A new ABARE report on sugar cane growers has revealed an industry in transition, with a trend toward larger farms and corresponding lower cash costs of production, as farms expand production. Many growers were found to derive income from activities other than sugar, which in some cases included off-farm income.

The report, Australian sugar cane growers: financial performance 2005-06, was released by Phillip Glyde, Executive Director, ABARE. ABARE surveyed 291 sugar cane growers throughout Australia in March 2007.

‘The Australian sugar cane industry appears to be in transition, with the volume of production relatively stable but with a reduced number of producers. This suggests a trend toward a smaller number of larger farms. A key reason for this transition is that there appears to be some economies of size,’ said Mr Glyde.

In 2005-06, the average cash cost of production for the smallest sugar cane producers is estimated to have been around $21 a tonne. For the largest sugar cane producers, the average cash cost of production is estimated to have been around $18 a tonne.

The report found that in 2005-06, there were 4824 sugar cane growers in Australia who produced, on average, 8250 tonnes of sugar cane per farm.

‘However, there was a wide range of farm sizes. Nearly two-thirds of small producers (those who produced less than 7500 tonnes of sugar cane), collectively accounted for a quarter of national production.’

‘In comparison, the largest 3 per cent of growers in 2005-06 accounted for around 22 per cent of sugar cane production,’ Mr Glyde noted.

While farm cash income averaged $66 000 in 2005-06, an estimated 27 per cent of farmers reported negative farm cash incomes.

‘Most of the farms reporting negative farm cash incomes were smaller sugar cane growers producing less than 7500 tonnes. These growers mainly depend upon off-farm income. The survey results indicated that, in every region, financial performance improved as the scale of sugar cane production increased,’ Mr Glyde concluded.

The ABARE survey of sugar cane growers was conducted on behalf of the Sugar Industry Oversight Group (IOG), in collaboration with CANEGROWERS and funded by the Department of Agriculture, Fisheries and Forestry through the Sugar Industry Reform Program 2004.