Cane Harvesting to Improve Industry Performance

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					     Cane Harvesting to
Improve Industry Performance




      SRDC Technical Report 2/2004
CANE HARVESTING TO
 IMPROVE INDUSTRY
   PERFORMANCE
   A REVIEW OF SUGAR CANE HARVESTING PRACTICES
          AND OPTIONS FOR IMPROVEMENT



                            Prepared by:




                        Edited by RK Jones

                  SRDC Technical Report 2/2004

                          ISSN 1327-9475



               Sugar Research and Development Corporation
               PO Box 12050, Brisbane George Street Q 4003
Telephone: 07 3210 0495 Facsimile: 07 3210 0506 Email: srdc@srdc.gov.au
FOREWORD
Mechanical harvesting of cane has been a major         improved harvesting efficiencies to be achieved,
success story for the Australian sugar industry        the entire value chain needs to be involved in
through world-leading technological innovation.        modifying the reward and incentive system
However, that success story now presents the           between growers, harvester operators and millers.
Australian industry with a major opportunity, and
                                                       The Sugar Research and Development
a major challenge to realise that opportunity, as
                                                       Corporation (SRDC) funded an analysis of the
it seeks to meet the international competition of
                                                       benefits and costs to different participants
the 21st century.
                                                       across the value chain from implementing better
The opportunity is to significantly increase           harvesting practices. The analysis was discussed
industry profitability without increased capital       at an Industry workshop in May 2003. This
investment through reducing field losses of            publication summarises that analysis and
cane and juice during mechanical harvesting.           identifies the opportunity and challenge in
Adopting Harvesting Best Practice with attention       moving forward.
to extractor fan speed, pour rate, feed train and
                                                       With this publication, SRDC seeks firstly to
chopper speed synchronisation, base-cutter
                                                       achieve greater ownership of the magnitude of
height control and row profile, row length and
                                                       sugar losses with mechanical harvesting of cane,
cane presentation, not only increases the
                                                       and secondly to encourage novel industry-led
amount of cane delivered to mills but also
                                                       approaches to reduce harvesting losses leading
reduces the potential for environmental impacts
                                                       to significant economic and environmental
associated with sugar juice entering waterways
                                                       benefits to industry and the community.
causing de-oxygenation.
                                                       There is no simple solution to this complex
The challenge is to implement harvesting best
                                                       issue, nor does one solution fit all situations.
practice for whole of system gain. Firstly, the loss
                                                       I encourage industry participants to use this
of juice and cane fragments with gathering,
                                                       publication to stimulate debate that will lead
base-cutting, chopping and extraneous matter
                                                       to tailored practices for improved harvesting
extraction through primary and secondary fans,
                                                       efficiency and industry competitiveness.
is largely invisible. However, detailed research in
Australia and overseas has shown sugar losses can
on occasion exceed 20%. Secondly, the benefits         R.C. Muchow
are gained by growers and millers, but the             Executive Director, Sugar Research and
implementation of harvesting best practice imposes     Development Corporation
additional costs on harvester operators. For           1 November 2004
CONTENTS
1. EXECUTIVE SUMMARY.............................................................................................................. 5
2. INTRODUCTION ........................................................................................................................ 8
3. CURRENT STATE OF KNOWLEDGE OF THE HARVESTING PROCESS ..................................... 9
     3.1 Harvesting Best Practice .................................................................................................. 9
     3.2 Review of Other Literature, Information, and Experience on Harvesting ................ 10
             3.2.1 Farm factors ......................................................................................................... 10
             3.2.2 Harvester machine factors .................................................................................. 13
             3.2.3 Farming system factors ....................................................................................... 16
4. ECONOMIC MODELLING OF SELECTED HARVEST AND INDUSTRY
   SCENARIOS .............................................................................................................................. 19
     4.1 Introduction .................................................................................................................... 19
     4.2 Harvesting and Industry Scenarios ............................................................................... 19
     4.3 Assumptions ................................................................................................................... 20
     4.4 Model Development, Linkage, and Manipulation....................................................... 22
     4.5 Economic Costs and Benefits of the Various Scenarios .............................................. 23
             4.5.1 Base data output ................................................................................................. 23
             4.5.2 Harvest Best Practice ........................................................................................... 25
                       4.5.2.1      HBP at Mill A........................................................................................... 25
                       4.5.2.2      HBP at Mill B ........................................................................................... 26
                       4.5.2.3      HBP — summary for both mills ............................................................... 26
             4.5.3 Cogeneration scenarios to increase the size of the revenue base ................. 27
             4.5.4 Cash flow issues .................................................................................................. 30
     4.6 Environmental and Social Impacts................................................................................ 30
5    PAYMENT SYSTEMS ................................................................................................................ 31
     5.1 The Current Payment System........................................................................................ 31
     5.2 The 2001 Cane Payment Discussion Paper................................................................... 31
     5.3 Scenario Modelling: Distribution of Returns from HBP to Industry Sectors............. 32
     5.4 Improved Payment Systems .......................................................................................... 33
             5.4.1 Core principles ..................................................................................................... 33
             5.4.2 Aligning incentives .............................................................................................. 33
6. IMPROVING THE EFFICIENCY OF HARVESTING ..................................................................... 37
     6.1 Adoption of HBP Harvesting ......................................................................................... 37
             6.1.1 Obstacles to adoption ......................................................................................... 37
             6.1.2 Action pathways for adoption ........................................................................... 38
     6.2 Other Measures to Improve the Efficiency of Harvesting .......................................... 39
7. APPENDICES............................................................................................................................. 40
1. EXECUTIVE SUMMARY
It is in the interests of all participants in the    factors (eg. pour rate, group size). The likelihood
industry value chain to maximise overall industry    that greater attention to each factor would
returns from sugar production. Thus, it is vital     contribute to improved harvest efficiency was
that as much of the sugar in every hectare of        assessed, and opportunities for further
cane is converted into saleable product leaving      development through R&D and extension
the mill. Unfortunately, some of this hard-won       identified.
sugar is lost as each participant in the industry
chain — grower, harvester operator and miller
— carries out their tasks, seeking to maximise       Consideration of some industry
their returns and minimise their costs in so         scenarios
doing. The Sugar Research and Development
                                                     The team conducted economic modelling of
Corporation (SRDC) provided funding on behalf
                                                     four different scenarios, namely Current Practice
of the Australian Government and the sugar
                                                     (the base case), HBP harvesting, and two
industry to BSES Ltd, Sugar Research Institute
                                                     cogeneration scenarios (15% Trash, and
and Macarthur Agribusiness to undertake a
                                                     25% Trash) for two contrasting mills — a central
review of options for maximising returns from
                                                     district mill crushing about 2 Mt per annum
harvesting and to develop these options at an
                                                     (Mill A) and a wet tropics mill crushing
industry workshop. This report is a summary
                                                     approximately 1 Mt per annum (Mill B).
that concentrates in particular on the impact
of practices and procedures followed during
the harvesting process on the overall industry
                                                     HBP harvesting
benefits and on distribution of risks and rewards    The HBP scenario modelled assumed that a) a
between the participants. It reviews the current     lower fan speed and optimisation of the feed
knowledge of factors affecting the efficiency of     train would reduce cane loss from 16.5%
harvesting, summarises current recommendations       (current practice) to 8.5%, and b) a lower
on Harvest Best Practice (HBP) and provides          harvester pour rate would reduce trash in the
information to encourage its wider adoption,         cane supply from 11.5% to 6%. The modelling
and gives details of economic predictions from       outputs showed that, if all mill area harvesters
the adoption of HBP harvesting and from other        changed from current practice to HBP, net
scenarios involving varying increases in the         margins for the overall industry would increase,
supply of trash to mills for electricity             with growers gaining an additional $3, millers
cogeneration.                                        gaining $1, but harvester operators losing
                                                     between $0.30 and $0.50 per tonne of cane.
                                                     (The gain for the growers was due to extra cane
Current knowledge of factors                         recovered during harvesting and a higher CCS,
affecting the efficiency of harvesting               the gain for the millers was due to the extra
The Project Team reviewed the major                  cane received and a decrease in factory costs
recommendations contained in BSES Ltd’s              arising from the cleaner cane supply, while the
“Harvest Best Practice Manual” and synthesised       loss for the harvester operators was due mainly
a large body of other published and unpublished      to the lower pour rate during harvesting. Most
information and experience on the efficiency of      of the gains for the growers and millers were
mechanical harvesting in achieving high levels of    the result of the extra cane produced by
sugar recovery. Three classes of factors affecting   lowering the harvester fan speed.) The benefits
harvesting efficiency were recognised and            of HBP, of course, were dependent on the
described — farm factors (e.g. row profile, soil     assumptions made. The present study suggested
types), harvester machine factors (eg. feeding       that growers adopting HBP would gain $3 more
system, chopper losses) and farming system           per tonne of cane when cane losses during


                                                 CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   5
harvesting were reduced by 8%. However, a              with the cane for milling. These trash levels
recent study at Mourilyan that assumed a 5%            were achieved by adjusting extractor fan speed
reduction in cane losses found that the growers        on the harvester while maintaining HBP pour
would gain only $1.50 more per tonne. The              rate. The scenario with 15% trash by fresh
difference between the results of the two              weight was equivalent to about half of the
studies was due largely to the assumed levels          available trash in the field being sent to the mill,
of improvement in cane recovery with HBP               while the 25% scenario was equivalent to nearly
over current practice.                                 all the trash (i.e. the entire crop) being sent.
                                                       Appropriate assumptions were made for each
In summary, the modelling indicated that
                                                       scenario about levels of cane loss and
the growers and millers between them
                                                       extraneous matter in cane; and about additional
would receive all the benefits of a change
                                                       costs (operating and/or capital) of harvesting,
to HBP harvesting, but the harvester
                                                       compensating the grower for loss of the trash
operators would incur the additional costs,
                                                       blanket, transporting the extra trash to the mill,
under the current payment arrangements.
                                                       separating the trash at the mill, and generating
Clearly, HBP harvesting would not be
                                                       the electricity for export.
widely adopted unless more appropriate
and more equitable payment arrangements
                                                       The results of the modelling (Table A) showed
were introduced.
                                                       that the additional trash when combined with
The consequences and technical and social              the bagasse in a cogeneration mill provided a
feasibility of a range of alternative harvesting       significant increase in income for the two case
payment arrangements that maximise                     study mill areas.
whole-of-system profitability were therefore
                                                       The export of electricity from the cogeneration
considered in some detail. It is suggested that
                                                       facility significantly increased the total revenue
industry participants need to cooperate in
                                                       for each mill area, but at least 30% of the
devising new payment systems in each mill area
                                                       increase in total revenue for the cogeneration
that compensate harvesters for the additional
                                                       scenarios was due to the additional sugar
costs of using HBP and provide them with an
                                                       revenue that resulted from the lower cane
appropriate share of the net revenue gains for
                                                       losses (see Table B).
the industry as a whole. Other obstacles to
the adoption of HBP were also considered               These scenarios illustrate the magnitude of the
and actions to overcome them and to                    overall industry gains that might be achievable
accelerate the adoption process discussed.             for a mill area. As with the HBP scenario, the
                                                       results are dependent on the assumptions
Electricity cogeneration using additional              made; in these cogeneration scenarios the
cane trash                                             assumptions about the capital costs of the
                                                       cogeneration plant (to be born by the millers)
The two trash scenarios were modelled to               were shown to be particularly important to
explore ways of increasing returns through             the outcome.
generating electricity from cane trash supplied




6     SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
TABLE A. INCREASE   IN TOTAL REVENUE FROM   HBP   AND COGENERATION SCENARIOS (HALF TRASH AND FULL TRASH)
          COMPARED TO CURRENT HARVESTING PRACTICE.

                                                                      Cogeneration scenarios

 Mill area                           HBP                         Half trash                   Full trash
                                   ($million)                    ($million)                   ($million)

 Mill A                               7.3                           19.0                         27.9

 Mill B                               3.9                           10.9                         17.2



TABLE B. BREAKDOWN    OF THE INCREASE IN REVENUE FROM FULL TRASH COMPARED TO CURRENT PRACTICE.

 Income source                              Increase in Revenue: Full Trash compared to Base Case

                                               Mill A ($million)                  Mill B ($million)

 Sugar                                                 9.7                                5.4

 Power                                                18.0                              11.7

 Molasses                                              0.2                                0.1

 TOTAL                                                27.9                              17.2



It is suggested that the sugar industry parties in           equitable ways of dividing up the additional
each mill area need to jointly evaluate the costs            revenue, giving appropriate weight to the
and benefits of such scenarios and agree on                  relative costs and risks involved.




