Global sugar deficits could be the key to unlocking more export opportunities for the Australian sugar industry, according to a commodity analyst.
Due to the impacts of El Nino events overseas, Rabobank analyst Georgia Twomey told cane growers at a recent forum that global sugar stocks had a reached a four-year low.
That was off the back of five years of surplus production.
Ms Twomey said the turnaround could mean major markets like Indonesia, China and Korea might soon be looking for more Australian sugar.
“The reduction in production has really been driven out of India and Thailand, particularly in the last few months where we have seen dry conditions contract conditions pretty strongly,” she said.
“China has also seen a strong fall in production and that has increased their import demand and that is certainly impacting global sugar trade.”
Although a large portion of the deficits is attributed to drought which could turn around in the future, Ms Twomey pointed out that while the deficits were here, 2016 and 2017 were the years to focus on pushing the export market.
“I think in terms of where the optimism for the Australian industry is … is really working on maintaining a level playing field for market access into those markets, which will ensure that we have a good customer base and great places to export our sugar,” she said.
Yet while Australia is the third largest exporter of sugar, its market share has shrunk and that means gaining more market access could be a difficult task.
Ms Twomey said customer relations would be a key ingredient in expanding Australian sugar exports.
“We certainly have not expanded our volumes to the levels that Brazil and Thailand have grown in the last 10 to 15 years,” she said.
“Our competitiveness into those markets from a cost perspective is really important, as well as making sure that our access is on an even keel with those competitor exporters.”
I feel our own production is a major issue in all of this…Tony Bugeja, Mackay region sugarcane grower
Long road to expansion, growers say
More than 100 sugar cane growers from around Mackay in the Tropical North attended Ms Twomey’s presentation on the market outlook for the industry.
Not everyone was quite as excited about growing the industry’s export market.
Grower Tony Bugeja said productivity posed the biggest barrier to expanding overseas sugar supplies.
“I feel our own production is a major issue in all of this … our production has got to be lifted to get the maximum out of what we are trying to grow,” he said.
Fellow grower Joseph Borg agreed.
“We have got to lift our efficiency in particular and we also need to be holding our market share.”
Source – ABC