An expected rise in sugar consumption across many developing economies will help drive demand for sugar cane growers.
Melbourne, Australia (PRWEB) October 26, 2014
The past five years have been turbulent for operators in the Sugar Cane Growing industry in Australia. The industry has battled adverse market conditions caused by extreme weather patterns, volatile commodity prices and fluctuations in global sugar production. According to IBISWorld industry analyst Brooke Tonkin, “Over the period, flooding and cyclones damaged or wiped out huge portions of Australia's sugar cane crop.” Consequently, industry revenue has displayed extreme volatility over the period, with absolute changes in revenue ranging from 34.0% growth to declines of close to 30.0%. Overall, industry revenue is expected to fall at an annualised 4.0% over the five years through 2014-15, to reach $1.2 billion.
Around 80.0% of processed sugar in volume terms is exported. However, Australia accounts for only 3.0% of global sugar production, which makes Australian sugar cane growers price takers on the world market. “Consequently, global sugar trade factors, such as prices, sugar production, demand and the exchange rate, influence the industry's performance,” says Tonkin. Volatile global sugar prices have contributed to the industry's fluctuating revenue over the past five years. Over 2014-15, steady global prices mixed with increased production is anticipated to lift industry revenue by 12.1%. The industry exhibits low levels of market share concentration.
Prospects for sugar cane growers are expected to improve over the next five years. An expected rise in sugar consumption across many developing economies will help drive demand for sugar cane growers, and the forecast depreciation in the Australian dollar will support export demand for Australian sugar. Furthermore, increasing demand for alternative fuel sources is anticipated to support industry growth and continue to open up additional export revenue channels for the industry. However, the Sugar Cane Growing industry is set for a major supply chain overhaul over the next five years. In 2017, sugar processors Wilmar International, MP Australia and Tully Sugar are set to break away from the industry's only export body, Queensland Sugar Limited, to create their own export channels. Growers have expressed concerns that a price war will erupt between the competing export bodies. A Senate committee has launched an inquiry into the effects that the change will have on sugar cane growers. Issues arising from the inquiry's results, which are expected in November 2014, have the potential to inhibit industry growth over the next five years.
For more information, visit IBISWorld’s Sugar Cane Growing industry in Australia report page.
This industry consists of companies mainly engaged in growing sugar cane.
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