                                                      CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   7
2.       INTRODUCTION
It is in the interests of all participants in          • review the state of knowledge of the effects
the industry value chain that overall industry           of these factors on the efficiency of the
returns from sugar production are maximised.             overall process;
Thus, it is vital that as high a proportion as
                                                       • model the costs and benefits of four
possible of the sugar contained in every
                                                         contrasting harvest scenarios for two mill areas;
hectare of cane at the time of harvest —
the culmination of major investments by the            • evaluate various payment systems that might
grower and the industry at large in land,                provide each sector of the industry with
labour, purchased inputs, and capital —                  appropriate incentives for maximising sugar
reaches the end of the harvesting, transport,            production from the mill area; and
and milling chain, and is available as high            • discuss ways of achieving change across the
quality, saleable product at the mill area level.        industry as a whole.
Mechanical harvesting of sugarcane, however,           In undertaking the studies reported here, it
is a complex process that involves many                was recognised that there was much variation
compromises or trade-offs and provides                 between blocks, farms and mill areas in factors
numerous opportunities for loss of the hard-won        that influence harvesting efficiency (eg in
sugar. It involves the optimisation of numerous        landscape, climate, soil type, community
factors operating at the farm, harvesting              demographic and sociological profiles,
machine and farming system levels. This report         population density, biodiversity, etc). Where
is a summary of a review and industry workshop         possible, relevant aspects of this variation
commissioned by the Sugar Research and                 have been incorporated into the overall study.
Development Corporation (SRDC) on behalf               However, the outputs and outcomes from this
of the Australian Government and the sugar             study may need to be adapted for specific
industry and undertaken by BSES Ltd, Sugar             situations. Thus, this report provides general
Research Institute and Macarthur Agribusiness          analyses that may require regional adaptation
to review and develop options for maximising           prior to implementation, based on local
returns from harvesting. The report is organised       circumstances and requirements.
into sections that:




8     SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
3. CURRENT STATE OF KNOWLEDGE OF THE
   HARVESTING PROCESS
3.1    Harvesting Best Practice                      • shorter haul distances

In 2002, BSES Ltd published “The Harvesting          • higher haul-out capacities and better
Best Practice Manual for Chopper-Extractor             matching with harvesting capacity
Harvesters” (Editors — Gary Sandell and John         • improved haul roads and tracks
Agnew). This excellent publication brought
together the knowledge, experience, and              • improved farm layout.
collective wisdom about the entire harvesting        While not necessarily simple, cheap, or fast
process held by R&D and Extension engineers          to implement, these factors each contribute to
and agronomists, harvester operators, growers,       overall harvest efficiency. For the purpose of this
and millers across the industry. It explains the     document, however, the term “Harvest Best
relevant terminology and definitions, and            Practice” will be used to mean those harvester
describes the various component parts of the         machine operations and adjustments under the
harvester and their operation under a wide           direct control of the harvesting contractor that
range of situations (e.g. in harvesting cane that    favour higher harvesting efficiency and higher
is burned or unburnt, moist from rain or dew,        sugar recovery.
lodged, and/or high yielding). Thus, it makes
recommendations about the correct settings           Throughout its length, the Manual emphasises
(height, angle, position, speed, rotational speed,   the fact that the full harvesting process requires
condition, etc) of the forward movement (hence       the various participants to optimise many
pour rate), floating shoes, spirals, side walls,     interacting processes. While the overall objective
tipper, knockdown roller, basecutter, basecutter     of all participants is to transfer as high a
blades, butt lifter, roller train, chopper system,   proportion as possible of the sugar standing in
chopper blades, extractor fan, elevator and          each hectare of cane through the subsequent
secondary extractor.                                 harvest, transport, and milling stages to
                                                     the final mill output, many compromises or
The advice and recommendations in the Manual         trade-offs are required along the way. For
largely revolve around the design, operation,        example, compromises in machine operations
and adjustment of components of the harvester        have to be made between the need to:
machine itself. Together, these form the core of
what the authors term as “Harvesting Best            • Minimise stool damage but operate at higher
Practice” (HBP). In addition, however, the             harvesting speeds (through having sharp
Manual makes mention of, and gives some                basecutter blades) and minimise machine
general advice on, various other factors that          downtime for changing blades, etc.
have a bearing on the overall efficiency of the      • Minimise cane loss (through slower primary
entire harvesting process. These include aspects       extractor fan speeds) and ensure the economic
such as the general desirability of having:            viability of the harvester sector (through high
• suitable row profiles                                harvester throughputs and lower labour, fuel,
                                                       and machinery costs per unit output).
• longer row lengths
                                                     • Minimise transport and milling costs (through
• reduced soil compaction                              low levels of soil, trash, roots, and tops —
• better weed, pest, and disease control               ie low Extraneous Matter or EM) and ensure
                                                       the economic viability of the harvester sector
• better harvest planning                              (also through high harvester throughputs and
• better data recording                                lower labour, fuel, and machinery costs per
                                                       unit output).


                                                 CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   9
• Minimise transport costs (through shorter              3.2.1 Farm factors
  billet lengths and higher bin weights) and
                                                         Farm factors that might conceivably affect
  minimise actual cane and juice loss during
                                                         the efficiency of cane harvesting, and the final
  harvesting, and deterioration losses during
                                                         recovery of sugar are summarised in Table 1.
  transport (through longer billet lengths).
                                                         Many of these factors were noted in passing in
In discussing these and other compromises                the HBP Manual. Of the 11 factors identified,
that are required in the overall harvesting              seven were considered to have a high likelihood
operation, the Manual gives particular                   of contributing to improved harvesting efficiency
emphasis to two operational factors that                 and sugar recovery — given greater attention
are central to several of these compromises,             and making use of existing technology and/or
namely fan speed and pour rate.                          understanding. One factor (slope/harvester
The Manual strongly advocates that,                      match) was considered to have low likelihood of
in order to reduce cane losses during                    receiving sufficient attention for it to contribute
harvesting, fan speeds and, to a lesser                  to improvements, while the impacts of two
extent, pour rates must to be reduced.                   others were seen as uncertain or not directly
Ways in which these and other changes                    applicable.
can be encouraged are the principal focus                Most of the farm factors listed clearly contribute
of Sections 4 and 5 of this document.                    in some way or another to the overall efficiency
                                                         of harvesting. However, only a few of them
                                                         (eg row profile, row spacing, and weeds) are
3.2     Review of Other Literature,                      amenable to immediate or short-term change.
        Information, and Experience                      Others are the result of chance events (eg
        on Harvesting                                    lodging, uneven crop densities, moist sticky soils
                                                         at harvest) that may be beyond the control of
Thorough searches of the published and
                                                         the grower. For these reasons, none of these
unpublished Australian literature, and collations
                                                         farm factors were considered to be appropriate
of expert opinion on the efficiency of the entire
                                                         for inclusion as variables in the subsequent
harvesting process in gathering the millable
                                                         modelling study reported in Section 3.
cane, were undertaken by the project team.
The information so gathered was evaluated,
organised, and distilled and then accessed by
the team in making expert judgements about:
• the adequacy of current knowledge of each
  factor, and
• the likelihood that improved understanding
  of, or improved ways of addressing, each
  factor would contribute to improved
  harvesting efficiency and higher recovery
  of sugar.
The full literature review is available from BSES
Ltd, but its principal findings are outlined in the
sections that follow.




10      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
TABLE 1. FARM     FACTORS IMPACTING ON THE EFFICIENCY OF CANE HARVESTING AND FINAL SUGAR RECOVERY

        RISK FACTORS                                 CURRENT STATUS                              NEW GAINS
    Technical and economic                  Current state of knowledge of the                  Likelihood that
    factors that pose a risk                 effect of the factor, and possible               greater attention
                                                   future developments                          to the factor
                                                                                                would lead to
                                                                                               improvements
 1. Row profile     Row profile        Limited formal data available, but unsuitable          High
                    not suited to      profiles are known to increase soil intake.
                    harvester or       Profile variation across a block wastes harvester
                    variable across    time and/or increases soil intake.
                    a block            Better communication between grower and
                                       harvester would minimise the risks of a poor
                                       match between row profile & harvester
                                       characteristics.
 2. Row             Row spacing        Row spacing often varies, leading to slower            High
    spacing         variable within    harvesting, and increased soil compaction or
                    a block            stool damage.

 3. Soil type,      Some soils         Limited formal data available but soils that           High
    & moisture      become             become “sticky” when wet lead to increased
    content         “sticky” when      soil intake and hence higher Extraneous Matter
                    moist              (EM) levels and lower sugar recovery.
 4. Topography      Excessive slope    Limited formal data available, but excessive           Low
                    reduces            slope is known to affect the matching of
                    harvester          harvester with row profile. Changes to
                    efficiency         harvester design to address this factor are
                                       considered unlikely.
 5. Planting        Planting depth     Although stool tipping is known to increase the        Uncertain
    depth           may affect the     risk of soil and roots entering the harvester, it is
                    incidence of       not known whether there is a relationship with
                    stool tipping      planting depth. R&D gap.
 6. Stool           Stool tipping      Stool tipping is known to increase risk of soil and    High
    tipping         may affect         roots entering harvester. Known causes of stool
                    harvester          tipping are low soil strength, soil compaction,
                    efficiency         grub infestation, and possibly planting depth (see
                                       above). Tipping seems to be more prevalent after
                                       high winds and in large crops. R&D gap.
 7. Crop            Crop lodging       Lodged crops are more difficult to harvest and         High
    lodging         may affect         result in higher EM levels. Lodging incidence is
                    harvester          believed to be a genetic trait. The relationship
                    efficiency         between crop class and lodging is not well
                                       documented. R&D gap.
 8. Sugar cane      Match              Harvester settings are often not appropriate to        High
    variety         between cane       the particular variety being harvested.
                    variety and
                    harvester
                    settings




                                                     CANE HARVESTING    TO IMPROVE INDUSTRY   PERFORMANCE    11
         RISK FACTORS                              CURRENT STATUS                            NEW GAINS
     Technical and economic               Current state of knowledge of the                Likelihood that
     factors that pose a risk              effect of the factor, and possible             greater attention
                                                 future developments                        to the factor
                                                                                            would lead to
                                                                                           improvements
9. Sugar cane     Match              Extent to which harvestability can be increased      Uncertain
   variety        between cane       through plant breeding is unknown, so is an
                  variety and        R&D gap. (Harvestability is not a selection factor
                  harvester          in some plant breeding programs.)
                  design
10. Weeds         Weeds in crop      Weeds are known to increase EM, and decrease         High
                  have impacts       CCS and yield. Passage of weeds through
                                     harvester may lead to satellite infestations in
                                     the block or farm. Quantitative information on
                                     the impact of weeds on machine operating
                                     costs and sugar recovery is meagre. R&D gap.
11. Irrigation,   Sub-optimal        Effects are complex but are not considered to        Not directly
    drainage,     levels of these    be directly relevant to harvesting efficiency and    applicable
    fertiliser    factors may        in-field sugar recovery.
                  affect CCS and
                  sugar quality




12      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
3.2.2 Harvester machine factors                          contractor — in consultation with the grower —
                                                         and that are currently commercially available.
Harvester machine factors that affect the
efficiency of cane harvesting and the final              In aggregate, these harvester machine factors
recovery of sugar are summarised in Table 2.             (particularly forward speed hence pour rate,
All factors were dealt with at some length in the        and extractor fan speed) were considered to
HBP Manual and many formed part of the core              be appropriate for inclusion as a general HBP
HBP recommendations that we define as being              variable in the subsequent modelling study
those machine set-up and operational factors             reported in Section 3.
that are under the direct control of the harvest


TABLE 2. HARVESTER MACHINE FACTORS IMPACTING ON THE EFFICIENCY OF CANE HARVESTING AND FINAL SUGAR RECOVERY

        RISK FACTORS                               CURRENT STATUS                            NEW GAINS
    Technical and economic                Current state of knowledge of the                Likelihood that
    factors that pose a risk               effect of the factor, and possible             greater attention
                                                 future developments                        to the factor
                                                                                            would lead to
                                                                                           improvements
 1. Topper        Cane may at        Topping is generally considered as desirable but     High
    Operation     times not be       some crops (eg those that have lodged) are
                  able to be         difficult or impossible to top. This increases
                  topped at all.     total tonnages harvested but may actually
                                     decrease grower returns because of higher
                                     transport costs and EM, and lower CCS.
 2. Topping       Topping may        Poor operator practice and grower feedback is        High
    losses        not be done at     known to lead either to excessive EM or to
                  the optimum        excessive stalk loss. R&D is underway on a
                  position           closed loop system.
 3. Gathering     Current            Poor alignment leads to poor feeding and             High
    system        standard           “glut-starve” events and “bulldozing”. A
                  system may         recently-developed, single-spiral gathering
                  give sub-          system reduces the problem but adds ~$15,000
                  optimal stalk      to the cost of the machine.
                  alignment
 4. Gathering     Floating shoes     This problem is known to increase EM. R&D is         High
    system        may plough         underway on the relative importance of the
                  soil onto          problem and on modifications to shoes, crop
                  gathered cane      divider saws, and sensors.
 5. Gathering     Stalks may be      R&D has identified the importance of the crop        High
    losses        lost from the      divider and the need to disentangle stalk and
                  swath being        leaf.
                  harvested
 6. Forward       Large crops        Large crops, particularly if lodged and/or           High
    feeding       can be hard        unburnt place high demands on the forward
    system        to harvest         feeding system. Such situations require
                                     high-level operator skills. However, improved
                                     feeding systems are continually being
                                     developed by manufacturers and researchers.




                                                  CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE        13
         RISK FACTORS                              CURRENT STATUS                             NEW GAINS
     Technical and economic               Current state of knowledge of the                 Likelihood that
     factors that pose a risk              effect of the factor, and possible              greater attention
                                                 future developments                         to the factor
                                                                                             would lead to
                                                                                            improvements
7. Forward       Excessive           These problems are known to cause stalk               High
   feeding       knockdown           splitting and shattering, stool damage, and
   system        and fin roller      resultant cane loss. The impact of these,
                 angles              however, is not well quantified so is an R&D
                                     gap. Improved feeding systems are continually
                                     being developed.

8. Base cutter   Excessive           Thought to be a problem that impacts on               Uncertain but
                 forward speed       harvester efficiency, but its effects are not         probably High
                 relative to base    well quantified. R&D gap.
                 cutter rotational
                 speed
9. Base cutter   Base cutter         Thought to be a problem that impacts on               Uncertain but
                 angle               harvester efficiency, but its effects, particularly   probably High
                 mismatched          on soil/EM levels are not well quantified. R&D
                 to row profile      gap. Hydraulically adjustable base cutter angles
                                     on some machines help, but this still requires
                                     high-level operator skills.

