What are the options?
5. Adopt best practice 6. Diversification
Best use of harvesting equipment
Paper presented by Tony Ross
INTRODUCTION
There have been joint workshops conducted between CANEGROWERS elected members and Mackay Sugar regarding harvesting and transport rationalisation. The principal goal is to have a system which is capable of handling 7 million tonnes of cane per year at the least cost to millers and growers.
Producing sugar takes two distinct operations. There is the growing and harvesting of cane, and the transportation and milling of the cane in the factory to produce sugar. The harvesting and transport is interdependent if the best quality sugar is to be produced. It may become evident that greater efficiencies and profitability in one area may reduce profitability in the other.
THE GROUP
There are 4 distinct categories of growers in relation to harvesting : Those employing independent contractors
Those who own machines for their own use and also contract outside Those who own harvesters used solely on their own farms.
Those who have formed co-operative groups.
There have been doubts expressed whether the present system of harvesting can last much longer.
Smaller groups cutting between 10,000 and 15,000 tonnes cannot be justified as an economically viable operation. That type of operation will face high replacement costs for harvesting and haul-
out equipment, the need to achieve maximum productivity from labour, which necessitates larger machinery, and the amount of capital tied up in rapidly depreciating machinery. Smaller groups also face continuous crushing and grouping arrangements that are a cause of conflict between miller and grower.
Harvesting is a major cost in farming. The effective use of harvesting and transport equipment has an important influence on harvesting costs. Yet, the actual throughput of harvesters falls well short of their potential. It can be assumed that if fewer machines are in operation then harvesting costs would be substantially reduced. Why are so many harvesters in use?
No clear answers have yet been produced. For example, the Racecourse area had 71 machines in action last year. Proserpine, with a greater assigned area, had only 39. The ability to roam throughout the mill area has reduced the need for any more machines. Nevertheless, ownership
of harvesters is still concentrated in the hands of growers, but throughput is higher on contractor owned machines.
Growers harvest their own cane for many reasons, for example independence, having the job done the way they like it done.
They may not wish to join a larger group with their neighbours. There may be sons returning to the farm, and buying a harvester is a way of providing employment for everyone. If these people join a larger group, instead of working on their own farm, they could move to work off farm
In 1994 the average Racecourse group size was 22,297 tonnes.In Proserpine ,it was 49,675, much closer to the potential of the machine. Last year there were 18 groups in Racecourse which cut less than 10,000 tonnes.
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doing basically the same job.
Smaller growers who cut their own cane will eventually be freed of the worry of replacing expensive machines. They will also be freed of the problem of finding and retaining reliable and competent labour. The cost of retaining this labour, by providing year round employment makes this exercise questionable.
The disadvantage of harvesting your own cane is that other farm work may be neglected.
Attention to growing cane, the principal objective, will suffer. Chemicals, fertilizer and water may not be applied at the best times. Increasing the yield by say five tonnes/ha will outweigh savings offered by harvesting your own crop.
The miller benefits in some respects by having small groups. This can act as a form of insurance against harvester breakdowns which can impede the flow of cane to the mill. On the other hand larger groups will result in more efficient, well maintained machines which are less likely to break down than obsolete ones.
Harvesting is scheduled as frequently and as evenly as practicable across all groups and throughout the season to reduce and equalise among growers the risk of weather and quality.If
separate arrangements are made between particular growers and millers this could interfere with grower equity. Individual negotiations are restrained by this as it would breach the award.
TRANSPORT
The efficient use of harvesters is also dependent upon the transport system provided by the miller.
A mill cannot operate efficiently without a consistent supply of cane. But, the miller will not improve his investment in this area other than to ensure a steady supply of fresh cane throughout the season. Savings to the mill from bigger groups can come from improved loco scheduling due to group rationalisation. Bigger sidings would therefore have to be built.
The majority of Racecourse cane (65%) is supplied in the morning.
But, it often happens that a group must wait until a further delivery of bins to recommence harvesting. Thus, even allowing for wet weather and mechanical problems, there is considerable unused harvester capacity. Delays also occur because of sidings which are too small for the daily allotment. Even if growers themselves invested in bigger sidings they still need the cooperation of the mill to ensure larger bin deliveries. Thus, the efficient use of harvesters is restricted by the transport system provided by the miller.
A favourable system is one with the following cut to crush delay: 60% within 12 hours, 90%
within 16 hours, and the balance within 20 hours. What is necessary to realise this, is a guaranteed bin supply. This will eventually give savings in numbers of bins, with the resultant benefit to sugar
quality.
Points which are significant:
1 Reduction in cut to crush delay 2 Reliability of service.
3 Better use of daylight hours gives savings in bin numbers, plus the resultant benefit to sugar
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quality.
4 Continuous harvesting will only work well if there is a constant supply of bins and the cut to crush delay kept under 16 hours.
CUTTING GREEN
What are the problems with cutting green?
Risk of dextran Lower bin weight
Propensity for floc formation
Riskier ratooning in cooler, July and August weather.
Some of the benefits:
Productivity increase under right conditions Harvesting flexibility
Minimum tillage
Big groups are necessary to provide the cashflow to purchase machines which can cut green either a Cameco or Austoft 7000.
Dextran is formed in sugar when the leuconostoc bacteria multiplies in the billet. Dextran makes the sugar syrups more difficult to boil out and produces an irregular grain. Refining costs therefore increase and the quality of the product is affected. Formation of dextran begins 12 hours after harvesting. Hot, humid weather may cause dextran to form in less time than that. It follows that the problem is more serious in green than burnt cane.
