 2.4% lower at 155.67 t per hectare in 2021. Countering this to a degree was a 3% increase in sugar content (CCS ).^e The crop had been impacted by earlier wet conditions including floods in March 2021. Global raw sugar prices remained strong, in Australian dollar terms, the benchmark raw sugar price averaged A$579 per tonne for 2021-22 compared with A$439 per tonne in 2020-21, 32% higher. Sustained stronger sugar prices will ultimately result in an increased supply response in the medium term by major sugar producers, seasonal conditions permitting. In addition, moderating energy and ethanol prices would likely see some diversion of sugar cane to sugar production. For NSW growers, two seasons of wet conditions have resulted in significant flooding in NSW cane growing regions and impacted production in 2021 and 2022. This will have follow-on production impacts for 2023 given the 2-year crops typically grown in NSW.

Production

Production for the 2021 crushing season, which typically runs from June to December in NSW, was down 4.4% on the previous year, with 200,852 tonnes of sugar (ISP)^d produced. The area harvested totalled 13,923 ha, 5% lower year-on-year, while cane yield was 2.4% lower at 155.67 t per hectare in 2021, than in the 2020 season.²⁵³ The crop had been impacted by earlier wet conditions including floods in March 2021.²⁵⁸ Two seasons of wet conditions resulted in significant flooding in NSW cane growing regions and impacted production. With one- and two- year crops typical of NSW sugar cane production systems, damage is partly determined by the length of time of submergence and the height of the crop with shorter cane most vulnerable. In addition, flooding can limit the ability to harvest.²⁵⁷

A 3% increase in the sugar content of the cane over 2020, to average 12.27% CCS^e in 2021, helped to moderate the negative impact of a lower harvested area and cane yield experienced in NSW.²⁵³ The higher average CCS percentage recorded for the season was attributed in part to some warmer temperatures into Spring 2021.²⁵⁵ Numerous factors influence the CCS percentage including variety, age of the crop, arrowing (flowering), and moisture, nutrient, or temperature stresses.²⁵⁷

Sugar cane production²⁵³

Area harvested for milling (ha)
Sugarcane yield (t/ha)

Download data (.XLSX)

Source: 87

NSW average commercial content of sugar²⁵³

CCS/Sugar Content

Download data (.XLSX)

Source: 87

Price

Global raw sugar prices continued to be supported from the cyclical low that occurred in 2020 following the large surplus observed in 2017-18 which contributed to lower raw sugar prices.²⁶⁵ The low price in 2020, and difficult growing conditions in key producing countries, resulted low global production and decreasing stocks.²⁶¹²⁶² By June 2022, the global raw sugar benchmark price was 96% higher than April 2020, with 2020-21 and 2021-22 net production positive, although still lower than the levels of net production seen between 2011-12 to 2014-15.²⁶² In Australian dollar terms, the benchmark raw sugar price averaged A$579 per tonne over 2021-22 compared with A$439 per tonne in 2020-21, an increase of 32%.²⁴⁵

Global raw sugar production/consumption balance and sugar price²⁶¹²⁶²

Global Net Production ('000 tonnes)
Sugar futures price (USD/lb)

Download data (.XLSX)

Source: 94 , 95

Trade

Sugar production in NSW is primarily domestic focussed, however exports totalling $2.3 million in solid form sucrose product, was exported to a number of destinations during 2021-22, 35% higher year-on-year. New Zealand remained the major export destination representing $1.7 million, with Papua New Guinea and Fiji other notable markets in 2021-22.³⁵

Macroeconomic Conditions

Substantial increases in energy prices including ethanol, which has increased 80% over the two years to June 2022,²⁵⁴ remained an important factor in sugar price trends. Sugar cane is a key feed stock for ethanol production amongst major producers such as Brazil and India, and as an alternate user of sugar cane, higher ethanol prices typically provide a positive influence on sugar prices. The current sugar prices remain attractive and support the recent sugar-ethanol production mix for Brazil.²⁵⁹ Government ethanol mandates in Brazil and India remain an important factor in understanding global raw sugar supplies.²⁵²

Global consumption of sugar has risen in 2021-22 as economies recovered from the COVID-19 pandemic and from growth in markets including China, India and Indonesia. In 2021-22 India exported record quantities of sugar to meet globally lower production and strong prices, although increased domestic demand in India is expected to contribute to less available sugar for export in the following year.²⁶²

A lower Australian dollar, which has decreased 7% against the US dollar over the 12 months to May 2022, also supports Australian sugar prices and the gross value of Australian sugar exports.²³⁴²⁵²

As is the case for other agricultural industries, cane growers are managing high costs for critical inputs such as fertiliser, agrochemicals and fuel which will be expected to impact margins.