10. Base         Blade condition     Alternative blade configurations require              Uncertain
    cutter       and                 investigations. R&D gap.
                 configuration
11. Base         Operator            Inappropriate settings of cutting height are          High
    cutting      manually            known to either leave millable cane (losses
    losses       controls            estimated at 2–10 t/ha) or increase soil intake
                 cutting height      leading to higher EM. However, effects are not
                                     well quantified so is an R&D gap. An automatic
                                     control system is not yet available.

12. Feed train   Roller peripheral   Synchronising feed rollers is known to improve        High
                 speed mismatch      feeding and reduce sugar loss and/or reduce EM.

13. Choppers     Mismatch of         Known that mismatch leads to sugar losses and         High
                 chopper             affects billet length distribution. Industry has no
                 peripheral          standard billet length. Optimising chopper/feed
                 speed to that       chain can increase sugar yield by 4–5%, but
                 of feed chain       few current machines are optimised. Limited
                 rollers             data exists on impact of billet length
                                     distribution on transport capacity, but transport
                                     system may be penalised.
14. Chopper      Billet length       Longer billet lengths can increase sugar              High
    losses       adjustment not      recovery by up to 2%.
                 optimised

15. Primary      Design set by       Chamber and hood design is fixed; only fan            Uncertain
    cleaning     manufacturer        speed can be varied. Alternative designs may
    system                           evolve over time.




14      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
       RISK FACTORS                             CURRENT STATUS                            NEW GAINS
   Technical and economic              Current state of knowledge of the                Likelihood that
   factors that pose a risk             effect of the factor, and possible             greater attention
                                              future developments                        to the factor
                                                                                         would lead to
                                                                                        improvements
16. Extractor    Overloaded       Current cleaning systems are overloaded at           High
    fan losses   cleaning         commercial cutting rates. Cane losses are
                 systems give     known to be high (eg 10 to >20 t/ha) but often
                 large losses     under-estimated by growers and harvesters.
                                  Total losses are not easy to quantify; better
                                  monitoring systems needed. The high fan
                                  speeds often used give large increases in cane
                                  loss but only minor decreases in EM. More
                                  emphasis on communication/education is
                                  needed, particularly south from Mackay.
17. Elevator     Current          Current system is the only one available. R&D is     Uncertain
                 systems can be   underway on new conveying systems.
                 unstable


18. Secondary    Current system   Current system is the only one available and         Uncertain
    cleaning     has fixed        provides no control over its operation. R&D is
                 speed            underway on alternative cleaning systems.

19. Instruments Feedback to       Improvements required eg a ground speed              Uncertain
    and         operator on       monitor as standard, and a better cane loss
    controls    machine           monitor. R&D is ongoing.
                performance




                                               CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE    15
3.2.3 Farming system factors                             changes in two other factors (group size and
                                                         wet weather policy). Changes at the grower or
Farming system factors that affect the efficiency
                                                         grower/harvest contractor level, however, would
of cane harvesting and the final recovery of sugar
                                                         be required to bring about changes in two of the
are summarised in Table 3. Many of them were
                                                         other factors (field efficiency, and compaction).
dealt with at length or noted in the HBP Manual.
Changes in one of these factors (Payment                 Although of vital importance to overall harvest
system) at the industry level was seen as crucial        efficiency, none of these farming system factors
for achieving desirable changes in three others          was considered appropriate for direct inclusion
(pour rate, fan speed, and billet length) that are       in the modelling study (Section 3), but the
under the direct control of the harvester                effects of alternative payment systems and their
operator. Similarly, changes at the industry level       likely impact on the adoption of best practice
would also probably be required to effect                harvesting are considered at length in Section 4.

TABLE 3. FARMING   SYSTEM FACTORS IMPACTING ON THE EFFICIENCY OF CANE HARVESTING AND FINAL SUGAR RECOVERY

         RISK FACTORS                              CURRENT STATUS                            NEW GAINS
     Technical and economic               Current state of knowledge of the                Likelihood that
     factors that pose a risk              effect of the factor, and possible             greater attention
                                                 future developments                        to the factor
                                                                                            would lead to
                                                                                           improvements
 1. Payment        The current       As noted below, the current $/tonne payment          High
    system         payment           system encourages high pour rate and high fan        Dealt with at
                   system favours    speed operation with benefits flowing to only        length in Sections
                   overall           one sector of the industry — the harvesters.         3–5 of this report.
                   inefficiency in   Numerous alternative payment systems have
                   the harvesting    been suggested and/or tried. Some harvesting
                   process           groups use cost + fuel, others use an hourly
                                     rate when yield is below an agreed minimum.
                                     Further R&D is required to:
                                     • Identify alternative payment systems that
                                       maximise the benefits to the industry as a
                                       whole
                                     • Examine the current and desired distribution
                                       of benefits across the various industry sectors,
                                       and devise alternative ways of “dividing up
                                       the cake”.
 2. Harvester      High harvester    Harvesting at high pour rates is encouraged by       High
    pour rate      pour rates        the current $/tonne payment system because           Gains of $100/ha
                   increase          harvesters benefit but growers, millers and the      have been
                   EM levels.        overall industry suffer (through higher EM           demonstrated in
                                     levels, higher transport, and milling costs, and     many situations.
                                     lower bin weights and sugar recoveries). Data,
                                     mathematical relationships and/or models exist
                                     for relating:
                                     • EM to pour rate and fan speed
                                     • EM to bin weight
                                     • EM to mill extraction efficiency
                                     • EM to grower return
                                     • Bin weight to cost of transport, and
                                     • Pour rate to cost of harvester.




16      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
       RISK FACTORS                            CURRENT STATUS                            NEW GAINS
   Technical and economic             Current state of knowledge of the                Likelihood that
   factors that pose a risk            effect of the factor, and possible             greater attention
                                             future developments                        to the factor
                                                                                        would lead to
                                                                                       improvements
3. Fan speed    High pour rate   Given the high pour rates noted above,               High
                operation        harvesters tend to increase fan speeds in an
                encourages       attempt to decrease EM levels. However, higher
                use of high      fan speeds increase cane loss exponentially,
                fan speeds       whereas they have only minor effects on EM
                                 levels. R&D needed to further develop the pour
                                 rate, fan speed, cane loss, EM relationships.
4. Billet       The need for     High bin weights decrease transport costs but        High
   length       high bin         require shorter billet lengths and lower EM levels
                weights          — both of which are associated with increased
                encourages       losses of cane and juice. Some data is available
                harvest          on the effects of billet length on bin weights,
                contractors      and on losses per chop, so the effects of billet
                to cut shorter   length on cane and juice losses and transport
                billets          costs could be modelled in further R&D.

5. Field        Farm layout      Farm layout has dramatic effects on costs of         High
   efficiency   affects          harvesting, with actual costs varying between
                efficiency of    $3 and $17/t depending on layout alone. While
                harvesting       layout is often constrained by local geography
                                 and topography (rivers and streams, hills etc),
                                 better farm layouts can often markedly increase
                                 efficiency (eg through improvements in crop
                                 density, row length, haul roads, and haul
                                 distance). Improved payment systems will also
                                 probably encourage better farm layouts.
6. Compaction   Harvesting       Soil compaction reduces yields and has been          High
                operations can   estimated to cost the Qld industry between
                contribute to    $50 and $150m p.a. Compaction during
                soil             harvesting is associated with:
                compaction       • Harvesting under wet conditions
                                 • A mismatch between row spacings and
                                   harvester and haul-out wheel spacings
                                 • Low haul-out capacity and hence more
                                   passes over each row
                                 • High axle loads
                                 While changes to these factors are not always
                                 easy or straightforward, they can nevertheless
                                 be achieved.




                                              CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE    17
         RISK FACTORS                              CURRENT STATUS                            NEW GAINS
     Technical and economic               Current state of knowledge of the                Likelihood that
     factors that pose a risk              effect of the factor, and possible             greater attention
                                                 future developments                        to the factor
                                                                                            would lead to
                                                                                           improvements
7. Group size    Group size          Overall, the tonnages harvested by Australian        High
                 affects fixed       harvester groups are sub-optimal, thereby
                 costs               increasing fixed costs per tonne of cane
                 associated with     harvested. Groups of <25,000 tonnes p.a.
                 harvesting          harvest the highest proportion of the
                                     Queensland crop. Currently, group size tends
                                     to be associated with the amount of capital
                                     invested, with small groups generally having
                                     less capital invested in harvesters and haul-outs.
8. Wet           Harvesting in       Harvesting in wet conditions increases:              High
   weather       wet conditions      • compaction (reducing future yields and returns)
   policy        increases costs     • harvesting costs (through decreased pour rates)
                 for all sectors     • milling costs (through increased soil in cane)
                 of the industry     However, the magnitude of the increase in
                                     costs is not well documented for all mills.
                                     Individual mills have either formal or informal
                                     policies on wet weather harvesting. Changed
                                     policies and/or practices in some mill areas
                                     could improve the efficiency of harvesting.




18      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
4. ECONOMIC MODELLING OF SELECTED HARVEST
   AND INDUSTRY SCENARIOS
4.1    Introduction                                      (Sandell & Agnew 2002). The HBP scenario
                                                         was aimed at present conditions, that is,
The farm, harvesting machine, and farming system         what can be done today with the existing
factors outlined in the previous section clearly         equipment and configurations to maximise
have implications on the economics of the overall        returns for the industry. Assumptions on
harvesting process and on the distribution of costs      extraneous matter levels are given in Table 4.
and benefits between the various sectors of the
industry. Of these factors, the full implementation    • Half Trash: minimum soil and roots in the
of the machine-related aspects of Harvest Best           cane supply but supplying half of the available
Practice (HBP) was an obvious scenario worth             trash for cogeneration at the mill. This
investigating, as the technology was currently           scenario approximates the operation of the
available and could be implemented immediately           whole supply chain with approximately half
without further capital investment. Other                of the cane trash and tops sent to the mill
scenarios of interest to SRDC and the industry           (representing about 15% of the cane supply
as a whole go beyond the harvesting-related              by fresh weight, see Table 4). This scenario
factors previously outlined in Tables 1–3 and            incorporates a cane pre-cleaning process at
concern the degree to which trash is deliberately        the mill and an electricity cogeneration plant
transported to the mill for use in electricity           at the mill to utilise the trash.
generation. Thus, they are in sharp contrast to        • All Trash: minimum soil and roots in the
the current harvesting emphasis on excluding             cane supply but supplying all of the available
trash, to the greatest extent possible, from             trash for cogeneration at the mill. This is
transport to the mill. The scenarios finally             a similar scenario to half trash, but
chosen for investigation are detailed below.             incorporating all trash from the field
                                                         (representing about 25% of the fresh weight
                                                         of the cane supply, see Table 4). This scenario
4.2    Harvesting and Industry
                                                         creates significant additional revenues from
       Scenarios                                         cogeneration, but increases transport and
Four scenarios were selected to reflect                  milling costs. Removal of all field trash also
combinations of extraneous matter levels and             requires payments to farmers for loss of
operational configurations (eg. harvest pour             green cane trash blankets and CCS dilution.
rate, cogeneration to export electricity, cane         The modelling of economic impacts was based
cleaning). The scenarios were as follows:              on actual data from two mill areas referred to
• Base Case: approximates the current                  as Mill A — a central district mill of around 2 Mt
  operating conditions in the existing supply          annual crushing capacity — and Mill B — a wet
  chain in each mill area from cane standing           tropics mill of approximately 1 Mt capacity. It
  on the farm to sugar produced from the mill.         included assumptions on sugar recovery and
                                                       extraneous matter, farming and harvesting
• Harvest Best Practice: minimum soil,                 practices, harvesting group configurations,
  roots, leaf, and tops in the cane supply and         capital expenditure (especially for electricity
  minimum cane loss, largely as a result of            cogeneration and cane cleaning) and cane
  reductions in harvester fan speed and pour           transport. Together, the data and assumptions
  rate. This scenario incorporates the relevant        provide a basis for predicting costs and returns
  harvest and haul-out parameters drawn from           to the three industry sectors, growing,
  industry experience and collated into the            harvesting, transport and milling enterprises,
  BSES-produced Harvesting Best Practice               as accurately as possible.
  Manual for Chopper-Extractor Harvesters


                                                 CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   19
4.3       Assumptions                                      • Harvest operations are undertaken by an
                                                             Austoft 7700 track harvester, elevator tipper
Assumptions about Extraneous Matter levels                   tandem axle haul-out units with 12 tonne
and types for the various mill and scenario                  capacity and Case MX 185 haul-out tractors
combinations are shown in Table 4.                           or similar. Mobile plant has a useful life of
Assumptions on sugar cane losses primarily                   7–10 years and the owner has 60% equity
associated with harvesting operations, based on              in the equipment with the balance debt
BSES Ltd research, are shown for each mill and               financed at 6% p.a. Total investment (net
scenario in Table 5. Other core assumptions are              of depreciation) in harvest group plant and
listed in Table 6. The main cane loss factor was             equipment is approximately $940,000.
extractor losses; under HBP this was set to                • Payments to farmers for loss of the green
3.5%, which is in accord with the results of                 cane trash blanket (GCTB) are based on BSES
many HBP field trials undertaken by BSES Ltd.                Ltd agronomic research.
The economic analyses were undertaken within               • Farm equipment and chemical and other
the following conditions:                                    inputs are reasonably standard across farms,
• All enterprises are managed as commercial                  and input prices (incl. GST) are based on
  enterprises. Independent research by the                   surveys completed in 2001 in the Innisfail
  consultants confirms that current prices                   Babinda and Burdekin regions.
  charged for some cane harvesting operations              • Calendars of operations for all cane farm
  in the industry are not sustainable. The                   activities in the respective mill areas are
  assumptions are made in this study that                    similar, given their north Queensland
  commercial sustainable prices will be charged              locations.
  for all harvesting and haul-out operations.
                                                           • The three partners in this work — SRI, BSES Ltd
• Transport of cane to the mill from the                     and Macarthur Agribusiness — made many
  siding/pad is a cost paid by the miller ranging            other minor assumptions when developing the
  from $3.61 to $5.28 per tonne of cane.                     spreadsheet model. However, as many variables
• Administration costs and labour are the average            as possible were kept constant in order to
  of farms in the Innisfail-Babinda wet tropics,             reduce the complexity of model outputs and
  based on industry surveys undertaken in 2001.              aid interpretation of results.


