A RISK SHARING MODEL AS A WAY OF DELIVERING PRODUCTIVITY GAINS FOR THE AUSTRALIAN SUGAR INDUSTRY

PILOT studies were established in the Herbert River, Mackay and Burdekin sugar growing districts of Queensland during 2006 to test the agronomic performance of a new crop ripener, MODDUS® (Trinexapac-ethyl). As part of the pilot studies, an innovative risk-sharing model was tested, whereby the price the grower pays was related to the incremental increase in sugar per hectare achieved from applying MODDUS®, in comparison to untreated benchmark plots. MODDUS® application in combination with the risk sharing model increased net return to growers by 13-39%. The risk sharing model approach allowed growers to capture the potential benefits from using MODDUS® while minimising the financial risk associated with variable responses. The paper demonstrates the value of the risk-sharing model as a tool for increasing the rate of adoption of new technology by sugar cane growers and creating flow on benefits to industry through the value chain.