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Payment
System
Advantages and Disadvantages
(advantages in bold)
HBP = Harvest Best Practice
Consequences
Feasibility and
Attractiveness
hectare • Makes harvester budgeting easier —
revenues are known
• Farmer’s costs are known
• Inbuilt disincentive-rewards high speed
harvesting
• Enables cross subsidisation of poor
productivity
• Limited incentive for extra work or
harvest quality
• Limited incentive to improve farm layout
6. Floor price • Enables some flexibility as rate reverts to
an hourly base if tonnage /ha is low
• Uses the BSES Rate Calculator Model as
a starting point
• A bet each way — implications are likely
to be too complex and risky for farmers
and harvesters
• Requires prompt and accurate tonnage
and area feedback and monitoring to work
7. Dollars per tonne
of sugar
8. Pay Direct
Economic Incentive
for Adoption of
HBP
($0.5/t +share of
net revenue gains)
effectively
• Directly links maximum whole chain
revenue to harvester incentives for harvest
quality
• Difficult to manage as sugar varies across
mill area. Geographic harvest options
required.
• Farmers fear loss of harvest equity from
geographic harvesting
• Technology constraints — difficult to
accurately measure and monitor sugar at
the harvester
• Complicated by delay in delivery to the
mill and loss of quality — 24 hour
transport scheduling
• Establishes a clear pre-agreed attractive
economic reward for harvest performance
based on specified field practices and
maximum sugar recovery
• Amenable to current cane payment
arrangements
• Allows flexibility to parties to agree
locally in mill area
• Needs to be negotiated by parties on a
mill area basis — including sharing of net
gains to farmers, and millers
• Does not fix all the inadequacies of the
current payment system
• Farmer will lose sugar
in the field
• Miller’s cane supply
and quality will not be
improved
• Harvester will focus on
cost management
• Farmer will lose sugar
in the field
• Miller’s cane supply
and quality will not be
enhanced
• Would deliver optimum
net incentives to all
parties but only where
payment system was
reset to better allocate
benefits
• Will result in
immediate positive
change in practice,
quality of harvest, and
economic flow on to
growers and millers
• May result in additional
harvest tonnage and
extension of season
length
cost
competitiveness; not
incentives to
maximise sugar
• Limited
attractiveness
• Currently feasible
• Focus will be on
cost
competitiveness; not
incentives to
maximise sugar
• Limited
attractiveness
• Feasible, subject to
payment system
realignment
• Most attractive
option
• Currently feasible
and commercially
attractive
• Focus will shift from
cane pricing to
revenue maximizing.
The most common alternative payments systems in use throughout the industry as identified by
Willcox et al. (2005) are listed below. One of the key findings of this work was that it only requires a
weak economic price signal to facilitate change.
Base Rate plus Fuel (BR+F). This method is widely used at Mackay, Burdekin and Maryborough.
There, the base rate varies between $5.50 and $5.80 per tonne depending whether burnt or green. The
fuel is paid for by the grower but delivered to the contractor’s tank. The system is easy to monitor and
‘police’, because it is a simple system. It is fair, because the grower pays for fuel actually used on
their farm. It does reduce the level of cross subsidisation, but still puts the cost of bad blocks back
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