With the advent of a new and competitive era in sugar marketing secured, CANEGROWERS has developed tools and a training program to help its members seize new opportunities to improve their profitability.
Following a long CANEGROWERS-led campaign and legislative changes in 2015, cane growers are assured a choice of marketer for their share of the sugar made from their cane.
This has led to the development of a wide range of options and introduced a new level of complexity to sugar pricing. In this new environment, cane growers need strong skills around price risk management, financial planning and business management tailored to their particular farm, business and family circumstances.
Undoubtedly, the increased choice and competition for sugar marketing services provides greater opportunity for growers to better manage the sugar price risk they face.
Many have already taken advantage of the new opportunities with some success. Marketers report growers that take an active participation in their pricing achieved a $30/tonne premium for their sugar on average over those that did not.
Growers who have a sound understanding of their cost of production and financial situation can make the most of forward pricing. Without a background in business management or finance, developing this understanding can seem like a daunting task.
Enhanced financial capability is a demonstrated need in the agricultural industry, and the changes in the sugar marketing landscape highlighted the importance of educational programs. Growers who engaged in external training have reported enhanced financial stability, primarily through securing better returns using forward pricing.
Identifying this gap, CANEGROWERS created a program to assist growers navigate the new era of sugar marketing. The Pricing Essentials for Cane Growers Workshop was a two-day program developed in collaboration with TAFE Queensland and supported by the Rural Jobs and Skills Alliance.
It was held across 10 regions in Queensland between February and May of 2021. More than 140 growers attended the workshop, which covered two units: Small Business Management and Risk Management.
Led by CANEGROWERS and sugar market consultant, Dougall Lodge, attendees learned how to calculate their cost of production using their existing finances and a CANEGROWERS-developed tool. The facilitators also spent time examining the different forward pricing options between different marketers and how to go about forward pricing under uncertainty.
As the Chairman of CANEGROWERS Herbert River, Michael Pisano attended the workshop in Ingham and was very happy with his experience. With more than 30 years of experience representing growers in his district, Michael found the cost production tool very helpful. He also valued how the workshop encouraged growers to re-evaluate their finances and constantly seek out marketing information.
“It triggered an urge to talk to a pricing manager about their new forward pricing packages,” he said.
Louise Bowman owns a family farm around of 240 hectares in the Mackay region. She enjoyed the hands-on learning experience.
“You get to network with people, the guys were really good and made it really interesting. It wasn’t just sitting in a classroom, everyone had a discussion,” she said.
In the Cairns region, Neil Maitland found that the facilitators did a great job at promoting how forward pricing should be used to reduce risk.
“If you understand your cost of production and the market cycle, you can get a lot of leverage and make sure you don’t go broke,” he said.
Attendees have praised the usefulness and time-effectiveness of the Pricing Essentials workshop, saying it improved their ability to understand financial reports and their costs of production as well as factors that influence sugar prices.
A significant takeaway that Michael noted was how attendees learned new forward pricing strategies to manage the risk of price fluctuations.
“I was actually surprised with the level of detail they went into,” he said.
“It helped the younger growers understand a lot of the strategies I’d been using and it was quite enjoyable to see.”
Even experienced growers, such as Neil, gained new learnings from the workshop.
“As technology evolves, growers will be able to see sugar prices on their phone and make a decision in 10 seconds to lock that price in,” he said.
“A thorough cost of production [calculation] is the first thing you have to know about your business.”
Feedback for the Pricing Essentials workshop revealed that growers would attend a follow-up session to consolidate their learning. Those with more experience in forward pricing expressed that they intended to further develop their skills and learn more about price speculation.
The course ended with growers being more aware of how interpreting financial and commodity information can impact their profit margins. By learning these skills and implementing them in their business strategies, growers who attended felt they could seize the opportunities of forward pricing and improve their financial stability.
According to Michael, “Not only does it give growers the knowledge and the skills to do certain things, it gives them the confidence to know that I can do this”.
Both experienced and newer sugarcane growers can learn how to increase their profitability by improving their financial skills.
For more information on the Pricing Essentials Workshop, contact Warren Males:
Head – Economics CANEGROWERS | P: 07 3864 6444 | M: 0417 002 325 | F: 07 3864 6429