"eco-efficient" production system - Department of Primary Industries

Modelling the role of an assumed 

“eco-efficient” production system: 

Queensland’s sugar cane industry 

For presentation at Outlook 2003 

Siobhan Dent 1 , John Switala 2 and Mark O’Sullivan 3 

Business Strategy Unit 

Rural Industry Business Services Group 

Department of Primary Industries, Queensland 

1 Phone: 07)3225 8716 E-mail: siobhan.dent@dpi.qld.gov.au 

2 Phone: 07)3238 3382 Email: john.switala@dpi.qld.gov.au 

3 Phone: 07)3239 3964 Email: mark.o’sullivan@dpi.qld.gov.au 

1

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there is not more recent or more relevant information available; 

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publication; and 

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from the use of the information contained in this publication. 

© The State of Queensland, Department of Primary Industries 2002 

Copyright protects this publication. Except for purposes permitted by the Copyright Act, 

reproduction by whatever means is prohibited without prior written permission of the 

Department of Primary Industries, Queensland. Inquiries should be addressed to: 

Manager, DPI Publications 

Department of Primary Industries 

GPO Box 46 

Brisbane Qld 4001 

2

Abstract 

This paper investigates the economic implications of the adoption of “eco-efficient” 

production practices in the Queensland sugar cane industry. Eco-efficiency is a combination 

of economic and ecological efficiency, and is basically about ‘doing more with less’. The 

authors acknowledge that the definition of “eco-efficient” sugar cane production in this paper 

is based to a large degree on practices that have not been proven commercially, and therefore 

many of the proposed practices are still evolving. The understanding of “eco-efficient” sugar 

cane production will undoubtedly change in the future. 

The results of this preliminary study indicate that the proposed production system offers 

potential benefits to sugar cane growers, the Queensland and national economies, and the 

environment. 

A gross margin analysis between an assumed generic “traditional” sugar cane production 

system and the proposed “eco-efficient” production system estimates that, on a per farm 

basis, sugar cane income will decrease by 4%, while expenses decline by 22%, resulting in a 

22% increase in the gross margin. It is also estimated that the “eco-efficient” production 

system would require 30% less labour per unit of output. 

The Monash Multi-Regional Forecasting (MMRF) model is used to evaluate the broader 

economic implications of the adoption of the proposed “eco-efficient” sugar cane production 

system in Queensland. The model forecasts that the adoption of the production system would 

lead to an increase in the size of the Queensland and national economies, and also to an 

improvement in the profitability of Queensland sugar cane growing. 

Acknowledgments 

The authors would like to acknowledge the substantial input from Neil Sing, Principal 

Agricultural Economist, Rural Industry Business Services, Department of Primary Industries, 

Queensland. 

A number of key external stakeholders were consulted, and provided advice, throughout the 

study including, Brian Roberts (Douglas Shire Council), Alan Garside (Sugar Yield Decline 

Joint Venture Project), and Malcolm Wegener (University of Queensland). 

The Office of Economic and Statistical Research, Queensland Treasury, provided valuable 

comments on the assumptions imposed on the MMRF model, and the interpretation of the 

results. 

Constructive comments were also received from Queensland Canegrowers Organisation 

Limited, particularly Jennifer Marohasy and Bernard Milford. 

The Department wishes to acknowledge Philip Adams from the Centre of Policy Studies, 

Monash University, for producing the simulation results presented in this report. 

3

Introduction 

The objective of this study is to demonstrate a modelling approach that enables us to firstly 

quantifying the on-farm impacts of the adoption of “eco-efficient” farming practices by the 

Queensland sugar cane industry, and secondly quantify the likely flow-on impacts to the 

Queensland economy. 

The proposed “eco-efficient” production system is based upon research conducted over the 

last four years through the Sugar Yield Decline Joint Venture Project by individuals from the 

Department of Primary Industries, Queensland, CSIRO and the Bureau of Sugar 

Experimental Stations, and also work undertaken by the Department of Primary Industries, 

Queensland, Sugar Solution project. It is important to recognise that the definition of “ecoefficient” 

production in sugar cane is still evolving, and what it involves will undoubtedly 

change in the future as science and research/commercial trials provide more insights. This 

paper offers an economic analysis of two production systems that are based upon a number of 

fundamental production assumptions, and therefore are not reflective of actual or potential 

practices across the entire industry. 

The systems modelled as “eco-efficient” are not currently available throughout the sugar 

industry. They refer to systems that are still being trailed, and a number of these innovations 

may prove not to be suitable in some areas. 4 Conclusions on the benefits of “eco-efficient” 

farming should therefore be viewed as indicative only and as an illustration of the potential 

value of a modelling approach. Certain components of the “eco-efficient” system identified in 

this paper have already been promoted and implemented by a number of producers, 

particularly those participating in the Sugar Yield Decline Joint Venture Project. 

Around 95% of Australian raw sugar is produced in Queensland (Hildebrand 2002). In 2001, 

there was approximately 525 000 hectares of cane production area in Queensland, of which 

440 000 was harvested to produce 29.9 million tonnes of cane and 4.3 million tonnes of raw 

sugar (Department of Primary Industries, Queensland, 2002). 

Sugar cane is grown along the majority of the Queensland coast: from the Queensland-New 

South Wales border to north of Mossman. 

What is eco-efficient? 