TABLE 4. EXTRANEOUS   MATTER ASSUMPTIONS

                                                               Mill A                       Mill B

 Scenario Name                                      Base     HBP    Half  All Base       HBP     Half  All
                                                    Case           Trash Trash Case             Trash Trash

 Trash %                                             6.5     3.0     9.0   16.0    7.0    3.0    9.0   18.0

 Tops %                                              5.0     3.0     5.0    7.0    4.5    3.0    5.0       6.0

 Dirt %                                              1.5     0.7     1.3    1.5    1.5    1.1    1.3       1.5

 Total Extraneous Matter %                          13.0     6.7    15.3   24.5   13.0    7.1   15.3   25.5




20        SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
TABLE 5. CANE   LOSS ASSUMPTIONS

                                                           Mill A                                   Mill B

 Scenario Name                                 Base     HBP      Half  All Base                HBP       Half  All
                                               Case             Trash Trash Case                        Trash Trash

 Gathering losses %                             1.0       1.0   1.0        1.0         1.0     1.0        1.0     1.0

 Base cutter losses %                           2.0       2.0   2.0        2.0         2.0     2.0        2.0     2.0

 Feed train/choppers losses %                   4.5       2.0   2.0        2.0         4.5     2.0        2.0     2.0

 Extractor losses %                             9.0       3.5   2.5        nil         9.0     3.5        2.5      nil

 Total Cane Losses %                            16.5      8.5   7.5        5.0     16.5        8.5        7.5     5.0

 Cane Lodged                                    no        no     no        no          no         no      no       no

 Cane Topped                                    yes       yes    no        no          yes     yes        no       no

 Harvester Roller Synchronisation               no        yes    yes       yes         no      yes        yes     yes


TABLE 6. OTHER    ASSUMPTIONS

                                                 Mill A                                       Mill B

 Scenario Name                        Base    HBP       Half     All        Base            HBP         Half      All
                                      Case             Trash    Trash       Case                       Trash     Trash

 Crop delivered to mill (Mt)           1.91    1.95     2.17      2.50       1.15            1.18       1.30      1.52

 CCS (units)                          13.84   14.92    13.44    11.82       13.23        14.21         12.85     11.13

 Season Length (weeks)                19.01   19.01    19.01    19.01       20.32        20.32         20.32     20.32

 Row Length (m)                         400    400        400       400          200         200        200       200

 Group Size (t)                       60,000 61,315 62,669 68,321 33,000 33,865 34,613 37,381

 No. of Haul-out units active             3      3          3          3           2           2             2           2

 Avg. forward speed when
 harvesting (km/hr)                       8      5          8          8           8           5             8           8

 Average in-field haul-out
 distance (km)                            3      3          3          3         1.5          1.5        1.5       1.5

 Haul-out Bin capacity (t)               10     11          9       6.5           10          11             9     6.5

 Avg. Haul-out ground speed (km/hr)      25     25         25         25         25           25          25        25

 Sugar price paid to grower
 ($/TC at mill)                       23.34   25.85    22.42    18.69       21.94        24.21         21.06     17.07

 Avg. Farm area planted to cane,
 excl. 15% fallow (ha)                   73     73         73         73         45           45          45        45

 % cut as Green Cane                     98     98         98         98         98           98          98        98

 Avg. Crop Size — Yield per ha at
 Mill tip (t/ha)                         92     92         92         92         98           98          98        98

 Avg. Farm size (TC)                  6,716   6,716    6,716    6,716       4,410        4,410         4,410     4,410


                                              CANE HARVESTING    TO IMPROVE INDUSTRY          PERFORMANCE            21
4.4      Model Development, Linkage                                supplies, maintenance, depreciation,
         and Manipulation                                          management, sugar transport, and other cost
                                                                   information, in order to produce a progressive
The cane supply chain that was modelled is                         ‘cost of production’ and ‘incremental value
represented in Figure 1.                                           change’ report of the main product (i.e. sugar)
                                                                   as it flows through the various manufacturing
Three financial spreadsheet models were                            processes. The factory model was linked to
integrated along the cane supply chain in                          factory cane cleaning and cogeneration files.
order to undertake this study. Macarthur
                                                                   The factory model uses SRI technical models to
Agribusiness and BSES Ltd provided the
                                                                   simulate crushing, juice heating, evaporation
farming and harvesting components of the
                                                                   and crystallisation processes in the factory. The
integrated model while SRI provided the
                                                                   spreadsheet model for the evaporators and
milling and cane transport model. The SRI
                                                                   heaters has been suitably modified to simulate
model is confidential and could not be
                                                                   triple, quadruple, quintuple and sextuple
physically integrated with the farming and
                                                                   evaporation systems. This model requires input
harvesting models. This limitation was
                                                                   data on the steam and vacuum conditions, area
overcome by strictly defining the relevant
                                                                   of evaporator vessels, heat transfer performance
variables along the supply chain and manually
                                                                   ratios, bleeding arrangements and the syrup
incorporating mill model outputs into the
                                                                   concentration. The mill model used in the
combined farming and harvesting model.
                                                                   factory model is based on correlations derived
The SRI sugar factory model used in the current                    from the SRI ‘MILSIM’ program. The latter uses
study was developed by SRI to quantify capital,                    principles of mass conservation applied to fibre,
operating and yield-related costs of every step in                 moisture and brix, together with empirical data
the sugar production process from the sidings to                   relating to the partition of these material
the delivery of raw sugar. The model was                           streams resulting from the milling process. The
developed as a series of linked EXCEL                              steam files cover issues relating to all aspects of
spreadsheet files in which the flow of physical                    steam generation and consumption, factory
and cost information was managed through a                         motive power and power generation. The
central file. More specifically, the model interacts               commercially available ‘HYSYS’ process model
with sheets tabulating capital equipment,                          which allows a greater degree of factory-specific


FIGURE 1. CANE     SUPPLY CHAIN

         Cane standing (or                                                                  Harvested cane, trash and
         lodged) in a cane field                                                            other extraneous matter is
         is presented to the                                                                transported to the mill by
         harvester                                    Payment system                        rail/road.


       $                                                           $                                                        $
           Farmer                                         Harvester                                         Miller
                                         Cane                                        Cane

  Economic loss to all parties due to:          • Harvester has major impact                Miller has economic incentive to
  • Cane stalks not gathered by                   on cane supply quality and                invest in:
    the harvester                                 aggregate value realised                  • Cane cleaning to reduce dirt
  • Cane stalks, juice, billets and             • Harvester’s economic motivator               in cane supply and reduce
    EM lost to the field during                   is $ per tonne of product (cane              mill maintenance costs
    cutting and chopping                          + trash + EM) to the mill siding          • Cogeneration plant to use
  • Cane billets and EM lost to                   as quickly as possible.                      trash to create electricity for
    the field during extractor                  • Currently there is little or no              sale to thrid parties
    cleaning                                      economic incentive to improve
                                                  harvest quality by slowing down
                                                  harvest machine




22       SUGAR RESEARCH        AND   DEVELOPMENT CORPORATION
detail relating to the high-pressure steam circuit    4.5.1 Base data output
which is applicable to cogeneration scenarios
                                                      Base case figures for each mill area (scenarios 1
was not used in the present study. The factory
                                                      and 5 in Table 7) predict that the average-sized
cane cleaner file provides sizing, power and
                                                      farms in the study were not profitable. A further
costs of a cleaning plant to suit a mill cane
                                                      complication to the base data was that many
crushing rate and specified cleaning efficiency.
                                                      harvest enterprises (including haul-out
Specific milling assumptions for the study areas      operation) were not charging the full costs
were as follows:                                      of operations, including depreciation, to their
• Base case capital cost was set to zero and          farmer clients. This predictably-unsustainable
  only extra capital was costed. The cost of          situation was verified in several discussions
  finance for capital expenditure was set at          and cost analyses with farmers, harvesters and
  10%.                                                millers in the wet tropics. However, charging the
                                                      full costs of harvesting plus a harvester profit
• Cogeneration scenarios were considered for          would make the farmers even less viable.
  the mill with new high-pressure boilers. The
  change to high-pressure cogeneration also           To establish a baseline for all scenarios, the base
  involved new turbo-alternator sets, electrical      case in the model used existing cane payment
  upgrades, evaporators and process                   formulae, and farmers were charged the exact
  modifications, changing mill and shredder           costs of harvesting and haul-out of cane as
  turbines to electric, and costs for various         generated by the harvest model. Under these
  other necessary alterations.                        conditions, no profit was generated in the
                                                      model for harvesters. While this approach could
• Costs and performance data for the factory          be considered to be unrealistic, it enabled a base
  cane cleaner used in cogeneration scenarios         to be established from which it was possible to
  were taken from latest SRI estimates,               identify incremental impacts on enterprises
  based on a prototype plant operated                 across all scenarios.
  at Condong Mill.
                                                      Table 7 presents the model outputs for each
• The model was set up based on the actual            scenario. Note that the revenue per tonne of
  configurations of the case study mills.             cane was based on tonnes produced in the base
• Model predictions were matched against              case. This could be misleading, given that the
  actual case study mill outputs including sugar      tonnes for each scenario vary significantly, as
  production, export power and molasses for the       shown in the first row of data.
  2002 season. In other words, the model was          Table 7 indicates that aggregate revenues across
  tuned to reflect the mills as operating in 2002.    the supply chain were predicted to increase by
                                                      more than $5.00 per tonne of cane, while costs
4.5    Economic Costs and Benefits of                 would rise by up to $3.50 per tonne of cane. In
                                                      both mill areas, the net margins for the three
       the Various Scenarios
                                                      hypothetical scenarios were higher than for the
The integrated models were tuned to                   base case. The HBP and Half Trash scenarios appear
investigate the net increase in profit (revenue       to offer the most potential to increase profitability
minus costs) for the three scenarios compared         for the three parties (grower, harvester and miller).
to the base case. The focus of the analyses was
                                                      Existing cane payment formulae are not able to
on the economic variability of returns between
                                                      allocate the increased revenues equitably. Three
scenarios and not on the quantum of the
                                                      components would need to be adjusted to
economic returns from each scenario.
                                                      ensure adoption of HBP or harvesting to supply
Therefore, the profit or margin in dollars per
                                                      additional trash. These are:
tonne of cane for the base case was considered
as less important, for example, than the              • adjustment of the cane payment to growers
increase in margin between the base case                undertaking full trash harvesting to
and HBP.                                                compensate for reduced CCS;


                                                CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE     23
• recognition of the increased farm costs for               • adjustment to payments made to the
  growers associated with the loss of the trash               harvester operator as an incentive to adopt
  blanket (i.e. increased weed control costs                  HBP and to haul additional trash.
  including tillage, and reduced soil moisture);
  and


TABLE 7. IMPACTS   OF FOUR DIFFERENT HARVESTING SCENARIOS IN TWO MILL AREAS

                                                      Mill A                            Mill B

 $/TC                                      Base    HBP       Half     All     Base    HBP      Half      All
                                           Case             Trash    Trash    Case            Trash     Trash

 Crop delivered to mill (Mt)                1.91    1.95      2.17    2.50     1.15    1.18      1.30    1.52

 Scenario                                      1       2         3       4       5       6         7        8

 REVENUE
 to miller         sugar                   12.97   13.65     17.23   19.27    11.85   12.36   15.80     18.58

                   cogeneration             0.43    0.27      3.05    4.19     0.64    0.39      2.91    4.30

                   molasses                 1.29    1.18      1.19    1.26     1.39    1.28      1.29    1.34

                   Subtotal                14.70   15.11     21.47   24.24    13.87   14.03   19.99     24.22

 to farmer                                 16.21   18.11     15.65   12.28    13.11   15.01   12.79      9.41

 to harvester                               7.14    7.74      6.78    6.41     8.83    9.20      8.27    7.66

                   Total Revenue           38.04   40.96     43.89   43.41    35.81   38.24   41.05     41.29

 COSTS             to miller               11.01   10.48     14.04   14.64    13.83   13.35   17.78     18.61

                   to farmer               17.66   17.69     17.65   17.60    23.84   23.87   23.83     23.78

                   to harvester             7.14    7.74      6.78    6.41     8.83    9.20      8.27    7.66

                   Total Costs:            35.81   35.91     38.47   38.65    46.49   46.41   49.88     50.05

 MARGINS           to miller                3.68    4.63      7.42   10.09     0.04    0.68      2.21    5.61

                   to farmer               –1.46    0.42     –2.00   –5.32 –10.73     –8.86 –11.04 –14.37

                   to harvester                0       0         0       0       0       0         0        0

 Aggregate Margin $/TC                      2.23    5.05      5.42    4.76 –10.69     –8.17   –8.82     –8.76

 Net Margin Change
 from Base Case                                0    2.82      3.19    2.53       0     2.51      1.86    1.93




24      SUGAR RESEARCH     AND    DEVELOPMENT CORPORATION
4.5.2 Harvest Best Practice                                    resulting in more trash in the bin than the base
                                                               case. As seen in Figure 2, supply of 13% trash
4.5.2.1 HBP at Mill A
                                                               in cane (without further investment in
The financial results for the HBP scenario                     cogeneration) resulted in total revenue being
compared to the base case for Mill A are                       increased by $8m — due to lower cane loss
presented in Figure 2. In summary, total revenue               (16.5% base case to 7.5% for the half trash
(from sugar, power, and molasses) increased by                 option) and some power sales. The farmers
just over $7m. Of this total revenue, farmers                  gained an additional $4m. However, this was
gained $6m due to more tonnes (lower cane                      less than in the HBP scenario because of the
loss) and increased CCS (cleaner cane). The                    reduced CCS brought about by the trash in
remainder went to the miller, but with the                     the cane supply. Milling and transport costs rose
decrease in milling costs, the result is an increase           but, with the lower cost of the cane (as paid to
in miller’s margin of around $2m. Harvesting                   the farmers), the miller had an increased margin
costs rose ($0.37-$0.60/t) due to the slow                     of $2m, the same as the HBP scenario. Whilst
harvesting speed required to achieve clean cane                harvester pour rate was not reduced, the
at low cane loss.                                              harvesting costs still increased due to the
                                                               lower bin weights.
The benefits of the HBP were mainly due to the
decrease in cane loss, i.e. 16.5% in the base                  The results for the half trash option showed that
case and 8.5% in HBP. To emphasise the                         reduction in cane loss is a powerful financial
importance of cane loss, we have also presented                driver to increase revenue. In this scenario, the
data for the half trash option with no                         improved recovery of cane was able to offset
cogeneration in this Figure. In this option, the               the disadvantages of more trash in the cane
harvesters would use a low fan speed to reduce                 supply to give both farmers and millers
cane loss, but maintain their normal pour rate,                reasonable returns above base case.


