What the past four years of low global sugar price has fostered is the message of driving competitiveness to new levels. Companies that stick to “2 per cent solution” (just improve performance by 2 per cent annually and you will be fine) are going to be become obsolete”1. Adam Smith’s The Wealth of Nations (1776) identified three primary business inputs: labour, capital and land (embracing the attendant any resource that can be produced or mined from land along with waste disposal). The two major industrial revolutions to date have been informed largely by exploitation of labour and capital. “The first gave us factories and limited liability corporations to drive growth at scale. The second, from the late 1800s to the early 1900s, added petroleum, the electric grid, the assembly line, cars, and skyscrapers with elevators and air-conditioning, and it created scientific management, thus enabling corporate globalization.”1 It is becoming clear that in the 21st century, for businesses to thrive, there will have to be dramatic resource-productivity improvements enabled by technological revolution embracing advances in variety of fields including information technology, materials science, biology and industrial biotechnology.
Arguably, in the beet sugar sector in EU, productivity increases in crop production and processing sectors over the past two or three decades have been significant, driven by superb collaborative structure between growers, processors and R&D institutions, and catalysed by policy makers who now feel confident of letting the industry letting loose at the mercy of market forces in 2017. In France, for example, over 1977 to 2012, beet sugar yield has increased from under 8 t/ha to 14 t, while at the same time nitrogen fertilizer application rate has decreased from 180 kg/ha to 90 kg. Rationalization of the processing sector has resulted in expansion in capacity – whereas the average output in cane sugar factories is around 100,000 tonnes that of beet sugar factories in the EU is well over 170,000 tonnes sugar.
Modernization of beet sugar factories in EU has resulted in requiring only 20 staff per shift where previously 200 were required. One of the top sugar company Nordzucker has reduced energy consumption by 40% over the period 1990 to 2013.
Various technologies are having a noticeable impact in driving resource productivity. In crop production, precision agriculture could improve input efficiency of water and fertilizers by at least 20-30%, and combined with no-tillage farming, it could reduce machinery and input costs by as much as 75%. Raizen Energia, one of the leading sugar companies in the cane sector is using drones to monitor crops instead of an army of technicians. Another fairly progressive Brazilian sugar and ethanol group São Martinho is keenly exploiting precision farming tools and is automating its farming operations with zeal – currently, according to local press reports, some 60% of harvesters are run by computers on an autopilot. In two years, the company expects this figure to reach 100%.
In sugar processing, the introduction of online colorimeters has supported production of sugar within a specified colour with significantly reduced margin, than was the case previously. This has resulted in reduction of water consumption, energy consumption and reduced remelting of good sugar. At the KTIS factory in Thailand, replacing existing steam turbine setup with electrically powered drive systems has increased plant efficiency by 30%.
Advances in industrial biotechnology has turned sugar into a superb feedstock to produce platform chemicals and variety of substitute petrochemicals. Cristal Union is partnering with biotech start-up Global Bioenergies to produce 50,000 tonnes of the platform chemical isobutene from sugar beet. Another biotech start-up Bio-on recently licensed its technology to a company in Brazil to produce bioplastic from cane molasses and syrup.
Some notable examples of innovation driven by resource productivity in other sectors are as follows. One manufacturer re-designed its shampoo bottles so that they were thinner, reducing material consumption by 30% – new shape enabled higher packing density for shipping. Further, for recycling purposes, the cap was made from the same material as the bottle, thereby eliminating separate recycling process. Companies Veolia and Suez in the waste business are transforming themselves into raw materials and energy suppliers by advising companies how to source value from waste streams through recycling and reuse. Car and planes manufacturers Tesla and Boeing, respectively, are substituting where possible metallic components with carbon fibre, which not only saves weight but supports the production of quieter, better performing and efficient vehicles.
The EU Beet Sugar Sustainability Partnership recently launched Good Practices2 document to drive resource efficiency across both crop production and sugar processing. There is a compelling case for cane industry association like the International Society of Sugar Cane Technologists, with excellent network within the sector to produce similar type of template. There should be little doubt, that in the years to come, Smith’s third input, land and natural resources must be at the heart of public policy and business strategy.
1 Stefan Heck and Matt Rogers (2014) Are you ready for the resource revolution? McKinsey Quarterly (March)
2 EU Beet Sugar Sustainability Partnership (2015) Good practices (69pp)