‘Eco-efficiency is a combination of economic and ecological efficiency, and is basically 

about ‘doing more with less’. “Eco-efficient” means producing more goods and services with 

less energy and fewer natural resources. “Eco-efficient” businesses get more value out of 

their raw materials as well as producing less waste and less pollution’ (Environment 

Australia, 2002). In this study we have assumed that an “eco-efficient” business would not 

only use less energy and fewer natural resources, but also fewer purchased inputs (e.g. 

chemicals). 

“Traditional” production of sugar cane 

Variations in the environment (e.g. rainfall, soil type and topography) across cane producing 

regions mean that production systems do differ between regions. 5 However, for the purposes 

of the economic modelling in this study it was necessary to consider a generic production 

system for “traditional” sugar cane production in Queensland. An overview of the assumed 

4 This paper does not cover all innovations that fit under “eco-efficient” production. For example, the sugar 

industry is implementing best practice irrigation and rat integrated pest management. 

5 In some regions the majority of cane is irrigated, while in others the majority of cane is rain grown. The level 

of pesticide use can also vary between regions. 

4

“traditional” production system is shown in Figure 1, which details the production system for 

a sugar cane farm over a 12-month period. This is a rain grown sugar cane production system, 

rather than an irrigated production system. 

Figure 1: Production map of a “traditional” Queensland sugar cane farm in 2002 (January–December) 

Block 1: One-year old cane (Table 1) 

Harvest — September to October 

Block 2: Ratoon 1 6 (Table 2) 

Harvest — June to November 

Block 3: Ratoon 2–(Table 3) 


Block 4: Ratoon 3 (Table 4) 


Block 5: Ratoon 4 and new plant 

cane (Table 5) 

Harvest — July 

Plant — August 

It is assumed that a “traditional” sugar cane farm in Queensland currently operates a fivestage 

plough out/replant 7 production system. In any one year (January to December), a sugar 

cane farm would have a proportion of the land under: 

One-year old cane (Block 1) 

Ratoon 1 (Block 2) (two-year old cane plant) 

Ratoon 2 (Block 3) (three-year old cane plant) 

Ratoon 3 (Block 4) (four-year old cane plant) 

Ratoon 4 and new plant cane (Block 5) (five-year old cane plant and new plant) 

A paddock under this system is harvested 8 five times and replanted every five years. 

This “traditional” production system is not representative of the current practices of the entire 

industry, and a number of sugar cane producers have already embarked on modifying 

agronomic practices as outlined in the “Eco-efficient” production and sugar cane section of 

this paper. 

The production requirements of new plant cane, one-year old cane and ratoon cane are 

different. The yield expectations from one-year old cane and ratoon cane are also different. 

The gross margins 9 for the assumed “traditional” production system are shown in Table 1 to 

Table 6. These gross margins detail the income and expenses for each stage of production, 

and identify levels of input usage. The chemicals listed in the gross margins may not be the 

optimal choices for use in all sugar cane growing regions in Queensland. 

6 Cane harvesting involves the cutting of plant shoots (stems and leaves), which therefore allows the plant to 

regenerate as a ratoon crop the following season. 

7 Ploughout-replant is the practice of ploughing out cane after harvest and immediately replanting sugar cane. 

The ploughout-replant system is more common in some sugar cane districts than others. 

8 “Traditional” and “eco-efficient” systems are assumed to harvest sugar cane green and use green trash 

blanketing and this varies significantly between regions, with much less in irrigated areas like the Burdekin. 

9 Expenses in the gross margins include the variable costs of machinery and implement operations, chemicals 

costs (fertiliser, insecticides and herbicides), contract costs (sugar cane planting and harvesting) and grower 

levies. A more detailed description of the cost calculations will be in the upcoming technical paper or can be 

obtained by contacting the authors. 

5

Table 1: Gross margin of a “traditional” Queensland sugar cane farm in 2002 — one-year old cane 

Activity Machinery/equipment Applications Rate Unit cost $/ha 

Income 

Sugar cane (t) 85 $26.20 10 $2227.00 

Total income $2227.00 

Expenses 

Crop care 

Headland slashing 60hp tractor 3 3ha/hr $8.80 $26.40 

Headland spraying 11 60 hp tractor 1 5ha/hr $0.62 $0.62 

Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 

Spraying banks and fences Glyphosphate (l) 1 1.3 $5.68 $7.38 

Harvest 

Contract harvesting 1 85 $6.10 $518.50 

Grower levies 1 85 $0.39 $33.15 

Total expenses $590.66 

Gross margin $1636.34 

10 Raw sugar prices is assumed to be $290 per tonne 

11 The variable cost of headland spraying is assumed to be 20% of the variable cost of crop spraying (i.e. the 

headlands are assumed to be 20% of the farm area). 

