In early September, key players in the sugarcane industry, particularly those in the R&D sector and those supplying a range of equipment, products and services to the sector will be descending to Tucuman, Argentina for the triennial International Sugar Cane Society of Sugar Technologists congress. The event takes place against the backdrop of major structural exporters Brazil, Australia and Guatemala taking India, the residual dump exporter, to task at the World Trade Organization for subsidies to its cane growers which has contributed to the recent global glut and drop in prices.
It is apparent from the plenary programme, that two central issues of concern are relative productivity of sugarcane to sugar beet and exploiting opportunities for diversification driven as much by the volatility of sugar price in the market place.
In a review published by Gudoshnikov1, over the last two decades, cane productivity has generally been stagnant with the increase in cane sugar production mainly informed largely by an expansion in acreage, whereas EU’s beet sugar sector has seen significant gains in productivity. In the top EU sugar-producing countries, not only is sugar output per hectare greater on average than the average of top cane sugar producers (see table 1).
But the relative differences in technical performances between beet and cane production belies structural problems and intangible issues. Arguably, smallholders who dominate cane supply inform the picture of yield stagnation in the sector. With the exception of sugarcane industries in Brazil, Australia and USA, the rest of the cane sector is supported by a sizeable chunk of small-scale growers. In China, on average, cane holding in the Guangxi region, main cane producing area, is 0.25 ha, whereas, in India and Thailand, it is 1 ha/farmer and 5 ha/farmer, respectively.
Whereas in the sugar beet sector, beet growers essentially comprise a community managing relatively large acreage with ample access to support from research institutions and research products for translation into improved crop management, the cane sector comprises factory/company-owned nucleus estate, plantation owners and smallholders. While the former two are resource-rich both management and capital-wise, the latter are invariably not. For example, the Philippines tale of two halves is doubtless repeated elsewhere in the global cane industry – productivity from large farms (>100 ha) is 73.4 t/ha while that from small farms (<5 ha) is 50.3 t/ha.
Underpinning the notion of why large-scale farms are superior to small-scale ones is tied to the fact that they are better at applying new knowledge and managing adoption risks. Small-scale farmers in the emerging and developing economies are simply handicapped by the fact that they do not have the suite of “managerial skills, good numeracy and basic science understanding” necessary for effective learning to apply latest innovations in agriculture. “The scarcity of these skills combined with the diverse but specialised skill requirements, make it costly for smallholders to acquire them.” Larger units have the resources and capabilities to effectively “internalize these costs, allowing faster learning”2.
As for diversification, this has increasingly become a necessity – to act as a cushion against volatility in sugar prices. The multi-national Thai sugar producer Mitr Phol claims that sugar represents only 42% of its revenues. Its heavily diversified business includes venturing into solar farms, apart from co-products and cogeneration. Scientific and technical advances are certainly opening up new avenues to diversify into. Ever and ever though, clear policy support from government is vital to advance uptake. Witness the RenovaBio policy in Brazil and biofuels policy India driving expansion in biofuels production in both countries. Conversely, witness the South African sugar industry handicapped by Eskom (the public utility) refusing to support incentivization of the cogen sector when President Zuma was in power.
Technologies supporting digital agriculture and those underpinning Industrie 4, Internet of Things, in particular, data analytics, artificial intelligence and machine learning will doubtless support growth in productivity in both field and factory in the foreseeable future. Can’t help thinking though that the elephant in the room is smuggling of sugar, which has undermined quite a few industries – not helped by porous borders and corrupt politicians.
1 Sergey Gudoshnikov (2018) Beet beats cane in productivity race, Int Sugar & Sweetener Report, 150 (8): 135-141
2 Paul Collier and Stefan Dercon (2009) African agriculture in 50 years: Smallholders in a rapidly changing world? ftp://ftp.fao.org/docrep/fao/012/ak983e/ak983e00.pdf