FIGURE 2. FINANCIAL   MODEL RESULTS FOR   HBP   AND HALF TRASH (WITH NO COGENERATION) COMPARED TO BASE CASE
FOR MILL A

                                   esaC esaB morf egnahC :A lliM
             m9$
             m8$
             m7$
             m6$
                                                                                          eunever latoT

             m5$                                                                          mocni sremraF       e

             m4$                                                                          M   stsoc gnilli


             m3$                                                                          psnarT   stsoc tro


             m2$                                                                          m srelliM   nigra

                                                                                          H   stsoc gnitsevra
             m1$
             0$
            −m1$                 PBH                      H   )negoc oN( hsarT fla


            −m2$




                                                      CANE HARVESTING        TO IMPROVE INDUSTRY    PERFORMANCE   25
4.5.2.2 HBP at Mill B                                         The half trash option, without additional
                                                              investment in cogeneration gave results for Mill
The financial results for the HBP scenario
                                                              B that were similar to those for Mill A. Thus,
compared to the base case for Mill B are
                                                              total industry revenue was higher; the farmers
presented in Figure 3.
                                                              gained more than the base case but less than
Compared to current practices, HBP increased                  that gained under HBP; the miller’s margin
total revenue by just under $4m for Mill B.                   increase was the same as under HBP; and
Farmers gained an additional $3.3m again                      harvesting costs increased with the reduced
because of the additional tonnes of cane and                  bin weight. The half trash scenario again
improved CCS. Milling costs were predicted to                 emphasised the importance of reduced cane
drop, resulting in an improvement in the miller’s             loss.
margin of $0.75m. However, harvesting costs
rose with the reduced pour rate to achieve HBP
conditions.


FIGURE 3. FINANCIAL   MODEL RESULTS FOR   HBP   AND HALF TRASH (WITH NO COGENERATION) COMPARED TO BASE CASE
FOR MILL B
                                   Mill B: Change from Base Case
            $5m


            $4m


            $3m                                                                        Total revenue
                                                                                       Farmers income
                                                                                       Milling costs
            $2m
                                                                                       Transport costs
                                                                                       Millers margin
            $1m                                                                        Harvesting costs


             $0

                                HBP                    Half Trash (No cogen)
           −$1m


4.5.2.3 HBP — summary for both mills                          meant approximately $3/t extra income for the
                                                              farmers and $1/t for the miller’s margin. (This
The changes in financial status for the farmers,
                                                              compares with the results from a recent study
miller and harvesters under HBP in the two mills
                                                              of HBP in Mourilyan Mill, where a difference
are summarised in Table 8.
                                                              of $1.50 per tonne of cane was predicted. The
                                                              difference was due to the assumed change in
TABLE 8. FINANCIAL MODEL RESULTS: MILLS A    AND   B—
                                                              cane loss from base case to HBP as explained in
HBP COMPARED TO BASE CASE
                                                              detail in Appendix 3).
                            Mill A          Mill B            For both Mills, harvesting costs increased to
 Farmers income             $6.00m          $3.30m            achieve HBP, primarily because of the impact
                                                              of low pour rates required to give high cleaning
 Millers margin             $2.00m          $0.75m            efficiency. This increase in harvesting costs must
 Harvesting costs           $0.80m          $0.83m            be addressed if HBP benefits are to be realised.
                                                              In Table 8 that deals with the impacts on net
                                                              margins, the additional harvesting costs were
For Mill A, nominally crushing 2Mt per annum                  arbitrarily assigned to the farmers. However,
and Mill B crushing about 1Mt, the HBP scenario               whether the miller should contribute to the

26      SUGAR RESEARCH    AND   DEVELOPMENT CORPORATION
increased harvesting costs would need to be                 was due to the additional sugar that resulted
decided in negotiations between the miller and              from this reduced loss of cane.
farmers.
                                                            As shown in Table 9, the export power from the
Thus the key messages from the HBP scenarios                cogeneration facility significantly increased the
studied are that:                                           total revenue for both mill areas. In Figures 4
                                                            and 5, milling costs rose significantly in the
• reduction in cane loss drives the economic
                                                            cogeneration scenarios. This rise in milling costs
  benefits of HBP; and
                                                            was due to the capital costs associated with the
• payment systems must provide the economic                 cogeneration plant. In the modelling exercises,
  incentives to relevant sectors of the industry            we minimised the capital expenditure by
  to ensure that the target of minimal cane loss            allowing off-season power production, thereby
  is actually achieved.                                     lowering the size of the high-pressure boiler.
                                                            Changes in capital cost can sharply erode the
4.5.3 Cogeneration scenarios to                             benefits of the cogeneration scenario as shown
      increase the size of the revenue                      in Figures 6 and 7. In these figures, the starting
      base                                                  points are the capital expenditures used in the
                                                            economic modelling exercises, namely Mill A —
The results for the economic modelling of the
                                                            $102 million, and Mill B — $76 million.
cogeneration scenarios are presented in Figures
4 and 5. Note that in these figures the HBP                 Figures 6 and 7 show that cogeneration
results without cogeneration have also been                 scenarios require major capital investments. With
included to indicate the relative size of the               increases in capital expenditure above the levels
increase in the revenue base that can be                    assumed, the benefits of cogeneration would be
achieved by changing the mill to a cogeneration             reduced and eventually make the investment
plant.                                                      unviable. The increase in revenue in the
                                                            cogeneration scenarios was sufficient to cover
The increased trash, combined with the bagasse, in
                                                            the additional costs to the grower (loss of the
mills that have invested in additional cogeneration
                                                            trash blanket), the higher harvesting costs and
capacity provided a large step increase in power
                                                            the increased milling costs, and leave a surplus.
income. This significantly increased the revenue
                                                            The additional income to the industry as a
base of both mills (see Table 9).
                                                            whole would need to be:
The increase in sugar income was a
                                                            • in proportion to the relative costs incurred by
consequence of the very low loss of cane in the
                                                              each party; and
full trash scenario where extractor fans were not
operated during harvesting. Note that at least              • sufficient to provide an incentive for all
30% of the predicted increase in total revenue                sectors to play their part.
for the cogeneration scenarios reported here



TABLE 9. BREAKDOWN   OF TOTAL REVENUE FOR   MILLS A & B   WHEN HARVESTING FULL TRASH, COMPARED TO THE BASE
CASE OF CURRENT PRACTICE

 Income source                              Increase in Revenue: Full Trash compared to Base Case

                                              Mill A ($million)                     Mill B ($million)

 Sugar                                                9.7                                    5.4

 Power                                              18.0                                    11.7

 Molasses                                             0.2                                    0.1

 TOTAL                                              27.9                                    17.2


                                                  CANE HARVESTING     TO IMPROVE INDUSTRY   PERFORMANCE      27
FIGURE 4. FINANCIAL MODEL   RESULTS FOR   HBP   AND HALF TRASH AND FULL TRASH BOTH WITH COGENERATION, COMPARED
TO BASE CASE FOR MILL A



                                 Mill A: Change from Base Case
           $30m


           $25m


           $20m                                                                     Total revenue
                                                                                    Farmers income
           $15m
                                                                                    Milling costs
                                                                                    Transport costs
           $10m
                                                                                    Millers margin

            $5m                                                                     Harvesting costs


             $0

                     HBP (No cogen)         Half Trash            Full Trash
           −$5m
                                                (Cogen)            (Cogen)




FIGURE 5. FINANCIAL MODEL   RESULTS FOR   HBP   AND HALF TRASH AND FULL TRASH BOTH WITH COGENERATION, COMPARED
TO BASE CASE FOR MILL B


                                  Mill B: Change from Base Case
           $20m
           $18m
           $16m
           $14m
                                                                                    Total revenue
           $12m                                                                     Farmers income
           $10m                                                                     Milling costs
            $8m                                                                     Transport costs

            $6m                                                                     Millers margin
                                                                                    Harvesting costs
            $4m
            $2m
             $0
                     HBP (No cogen)         Half Trash            Full Trash
           −$2m
                                             (Cogen)               (Cogen)




28     SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
FIGURE 6. EFFECT OF CHANGES                                           IN CAPITAL EXPENDITURE REQUIRED TO INCREASE ELECTRICITY COGENERATION USING
FULL TRASH ATMILL A

                                                                                                     Mill A
                                             $30
                                             $28
                                             $26
                                             $24
          Revenue/costs ($m)




                                             $22
                                             $20
                                             $18
                                             $16
                                             $14
                                             $12
                                             $10                                                                        Total revenue above base case
                                                    $8                                                                  Power contribution to total revenue
                                                    $6                                                                  Mill costs above base case

                                                    $4
                                                         90    100     110    120     130      140      150     160      170      180      190        200     210
                                                                                            Capital expenditure ($m)




FIGURE 7. EFFECT OF CHANGES                                           IN CAPITAL EXPENDITURE REQUIRED TO INCREASE ELECTRICITY COGENERATION USING
FULL TRASH ATMILL B

                                                                                                     Mill B
                                                    $20

                                                    $18

                                                    $16
                               Revenue/costs ($m)




                                                    $14

                                                    $12

                                                    $10

                                                     $8                                                               Total revenue above base case
                                                                                                                      Power contribution to total revenue
                                                     $6                                                               Mill costs above base case

                                                     $4
                                                          70     80      90     100     110       120     130         140      150      160      170        180
                                                                                        Capital expenditure ($m)




                                                                                               CANE HARVESTING         TO IMPROVE INDUSTRY           PERFORMANCE    29
4.5.4 Cash flow issues                                   number of the scenarios modelled — would have
                                                         a beneficial impact on the environment because
The financial models used in these studies were
                                                         cane fragments and juice lost during harvesting
focused on the quantum impact of financial flows,
                                                         can enter waterways through runoff, depleting
not on the timing of these flows. Therefore, they
                                                         the amount of oxygen and in turn increasing the
do not demonstrate the cash flow implications on
                                                         likelihood of fish kills. (A number of research
the respective parties. Cash flow to the supply
                                                         reports into the effects of cane juice on the
chain originates with payments to the miller from
                                                         environment are available, including a recent
third parties for raw sugar, molasses, and exported
                                                         study ‘Effects of trash incorporation and soil
electricity. Cane payments based on the current,
                                                         water content on the rate of breakdown of
relatively inflexible and outdated cane payment
                                                         soluble sugars in the soil following sugar cane
formula are then made to individual farmers,
                                                         harvest’ which was presented at the 2003
based on their cane tonnage and sugar content. In
                                                         Australian Society of Sugar Cane Technologists
turn, harvest contractors (including contractors,
                                                         Conference (Cook et al. 2003)).
farmer syndicates or farmer-harvesters) employed
by individual farmers are paid per tonne of              Similarly, the amount of cane trash taken to the
cane harvested and hauled to a rail siding or            mill impacts on the environment. A decision to
loading pad.                                             transport virtually all cane trash to the mill
                                                         would negatively impact the environment
In relation to the contract harvester sector, many
                                                         through loss of ground cover, thereby increasing
private contractor harvesters reportedly have
                                                         the risk of soil erosion and subsequently
substantial cash flow problems because of
                                                         affecting water quality. Removal of the trash
repayment commitments on 1–5 year old plant
                                                         blanket would also be likely to result in
and equipment and an inability to cover costs
                                                         declining physical, chemical and biological health
at current harvesting charges. Some harvester
                                                         of soil. The half trash and full trash scenarios
operators are in fact offering discounts to
                                                         modelled above would also incorporate
farmers to secure volume through their
                                                         electricity cogeneration, which produces an
machines. Their low cash flows have been further
                                                         environmentally friendly energy and, importantly
diminished by the reduced tonnages available to
                                                         for the environment, displaces coal-fired
cut because of adverse climatic conditions.
                                                         electricity generation.
Similarly, many growers are reportedly
experiencing rising debt due to depressed                Social problems may arise from the additional
revenues resulting from long term low sugar              cane trash in some scenarios spilling from trucks
prices, drought, and pest and disease incidence.         on route to the mill and being left on the road
                                                         and roadside. Burning of trash can cause social
                                                         problems due to the ash and smoke in the air.
4.6    Environmental and Social                          HBP may require longer working hours. Traffic
       Impacts                                           noise associated with after hours harvesting is
                                                         a social factor impacting on rural communities.
While not central to the studies reported here, the
                                                         Road and traffic safety after hours, particularly
severity of environmental and social impacts from
                                                         associated with cane rail systems, is also
cane harvesting operations depends on
                                                         relevant where major transport routes
management decisions made by the farmer, the
                                                         intersect mill areas.
harvester, and the miller. For example, a reduction
in cane juice loss — as would be achieved in a