6

Table 2: Gross margin of a “traditional” Queensland sugar cane farm in 2002 — ratoon one cane 


Income 

Sugar cane (t) 90 $26.20 $2358.00 


Expenses 

Crop care 

Spraying 60hp tractor 1 5ha/hr $3.10 $3.10 

Herbicide Gramoxone (l) 1 1 $9.41 $9.41 

Diuron (kg) 1 0.5 $13.59 $6.80 

2 4-D (l) 1 0.5 $5.64 $2.82 

Fertiliser application 100hp tractor 1 1ha/hr $15.72 $15.72 

60hp tractor with bag lifter 1 6ha/hr $1.65 $1.65 

Fertiliser Fertiliser 1 12 (t) 1 0.625 $391.50 $244.69 

Pre-emergent spraying 60hp tractor 1 5ha/hr $3.10 $3.10 

Herbicide 2 4-D (l) 1 1 $5.64 $5.64 

Atrazine (kg) 1 2.5 $10.33 $25.83 

Spot spraying - guinea grass 60hp tractor 1 4ha/hr $3.44 $3.44 

Gramoxone (l) 1 0.125 $9.41 $1.18 

Hexazinona and Diuron (kg) 1 0.5 $10.74 $5.37 

High-clearance spraying 60hp tractor 3 5ha/hr $3.10 $9.30 

Herbicide 2 4-D (l) 2 1 $5.64 $11.28 

Atrazine (kg) 2 2.5 $10.33 $51.65 

Gramoxone (l) 1 1 $9.41 $9.41 

Diuron (kg) 1 0.5 $13.59 $6.80 


Headland spraying 60hp tractor 1 5ha/hr $0.62 $0.62 

Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 

Spraying banks & fences Glyphosphate (l) 1 1.3 $5.68 $7.38 

Harvesting 


Grower levies 90 $0.39 $35.10 



12 Fertiliser 1 makeup: Di-ammonium Phosphate (10–20%), Urea (40–50%) and Potassium Chloride (40–50%) 

7

Table 3: Gross margin of a “traditional” Queensland sugar cane farm in 2002 — ratoon two cane 


Income 

Sugar cane (t) 85 $26.20 $2227.00 


Expenses 

Crop care 



Diuron (kg) 1 0.5 $13.59 $6.80 

2 4-D (l) 1 0.5 $5.64 $2.82 



Fertiliser Fertiliser 1 (t) 1 0.625 $391.50 $244.69 


Herbicide 2 4-D (l) 1 1 $5.64 $5.64 

Atrazine (kg) 1 2.5 $10.33 $25.83 


Gramoxone (l) 1 0.125 $9.41 $1.18 



Herbicide 2 4-D (l) 2 1 $5.64 $11.28 

Atrazine (kg) 2 2.5 $10.33 $51.65 

Gramoxone (l) 1 1 $9.41 $9.41 

Diuron (kg) 1 0.5 $13.59 $6.80 



Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 


Harvesting 





8

Table 4: Gross margin of a “traditional” Queensland sugar cane farm in 2002 — ratoon three cane 


Income 

Sugar cane (t) 80 $26.20 $2096.00 


Expenses 

Crop care 



Diuron (kg) 1 0.5 $13.59 $6.80 

2 4-D (l) 1 0.5 $5.64 $2.82 





Herbicide 2 4-D (l) 1 1 $5.64 $5.64 

Atrazine (kg) 1 2.5 $10.33 $25.83 


Gramoxone (l) 1 0.125 $9.41 $1.18 



Herbicide 2 4-D (l) 2 1 $5.64 $11.28 

Atrazine (kg) 2 2.5 $10.33 $51.65 

Gramoxone (l) 1 1 $9.41 $9.41 

Diuron (kg) 1 0.5 $13.59 $6.80 



Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 


Harvesting 





9

Table 5: Gross margin of a “traditional” Queensland sugar cane farm in 2002 - ratoon four and new plant cane 


