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e able to choose. Sugar Industry Mallee Woody Crop Differences/Contrasts Key Issues and Recommendations Processing, Planning, Economic and Market Considerations 1. Strong commercial focus on profitable sugarcane production and sugar extraction. 2. Profitability through sugar production is the key driver for all stakeholders 3. Primary market is sugar production. More recent focus on alternative products and by-products has been on the back of an already viable sugar product base. 4. Sugar price is determined by processor (miller and refiner) and apportioned to producer after transport costs paid. Price affected by domestic and international price (80% export) and exchange rate. 5. Sugarcane is the only feedstock for sugar production in Australia. 6. Sugar industry and company profits are directly linked to an assured cane supply of suitable quality and quantity. 7. Fundamental research into sugarcane harvesting and transport systems has dwindled in recent years. Much innovation occurs within the mill area and producers/contractors. Formal research is increasingly focused on systems approach 8. Cane payment is based on sugar price and recoverable sugar content. Based on aggregate production for mill area. Traditionally there has been a split between miller 1/3 and grower 2/3 - a relative payment system is in place to account for quality changes through season. Payment to the grower is based 1. Focus on profitable wheat production. Mallee has generally been seen as an environmental service that must pay its way. More recently there has been increased emphasis upon the commercial value of biomass. 2. Primary market is biomass for energy markets including pyrolysis bio-oil (precursor to transport fuel), fuel pellets, co-firing with coal, thermal energy (boiler fuel) and other products such as charcoal and eucalyptus oil. 3. Biomass prices for electricity generation driven by renewable energy targets (20% by 2020), network power charges, competing technologies and renewable energy certificate rates. Uncertainty in future policy and pricing of REC’s is a key issue. 4. Energy Producers such as Verve Energy are actively developing renewable energy opportunities, especially wind and solar. 5. Coal is the primary feedstock for electricity generation in Australia. The established infrastructure of coal-fired power stations and the economies of a large scale concentrated fuel resource gives coal a significant economic advantage over biomass. Demand for biomass for electricity generation is driven more by regulatory mechanisms and policies (REC’s) which are immature and subject to policy change. Biomass complements the energy company’s portfolio of renewable energy sources (wind, solar, geothermal) given that it is a base load generation system. 6. Typically mallee will have the following 1. The sugar industry has evolved to maximize profitability and sustainability from sugarcane production. Mallee plantings were initiated to control salinity. 2. Sugar mills have developed sophisticated sugar extraction processing capability over many years. New by-products processing requirements are in many cases complementary to sugar extraction technologies. Sugar refineries focus on adding value to the product by preparing and packaging sugar for different market sectors. Electricity generators are not well suited to developing new market opportunities for Mallee. They are more akin to a sugar refinery that is single product (ie sugar) focused. 3. The sugar value chain is well developed and has committed stakeholders who are fully dependent on one another. 4. The bioenergy value chain is less developed and has competing supply products. 5. The sugar industry processor (miller) and the bioenergy producer have power over the supply chain. The sugar miller has arguably a better understanding of the producer’s needs. Many sugar millers also have sugarcane growing operations which are used to manage supply risk. 6. Energy markets will generally see the biomass supply as a commodity and have no interest in becoming involved in supply chain planning and management. 7. In sugar industry the growing sector has some influence on price paid for cane (through their representing bodies (Canegrowers)) and in some regions (eg 1. Greater incentive in sugar to integrate supply chain with key driver being enterprise profitability. Returns from Mallee production seen as secondary to core business of wheat production and marginal so less incentive to optimize. 2. Energy markets are less likely to be proactive in developing alternative resource streams to their existing sources. New businesses will need to develop to take up these other energy market opportunities. There are no other players in this space which are analogous to the sugar miller, with the possible exception of Delta Energy. 3. Key barriers to biomass markets likely to include marginal economics under current policy settings; inadequate volumes in biomass production; lack of integrated supply chain; uncertainty in volume of resource available; lack of established market for mallee biomass; limited interest in biomass supply within agricultural sector and electricity generating sector. 4. The economic viability of Mallee for bioenergy production better suited to thermal energy production and less to electricity generation given processing efficiencies. Consideration to be given to local markets at a local level, for example thermal energy for heating at abattoirs, hospitals and other demand points (replacement of LPG). 5. New markets will be required for Mallee biomass. This could involve a business who pre-processes the biomass (analogous to a sugar mill) separating the various components (eg trash, leaves, chips) for separate processing of oil, charcoal, bio-oil, electricity generation (analogous to the sugar refinery). 187