30      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
5. PAYMENT SYSTEMS
It will be apparent to readers from the earlier          row length and haul distance. This raises further
discussions on the harvesting process and HBP, and       issues related to location of haul-out points,
on the results of the modelling work on various          harvest group structure, and cartage distances.
potential scenarios, that the system of payment to
the various sectors of the industry is the key driver
of many of the changes that are necessary for            5.2     The 2001 Cane Payment
increasing overall returns from the sugar industry.              Discussion Paper
The current payment system has been in place for
                                                         In February 2001, the Far North Qld Sugar
many years and a number of attempts have been
                                                         Industry Task Force released a discussion paper
made to review its strengths and weaknesses —
                                                         on the existing and still current cane payment
the most recent being the result of the Far North
                                                         system. It raised a fundamental question
Qld Sugar Industry Task Force and a current
                                                         regarding the market signals that payment
SRDC-supported project, BSS261. In this section,
                                                         systems send to each participant in the cane
the current payment system is described, the
                                                         supply chain (i.e. farmers, harvesters and millers).
discussion paper from the Task Force is revisited,
                                                         The paper confirms that the central objective of
the implications of the scenario modelling on the
                                                         all participants must be to maximise the amount
distribution of benefits are discussed, and an even
                                                         of sugar actually sold by the miller to the
wider range of alternative payments systems is
                                                         market. As the primary revenue received is for
presented and critically reviewed.
                                                         sugar sold, the joint focus for all three parties,
                                                         therefore, must first be to maximise the size of
5.1     The Current Payment System                       the revenue ‘cake’ and only then to develop
                                                         more appropriate and more equitable ways of
Harvester operators are currently paid at an             ‘dividing up the cake’.
agreed rate for each tonne of cane (i.e. including
extraneous matter and soil) that they harvest.           The study cites a number of apparent defects
This system encourages harvester operators to            with the formula employed in the current
cut at high pour rates and high extractor fan            payment system, including:
speeds because they receive greater income               • Inappropriate use of constants in the formula
and make more profit by cutting the maximum                that have little relation to quality and that
possible tonnage per hour, at the same costs               result in inequities
per hour. As noted earlier in this document,
                                                         • Inappropriateness of CCS as a reasonable
however, harvesting at high pour rates and
                                                           measure of recoverable yield from cane.
high fan speeds increases cane losses during
                                                           As a weak indicator of quality, it is an
harvesting, and increases the levels of EM and
                                                           inappropriate market signal.
soil in cane, and these in turn decrease CCS
and increase mill costs. Thus, the behaviour that        • Inappropriate levels of incentive to the various
is encouraged by the current payment system                parties
is the antithesis of HBP, which is based on the          • Inappropriate use of class fibre measurement
premise that lower fan speeds and pour rates               rather than individual fibre
produce cane in the bin of similar or better
quality but with minimal cane loss.                      • Incorrect price assumptions regarding levels
                                                           of EM
Per tonne payment systems also do not
encourage improvements in farm layout —                  • Payment of harvesters, based on tonnage
another factor that is closely involved in the             alone, that sends a poor market signal.
overall efficiency of harvesting. Manipulation of        Advances in near infrared spectroscopy (NIR)
the models confirms that the costs of harvesting         technology enable payment systems to recognise
are very sensitive to farm layout factors such as        cane supply quality at the mill. The paper


                                                   CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE    31
recognises a need to incorporate these measures          5.3    Scenario Modelling: Distribution
into the payment system. Citing an earlier study                of Returns from HBP to Industry
by the Boston Consulting Group, the paper lists
a set of key criteria for the design of an “ideal”
                                                                Sectors
payment system, as follows:                              The economic analyses completed in this review
• Integration of the growing and processing              (see Section 3) clearly demonstrated that the
  requirements that reward cooperation                   economic benefits of HBP were mainly due to
                                                         the reduction in cane loss and were therefore
• Accurate market signals reliably reflecting the        available as additional revenue for the whole
  quality of cane supplied                               industry chain. Of the additional $4 per tonne
• Effective utilisation of capital at all steps          of cane that the industry was predicted to gain
                                                         from HBP (see section 3.5), an estimated 85%
• Production of a range of products of different         was due directly to the additional cane arising
  values                                                 from reductions in cane loss. It follows that any
• Practical, robust and simple financial drivers         alternative payment system must encourage and
  suitable for long term use                             reward cane loss reduction as its first priority.
                                                         Such a system must create attractive economic
• Consistent price messages all going in the             rewards that motivate the supply chain
  same direction                                         participants that are responsible for this cane
• Changes in price that benefit all parties by a         loss. This is primarily the harvester operators.
  similar amount, with sharing of market risk to         The economic analyses also showed up, in
  enhance cooperation                                    a dramatic way, the inequities of the current
• Ensuring that no party has excess power over           payment arrangements and related formulae.
  the others                                             The models predict that the increased industry
                                                         revenue of $4 per tonne of cane would be split
• Minimising of adversarial relations between
                                                         $3/t to the grower, and $1/t to miller, under
  parties
                                                         existing payment arrangements. As the payment
• Ensuring that season length has a minimal              formula does not include harvesters, any share
  impact on all stakeholders                             of gains allocated to the harvester operators
                                                         depends entirely on their bargaining power.
• Maximising the economic return to the whole
                                                         As noted later, the weak bargaining power of
  industry through optimum yield of sugar and
                                                         the harvester operators is a major issue limiting
  other products sold.
                                                         the adoption of HBP, so it is also the major
The paper presented a number of alternative              factor limiting the recovery of more sugar and
cane payment options that would variously                the flow of additional economic benefits to
address the key criteria. It recommended that a          the whole supply chain.
balanced and suitably skilled industry committee
                                                         Not only do the harvest operators have little
be established to investigate the alternative
                                                         incentive to adopt HBP for the benefit of all
payment system options.
                                                         supply chain participants, but they also must
It is important to note that the discussion paper        suffer the additional costs of about $0.50 per
was developed from the context of the grower             tonne of cane cut as a direct result of adoption
and the miller, with a particular focus on cane          of HBP. This is largely due to the need to reduce
quality. While most of the criteria raised are           the forward speed of the harvester machine
valid, very limited direct reference is made to          (hence the pour rate) and the extractor fan
the harvest activity and the potential for               speed. These actions result in lower tonnes cut
enhanced returns through improved sugar                  per hour and hence lower revenue per hour
recovery at the harvester. These aspects are             under current payment arrangements, and
given greater attention in the following                 higher costs per hour (including hourly labour,
sections.                                                fuel usage and other running costs). In short,
                                                         current payment arrangements do not align


32      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
revenue drivers with costs drivers for harvester       The use of economic incentives to drive harvest
operators. They are currently paid per tonne of        performance. Traditionally the harvester operator
cane delivered but they incur costs by the hour.       has received few signals regarding the quality
                                                       and value of his harvesting performance.
Payment for the quality of cane supplied to the
                                                       Certainly none of these signals has been
mill is important and therefore there is a need
                                                       sufficient to motivate better harvest quality or
for accurate NIR measurement at the mill, as
                                                       sugar recovery. The dominant signal provided
noted above. However, the economic models
                                                       to most harvesters has been to harvest as
show there is also a danger in paying cane
                                                       much tonnage as possible in as short a time as
supply chain participants on cane quality
                                                       possible, before moving to the next block. The
alone. A clean cane supply is usually obtained
                                                       payment system has not been able to define and
by high extractor fan speeds when harvesting,
                                                       avail the harvester operators of an equitable
thus inducing high cane loss. Clean cane
                                                       share of these gains up to now. Harvester
generally results in heavier bin weights and
                                                       operators are only likely to change their field
some mill areas have incentives for heavy bins.
                                                       practices if they are aware of, and confident in,
This may encourage harvester operators to
                                                       securing attractive and defined economic gains
supply shorter billets, which results in
                                                       for each level of harvest performance.
increased cane and juice losses and
consequently a loss in total sugar revenues            The economic analyses described in Section 3
to the overall industry.                               highlight the significant gains that are available to
                                                       the whole sugar supply chain from the adoption
                                                       of HBP harvesting. The analyses demonstrate that
5.4     Improved Payment Systems                       these gains may be further extended by collection
                                                       of half of the trash. Investment in cogeneration
5.4.1 Core principles
                                                       adds to the net revenue pool, primarily though
The most effective cane payment system will be         addition of electricity to products from the supply
based on two main principles:                          chain. The amount of sugar recovered at the mill
A whole-of-supply-chain approach to                    may increase due to collection of all trash but the
harvesting. The linkages between the three             recorded CCS will decrease due to the increased
elements — milling, farming and harvesting —           fibre content. The net increase in sugar from
are central to creating additional value in the        harvesting all trash is not a sufficient incentive on
industry. These elements should not be divorced        its own to warrant processing all trash, but it is an
or separated. No one or two elements in the            incremental bonus from cogeneration of electricity
value chain can create and realise additional          using all trash.
value without the essential second and/or third
element. Harvesting is therefore a critical activity   5.4.2 Aligning incentives
for both the miller and the grower.                    The best way for the whole supply chain
It is the key to accessing significant additional      to maximise its net revenues from the three
revenues currently lost through loss of cane           inter-linked business groups is to create strong
during harvesting, as demonstrated in the              direct commercial links between the three, using
economic models. It is over-simplistic to state        whole-of-chain incentives based on available
that sugar is made in the paddock and not in           sugar in the field and the payment for sugar and
the harvester, because the harvest operator            other products at the market. If these net
undertakes the defining act that dictates the          incentives were in place, operational decisions
final level of sugar recovery. The total revenue       made by farmers, harvesters and millers would
pool available to the supply chain can only fall       be likely to be focused on a common goal of
from the point of harvest onwards along the            maximising returns. This goal should become
chain. Therefore, every effort should be made to       part of an agreed harvest plan that maximises
gain a return on all costs invested by all supply      net incentives and therefore maximises net
chain parties in growing, transporting and             revenues across the whole supply chain.
milling the crop.


                                                 CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE    33
The allocation of shared returns must be                  payment formula is not able to achieve this.
equitable to millers, farmers and harvesters and          Instead, it acts as a disincentive to increased
reflect the costs incurred and risks taken by each        revenues.
party in contributing to the whole-of-chain
                                                          An analysis of alternative harvest payment
result. Accordingly, payment systems should be
                                                          systems is summarised in Table 10. It should be
designed to educate and reward harvester
                                                          noted that several of the options do not offer
owners and operators on the value of increased
                                                          sufficient commercial incentives to the parties
sugar recovery that can be created by
                                                          to improve sugar recovery but focus instead on
implementing HBP and by achieving a higher
                                                          mechanisms to allocate current revenue rather
quality cane supply in terms of low extraneous
                                                          than on first increasing the amount of revenue
matter and cane loss. The scenarios analysed in
                                                          available across the supply chain.
this report confirm that the current cane

TABLE 10. ALTERNATIVE   HARVEST PAYMENT SYSTEM OPTIONS, CONSEQUENCES AND INCENTIVES

 Payment          Advantages and Disadvantages                    Consequences            Feasibility and
 System           (advantages in bold)                                                    Attractiveness

 1. Dollars per   • Widely known system                           • Harvester will not    • Currently
    tonne cane    • Easy to administer as relates to                perform a quality       feasible but
    (Current        tonnage along supply chain —                    harvest as there        results in
    System)         Not open to abuse                               are no incentives       significant
                  • Inbuilt HBP disincentive-rewards high         • Farmer will lose        losses along
                    speed harvesting                                sugar in the field      supply chain.
                  • Heavy cross subsidisation of poor               and may suffer          Does not create
                    productivity                                    stool/field             net incentives
                  • No incentive for extra work or harvest          damage                  to maximise
                    quality                                       • Miller will receive     economic sugar
                  • Does not encourage improvements in              higher EM and         • Limited
                    farm layout                                     incur higher costs      attractiveness
                  • Discounts the importance of the key
                    parameter viz capturing the total
                    tonnage of available sugar

 2. Dollars per   • Enables full HBP economic incentives          • Harvester has         • Currently
    hour            to capture “economically viable” sugar          power to agree          feasible and
                    to flow to harvester and grower                 specific                commercially
                  • Allows automatic accounting for                 commercial              attractive
                    variable yield                                  incentives with       • Requires
                  • Enables full economic incentives to             farmer and miller       enhanced
                    flow to growers from better farm              • Farmer faces            pre-harvest
                    design                                          greater risk of         planning and
                  • Encourages improved crop                        poor admin. and         contractual
                    presentation                                    time keeping,           arrangements
                  • Promotes closer pre-harvest planning            but will capture        between the
                    between harvester & grower                      added revenues          parties to agree
                  • Penalises growers distant from receival         if arrangements         how time will
                    pads/ sidings, especially in wet weather        are on clear            be managed
                  • Requires detailed accurate time                 contractual terms       and risks and
                    recording by machine operators and            • Miller will receive     returns
                    authorisation by farmers                        increased volume        allocated
                  • Opportunity for human error in                  of clean cane
                    recording of time                               with positive
                  • Opportunity for unscrupulous charging           impact on net
                    of time by harvest operators                    revenue.