Income 

Sugar cane (t) 75 $26.20 $1965.00 


Expenses 

Crop care 



Diuron (kg) 1 0.5 $13.59 $6.80 

2 4-D (l) 1 0.5 $5.64 $2.82 


60hp tractor with baglifter 1 6ha/hr $1.65 $1.65 



Herbicide 2 4-D (l) 1 1 $5.64 $5.64 

Atrazine (kg) 1 2.5 $10.33 $25.83 


Gramoxone (l) 1 0.125 $9.41 $1.18 



Herbicide 2 4-D (l) 2 1 $5.64 $11.28 

Atrazine (kg) 2 2.5 $10.33 $51.65 

Gramoxone (l) 1 1 $9.41 $9.41 

Diuron (kg) 1 0.5 $13.59 $6.80 



Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 


Harvesting 



Lime spreading 60hp tractor and spreader 1 $3.22 $3.22 

Lime (t) 1 2 $175.00 $350.00 

Ground preparation 

Incorporate trash 140hp tractor & offset discs 3 $13.44 $40.31 

Ripping both ways 115hp tractor 2 $16.08 $32.17 

Rotary hoeing 115hp tractor 1 $18.80 $18.80 

Marking out 60hp tractor with 3 tynes 1 $4.78 $4.78 

Pre-emergent herbicide 60hp tractor 1 2ha/hr $3.10 $3.10 

Diuron (kg) 1 1.5 $13.59 $20.39 

Atrazine (kg) 1 1.5 $10.33 $15.50 

Planting 

Contract planting 1 $300.00 $300.00 

Billet cane 1 8 $26.20 $209.60 


Fungicide - pineapple disease Shirtan (bottle) 1 2.5 $8.50 $21.25 

13 Fertiliser 2 makeup: Di-ammonium Phosphate (60–70%) and Potassium Chloride (30–40%) 

10

Insecticide - wire worm Chlorpyrifos (l) 1 1 $10.57 $10.57 

- cane grub suSCon(20kg) 1 1 $254.50 $254.50 

Press drills 60hp tractor & roller 1 1 $4.78 $4.78 

Row profile shaping 60hp tractor & cotton king 1 1 $7.09 $7.09 

Crop care 



Diuron (kg) 1 0.5 $13.59 $6.80 

2 4-D (l) 1 0.5 $5.64 $2.82 

Cultivation 100hp tractor with grubber tynes 3 1ha/hr $15.72 $47.15 

Fertilising with 1 cultivation pass Urea (t) 1 0.1875 $350.00 $65.63 

Hilling up 100hp tractor 1 1ha/hr $20.86 $20.86 


Herbicide 2 4-D (l) 2 1 $5.64 $11.28 

Atrazine (kg) 2 2.5 $10.33 $51.65 

Gramoxone (l) 1 1 $9.41 $9.41 

Diuron (kg) 1 0.5 $13.59 $6.80 



Gross margin -$722.99 

Under the “traditional” production system, over the whole crop cycle, a 30ha cane farm will 

achieve a gross margin of $27,108 (see Table 6). 

Table 6: Summary gross margin of a “traditional” Queensland sugar cane farm in 2002 - whole crop cycle for a 

hypothetical 30 ha operation 14 

Crop cycle Income ($/farm) Expenses ($/farm) Gross margin ($/farm) 

One-year old cane $13,362 $3,544 $9,818 

Ratoon 1 $14,148 $6,347 $7,801 

Ratoon 2 $13,362 $6,153 $7,209 

Ratoon 3 $12,576 $5,958 $6,618 

Ratoon 4 and new plant cane $11,790 $16,128 -$-4338 

Total crop cycle $65,238 $38,130 $27,108 

Why change production practices? 

Recent reports have potentially linked agricultural activities within the Great Barrier Reef 

catchment area, with water quality problems in the Great Barrier Reef lagoon. 15 

In line with the precautionary principal, many features proposed below under the “ecoefficient” 

production system (e.g. reduced chemical application, and reduced cultivations) 

will further reduce any potential sediment and pollutants that run off from sugar cane 

production areas. 

A variety of factors (e.g. low world sugar price, disease problems and drought) have 

negatively impacted on the financial returns Queensland cane producers have recently been 

receiving. An “eco-efficient” production system may also offer substantial financial benefits 

as indicated below for cane producers. 

14 Based on a farm with 5 paddocks, each of which is 6 ha in size. This farm size is not representative of the 

industry average. 

15 Productivity Commission (2003) and Baker (2003) 

11

“Eco-efficient” production and sugar cane 

“Eco-efficient” production has been defined as ‘doing more with less’. Table 7 highlights 

some possible actions that could reduce the amount of inputs used by Queensland sugar cane 

producers, while maintaining, or increasing, yields per unit area. The proposed “ecoefficient” 

production system is based upon research conducted over the last four years 

through the Sugar Yield Decline Joint Venture Project, and by the Department of Primary 

Industries, Queensland, Sugar Solutions project. The definition of “eco-efficient” production 

of sugar cane is still evolving, and what it involves will undoubtedly change in the future as 

science and research/commercial trials provide more insights. 

For “eco-efficient” production systems to have positive impacts on the environment they 

must be ‘eco-effective’. In the instance of sugar cane, this may mean a reduction of inputs 

such as fertiliser, fuel and pesticides, but also a reduction in the amount of land used (i.e. land 

that is close to waterways or has a steep slope). 16 On the other hand “eco-effective” land use 

may also result in more land being brought into production, especially if different uses for 

sugarcane (e.g. biomass ) are introduced. 

Table 7: Possible actions to “eco-efficient” production of sugar cane assumed in the proposed “eco-efficient” 

system 

Action Production effect Economic effect 

Crop rotation 

Soybean fallow 

Planting 

Zero-till planting and control traffic 

Fertiliser (mainly P and K, with 

reasonably low levels of N) 

Replace Shirtan fungicide with 

Bumpa fungicide 

Replace Chlorpyrifos insecticide 

with Fipronil insecticide 

Reduced need to use suSCon (i.e. 

every second planting) 

Crop Care 

Shrouded sprayer 

Provides N (in a slow release form), 

increases organic matter in the soil 

and improves soil health. 

Eliminate soil preparation 

operations. 

Soybean fallow allows a fertiliser 

low in N to be used, and at lower 

rates. 

Bumpa does not contain mercuric 

compounds. 

Fipronil is not an organophosphate. 

Increased levels of organic matter in 

the soil increase the population of 

beneficial insects with subsequent 

impacts on cane grub populations. 

Enables joint use of Glyphosphate 

and Gramoxone for weed control 

rather than Atrazine and Diuron. 

Reduces need for in-crop 

cultivations. 

There are costs to grow soybean 

crop. 

Research trials suggest increase in 

sugar cane yield between 10–30% 

Reduced tractor and implement 

repairs and maintenance and fuel 

use and reduced tractor sizes. 

Reduced N costs for new plant 

cane. 

Reduced fungicide costs. 

Increased insecticide cost. 

Reduced insecticide cost. 

Increased sprayer operation cost. 

Reduced herbicide cost. Reduced 

cultivation operation cost. 

