Improving Competitiveness of the Australian Sugar Industry by Analysing Cane Supply Arrangements across the Value Chain

The term “value chain” describes the collection of activities that are performed to design, produce, market, deliver and support a product. The Australian sugar industry value chain has a number of distinct stages involved in the transformation of the cane crop into raw and refined sugar and other manufactured products. These stages include production, processing and distribution functions. Despite its linear direction, a critically important feature of the sugar industry value chain is that it is not a collection of independent activities but a system of interdependent activities. In the Australian sugar industry, there remains a significant degree of segregation in the organisation of growing, milling, and marketing activities, despite the fact that these sectors are linked. These linkages reflect the need to coordinate activities between growers, millers and marketers, and do not appear to have been fully exploited in the way that a more vertically integrated industry would. A key question is what opportunities exist to manipulate the whole value chain to enhance industry profitability and competitiveness? To address this question, this paper explores the strengths and weaknesses of value chain analysis as a framework to review the competitive position of the Australian sugar industry and identify opportunities for improvements. It is concluded that there is a need to examine more novel approaches that could achieve further efficiency gains across the entire sugar industry value chain. This will involve going beyond traditional measures of competitiveness and focussing on improving the organisational efficiency of the industry.