Outlook

Sugar production from Brazil, responsible for over 40% of global exports, is expected to continue to recover from significant drought and frost conditions experienced during 2020-21 and given timely rain for some key growing regions prior to the 2022 harvest.²⁵⁹ Similarly, Thailand’s sugar production is recovering from a decadal low in 2021 as a result of drought however, despite positive sugar prices, potential production increases are expected to be tempered by the attraction of alternate crops such as cassava, with lower fertiliser and agro-chemical requirements given current high input prices.²⁵⁹²⁶² For both sugar exporters, sugar ending stocks for 2022-23 are forecast to be substantially lower.²⁵⁹²⁶² Similarly, the global stock to use ratio is expected to be lower over the near term decreasing from 46.1% in 2020-21 to a forecast 41.9% for 2022-23.²⁶⁶

In the longer term, while population growth supports global consumption of sugar, the outlook for growth in per capita consumption of sugar is contrasted between developed and developing countries. For OECD countries including Australia, which already have a high consumption per capita, consumption is expected to decrease over the decade. In contrast developing countries in Asia are anticipated to increase consumption per capita with increasing incomes and urbanisation supporting demand for confectionery products and soft drinks.²⁶²¹⁸²

Locally, two seasons of wet conditions have resulted in significant flooding in NSW cane growing regions and impacted production in 2021 and 2022. Recovery from NSW flooding in early 2022 will be a major factor in the production of sugarcane for the 2022 crush and with follow on impacts for 2023 given the importance of 2-year crops to the industry.

Sustained stronger sugar prices will ultimately result in an increased supply response in the medium term by major sugar producers, seasonal conditions permitting. In addition, moderating energy and ethanol prices would likely see some diversion of sugar cane to sugar production, away from ethanol, increasing supply further but this will also be influenced by countries’ energy mandates.²⁵²

Stronger Primary Industries Strategy

Bushfire Rural Recovery Support Service

DPI’s Bushfire Rural Recovery Support Service (RRSS) was established in October 2019 in response to the widespread Black Summer Bushfires that caused multiple natural disasters to be declared and over 6 months, impacted 50 Local Government Areas (LGAs) across NSW.

Strategic Outcome

Response Capacity

The DPI worked in partnership with Resilience NSW and secured $9.4m funding to operate the Rural Recovery Support Service through the Federal Government’s Disaster Recovery Funding Arrangements (declaration AGRN871) until December 2021.

The Rural Recovery Support Service provided free, voluntary and accessible support to anyone who had experienced losses and trauma as a result of the fires. Recovery officers, located in four teams across NSW, helped link impacted individuals to government and non-government support services for financial assistance, housing assistance and family services as well as technical advice and information on planning, development and infrastructure replacement. They were also Involved in hundreds of industry and community events designed to support community cohesion and resilience and build preparedness for future disasters.

The Rural Recovery Support Service assisted the recovery efforts of over 4,300 primary producers and rural landholders across 53 NSW Local Government Areas, helping them access more than $45.46m in financial assistance through Govt assistance programs, charities and in-kind support. The team worked with 77 different stakeholder types ranging from Local Government to industry groups, to service providers and charities to ensure the clients had access to the most appropriate information and support to meet their individual needs.

Recovery barriers were identified and where possible, addressed using local solutions. A great example was identifying the challenges associated with repairing the northern wild dog fence, and through initiating a partnership with Blaze Aid and Back Tack Boys, volunteer efforts, alongside impacted primary producers, resulted in the replacement of critical fencing that would protect livestock from wild dog predation.