on sugar only, other proceeds (molasses etc) belongs to miller. The Sugar Act sets a framework for negotiations. 9. Increased economies of scale are improving viability (growth or acquisition). pricing structure (Farmer stumpage $15- $30/gt; Energy market $50-70/gt. Thus harvest and transport needs to be $30- $35/gt). 7. In Mallee bioenergy production there will be a fixed price determined by other established sources of energy, so farmers will be price takers. 8. Research into biomass harvesting is relatively limited and has focused on the harvester development currently underway. There is not a strong producer/contractor element to provide innovation. 9. Electricity and biofuel markets likely to be based on large scale industrial processing which raises the supply chain issues referred to elsewhere. Currently there is insufficient reliable local feedstock for such a large scale operation. 10. Alternative markets of thermal energy, fuel pellets, co-firing and co-generation, oil extraction and charcoal production are under various scales of development using other biomass materials and provide opportunity for mallee. 11. Conversion to fuel pellets would reduce cost of transport through higher bulk density, consistent properties, ease of handling and long term storage. Aim would be to limit transport of chips (400kg/m3 at 40% moisture content) over a short distance to the pellet facilities with further long haul distribution of higher value pellets (680kg/m3 at 10% moisture). 12. Post processing of material from the harvester (screening, re-chipping, drying) could improve the wood chip product. Tradeoff between the pellets and improved wood chip material (ie costs per GJ of delivered fuel) would need to be assessed. 13. Market for eucalyptus oil is small and high value (about $10 per kg); however at extraction of 1% by mass of biomass could return $10/gt delivered biomass (based 8. Mackay) are rewarded through the pricing mechanism for good quality cane. In the mallee industry producers will be price takers and there is no trading commercial representation of mallee producer interests. 6. Integration of energy companies up the supply chain to own production areas or control management of supply is unlikely. 7. Energy market or regulatory mechanism to increase the mallee biomass price may be required. 8. In the Mallee industry the raw material supply is in place, however the market needs to be developed. Technologies are in place to process the crop however the economics are questionable. New markets may need to be developed which could include small local usage (eg mulch, thermal energy). 9. Alternative markets for different parts of the biomass (e.g. woodchips, leaf, twigs) will require further processing (eg separation, pelleting) with associated costs. Beneficial income would need to exceed incremental processing costs. 10. Multiple markets will increase focus on quality of material supplied and will impact criteria for good quality 11. A mallee industry based on a single market operator who controls the supply chain will reduce the power of the biomass supplier. 12. Uncertainty in the market and future pricing would negate a processor negotiating long term supply contracts. 13. Unlikely for a processor to invest in biomass supply unless there was an established market that could be made more secure by investment in the supply chain. 14. Small scale markets close to the source could be the basis of early supply chain operations. These niche markets may offer relatively high value for the biomass even if they are limited in scale. 15. As the Industry expands, most significant potential market will probably involve emerging technologies such as liquid fuels via pyrolysis. 16. 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. 188
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Sustainable Biomass Supply Chain fo
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Foreword This report provides an as
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include business development (new p
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Acknowledgments The authors would l
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4.1 Product Options and Supply Chai
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Table 4.2 Assessment of current val
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Figure 3.4 Tracked rigid self-prope
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Executive Summary What the report i
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• Biomass production potential of
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• As the Industry expands, the mo
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Harvesting, transport and storage s
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Biomass processing, supply chain pl
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Key barriers to biomass industries
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Crop-Biomass Production Production
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Figure 1.1 The cropping and pasture
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Table 1.1 Mallee species used for p
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1.1.4 Growth Cycle Mallee System Ma
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northern New South Wales (where it
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Almost 80% of the industry now cuts
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Bark has relatively high ash but as
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Carbon sinks Planting of mallees to
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Table 1.5(a) State Land area devote
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out the fluctuations in farm income
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Mallee system Most of the mallee bi
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inconclusive result may have been d
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For a sustainable woody crop indust
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changed significantly since they we
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Figure 2.2 Biosystems Engineering p
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Whole-of-crop harvesting represents
