Managing low sugar prices on farms - short-term and longer-term strategies

Low sugar prices, resulting in negative returns for many growers, force both growers and the industry to look hard at the options available. The results of a four-year RCS/BSES benchmarking project have highlighted that profitability improvements are possible for the majority of growers but in order to realise these improvements, individual growers need to clearly identify short-term and longer-term strategies for their businesses. Regression analysis confirmed the generally held view that short-term costs and tonnes of sugar per hectare are key variables for improved profitability. However, the overwhelming majority of participating growers identified that yield increases were possible on their farms through improved management practices. Such short-term strategies must, of necessity, focus on doing the right things at the right time. These include reducing inputs, saving on repairs and maintenance, putting off purchase or lease of new equipment, etc. In our analysis, growers below the top 20% could realistically expect to save up to $2/tc depending on circumstances. The longer-term strategies emphasise a critical evaluation of labour efficiency and the size of operation and should also assess investment in productivity improvement measures such as irrigation, drainage and overall farm layout. Benchmarking is a valuable tool for growers to assess their true enterprise performance and to establish a clear path for improvement.