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Case Study 6.3 – Model Application – Mackay Mill Area (SRDC, 2006b)
A key driver for this work was expansion in production areas up to 1999 followed by drought, disease (orange
rust) and low sugar prices. Major cost cutting was required by the mill, with outsourcing of services,
termination of cane inspector services, resulting in poor relations between miller and grower. A key result of
this work was better cane payment systems that promote growing regional wide revenue and distribution more
equitably. The project also resulted in investment in information technologies to collect store and share
information to improve decision making.
Cooperative Systems Model
The mill made the decision to invest heavily in information technologies to collect, store, and communicate
information electronically to growers, and involve all sectors in the decision-making process using a
participative approach. Timely and relevant information about all sectors is required by participants in each
sector to make decisions that support an integrated value chain. Systems have been developed to:
• record yields, paddock inputs, and pest and disease management actions;
• select varieties for use in particular blocks based on past performance on, for example, the farm, soil
type, or sub-region;
• display mapping information (e.g. farm and soil maps, aerial photographs, satellite imagery, paddocks
harvested, etc);
• analyse cane quality for pol, brix, fibre and ash (from which to calculate sucrose, impurities, clean
fibre, dirt, and extraneous matter) by on-line NIR and provide rapid access to it (at an appropriate
level of aggregation) for participants in all sectors;
• monitor harvester performance (engine on/off, elevator on/off, fan speed, and chopper pressure), track
their movements by GPS, and monitor and benchmark harvesting costs using the Harvest-Haul
model;
• consign cane electronically from the farm to the mill;
• benchmark all measures of performance against that of other members of the value chain; and
• store information centrally in a secure environment and provide appropriate access and application
tools to all parties via a Web portal.
Many of these systems are now fully operational. The most significant outcome has been the development of a
new payment system which came fully operational in 2005. It brings the interests of the grower and the miller
into close alignment and pools all revenue from sugar (including sugar quality payments), electricity,
molasses, and any future products before dividing it (by negotiated agreement) between miller and grower.
The new system overcomes the disadvantages of the traditional cane price formula which are discussed in
Section 5.3 of this report. The change to a new payment system has had an impact on the behavior of growers,
harvesters and millers because it has the incentives for all parties aligned with the regional objective of
“growing the size of the cake” and distributing the revenue equitably.
6.6 Supply Chain Alternatives and Options for the Mallee Industry
Based on sugar research and experience in supply chain modeling a number of recommendations for
the Mallee woody crop industry are identified below. Recommendations are best interpreted and
applied for a specific processing and supply area as local situations will have an overriding effect.
The focus of supply chain planning and management should be broadened from the narrow logistical
and operational technical issues to include improving the transparency of information, integration of
the various businesses within the supply chain, and awareness of new market opportunities.
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