34      SUGAR RESEARCH    AND   DEVELOPMENT CORPORATION
Payment          Advantages and Disadvantages                  Consequences             Feasibility and
System           (advantages in bold)                                                   Attractiveness

3. Base Price    • Easy to manage for both fuel and            • Harvester will         • Currently
   +Fuel ($/t      tonnage                                       focus on cost            feasible
   + fuel        • Partially accounts for farm layout            management             • Focus will be
   supplied        variations                                    rather than              on cost
   by grower)    • Introduces flexible fuel pricing              quality.                 competitiveness;
                   options                                     • Farmer assumes           not incentives
                 • Enables partial economic incentives           more cost risk           to maximise
                   to flow                                       without                  sugar
                 • Some cross subsidisation of poor              guarantee that         • Limited
                   productivity                                  harvester will           attractiveness
                 • Partial disincentive for extra work or        capture
                   harvest quality                               maximum sugar.
                 • Limited incentive for improvements in       • The Miller’s cane
                   farm layout                                   supply and
                                                                 quality will not
                                                                 be improved

4. Quoted        • Provides verifiable economic                • Uncertain,             • Uncertain,
   Price using     quotations                                    subject to               subject to
   BSES          • Significant effort required to understand     components               components
   Model           & use the model the first time                of model                 of model
                 • Needs annual review, possibly between
                   harvest rounds to recognise changes in
                   yield estimates
5. Dollars per   • Easy to administer based on agreed          • Harvester will         • Currently
   hectare         field areas                                   focus on cost            feasible
                 • Makes harvester budgeting easier              management             • Focus will be
                   — revenues are known                        • Farmer will lose         on cost
                 • Farmer’s costs are known                      sugar in the field       competitiveness;
                 • Inbuilt disincentive-rewards high speed     • Miller’s cane            not incentives
                   harvesting                                    supply and               to maximise
                 • Enables cross subsidisation of poor           quality will not         sugar
                   productivity                                  be improved            • Limited
                 • Limited incentive for extra work or                                    attractiveness
                   harvest quality
                 • Limited incentive to improve farm
                   layout
6. Floor price   • Enables some flexibility as rate            • Harvester will         • Currently
                   reverts to an hourly base if tonnage          focus on cost            feasible
                   /ha is low                                    management             • Focus will be
                 • Uses the BSES Rate Calculator               • Farmer will lose         on cost
                   Model as a starting point                     sugar in the field       competitiveness;
                 • A bet each way — implications are           • Miller’s cane            not incentives
                   likely to be too complex and risky for        supply and               to maximise
                   farmers and harvesters                        quality will not         sugar
                 • Requires prompt and accurate tonnage          be enhanced            • Limited
                   and area feed back and monitoring to                                   attractiveness
                   work effectively




                                               CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE        35
 Payment          Advantages and Disadvantages                   Consequences           Feasibility and
 System           (advantages in bold)                                                  Attractiveness

 7. Dollars per   • Directly links maximum whole chain           • Would deliver        • Feasible,
    tonne of        revenue to harvester incentives for            optimum net            subject to
    sugar           harvest quality                                incentives to all      payment
                  • Difficult to manage as sugar varies            parties but only       system
                    across mill area. Geographic harvest           where payment          realignment
                    options required.                              system was reset     • Most attractive
                  • Farmers fear loss of harvest equity from       to better allocate     option
                    geographic harvesting                          benefits
                  • Technology constraints — difficult to
                    accurately measure and monitor sugar
                    at the harvester
                  • Complicated by delay in delivery to the
                    mill and loss of quality — 24 hour
                    transport scheduling

 8. Pay Direct    • Establishes a clear pre-agreed               • Will result in       • Currently
    Economic        attractive economic reward for                 immediate              feasible and
    Incentive       harvest performance based on                   positive change        commercially
    for             specified field practices and                  in practice,           attractive
    Adoption        maximum sugar recovery                         quality of           • Focus will shift
    of HBP        • Amenable to current cane payment               harvest, and           from cane
    ($0.5/t +       arrangements                                   economic flow          pricing to
    share of      • Allows flexibility to parties to agree         on to growers          revenue
    net             locally in mill area                           and millers            maximizing.
    revenue       • Needs to be negotiated by parties on         • May result in
    gains)          a mill area basis — including sharing          additional
                    of net gains to farmers, and millers           harvest tonnage
                  • Does not fix all the inadequacies of the       and extension of
                    current payment system                         season length


Based on the economic modelling undertaken                   improved harvest outputs (that is, by
in this review, Option 8 (Table 10) is considered            agreeing on a specified fan speed and pour
to be the preferred payment system option to                 rate for the particular crop conditions). This
ensure that incentives are provided to all three             amount will reimburse harvesters for the
parties to maximise sugar revenue. In the first              cost of slowing down their machines. The
seven options, there is little alignment of                  additional payment will need to be agreed
incentives for the various activities to maximise            before harvesting and be aligned with
sugar yield. The three parties in each mill area             regional cane payments formulae. Based on
need to discuss and agree on economic                        subsequent increases in revenue accrued
incentive arrangements that encourage                        to growers and millers as a result of these
harvesters to adopt HBP and that equitably                   actions, it is suggested that approximately
share the gains resulting from HBP (which is,                40 cents per tonne of this additional
primarily, less cane and sugar loss). The                    harvesting cost should be paid by the
economic modelling suggests that these                       grower and 10 cents by the miller.
incentives should be based on two payments:
                                                         2. An equitable share of the increased
1. An additional amount of approximately                    revenues resulting from increased sugar
   50 cents per tonne of cane to harvesters,                recovery for harvesters, growers and
   paid as part of the contract harvesting price            millers reflecting individual conditions
   for adoption of HBP and delivery of                      in each mill area.


36      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
6. IMPROVING THE EFFICIENCY OF HARVESTING —
   OUTPUTS FROM MAY 2003 WORKSHOP
Improving the overall efficiency of the entire          6.1.1 Obstacles to adoption
harvesting process was the key objective of
                                                        The principal obstacles to increased adoption
a recent workshop attended by a broad cross
                                                        of HBP harvesting were seen to be as follows:
section of industry participants (Review of
Sugarcane Harvesting Practices) held at Sugar           • Lack of appropriate incentives for harvester
Research Institute, Mackay, in May 2003. The              operators to encourage greater adoption.
participants discussed the scenarios presented            As explained in detail in Section 4, under the
above at the workshop. This Section draws                 current system of payment, HBP harvesting
heavily on the ideas and priorities raised at             results in lower returns and higher costs for
this workshop and attempts to chart an                    harvester operators, but higher net returns
achievable, pragmatic way forward for                     for both growers and millers. Thus, the
the industry.                                             rewards from HBP harvesting are not
                                                          distributed equitably between the various
                                                          industry sectors. Moreover, harvester
6.1    Adoption of HBP Harvesting                         operators are currently in a weak bargaining
Of the various options for improving the                  position since the best of them, with modern
efficiency of the harvesting canvassed in                 technologies and highly trained staff, have to
previous sections of this document, the one               compete on a price per tonne harvested with
that appears to have the strongest case for               others who are less concerned with achieving
immediate implementation is the more                      a “quality” harvest.
widespread adoption of HBP harvesting.                  • Inadequate awareness of the costs and benefits
The rational for this conclusion is as follows:           of HBP harvesting by the various industry
• HBP harvesting is well understood by R&D                sectors and inadequate focus by all sectors on
  and Extension staff and by many harvester               the main target — increasing the total amount
  operators and growers, and its effects on               of sugar harvested from a mill area. A
  cane loss and extraneous matter levels are              symptom of these inadequacies may be the
  well documented.                                        reasonably widespread reluctance amongst
                                                          growers across the industry to reward harvester
• The economic benefits of HBP harvesting                 operators for the “quality” of their work.
  have been clearly demonstrated by R&D                   Improved trust, cooperation, communication,
  and by the scenario modelling reported                  and information flow between the sectors
  in this study.                                          would clearly be of great benefit.
• HBP harvesting requires no new capital                • Lack, or inadequate use, of measurement
  investment and can, theoretically, be                   technologies. Appropriate technologies exist
  implemented immediately.                                for the measurement at the point of harvest
(As previously noted in section 2.1, the term             of ground speed, pour rate, and extractor fan
“Harvest Best Practice” is used throughout this           speed, but these are not as widely used as is
document to mean those harvester machine                  desirable. Direct and accurate measurement
operations and adjustments under the direct               of one of the key variables — cane loss —
control of the harvesting contractor that favour          however is very difficult, even experimentally,
higher harvesting efficiency and higher sugar             and not widely available on most harvesters.
recovery. The principal factors contributing              Better measures of cane quality (e.g. soil,
to HBP are reduced pour rates and reduced                 extraneous matter, billet length and
fan speeds.)                                              disintegration, etc) at the point of harvest,
                                                          preferably on a block by block basis, are also


                                                  CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   37
     needed. Technologies to measure crop yields            • Given that HBP harvesting looks economically
     prior to harvest are also inadequate; if better          attractive on paper, each mill area needs
     methods were available they would greatly                to revise incentive and payment systems
     benefit harvest planning.                                to ensure that:
                                                               a) maximum net incentives are created
6.1.2 Action pathways for adoption
                                                                  across the whole chain;
Pathways to adopt HBP and enhanced sugar
                                                               b) commercial rewards are provided to the
recovery will be most successful where joint mill
                                                                  three parties in the chain, based on
area teams work together on issues. Initial steps
                                                                  specific performance criteria; and
that were considered to be necessary by
workshop participants were:                                    c) revised payment systems equitably and
                                                                  cost-effectively deliver these rewards in a
• Mill area chain participants need to jointly
                                                                  timely commercial manner to each party.
  investigate the costs and benefits of adopting
                                                                  This step will encourage endorsement and
  a program of HBP harvesting, with or without
                                                                  adoption of HBP by all enterprises across
  harvesting of additional trash for electricity
                                                                  the whole supply chain in each mill area.
  cogeneration, based on local circumstances
  and requirements. The economic predictions                The industry workshop considered that six
  in this report, using recent data, indicate               activities must be completed to enhance industry
  clear economic gains from HBP in two typical              harvest productivity and sugar recovery. These
  mill areas.                                               are listed in Table 11, in no particular order.

TABLE 11. ACTIVITIES   IDENTIFIED AT WORKSHOPS THAT ARE REQUIRED TO ENSURE RAPID UPTAKE OF   HBP
 ITEM                            HOW DO WE MAKE IT HAPPEN?
 Managing what is                • Improve the technology for measurement of cane loss, and make an
 happening in the                  appropriate cane loss monitor widely available
 paddock during the              • Aim to monitor harvester productivity on a block-by-block basis using
 actual harvest                    GIS/GPS systems. This would allow progress to be monitored and provide
                                   a basis for further improvement of harvest efficiency
                                 • Improve feedback to growers and harvesters from the mill on cane quality,
                                   bin weights, EM, soil in cane, etc.
 Implementing an HBP             • Establish mill area HBP groups and perhaps use case study and action
 Program                           learning approaches to accelerate promotion of HBP at the local level
                                 • Recruit pilot group innovators to promote the HBP manual
                                 • Investigate linkages to the cane payment system at the mill area level
                                 • Adapt models at the mill area to better define costs and benefits
                                 • Develop a system of stratified payments, depending on crop condition
                                 • Develop model/draft contracts for reward systems at the mill area level
 Improving                       • BSES, SRI, & Macarthur to jointly promote the HBP program
 communication of                • Demonstrate the benefits to participants using supply chain models that
 benefits/costs of HBP             have been tuned to the particular mill area conditions prevailing
 Accrediting and                 • Conduct HBP information workshops
 training operators              • Provide competency-based training for harvester operators and growers
                                   and use this training (and actual performance) as a basis for contracts
 Improving the                   • Maximise mutual trust and respect by sharing information more openly
 transparency of supply          • Encourage the industry chain participants to participate in the HBP
 chain information                 implementation program in good faith
 Fostering leadership            • Challenge Workshop participants who have been exposed to data on the
 and courage                       costs/benefits of HBP harvesting to “speak with one voice” at the mill
                                   area/ regional level


38        SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
6.2    Other Measures to Improve the                    any new payment system must account for
       Efficiency of Harvesting                         the risks and related costs of transport as an
                                                        integral activity within the chain.
A number of other measures that would
                                                      • Improved farm layouts. Improved layouts
improve the efficiency of harvesting, particularly
                                                        would increase the proportion of total
if used in combination with “core” HBP
                                                        harvester time actually spent harvesting.
harvesting, were also suggested at the
                                                        Measurement of harvesting costs on a block
workshops. They are listed below.
                                                        basis would be likely to raise grower
• Improved harvest-transport linkages.                  awareness of, and action on, this issue.
  Efficiency of cane transport, typically involving
                                                      • Improved long-term weather forecasting.
  in-field haul-out and transport from the pad
                                                        This is likely to be beneficial in decision
  to the mill tip by road or narrow-gauge rail,
                                                        making, e.g on the order in which blocks
  is a major area for improvement for the
                                                        are harvested
  industry. Transport is a cost for the whole
  supply chain, not a revenue centre. It does         • Greater transparency of information across
  not offer the chain participants new ways to          the entire industry chain. Transparency and
  create new revenues, it only offers ways to           sharing of information between industry
  save costs. Due to the capital-intensive nature       chain participants is likely to increase
  of transport activity, supply chain managers          awareness of benefits, costs, and issues
  must aim to minimise the fixed and variable           of concern, and in time build trust between
  transport costs charged to every tonne of             participants.
  sugar using the transport system. Thus, high
                                                      • Accreditation and Contracts. Accreditation of
  utilisation of capital is essential to cost
                                                        harvest and transport operators, and the use
  control. Inefficiency of cane transport systems
                                                        of formal contracts for harvesting between
  results in significant costs increases,
                                                        growers and harvester operators are likely
  particularly to harvesters, and any benefits
                                                        to lead to better harvesting efficiency and
  accruing to the supply chain from in-field
                                                        provide greater security to harvester
  HBP may be eroded by poor transport
                                                        operators.
  management. It follows, therefore, that