It is assumed that a typical “eco-efficient” sugar cane farm in Queensland would operate a 

six-block production system that incorporates a legume rotation. 17 In any one year, an “ecoefficient” 

sugar cane farm would have a proportion of the land under: 

16 The transfer of land out of cane production for environmental purposes has not been factored into this analysis 

but does need to be considered in the future. 

17 Soybeans have been used as the legume rotation crop in this study, however it is possible to use other legumes 

as the rotation crop (e.g. navy beans and peanuts). 

12

New plant (Block 1) 

One-year old cane (Block 2) 

Ratoon 1 (Block 3) (two-year old cane plant) 

Ratoon 2 (Block 4) (three-year old cane plant) 

Ratoon 3 (Block 5) (four-year old cane plant) 

Ratoon 4 (Block 6) (five-year old cane plant) 

Figure 2: Production map of a hypothetical “eco-efficient” sugar cane farm in 2002 (January–December) 

Block 1: New plant cane (Table 8) 

Plant cane — May to June 





Block 2: One-year old cane (Table 9) 




Block 6: Ratoon 4 (Table 13 and 

Table 14) 

Harvest — October to November 

Zero-till plant soybeans — November 

to December 

For the purpose of this study, the authors have assumed this hypothetical farm is a rain grown 

sugar cane production system, rather than an irrigated production system. Each paddock 

under this production system is harvested five years out of every six years. As with 

“traditional” sugar cane production, the production requirements of new plant cane, one-year 

old and ratoon cane are different under an “eco-efficient” production system. The yield 

expectations between one-year old cane and ratoon crops are also different. The gross 

margins for the assumed “eco-efficient” production system are shown below in Table 8 

through to Table 15. The chemicals listed in the gross margins may not be the optimal 

choices for all sugar cane growing regions in Queensland. 

It is assumed that under this system, sugar cane yields per hectare increase by 15%. 18 

However, due to the incorporation of a rotation crop, every year sugar cane is not harvested 

from one of the six blocks (new plant cane). The resulting reduction in income is largely 

compensated for by an increase in yields in the blocks harvested. 

18 The assumed increase in sugar cane yields is based upon experimental results from the Sugar Yield Decline 

Joint Venture Project. 

13

Table 8: Gross margin of an “eco-efficient” Queensland sugar cane farm in 2002 — new plant cane 


Income 

Sugar cane (t) 0 $26.20 $0 

Total income $0 

Expenses 

Planting 

Contract billet planting 1 $300.00 $300.00 

Billet cane 1 2.5 19 $26.20 $65.50 


Fungicide - pineapple disease Bumpa (l) 1 0.15 $85.45 $12.82 

Insecticide - wire worm Fipronil (l) 1 0.075 $330.00 $24.75 

- cane grub suScon (20kg) 21 1 0.5 $254.50 $127.25 

Crop care 

Spraying Shrouded sprayer 3 3ha/hr $6.32 $18.95 


Glyphosphate (l) 2 2 $5.68 $22.72 




Table 9: Gross margin for an “eco-efficient” Queensland sugar cane farm in 2002 — 1-year old cane 


Income 

Sugar cane (t) 97.75 $26.20 $2561.05 


Expenses 

Crop care 


Headland spraying 22 60hp tractor 1 5ha/hr3 $0.62 $0.62 

Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron 1 0.2 $13.59 $2.72 

Spraying banks and fences Glyphosphate (l) 1 1.3 $5.68 $7.38 

Harvesting 

Contract harvesting 1 97.75 $6.10 $596.28 

Grower levies 1 97.75 $0.39 $38.12 



19 “Eco-efficient” production system uses fewer billets (2.5t/ha versus 8t/ha) because it is assumed that a stateof-the-art 

planter is used that more precisely measures out cane billets. 

20 Fertiliser 3 makeup: Di-ammonium Phosphate (40–50%) and Potassium Chloride (50–60%). 

21 The industry currently has a widely developed and acknowledge Integrated Pest Management (IPM) program 

in place. The suggestion in the paper that this use of suSCon for cane grub control be reduced to one in every 

second planting is a contentious and unproven assumption, as it relies on predictable, but unquantified, benefits 

of higher levels of organic matter. It does recognise that regardless of what annual management strategies are 

used, cyclical cane grub populations will still need to be controlled. The need for IPM cane grub control will 

vary between regions based on location, soil type, level of organic matter in the soil, cane grub species and level 

of natural pests and predators to the cane grub. 

22 The variable cost of headland spraying is assumed to be 20% of the variable cost of crop spraying (i.e. the 

headlands are assumed to be 20% of the farm area). 

14

Table 10: Gross margin of an “eco-efficient” Queensland sugar cane farm in 2002 — ratoon one cane 


Income 

Sugar cane (t) 102.75 $26.20 $2692.05 


Expenses 

Crop care 








Gramoxone (l) 1 0.25 $9.41 $2.35 




Headland spraying Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 


Harvesting 


Grower levies 102.75 $0.39 $40.07 


Gross margin – ratoon 1 $1642.83 

15

Table 11: Gross margin of an “eco-efficient” Queensland sugar cane farm in 2002 — ratoon two cane 


Income 

Sugar cane (t) 97.75 $26.20 $2561.05 


Expenses 

Crop care 








Gramoxone (l) 1 0.25 $9.41 $2.35 




Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 


Harvesting 


Grower levies 97.75 $0.39 $38.12 



16

Table 12: Gross margin of an “eco-efficient” Queensland sugar cane farm in 2002 — ratoon three cane 


