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Industry and business structures
• A range of supply chain ownership models are possible. Generally the greater the proportions of the
supply chain owned by a single entity, the greater the efficiency and lower the conflict. Good
performance across the supply chain also results when there is cooperation and commitment between
each sector in sharing business proceeds.
• It will be important for organizations involved in the mallee supply chain to discuss and outline their
vision and requirements.
• The mallee industry has new opportunities to put in place appropriate supply arrangements. These need
to address the likely imbalance between the processor (established and powerful, potentially with
alternative supply options) and the grower.
• An intermediate commercial entity will need to occupy the space between the grower and processor and
make a business of a profitable supply chain. Neither the grower nor the processor is likely to have a real
interest in the supply chain.
• Consideration needs to be given to the need for a growers’ commercial representative, similar to the role
of the former Oil Mallee Company.
• Streamlining harvest and transport costs will require coordination at the processing end to meet supply
requirements. A single operator for harvesting and transport would most likely evolve to provide scale
and economic benefits.
• Seasonal mallee supply will need to be accurately determined to manage harvesting and processing
although daily scheduling may not be as sensitive as it is in the sugar industry.
• Industry development will be driven by the party who values the product most. The processor will need
to take an interest in farm based production issues to ensure a sustainable supply source, even though
they are unlikely to be interested in biomass growth.
• Long term contracts will be required to guarantee supply and attract farmers to grow the biomass.
• Payment systems and business structures vary in sugar cane and provide a range of models from which
the mallee industry will be able to choose. A payment formula that accounts for quality of material
delivered will be important when there are multiple products and markets. Contract specific pricing
arrangements would be required.
Key Issues and recommendations for biomass processing, supply chain planning and economic
and market consideration are identified below.
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