The value chain of the Australian Sugar Industry : developments in the period 1970-2005 and future opportunities

Abstract

This report by the Sugar Research and Development Corporation (SRDC) provides an overview of the “state-of-the-art” of value chain improvement in the Australian sugar industry. It seeks to firstly, improve the level of awareness of the scope and potential benefits of value chain Research and Development (R&D) by regional participants in the sugar industry. Secondly, it seeks to stimulate thinking and interest in conducting further value chain R&D to underpin a vibrant industry. SRDC, as part of its R&D investment philosophy, believes that adoption of whole-of-system solutions based on integrated management of the value chain, particularly at mill area and regional levels, offers the opportunity to enhance revenue and cost efficiency to the benefit of all industry participants. The report draws on the following sources: • a review of value chain R&D conducted during the last decade by Higgins et al (2005); • presentations and discussions at the Value Chain Forum hosted by SRDC in Townsville in October 2005; • publications on value chains, particularly those concerning the Australian sugar industry; and • extensive discussions with representatives of the various sectors and regions of the Australian sugar industry, and with researchers. The report begins with a bold vision of what the sugar industry could look like in five or ten years. Achieving this vision, however, will require far-reaching changes to the existing value chain. The report then provides an explanation of value chains, and of the key factors that underpin their successful operation. It emphasises the central role of trust and commitment to the philosophy of “cooperating to compete” in improving the operation of value chains. Trust creates the environment within which investments in developing relationships (people, time, capital, processes and systems, transparency) and in re-negotiating reward systems, can flourish. The report then provides a very encouraging snapshot of value chain developments that have occurred and/or are in progress in three regions — Maryborough, Mackay, and the Herbert. It demonstrates that the pace of value chain improvement has accelerated greatly in the last five years and that benefits are being realised. Clearly, many interesting and far-reaching developments are underway and will in time enhance the operation of the value chain across the entire industry.