Income 

Sugar cane (t) 92.75 $26.20 $2430.05 


Expenses 

Crop care 








Gramoxone (l) 1 0.25 $9.41 $2.35 




Headland spraying Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron (kg) 1 0.2 $13.59 $2.72 


Harvesting 


Grower levies 92.75 $0.39 $36.17 



17

Table 13: Gross Margin of an “eco-efficient” Queensland sugar cane farm in 2002 — ratoon four cane 


Income 

Sugar cane (t) 87.75 $26.20 $2299.05 


Expenses 

Crop care 




2 4-D (l) 1 0.5 $5.64 $2.82 





Gramoxone (l) 1 0.25 $9.41 $2.35 




Gramoxone (l) 1 0.2 $9.41 $1.88 

Diuron 1 0.2 $13.59 $2.72 


Harvesting 


Grower levies 87.75 $0.39 $34.22 

Lime spreading) 60hp tractor and spreader 1 $3.22 $3.22 

Lime (t) 1 2 $175 $350.00 



18

Table 14: Gross margin of an “eco-efficient” Queensland sugar cane farm in 2002 — soybean fallow 


Income 

Total income $0 

Expenses 

Ground preparation 

Spray out cane 60hp tractor 1 5ha/hr $3.10 $3.10 


Planting 

Planter Covington 4-row 1 1ha/hr $21.90 $21.90 

Seed Leichhardt (kg) 1 50 $1.36 $68.00 

Inoculant (pkt) 1 0.3 $6.00 $1.80 

Crop care 



Spray out soybeans 60hp tractor 1 5ha/hr $3.10 $3.10 


24D (l) 1 1 $5.64 $5.64 



Table 15: Gross margin of an “eco-efficient” Queensland sugar cane farm in 2010 – whole crop cycle of a 

hypothetical 30 ha operation 23 

Crop cycle Income ($/farm) Expenses ($/farm) Gross margin ($/farm) 

New plant 24 $0 $3,645 -$3,645 

1 year old cane $12,805 $3,367 $9,438 

Ratoon 1 $13,460 $5,246 $8,214 

Ratoon 2 $12,805 $5,084 $7,721 

Ratoon 3 $12,150 $4,922 $7,228 

Ratoon 4 and soybean rotation $11,495 $7,376 $4,119 

Total crop cycle $62,715 $29,640 $33,075 

Under the “eco-efficient” production system, over the whole crop cycle a 30ha farming 

operation would achieve a gross margin of $33,075 (see Table 15). In this system, it is 

assumed that the soybean crop is slashed without being harvested. The returns from the “ecoefficient” 

production system would be improved if the soybean crop was harvested rather 

than just slashed. This would reduce the amount of nitrogen returned into the system, 

however research undertaken by the Sugar Yield Decline Joint Venture project indicates that 

the additional income can be obtained without sacrificing the rotation benefits of reduced 

pathogens, increased yields and reduced nitrogen fertiliser in the plant crop. It should be 

noted that seasonal wet weather conditions might prevent seed harvesting in some cane 

producing regions in Queensland (i.e. Townsville north). 

23 Based on a farm with 6 paddocks, each of which is 5 ha in size. This is not representative of the industry 

average. 

24 The costs associated with the soybean crop have been incorporated, in this instance, with the new plant gross 

margin. However, some expenses (e.g. planting) would actually occur within the ratoon 4 year. 

19

Comparison of “traditional” and “eco-efficient” production systems 

Table 16: Gross margin comparison between “traditional” and “eco-efficient” sugar cane production systems 

over a 30ha land area (on an annual basis) 

Production system Income ($/farm) Expenses ($/farm) Gross margin ($/farm) 

Traditional $65,238 $38,130 $27,108 

Eco-efficient $62,715 $29,640 $33,075 

Difference (% change) -4% -22% 22% 25 

A comparison between the assumed “traditional” and “eco-efficient” production systems 

reveals that under the “eco-efficient” system: 

Sugar cane income per farm decreases by 4% 

Total expenses per farm decline by 22% 

The gross margin per farm increases by 22% 

The lower sugar cane income under the “eco-efficient” production system reflects that, there 

is one stage (new plant cane) without sugar cane income. The lower expenses reflect the 

assumed reduction in machinery operations, sugar cane billets and chemical (fertiliser, 

herbicides and pesticides) use. The reduction in these costs is slightly offset by costs of the 

soybean rotation crop, and higher harvesting costs and grower levies (due to bigger yields). 

The lower expenses and slightly lower income translate into a 22% increase in the gross 

margin. 

Methodology 

This study uses the Monash Multi-Regional Forecasting (MMRF) model to produce an 

alternative forecast for the Queensland sugar cane farming industry, based on the adoption, as 

discussed earlier, of the proposed “eco-efficient” production system by the industry. The 

study quantifies the likely impact the adoption of “eco-efficient” production in the sugar cane 

industry has on other sectors, and the Queensland and national economies. 

Economic Model 

MMRF is a multi-sector dynamic model of the Australian economy covering the six states 

and two territories. It models each state as an economy in its own right, with state-specific 

prices, state specific-consumers and state-specific industries. Since MMRF is dynamic it is 

able to produce sequences of annual solutions connected by dynamic relationships. The 

model also includes enhanced capabilities for environmental analysis, and a regional 

disaggregation facility that allows results for the six states to be disaggregated down to 56 

sub-states regions (Statistical Divisions). 

