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conflict. Notwithstanding ownership issues, good performance across the value chain results when
there is cooperation and commitment between each sector in sharing business proceeds.
Based on the lessons learnt from the Sugar Industry, to achieve a sustainable biomass industry, the
Mallee industry needs to streamline the value chain by establishing an intermediary organisation /
party to facilitate harvesting, transport and supply arrangements. This will in turn limit capital
requirements and multiple combinations of ownership, potential conflicts and costs. This will be
particularly important for the Mallee industry to consider given the interdependence of the grower and
the processor is quite different to the sugar industry experience. It is unlikely that supply
arrangements will be driven by necessity and more likely via a commercial opportunity. Alternatively
the cooperative harvesting groups / partnerships, as encountered in the NSW Sugar Industry, provide a
good example of how the growing sector, consisting of relatively small scale operators can maintain
ownership of the supply chain while operating a highly efficient harvest and transport system.
Prior to these considerations a key ingredient, is the ability to establish confidence through long term
contracts / supply agreements. This is particularly important in the Sugar industry and likely to be just
as important in the supply of Mallee Biomass. This needs to be informed by the availability of
material and the feasibility of supply, which like the sugar industry underpins the profitability and
economic stability of a cane supply area which acts as the basic profit centre (a view point the Mallee
industry should adopt). Whilst the business and industry structures described provide the mechanism
for things to occur, there remains an underlying requirement for a critical mass of supply within an
economic radius. This is certainly the experience within the sugar industry where various ownership
models and structures are in place and yet a number of mills have closed in recent years.
Key considerations regarding sugar and mallee industry and business structures are summarised in
Appendix 1 of the document.
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