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onto the harvester. BR+F still sends the market signal for high pour rates to maintain viability, but not
as much as $/tonne.
b) Base Rate plus Fuel at higher rate. This method uses a base rate but the fuel is priced higher (e.g.
$2/L) to allow for labour. The system is used by some groups in New South Wales. The amount of
fuel used is measured and the grower invoiced at set price. The reasoning behind this system is that
paying for fuel alone does not compensate for machinery and labour costs.
c) Hourly Rate. This method pays on engine hours similar to the hire of most earthmoving equipment
and is negotiated between grower and contractor. Rates used for pilot group examples were $350-
420/hour, depending on the number and size of haulouts. For acceptance, monitoring equipment is
needed for growers to know that the machine was working as contracted, e.g. fan speed, forward
speed, GPS tracking. Hourly Rate sends the best market signals, as it creates the greatest variation in
price per tonne and reflects true cost, as most variable costs are accumulated on an hourly basis. This
encourages best-practice farming, as the more efficient a farm is to harvest and the better the crop size
and yield, the lower the cost per tonne to harvest. By providing a stable income to the operator, it
allows the grower to prescribe the mode of harvester operation for each block. If a grower does not
understand the financial benefits of HBP, this could lead to unwise decision-making focused on
minimum time and, hence, minimum cost at the expense of high cane loss, low cane quality and poor
ratoons. To operate efficiently, hourly rate needs to be linked to a cane quality measurement system at
the mill to provide targets for cane quality. In addition, there is no incentive for the harvester to reduce
cane loss, so settings of the harvester, such as extractor fan speed and forward speed, need to be
monitored.
d) Sliding-Scale Base Rate plus Fuel. This method uses a sliding scale based on crop yield to
calculate a base rate, e.g. $6.30 for 35-45 tonne/ha to $5.70 for 95-105 tonne/ha. Fuel is purchased by
the grower. This appears a simple system with good market signals. It is transparent and easy to apply.
The base rate covers cane loss issues and true fuel costs are covered. The sliding scale covers some of
the labour and machinery costs associated with crop size. It reflects true cost a little better, but is still
a tonnage rate, which encourages maximising pour rate and delivery rate.
Mallee System
The harvesting payment structure is yet to be determined. An important influence upon this will be the
business structure(s) that is set up by the new industry, and where the point of sale occurs along the
supply chain. One commonly assumed model is that farmers merely grow the mallees and all supply
chain operations and costs are managed by the biomass purchaser’s agent, but this is likely to see very
low returns to the farmers and limited adoption of mallee as a crop. The current mallee resource is not
adequate to support a significant processor industry, so expansion of the resource is a precondition of
the existence of a substantial industry. Farmers are yet to be engaged by the prospect of a new
industry at the scale required for large industrial conversion processes to be established, and they need
tangible commercial incentives to participate.
There would be advantages to vertically integrating the supply chain and for the point of sale to be as
far along the supply chain as possible to minimise the problems of the farmer-harvester-mill conflicts
of interest observed in the sugar industry.
2.6.2 Cost of Harvesting
The typical price of harvesting cane in the cane industry varies. The price varies depending on the
payment structure (e.g. flat rate, base rate + fuel), the harvesting contract structure (e.g. Co-operative,
contractor, miller) and the crop condition (e.g. burnt, green).
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