COMMENT: Like all industries, the Australian sugar milling sector has moved swiftly to assess the potential and likely impacts of the COVID-19 pandemic.
The health and safety of the milling companies' workforce, their families and the broader community is the priority, together with scenario planning for business continuity.
There is a deep sense of responsibility being felt across all sugar milling companies. The sector is currently in its maintenance period with all efforts firmly focused on starting the crushing season on time mid-year.
While recognising the growing community anxiety, the one certainty is that this will be a season like no other!
The sugar milling sector is a $4 billion a year contributor to the Queensland economy, and underpins around 22,500 jobs.
There is an understanding from all levels of government and our communities that without compromising human health, we must do everything we can to keep the businesses running that generate employment and income for the economy.
Like other agricultural and manufacturing sectors, we are working closely with various government ministers and departments to ensure that sugar milling operations and the entire industry supply chain continues to be recognised as an essential service.
Unfortunately the current global contraction has also cast a grim shadow over the sugar market.
Near-term sugar prices have plummeted almost 30 per cent in a short space of time, in line with falls across many other commodities, due to concerns about the impacts of the outbreak on consumer and industrial demand.
Near-term sugar prices have plummeted almost 30 per cent in a short space of time... due to concerns about the impacts of the outbreak on consumer and industrial demand.
- David Pietsch, Australian Sugar Milling Council
The global sugar price has been affected by Brazil's increased crop forecast and falling oil prices - a strong market signal given Brazil's ability to switch from ethanol production to sugar. The AUD:USD provides some relief, but rates are falling for a reason as Australia's trade-exposed economy drifts into uncharted waters.
While difficult during this time of crisis, representative bodies must continue to focus on addressing the underlying challenges the industry faces in the medium and longer term. The sector needs to position itself in readiness for life after the pandemic.
On behalf of our members who will be firmly engaged in the here and now of the 2020 crushing season, ASMC will continue to focus on:
- Working with the Australian Government to progress WTO action against India and on the development of our trade policy/market access agenda to 2030.
- Working with Sugar Research Australia on its fresh approach to deliver a return on the milling sector's sizeable research investment.
- Ensuring energy and water policies underpin improved productivity and profitability for milling companies and their grower suppliers.
Finally, on behalf of all at Australian Sugar Milling Council, stay safe everybody, and look after your local communities.
Sugar Policy Insights also features an update prepared by the Australian Department of Foreign Affairs and Trade on Australia's WTO dispute and the case against the Indian government's sugar subsidies.
In Focus looks at the US's sugar program. Access for Australian raw sugar is severely restricted and a policy priority is to increase preferential access. Our base WTO tariff rate quota is a low 87,000 tonnes - less than 1pc US supply.