Download (4Mb) - USQ ePrints - University of Southern Queensland

The sugar industry has a number of ownership models. Generally the greater the proportion of the
supply chain owned by a single entity (eg a cooperative) the greater the efficiency and lower the
conflict. Good performance across the value chain also results when there is cooperation and
commitment between each sector in sharing business proceeds.
Ideally the harvest and transport system would be more readily optimised if owned by a single party
managing the process from plant in the field to biomass delivered to the mill. In practice the harvest
and transport system of the sugar industry involves multiple combinations of ownership including
farmers (hundreds), contract harvesters (several to many), contract truck transport and the sugar mill.
Harvest and transport systems are recognised as a priority for quantum gains in productivity.
To achieve a sustainable biomass industry, the Mallee industry needs a streamlined value chain with
an intermediary party or organisation facilitating harvesting, transport and supply arrangements. This
will limit capital requirements, multiple combinations of ownership, potential conflicts and costs.
This will be particularly important for the Mallee industry since the interdependence of the grower
and the processor is less entrenched than in the sugar industry. Supply arrangements for mallee
biomass are more likely to be driven by commercial opportunity than by necessity as is the case for
sugar. Alternatively the cooperative harvesting groups / partnerships, found 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.
A key requirement will be establishing confidence through long term contracts and supply
agreements. This has to be informed by the availability of material and the feasibility of supply in the
production or supply area which represents the profit centre.
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.
Supply chain management, planning and modelling
Many years of supply chain research in the sugar industry have highlighted the unique characteristics
and requirements of different processing or supply areas where local situations will have an overriding
effect. Research has also emphasized that 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.
Relationships between sectors and participants in the supply chain are important and where there has
been a tradition of cooperative relationships between participants, or a major effort has been placed to
develop these relationships, there has been greater progress in improving the supply chain.
Sugar experience has shown the importance of promoting both tangible and intangible benefits of
value chain improvement to stakeholders. While sometimes difficult to quantify they provide a key
incentive for adopting system improvements.
Flexibility is essential in biomass supply chains to cope with and adapt to unforeseen events such as
weather impacts, equipment failure, changes to industry participants and cross-sector relationships.
Appropriate standard contracts and protocols for services will support best management practice and
equitable distribution of proceeds.
179