CHANGES AND INCENTIVES
It is to the benefit of all parties concerned that the amount of sugar produced is maximised, and the crop is harvested in good time.
Is there a commitment to develop efficient and effective practices?
What are the problems and how can they be corrected?
Will these gains remain untapped or will the potential be realised?
Incentives for change:
Rosters, what is appropriate for the area 5/7, 8/10, 13/15 days? Spreading harvesting hours to make better use of daylight hours that is 4am to 6 pm.
Move to a common bin fleet to assist transfer between mills.
The savings to mills would be in the areas of more efficient use of the common bin fleet and larger locomotives eg 40 tonne and fewer and larger sidings. These savings would not be realised immediately. A six tonne is the most economical from the mill capital investment point of view.
However ten tonne would be suitable if infield transporters are more widely used. This would not take place until transport equipment needed to be replaced and rationalisation of harvesting and
scheduling took place.
Financial assistance to change.
Should there be financial assistance to merge groups?
If so where does the money come from?
How is it divided up, that is how much is paid out to individuals providing the benefits and incurring extra costs.
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Impediments to change
Disposal of harvesting equipment. Mackay is already a graveyard for old machines. Older machines still in good order, such as Toft 6000's are often sent to the wrecker. Demand has fallen away as they can not cut green cane competitively.
Different planning is required for bigger groups , rather than small deliveries to a large number each day.
Growers still resist moving to larger groups for the reason that more of their crop is being cut at any one time. They worry about the potential loss of burnt cane if there is rain or a strike at the mill. The larger the burn, the greater the potential loss of income. But, larger groups also now have the ability to harvest green, which negates the concern about weather.
Growers harvesting their own and perhaps a neighbours cane may not be able to realise potential labour cost savings, unless they are able to use the saved time or labour in an alternative production activity such as expanding their cane production. Until then, growers may be better of using their own labour to harvest their own cane.
Potentially the advent of mechanical harvesting could have released growers from their involvement and allowed them to concentrate on producing larger crops. Harvesting could have been left to the contractors.
In the past regulations regarding expansion forced the value or opportunity cost, of growers labour downwards. For many growers then, the next best use of their time and labour was to harvest their own cane. This practice has continued until now. The introduction of continuous crushing is now demonstrating that the adoption of the economies of bigger groups and broad acre techniques can work. Weekend harvesting has improved utilisation of equipment, some savings have been offset by labour overtime costs.
There must be incentives for all parties to seek organisational change to achieve a common benefit. Gains from larger groups can be reflected in say price, quantity, delivery and so on.
Naturally, moves toward negotiation will depend on each groups relative bargaining power. It is undesirable that one group should acquire excessive power over the others. Some high cost
contractors may not be able to compete in providing harvesting services. They could well be forced out of business.
Sugar industry controls are interrelated, so all affect the harvesting sector in some way. But, those which apply to the delivery, transport, and scheduling of harvesting and milling have a direct and profound effect. As you know these controls are set out in the various local board awards. These awards vary from area to area, but all contain clauses covering grouping, harvesting equity, allotments, supply of bins, cane payment and so on.
Local boards will need to become involved in amending awards to increase the scope of gains which can be achieved. Discounts and premiums could be introduced to reward adherence to the
conditions of delivery. Conversely, if bins are late and harvesting disrupted, the miller would have to pay the opportunity cost of lost time and hance would be encouraged to ensure a constant and reliable supply of bins. Reduced harvester idle time and growing more cane would have the effect of better use of harvesting resources. Contractors may chose not to charge by the tonne, but by
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the time spent harvesting a particular paddock. This would encourage growers to ensure that their cane was cut in the least possible time. As delays impose an opportunity cost on contactors, they would charge more for delays and growers therefore would do all in their power to ensure idle time was as low as possible. The final price would be a combination of group size, quality of equipment used, harvesting conditions and quality of work performed.
The present harvesting arrangements create a pattern of incentives which affect growers millers and contractors very differently. Millers benefit from continuous crushing as it enables them to reduce the season length and increase sugar production. The gradual reduction in the difference between no1 and no2 pool gives them the incentive to crush on the week end.
Contractors are now staring to charge different rates to take into account specific conditions on each farm in their group.
those growers with well laid out, easily harvested farms can rightly expect to pay less than those whose farms are a nightmare to harvest. Contractors will become less inclined therefore to harvest in remote and awkward conditions.
Contractors must have the ability to roam to enhance their business and as their growers buy other farms to be able to continue to provide them with that service. Roaming confers flexibility, and the opportunity to move between wet and dry areas. Liberal policies enable flexibility, and therefore profit.
Innovators will always lead this process. Security of getting the crop off, regardless of conditions is a big benefit.
Very little data is available to substantiate the rate of change in district, restricted to hearsay.
CONCLUSION
A sugar cooperative is established to turn a farmers product into a saleable commodity. The effectiveness of a cooperative is not measured only by the profit figures in its annual report. A true yard stick is the profitability and effectiveness of each of its members. Directors must realise that this is of equal importance and status to that of the mill itself. Large numbers of people are
employed to asses the effect on the mill of the growers and contractors performance. Yet, who is employed to assess the effect on the growers of the mill performance and decisions??
The problem is diverse and complex, will it take less than 5 years to resolve? Unlikely unless all participants have a genuine commitment to improve and develop efficient and effective practices.
Entrenched attitudes need to be changed and this will be a bigger challenge than changing machinery. Growers need to realise that they will not be losing control of their business. Relatively prosperous times at the moment may make this more difficult.
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AVERAGE GROUP SIZES FOR EACH HARVESTING CATEGORY
PERCENTAGE CROP HARVESTED BY EACH HARVESTING CATEGORY