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• Marginable economics for converting biomass to electricity and other byproducts.<br />
• Mallee production which is generally regarded as non-core business in a cereal cropping<br />
farming enterprise.<br />
• The Mallee tree is particularly difficult to harvest and process cost effectively owing to its<br />
physical characteristics and plant layout.<br />
The structure <strong>of</strong> an industry and its participants will affect the supply chain. For example the<br />
Australian sugar industry is structured with predominately family owned farms, and a range <strong>of</strong><br />
ownership structures for harvesting. Cooperative or company owned mills are responsible for cane<br />
transport, the manufacture <strong>of</strong> sugar and other products, and now, with a deregulated environment, for<br />
contracting storage, marketing and shipping. This means that there are many pr<strong>of</strong>it centres with each<br />
centre and sector seeking to maximise its income and minimise its costs (SRDC 2006b). Individual<br />
sector goals, however, may impose costs across the entire value chain such that whole-<strong>of</strong>-system<br />
pr<strong>of</strong>itability is not maximised. Opportunities exist, therefore, for more integrated management <strong>of</strong> the<br />
value chain to enhance revenue and cost efficiency for the benefit <strong>of</strong> all industry participants (SRDC<br />
2006b). A key driver in the cane industry has been a cane payment formula based on quality <strong>of</strong> the<br />
product delivered, which is impacted by operation <strong>of</strong> the supply chain in terms <strong>of</strong> delivery delays and<br />
impurities from the field.<br />
The Mallee Industry in Western Australia is largely structured around independent wheat farmers who<br />
have no strong links to biomass markets and processors and for which there is no established harvest<br />
and transport system. Biomass processors are unlikely to manage the supply chain, but one value<br />
chain option is that a large central processor will engage or form an agent to occupy a “middle-man”<br />
role. Farmers could similarly form a cooperative or other corporate structure to be the middle-man.<br />
A key part <strong>of</strong> managing the supply chain will be in product diversification. This is discussed in<br />
greater detail in Chapter 4. Diversification within the sugar industry has considered production <strong>of</strong><br />
renewable energy from ethanol or electricity co-generation and other possible new enterprises, such as<br />
the production <strong>of</strong> fibre-based products (paper, packaging, etc.) or lactic acid and other chemical byproducts,<br />
livestock feed and fertilizers products.<br />
Product diversification for Mallee biomass is also likely, with products including electricity,<br />
eucalyptus oil, and the use <strong>of</strong> pyrolysis to produce liquid fuels (via bio-crude oil or Fischer Tropsh<br />
synthesis), biochar and chemicals. This diverse product base will also affect supply chain<br />
management. Sugarcane product diversification evolved from an established sugar market which<br />
was able to sustain development <strong>of</strong> new product streams. Development <strong>of</strong> an established biomass<br />
market will be required to support development <strong>of</strong> sustainable biomass supply chains. It is not<br />
clear whether this large scale market will be for electricity generation or the bio-oil market.<br />
Bezuidenhout and Bodhanya (2010) identify a supply chain as being a composition (or framework) <strong>of</strong><br />
five important building blocks Figure 6.1. The value chain is concerned with systems properties<br />
describing value-adding, value loss and distribution <strong>of</strong> benefits throughout the chain. Second, a<br />
material handling chain, concerns the physical equipment and processes used to enable value adding.<br />
The third dimension, viz. a collaboration chain, focuses on the way stakeholders collaborate and comanage<br />
the material handling activity. Fourth, the collaboration chain is held together through an<br />
effective information chain that enables stakeholders to manage their system. Finally, only once these<br />
four chains are understood and well managed, could one consider integrated system innovations<br />
where all processes are aligned to enhance efficiency. Bezuidenhout and Bodhanya (2010) suggest<br />
that the interaction between the different above-mentioned chains is critical and any innovation that<br />
does not consider all these dimensions simultaneously will probably fail.<br />
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