The strength of the MMRF model is in tracing the regional effects of reforms or events that 

are regional specific. It has already been used to address a wide range of issues, including the 

economic impacts of a foot-and-mouth disease outbreak in Queensland, the effects of global 

trading in greenhouse emission permits, and the effects of changes in state and federal taxes. 

25 Expenses in the gross margins include the variable costs of machinery and implement operations, chemicals 

costs (fertiliser, insecticides and herbicides), contract costs (sugar cane planting and harvesting) and grower 

levies. 

20

Assumptions 

Intermediate inputs 

The adoption of “eco-efficient” production methods by the Queensland sugar cane farming 

industry is assumed to change the amount of intermediate inputs used by the industry. The 

industry will use less of some inputs and more of others. The assumed changes in input usage 

are calculated by using the gross margins of “traditional” and “eco-efficient” sugar 

production (Table 1to Table 15) as a basis. 26 

To model the adoption of “eco-efficient” production by the Queensland sugar cane industry 

we alter the input usage of Queensland sugar cane farming. In Table 17 are the assumed total 

percentage changes in input usage over a ten-year period (2003–12), and the associated total 

absolute ($m) changes. It is assumed that these changes will occur linearly over the ten years. 

Table 17: Assumed changes in input usage by the Queensland sugar cane growing industry as a result of the 

adoption of ”eco-efficient” production (changes from basecase) 

Input 

Total change over the ten years 2003 to 

2012: percentage 

Other crops (Soybean seed) 690.0 6.0 

Petroleum refining -33.0 -16.8 

Chemicals -23.0 -74.8 

Repairs -26.0 -11.4 

Labour -30.0 -217.3 

Total -314.3 

Total change over the ten years 2003 to 

2012: $m* 

* Derived by applying the total percentage change to the dollar cost of the input in 2003 taken from the basecase simulation. 

Labour 

The “eco-efficient” production system also requires less labour per unit of output. It is 

estimated that, under the modelling assumptions, the elimination of ground preparation 

before planting and fewer in-crop sprays will reduce the amount of labour per unit of output 

by 30%. It is assumed that the surplus labour will be utilised elsewhere in the economy. 

Sugar cane production 

It is assumed that the adoption of “eco-efficient” farming practices will increase sugar cane 

yields by 15% (see Table 7). However, under an “eco-efficient” production system, 1/6 of 

land is not harvested each year. Therefore, we have assumed that the increase in yield largely 

offsets the reduction in the area harvested each year. 27 

The adoption of an “eco-efficient” production system by the Queensland sugar cane farming 

industry is modelled as a technological change in the industry. The production assumptions 

imply that there is a technological improvement in the industry. 

26 The percentage changes indicated in Table 17 for petroleum refining, chemicals and repairs are highly 

conservative. 

27 We have assumed that the area of land harvested declines annually by 15% and that this is accompanied by a 

15% increase in land productivity. 

21

Results 

National macroeconomic effects 

Figure 3: National real GDP and factor inputs 

Capital stock Employment Real GDP 

0.040 

0.035 

0.030 

0.025 

0.020 

0.015 

0.010 

0.005 

0.000 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

Deviation from basecase (%) 

The adoption of “eco-efficient” sugar cane production in Queensland is forecast to increase 

real Gross Domestic Product (GDP) above basecase values. The increase in real GDP is 

predominantly driven by the direct effect of the assumed technological improvements. A 

forecast increase in capital stock also contributes to the increase in real GDP. 28 In total, real 

GDP is forecast to be 0.034% or $426m above the basecase in 2020. 

It is an assumption in the model that real wages adjust so that the effect of an external shock 

on employment in Queensland and the rest of Australia, moves in line with the basecase in all 

years of the projection period. Therefore, by assumption, national employment does not 

deviate from the basecase. Over this period, real wages are forecast to fall below the basecase 

in order to induce other industries to absorb the surplus employment. 29 

Queensland effects 

Adoption of the proposed “eco-efficient” sugar cane production in Queensland is forecast to 

increase real Gross State Product (GSP) in Queensland by 0.195% or $399m in 2020. This 

represents 94% of the forecast national GDP gain. The majority of the gain from the adoption 

of eco-efficient sugar cane production is forecast to occur in Queensland because the 

assumed technological improvements are occurring in a Queensland industry and it is 

assumed that this initial loss of employment in the sugar cane industry is offset by expanded 

employment in other Queensland industries. 30 

28 In the long-term, the rates of returns to fixed factors (e.g. land and labour) are forecast to increase relative to 

the rates of returns to capital (variable factor), which leads to some substitution of capital for fixed factors 

In this modelling, we assumed that real consumption moves in line with real income. Private consumption is 

forecast to increase above the basecase by 0.023% in 2020, reflecting an increase in factor income (caused by 

assumed cost savings and increase in capital). The increase in private consumption is forecast to be less than the 

increase in real GDP, this is caused by a reduction in purchasing power caused by a small reduction in the terms 

of trade. Investment is forecast to be 0.034% above the basecase in 2020, reflecting the substitution of capital 

for fixed factors in the long-term. 

