Introduction
2.9 Economics of Cane Farming Systems
Cane farming operates in a unique economic environment. Cane farmers sell to one buyer, have no control over price and cannot ascertain a price during harvest. T h e product is not saleable as cane, but is milled prior to sale. Furthermore, cane farming areas are almost entirely monocultures producing only cane.
Whilst there are few options within growers control of changing returns, cane farmers have alternatives for reducing costs or designing growing systems to optimise net income. Of particular interest are the economic advantages offered by green harvesting since this practice appears to contribute to both economic and environmental sustainability.
There are only a few documented studies of the economics of green cane harvesting. Smith et al (1984) looked simply at the difference derived from the reduced cultivation practice (see table 7 below) and assumes fertiliser broadcasting and no ridge reforming required.
T a b l e 7
V a r i a b l e Costs of G r e e n H a r v e s t Ratoon Cultivation Expense Fuel And Oil Repairs & Maintenance Labor
Total
Costs Per Hectare Normal Cultivation 10 Passes 48.30
40.10 48.50 136.90
Green Cane Trash Blanketing 1 Pass (Fert) Broadcast 2.90
3.90 4.70 11.50
Variable Cost- Difference $ 125.40/Ha/Yr |
In addition to the variable cost difference above, savings on fixed costs become available in the longer term as the reduction in both size and number of tractors and implements used on farms practicing trash blanketing and were estimated at $46.60/ha/yr. Looking at the harvest operation and considering 5 year averages for yield, percentage higher CCS with green harvesting, extraneous matter, 10% higher urea application, higher harvester cost & losses, less burning costs, and including the above reduced cultivation costs; the possible savings for green harvest were
$34.74/ha/year plus fixed cost savings of $46.60 or $81.34/ha/year.
Ridge (1984) costed green cane harvesting in south Queensland and concluded that possible savings of $60/ha may result. When his estimate of fixed equipment cost savings of $38/ha were added the yearly benefit of green cane harvesting comes to $98/ha, or quite close to Smith's estimate of $81.34/ha. These practical costings are useful, but do not include a number of documented and likely benefits. They also do not include the intangible benefits that are difficult to quantify or consider in traditional economic models. If we include a number of other studies and some reasonable estimates for other benefits, a different picture emerges, as a 'best case' example.
The figures in Table 8 roughly document economic advantage of a green cane trash blanket system.
Under intermediary minimum or zero tillage systems, there is considerably less spent on tillage with increased expenses on herbicides. Such systems are less costly than conventional culture.
The most difficult problem in establishing economic benefits of implementing sustainable practices is the inadequacy of the tools available for analysis. Growers interviewed clearly saw the soil conservation and improvement benefits achieved by green cane trash harvesting. However these benefits are generally treated as intangibles or externalities by most current cost-benefit economic models. They are difficult or impossible to include in such models regardless of their obvious importance. As a result, traditional economic analysis of the benefits of implementing sustainable practices are at best weak, and at worst, misleading.
Keeping It Sweet • ACF Table 8 Economic Advantages of Green Cane Trash Blanket Farming Compared With Conventional Cultivation
Ave Variable Costs of Ratoon Cultivation and Fertilisation of 22.16 (1), 37.70 (2), 60.00 (6) and 125.40 (5)
Ave Fixed Costs of Ratoon Cultivation of 32.00 (2), 34.74(3), 38.00(6) Labor Cost of Conventional Tillage (1) @7.4 Hr-$12/Hr
Savings on Two Irrigations (1) ** Applies To Irrigated Farms Only Higher CCS .3 Units @$230/T Price
No Payment of Burnt Cane Penalty . 10/T, 80t/Ha 10% Yield Increase 8t @$28/T (5)
Savings on lOOkg/Ha Nitrogen Now Present in Trash @$.86/Kg As Urea @$400/T Total
Less: Higher Green Harvest Costs @$80t/Ha, $1.00/T (4) 1 Assumes Losses=Burnt
Total Advantage Per Ha Ratoons If Dryland -If Irrigated**
Savings/Ha/Yr 61.30 34.91 89.28 54.00 56.00 8.00 224.00 86.00 613.49 (80.00)
$533.49 1
$479.49 J ( l ) H a r d m a n E t A l , 1985
(2) Teske & Gibbons, 1991 (3) Smith Et Al, 1984
(4) Saved burning costs assumed off-set by fire prevention & management
(5) Based on yield increases of Thompson (1965) 9.6 T/Ha, Teske (1991) 7.1 T/Ha applies if unirrigated dry sites ( 6 5 % of Mackay district)
(6) Ridge, 1984
At the time of the growers consultation, economic conditions in the sugar industry were not good.
Farm debt has increased while commodity price and tariff protection have declined. Adverse climatic conditions in the late eighties and early 90's has made the situation worse.
Due to high debt load and marginal economics of cane farming, farms are often being sold to larger, successful growers or private milling companies for operation as share farms. The result can be a deterioration in standard of farming, level of knowledge and care, and conservation activities (Joe Farley, ACFA pers comm). Anecdotal evidence from Bundaberg is clear following such farm sales to corporate mills.
Figure 2
Average Gross Indebtedness Cueensland Sugar Cane Farm
1988/ 89 1989/ 90 1990/ 91
From Canegrowers- Mackay District Newsletter, July 1992 Figure 3
Mackay District, Revenue Lost Due to Climatic Conditions
2.9.1 Trade
Due to increasing USA quota restrictions on Australian sugar, since 1990-1991 Australian sugar sales to the US have been cut 42% (anon, Sept 1992). With the new North American Free Trade Agreement, the U.S. may replace Australian sugar with supplies from Mexico in the long term.
Australia can now supply the U.S. with 8.3% of its imported sugar or 96,786 tonnes.
Keeping It Sweet - ACF
2.9.2 S u g a r R e p l a c e m e n t s
A new class of sugar mimics have been found by the Nutra Sweet Company in the US. Unlike familiar artificial sweeteners, these non-toxic polyhydroxylic compounds behave like sugars in cooking and baking (Bradley, 1992). For the first time, sugar can be replaced in cakes, biscuits, frozen desserts and confectionery to produce diet foods. Expected to be on the market within five years, this could have a substantial impact on the demand for sugar.
2.9.3 Diversification a n d V a l u e A d d i n g - M u s h r o o m s a n d P i g s
Bagasse is currently mostly used for fuel in mills, however it can be used for higher uses than simply fuel. While bagasse has low nutritive value for animal feed it can be used for growing mushrooms. Certain edible fungi delignify bagasse and improve its nutritive value as animal feed in addition to providing high quality gourmet mushrooms (Azim, et al, 1987). After growing mushrooms on bagasse, the protein content doubled to ~ 7 % and crude fibre decreased 30%.
Enzyme soluble organic matter almost doubled and up to 3 6 % of the biomass (dry matter basis) was converted to high value oyster mushrooms. This is value adding!
Recent feeding trials with pigs at Gatton College have shown remarkable results from Sucrafeed, a granulated fraction made from the sugar rich soft tissue cells of cane containing natural sugars and cell wall material. After nine weeks on a ration of up to 5 0 % Sucrafeed, fat levels were reduced by 4 0 % and eye muscle increased 3 0 % with slightly higher overall gains compared to those on a straight grain diet. With many markets demanding leaner meat and low fat pork attracting a 50%
price premium in Japan, perhaps some cane farmers can consider this alternative use of their cane crops, (anon, 3 Dec 1992)