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During the last decade the harvesti
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single row, as this would improve t
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2.2.2.2 Weight Sugar System The Aus
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Table 2.1 Harvester Comparison Tabl
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The quality of cut may be less impo
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ate than a 170 tonne/ha crop of sta
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Dry Leaf 6.1 - 3.5 17.0 58.9 53.2 T
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Bulk density will be a key consider
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Table 2.4 EM levels in cane supply
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L/T L/T 60 0.97 0.71 80 0.92 0.66 1
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Total 7.5-26 16.5 Mallee System The
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• waiting for mill delivery of em
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perhaps at 10 - 20 km intervals. Th
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transport arrangements, harvest gro
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contractors and growers, and the fa
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experience of the sugar industry wi
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Table 2.11 Alternative harvest paym
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onto the harvester. BR+F still send
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Repairs and maintenance 2.10 Capita
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Figure 2.14 and Table 2.14 describe
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Sichter et al. (2005)), harvest and
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Transport efficiencies may be possi
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3. Transport and Storage Systems Tr
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same time, the potential problems o
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Figure 3.3 Articulated self-propell
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• The harvester will not have any
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Figure 3.7 Gross mass compared with
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external factors dramatically impac
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Figure 3.11 The effect of haulout t
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3.3 Road Transport 3.3.1 Configurat
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Figure 3.15 shows an example of the
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Road distance one way < 20 km 70 km
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Haul distance is largely outside th
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3.6 Recommendations The nature of t
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• The strategy offered lower tota
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sugarcane billets are such that wit
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• Transfer the whole tree product
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Figure 4.5(b) Energy balance of con
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2010). Table 4.2 presents a summary
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4.4.2 Activated charcoal Activated
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Nett Product Value ($/t) $475.00 $
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Table 4.9 presents an estimation of
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• Oil from leaf @ $2/kg • Synth
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• The mallee oil would be extract
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5. Industry and Business Structures
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is conducted into tariff levels on
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Bx is % brix in first expressed jui
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Hildebrand (2002) estimated that th
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also has a flow on effect to the sp
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Sugar Industry Illustrative Example
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Page 161 and 162: farmer vs. harvester) is the next l
Page 163 and 164: 6. Supply Chain Planning and Manage
Page 165 and 166: Figure 6.1 Building blocks of the s
Page 167 and 168: weighed against the costs of operat
Page 169 and 170: • There is close contact between
Page 171 and 172: 6.4 Planning, Management Tools and
Page 173 and 174: • Harvest and transport logistics
Page 175 and 176: interface. The system allows users
Page 177 and 178: Case Study 6.2 - Model Application
Page 179 and 180: Relationships between sectors and p
Page 181 and 182: 7. Supply Chain Modelling and Econo
Page 183 and 184: It was assumed that there was a fif
Page 185 and 186: Table 7.2 Scenario two capital equi
Page 187 and 188: Table 7.4 Fuel burn rates harvester
Page 189 and 190: Figure 7.5 Effect of capital equipm
Page 191 and 192: Figure 7.7 Effect of annual tonnes
Page 193 and 194: 30 1.8 7.0 12.3 17.5 50 1.1 4.3 7.6
Page 195 and 196: 8. Conclusions and Recommendations
Page 197 and 198: Biomass bulk density has a large im
Page 199 and 200: Vehicles used for infield haulout w
Page 201 and 202: This can be compared with harvest a
Page 203 and 204: While diversification can add value
Page 205 and 206: Appendix 1: Comparative Assessment
Page 207 and 208: and transport conditions. Billet le
Page 209: that cane production is the most pr
Page 213 and 214: References Agnew, J 2002. A Partici
Page 215 and 216: Enecon 2001. Integrated Tree Proces
Page 217 and 218: Keating, BA, Antony, G, Brennan, LE
Page 219 and 220: Ridge, DR and Linedale, AL, 1997. T
Page 221: Willcox, T, Hussey, B, Chapple, D a
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