29 It is assumed that there will be a 30% reduction in the labour required per unit of sugar cane industry output. 

Because the output of the industry is assumed to be relatively unchanged, the assumed reduction in labour 

requirements results in a fall of approximately 30% in sugar cane farming employment. 

30 The real wage rate in Queensland is forecast to decline below basecase, which facilitates the absorption of 

surplus labour by other Queensland industries. 

22

Figure 4: Queensland GSP 

0.25 

0.20 

0.15 

0.10 

0.05 

0.00 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 


2013 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

Regional effects 

The MMRF model is capable of modelling the impact that the adoption of “eco-efficient” 

production has on Queensland sub-state regions (i.e. statistical divisions). These impacts have 

not been reported in this paper, but will be included in a technical paper that is to be released 

later this year. 

Industry effects 

According to the MMRF 1996–97 31 database, Queensland’s sugar cane farming industry 

production was $1120m, all of which was supplied to the sugar milling industry. 

Output from the Queensland sugar cane farming industry is assumed to be relatively 

unchanged. This is achieved through various assumptions, including that the effective input 

of land for sugar cane farming does not change from basecase values, and that the changes in 

technology have no impact of the quantity of productive capital. Because output, land and 

capital are assumed fixed, effective labour is also fixed. 

Figure 5: Sugar cane profitability 


35 

30 

25 

20 

15 

10 

5 

0 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

31 The Centre of Policy Studies begins with a 1996–97 database and uses the MMRF model to project the 

basecase forward to 2020. 

23

Because it is assumed that output from Queensland sugar cane industry is relatively 

unchanged there is little change in the price received by sugar cane producers. Because the 

change in the price of sugar cane is very small, the cost reductions resulting from the 

technological improvements result in a significant increase in the unit cost of capital (unit 

profit or profitability). Therefore the assumed technological improvements do not lead to an 

increase in sugar cane production, but rather an increase in the profitability of sugar cane 

production. In 2020, the profitability of the Queensland sugar cane industry is 33.1% above 

the basecase. 

The adoption of “eco-efficient” sugar cane production in Queensland is forecast to have a 

very small impact on the Queensland sugar manufacturing/refining industry. This is because: 

1. output from the sugar cane industry is assumed to be relatively unchanged 

2. the price of sugar is not greatly affected 

The Queensland other crops industry is forecast to benefit from the adoption of the “ecoefficient” 

production system. Output from other crops is forecast to increase by 0.089% or 

$4.1m in 2020. This industry produces soybean seeds and the increase in the industry’s 

output reflects the assumed increase in the use of soybean seeds by the Queensland sugar 

cane growing industry. 

Conclusions 

To the authors’ knowledge, this is the first study to examine, under the modelling 

assumptions, the broader economic implications of the adoption of “eco-efficient” sugar cane 

production in Queensland. The results of this study indicate that the proposed “eco-efficient” 

production system has the potential to benefit sugar cane growers and the Queensland and 

national economies. 

A gross margin analysis between the assumed generic “traditional” sugar cane production 

system and the proposed “eco-efficient” production system estimates that, sugar cane income 

could decrease by 4% and expenses could decline by 22%, resulting in a 22% increase in the 

gross margin. It is also estimated that the eco-efficient production system would require 30% 

less labour per unit of output. 

The MMRF model is used to evaluate the broader economic implications of the adoption of 

“eco-efficient” sugar cane production in Queensland. It is forecast that the adoption of the 

production system will lead to a $426m increase in the size of the national economy in 2020 

(the final year of the simulation) and a $399m increase in the size of the Queensland 

economy. The profitability of Queensland sugar cane growing is forecast to increase by 33% 

in 2020. 

The MMRF model is an accepted tool that can be used to analyse complex issues, providing 

its limitations are understood. This model allows you to evaluate a number of issues, and 

could be used to evaluate the impact of price differences that could be achieved in the market 

place for eco-efficient sugar. 

There are many other issues that could to be considered, which have not been covered in this 

paper. For instance, yield increases have been documented at between 20–30% (Garside 

2003) and there maybe potential increases in Commercial Cane Sugar (CCS). In relation to 

farm capital requirements, this paper has not dealt with issues associated with machinery 

sales or purchases. 

There are many social and ecological issues that also need to be addressed in further research. 

24

References 

Azzopardi, M., Marohasy, J., Christiansen, I. & Dawson, D. 2001, Environmental 

Commitment of the Queensland Sugar Industry, Brisbane 

Baker, J. 2003, A Report on the Study of Land-Sourced Pollutants and their Impacts on Water 

Quality in and Adjacent to the Great Barrier Reef, Brisbane 

Department of Primary Industries, Queensland 2002, Queensland Sugar Industry Profile, 

Brisbane 

Environment Australia 2002 (www.ea.gov.au/industry/eecp; accessed 12/09/2002), Canberra 

Garside, A.L. 2003, Sustainable Sugar Cane Farming Systems: Developments to Date, Paper 

presented at Outlook 2003, Canberra, 4–5 March 2003 

Hildebrand, C. 2002, Independent Assessment of the Sugar Industry 2002, Canberra 

Productivity Commission 2003, Industries, Land Use and Water Quality in the Great Barrier 

Reef Catchment, Productivity Commission Research Report, Canberra 

25

"eco-efficient" production system - Department of Primary Industries

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