The South African sugar industry produces a weather-dependent annual crop of
2,5 million tons. Our sugarcane is grown relatively far from the equator, and milling is undertaken over a relatively long season, which makes for efficient use of the industry’s capital resources.
Approximately 55% of the sugar crop is consumed locally by market segments that vary from consumers influenced by developed-country concerns of health and diet, to those concerned with taste and affordable energy. The remaining 45% of the crop is exported to the world market.
Our sugar industry plays a pivotal role in the development and economic life of the rural areas in which sugarcane is grown. Like ours, sugar industries around the world have been well served by their technologists who have pushed the envelope in sugarcane breeding and processing.
Technologists have also made our industries more efficient by containing input costs, increasing tonnages vertically and continually improving quality. However, in this very dynamic period for global agriculture and agribusiness, established sugar industries and new agriculture-based, energy-orientated industries are undergoing fundamental changes.
Policy change is an ongoing dynamic. EU reforms have stimulated many parts of the European sugar beet sector to achieve world-class productivity and to seek alternate uses for sugar beet. Such national policy changes are reshaping the outlook and production profile of many traditional sugar industries.
Further, volatile world sugar prices have plummeted by about 50% from the 25-year highs of February 2006 to current levels, challenging industries that operate on the world market. Added to the volatility of prices are currency movements, which affect exporting countries differentially.
Recently, the uncertainty of sugar markets has been compounded by new renewable-energy dynamics such as the development of the Brazilian market for ethanol derived from sugarcane, and the American market for ethanol derived from maize.
While sugar producers are familiar with sugar market price movements, the world maize price has moved from US,50/bushel a year ago to the current level of
US,50/bushel – having peaked at
US,25/bushel in February 2007 – reflecting record levels and increased volatility.
All these changes and uncertainties point to increasingly competitive forces around the sweetener and energy cluster. Many sugar industries are competing at world prices; other segments are competing against other sweeteners; and still others are contemplating the competitive world of renewable energy feedstocks.
The role of technology in achieving sustainable business models is exemplified by new American ethanol production initiatives. The conventional wisdom is that ethanol production from maize is energy-inefficient. However, an American example shows the power of innovation and technology.
After fermentation to produce ethanol, the distillers’ maize is fed to feedlot livestock. In turn, the cattle manure is processed in an anaerobic digester to produce biogas that powers the ethanol plant. This closed-loop system has reduced total energy requirements by 50%, making this ethanol globally competitive with substantial environmental advantages.
Brazil’s robust development of sugarcane to provide renewable, affordable, and environmentally and socially friendly energy in the form of their national ethanol programme is universally recognised. There are many other international examples of the use of molasses as a feedstock for ethanol, and bagasse as a source of electricity cogeneration.
Partnership with government is important
However, it is important to note that the meaningful production and consumption of both bioethanol and bioelectricity anywhere requires partnership with government and its agencies to provide the necessary legislative and fiscal measures to enter an era of more sustainable energy use. South Africa is currently developing its renewable energy policy and strategy to provide the required certainty to encourage investment.
Despite the competitive and dynamic world of agriculture, sugarcane remains an important, if not vital, part of developing countries’ economies. The history of the South African sugar industry since the mid-1800s illustrates the positive influence of a developing sugar industry in the provision of infrastructure and social services. Many industries have had similar experiences in the sustainable development that results from the establishment of a sugar industry. In South Africa, the development of the sugar industry is driven by current sociopolitical requirements. After the miraculous political transformation of the 1990s, South Africa’s challenge is to transform its socio-economic and business structures.
The sugar industry is well placed to achieve government targets of having 30% of freehold land owned by previously disadvantaged individuals by 2014. This requires considerable input from institutions and new business models to ensure the sustainable advancement of new landowners and processors with limited appropriate business experience and who are financially highly geared.
The development credentials of sugarcane and sugar industries are evident throughout Southern Africa. Mauritius, previously a sugar-producing economy, transformed into a multi-enterprise economy with textiles, electronics, tourism, and more recently electricity cogeneration, ensuring full employment. This is a classic case for development economists.
There are several other Southern African countries where sugar is a major part of the GDP. These countries can use the powerful positive effects of their sugar industries to diversify their economies.
The dynamic agribusiness environment, and the continued importance of sugarcane as the stable feedstock for sugar and the new feedstock for electricity cogeneration, ethanol production, and a seemingly endless list of other possibilities, underlines the need for technological excellence.
The importance of collaborative research
Sugarcane is a relatively small global agricultural crop, which does not attract the large research funding of more widely grown crops. Added to this is the challenging genetic structure of the sugarcane plant.
Funding for research into sugarcane and its processing is needed and must be optimally spent internationally for sugarcane to maintain its rightful place as one of nature’s gifts to biomass production.
International cooperation is essential. Unless countries collaborate in researching and developing the potential of sugarcane, sugar industries will lose their international competitiveness. The International Society of Sugar Cane Technologists (ISSCT) is an ideal forum for international research to form partnerships that will reap the required synergy.
The ISSCT should be aware of the dynamic environment in which its stakeholders operate, and ensure that it has the necessary structure, focus and programmes to optimise the development of the sugarcane plant. There may come a time when the sugarcane plant will be known as “cane” in recognition of the many products it yields in addition to sugar. Indeed, the ISSCT may have to change its name to the International Society of Cane Technologists. – Lloyd Phillips |fw