                                                CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   39
7. APPENDICES

APPENDIX 1                                                       sugar industry of operating commercial
                                                                 mechanical harvesters to maximise sugar
                                                                 recovery from the field and at the mill,
Tender for review of sugarcane                                   compared to current operations, while
harvesting practices: Terms of                                   a) minimising soil, roots, leaf, and tops
reference                                                           in the cane supply;
Objectives:                                                      b) minimising soil and roots in the cane
• To integrate and synthesise the relevant                          supply but supplying approximately
  published and unpublished information on                          5% fresh weight leaf and tops for
  cane harvesting operations that seeks to                          cogeneration at the mill; and
  reduce cane and juice losses, and to reduce                    c) minimising soil and roots in the cane
  soil and other extraneous matter                                  supply but supplying approximately
  contamination of the cane supplied for                            10% fresh weight leaf and tops for
  milling                                                           cogeneration at the mill.
• To conduct economic analysis of the benefits               (iii) Alternative payment arrangements for
  and costs across all industry sectors of                         harvesting operations that increase the
  harvesting operations that reduce cane and                       profitability for all parties across the
  juice losses, and soil intake, for a range of                    value chain, including analysis of the
  target leaf content levels in the cane supply                    expected costs and benefits to all parties
• To indicate options, consequences, and                           of the various options
  technical and social feasibility of alternative            (iv) The generality of harvester operating
  harvesting payment arrangements that                            guidelines to minimise cane loss, juice
  maximise whole of system profitability                          loss and soil intake across the range of
• To organise and facilitate an industry                          mill areas including those subject to wet
  workshop aimed at developing pathways                           harvesting periods, one- and two-year
  to adoption of more sustainable harvesting                      crops, and burnt and green cane
  operations and payment arrangements.                            harvesting.
                                                         Specifically the analysis should
1. Technical and economic analysis of
                                                         • examine the final reports and other relevant
   Sugarcane Harvesting Practices and
                                                           documents available at SRDC and other
   Payment Arrangements
                                                           Australian institutions relating to R&D for
The following should be considered by the                  mechanical harvester improvement
consultant(s) undertaking the Review and
                                                         • assess the technical feasibility and practicality
reported on:
                                                           of operating harvesters over the range of
     (i) All relevant published and unpublished            Australian conditions to maximise sugar
         information on the technical aspects of           recovery and minimise soil intake
         mechanical harvesting operation that
                                                         • undertake economic-impact modelling using
         minimises cane and juice losses while
                                                           available industry data to predict the likely
         minimising soil and other non-cane
                                                           costs and returns to the growing, harvesting,
         materials in the cane supplied for milling
                                                           transport and milling sectors of the Australian
     (ii) The projected economic benefits and              sugar industry, for at least three scenarios of
          costs to all sectors of the Australian




40      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
   trash level in the cane supply and in at least         2. Case studies of the projected economics of
   two different mill areas                                  alternative harvesting operations to provide
                                                             a range of practical trash levels
• summarise current knowledge of best
  harvesting practices, including benefits and            3. Identifying linkages between best harvesting
  costs in terms of economic impacts across the              practices, better ratooning, reduced soil
  industry value chain, in a form suitable for               compaction, and environmental as well as
  presentation at an industry workshop                       economic benefits of reduction in cane and
                                                             juice losses
It is expected that the consultant(s) will need to
interact with a range of relevant sugar industry          4. Alternative harvesting payment
people during the preparation of the review                  arrangements that aim to maximise returns
report. In particular, the consultant(s) should              across the industry value chain
seek to collaborate with other SRDC-funded R&D
                                                          5. Information on linkages between best
activities that involve harvesting operations, quality
                                                             harvesting practices and best transport
of the cane supply, and harvester payment
                                                             logistics, with the aim of improving cost
arrangements with the aim of sharing information
                                                             efficiencies and revenues between the farm
to the mutual benefit of all participants.
                                                             and the mill
The analysis will be required by 1 May 2003
                                                          6. Identification by participants of potential
prior to the conduct of a workshop with
                                                             obstacles to implementing alternative
participants from throughout the Australian
                                                             harvesting payment arrangements, and
sugar industry aimed at adopting more
                                                             possible solutions
sustainable harvesting practices. It is expected
that the consultant(s) undertaking the analysis           7. Participative workshop process to synthesise
will present a summary of the technical and                  information and develop pathways to
economic findings at the workshop, and lead                  adoption of more sustainable harvesting
a discussion on these findings.                              operations and payment arrangements
                                                          8. Evaluation of the workshop process.
2. Industry Workshop to develop Pathways
   to Adoption of more Sustainable                        It is expected that the consultant(s) will organise
   Harvesting Operations and Payment                      and facilitate the workshop, and provide a
   Arrangements                                           written summary of the proceedings including
                                                          any recommendations and proposals developed
The Workshop should involve:                              from the workshop. It is proposed that the
1. Presentations on the technical and economic            industry workshop be held in May 2003 at
   aspects of mechanical harvesting operations            Mackay, at a date to be determined. The report
   to maximise sugar recovery while minimising            on the workshop, will be submitted to SRDC
   soil intake                                            within one month of the workshop.




                                                    CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE    41
APPENDIX 2
Harvest Review Workshop Agenda and Participants
Friday 23rd, May 2003, Mackay, SRI Conference Room
Workshop Objective: Review cane supply chain analyses, and Identify harvester adoption pathways
                    for improved cane harvest productivity and returns to industry
8.00 am                 Getting Started — welcome and introductions
                        What the brief requires — process and objectives
                        Review of supply chain
                        Models and linkages — farming; harvesting; transport/milling
                        Mill area assumptions — Base Case
                        Scenario — Base; HBP; 1/2 Trash; 1/2 Trash + clean; 1/2 Trash +cogen;
                        All Trash
9.00 am                 Define HBP and compare to Base
                        What is HBP, current status, why change has/has not occurred
                        Fully Lit Review Synthesis of Literature Review — key drivers
                        What is driving the HBP margin change — reduced cane loss
                        Model inputs — operating tonnages, capital, time, group configuration
10.30 am                Coffee Break
10.50 am                Economics/Revenue Chain — How is additional revenue produced
                        Integrated Model outputs — economics along the chain, margins
                        Achieving low cane loss, ‘clean’ cane — extra harvest costs, who pays
                        Achieving low cane loss, more trash — extra transport, increased milling costs
                        Implications/Barriers for adoption at the field level and transport
12.30 pm                Lunch
1.30 pm                 Implication/Barriers to increasing the supply chain revenue ‘cake’
                        Revisit — who pays and who benefits, implications and barriers
                        Scope — system changes to encourage adoption short term, long term
                        Consider/suggest payment redistribution to enable revenue cake to increase
                        • Discussion
2.30                    Coffee Break
                        New directions/concepts
                        Half trash assumptions — +clean, + cogen
                        Full trash assumptions — with cogen
                        Adoption pathways to cogeneration scenarios
4.00 pm                 Close




42     SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
Workshop invitees
Mr Mal Baker        CNH Austoft                      Mr   Ross Frumento       QMCHA Tully
Mr Trevor Willcox   BSES Mackay                      Mr   Gary Stockham       QMCHA Burdekin
Mr Stephan Ryan     ACFA                             Mr   Eric Waugh          QMCHA Mossman
Mr Max Craigie      ASMC                             Mr   David Hinschen      QMCHA Proserpine
Mr David Braddock   Maryborough Sugar                Mr   Adrian Toft         QMCHA Bundaberg
Dr Les Robertson    SRDC                             Mr   Peter Milanovic     QMCHA Ingham
Mr Ian Ballantyne   Canegrowers Head Office          Mr   John Dowling        QMCHA Maryborough
Manager             Canegrowers Cairns               Mr   Bert Plenkovich     QMCHA NSW
Mr Peter Lucy       Canegrowers Tully                Mr   Alan Johnstone      Mossman Mill
Mr Peter Sheedy     Canegrowers Herbert River        Mr   Ray McDowall        Mulgrave Mill
Mr Robert Cocco     Canegrowers Burdekin             Mr   Robert Lewis        Tully Mill
Mr Ian McBean       Canegrowers Proserpine           Mr   Alf Musumeci        Proserpine Mill
Mr Scott Perkins    Canegrowers Mackay               Mr   Mark Hochen         Isis Mill
Mr Dale Holliss     Canegrowers Bundaberg            Mr   John Power          Maryborough Sugar
Mr Wayne Stanley    Canegrowers Isis                 Mr   David Heck          Rocky Point Mill
Mr Trevor Turner    Canegrowers Maryborough          Mr   Greg Messiter       NSW Sugar
Mrs Olly Rowe       Canegrowers Rocky Point          Mr   Grant McLean        Bundaberg Sugar
Mr John Makepeace   Canegrowers NSW                  Mr   John Pollock        Mackay Sugar
Mr John Powell      QMCHA Mackay                     Mr   John Baird          CSR Sugar
Mr Joe Muscat       QMCHA Mackay




                                           CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   43
APPENDIX 3
Modelling Comparison — SRDC                              This difference, however, is still appreciable and
Project and Bundaberg Sugar Ltd                          is investigated further in the next section
(Mourilyan)
                                                         2. Reasons for Differences
1. The Issues
                                                         The difference between the calculated benefits
This Appendix discusses the concerns raised              of $3/t and $1.50/t from the two studies is due
at the SRDC Project Workshop about major                 to the assumed input conditions that are shown
discrepancies between modelled results from the          in the table below.
SRDC Project (reported in this document), using
                                                         The key difference is in the cane loss —
the SRI Model, and similar studies undertaken
                                                         the extra cane that the SRDC Project assumed
by Bundaberg Sugar in the Mourilyan area. The
                                                         would be sent to the factory over that from
SRDC Project reported benefits of $4/t from HBP
                                                         the Mourilyan study meant more sugar and thus
harvesting, whereas the Mourilyan study
                                                         more revenue for the growers. This difference is
reported benefits of only $1/t.
                                                         the main reason for the different results from
Firstly, it should be noted that the SRDC Project        the two studies.
reported a $4/t benefit for the growers and
                                                         (At the start of the SRDC project, the team
millers combined, specifically $3/t for the
                                                         modelled a different scenario using cane loss
growers and $1/t for the millers. The Bundaberg
                                                         figures of: Base case, 13.5%; HBP, 8.5%; hence
Sugar Ltd (BSL) Mourilyan study benefit of $1/t,
                                                         Base-HBP, 5%. This scenario, which is very
however, was only for the growers. So, in effect,
                                                         similar to that for the Mourilyan study, produced
the grower benefit comparison is between $3/t
                                                         a gross benefit to the grower of just under $2/t,
(SRDC Project) and $1/t (Mourilyan).
                                                         which is reasonably closer to the $1.50/t of the
Secondly, the BSL Mourilyan figure of $1/t is            Mourilyan work.)
a net figure, after the increased harvesting cost
                                                         It is important also to note that, in the SRDC
of implementing HBP had been accounted.
                                                         Project, the modellers assumed that the cane
This increased harvesting cost was approximately
                                                         supply was significantly cleaned by HBP, with EM
$0.50/t. Thus the gross benefit to the growers
                                                         decreasing from 11.5% to 6%. This compares
was $1.50/t. Our reported benefit of $3/t for
                                                         with the very small change in the Mourilyan
the growers was a gross figure, that is, we had
                                                         study, namely 4.5% down to 3.7%. As EM
not subtracted the increased harvesting cost.
                                                         levels directly affect sugar recovery, the greater
Therefore, the real comparison is between                decrease in EM in the SRDC Project would also
gross grower benefit of $3/t (SRDC Project)              have contributed to the difference. However, the
and $1.50/t (Mourilyan study), rather than               contribution of the change in EM to the overall
$4/t and $1/t that was the original concern.             result was probably relatively small. In our SRDC

         Study                      Base case                     HBP                    Base – HBP

 Extraneous matter, EM (excl. dirt)

 SRDC                                 11.5%                      6.0%                       5.5%

 Mourilyan                            4.5%                       3.7%                       0.8%

 Total cane loss

 SRDC                                 16.5%                      8.5%                       8.0%

 Mourilyan                            11.5%                      6.5%                       5.0%


44      SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
Project study, we estimated that the dollar         study was quite different — the changes
benefits of HBP compared to the Base case           in cane loss and EM were smaller, so the
were due 85% to the increased cane (lower           calculated benefits to the growers were
cane loss) and 15% to the increased sugar           smaller.
recovery (lower EM).
                                                    Thus, the two studies represent two different
                                                    HBP scenarios; two points on the curve of HBP
3. Summary                                          versus benefits. Which scenario was more
In summary, the SRDC Project modelled               correct, only further industry experience will tell.
a base case where the cane loss was high            The Mourilyan input data resulted from BSL and
and the cane supply relatively trashy, and          BSES measurements and detailed knowledge
an HBP scenario where the cane loss was             from Mourilyan. The SRDC input data came
reduced dramatically, and the cane supply           from the wider Literature Review that formed
very clean (in terms of trash at least, the         the first part of the study, and the brief initially
assumed amount of tops in the cane                  set by SRDC, i.e. to examine minimum EM and
declined only marginally). The Mourilyan            cane loss that could be practically achieved.




                                              CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE    45
NOTES




46   SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION
NOTES




        CANE HARVESTING   TO IMPROVE INDUSTRY   PERFORMANCE   47
NOTES




48   SUGAR RESEARCH   AND   DEVELOPMENT CORPORATION

				
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