Organisation and profit-sharing in mechanised sugarcane harvesting: Is Australia's experience relevant to China?

Abstract

China now grows about 1.5 million hectares of sugarcane and is the third largest sugar producer in the world after Brazil and India.  Almost all Chinese sugarcane is still harvested by hand but labour in countryside areas has become more expensive and difficult to recruit.  The sugar mills prefer to crush the cleaner cane that manual harvesting delivers and some mills, in areas where mechanical harvesting capacity has increased in recent years, have imposed restrictions on the quantity of machine cut cane that can be delivered each day.  In the longer term, it is inevitable that the mills will accept a greater proportion of machine harvested cane.

It is therefore important that an institutional structure and appropriate management strategies to control the harvesting sector be developed as the transformation from manual to mechanised harvesting takes place in China to achieve the best possible outcome for the sugar industry.

Australia was the pioneering country where mechanised sugarcane harvesting was developed and most of the organisational arrangements for mechanical harvesting of sugarcane were adapted from the manual cutting system that preceded mechanisation.  The cane payment system in Australia acknowledges the respective capital shares invested in the independent farms supplying cane and the mills which process it, and attempts to share the net revenue from sugar sales roughly in proportion to their respective historical capital shares.

When mechanical cane harvesting was introduced into the Australian industry, there was no attempt to recognise the capital investment by harvester operators as part of the whole supply chain.  They have always been paid on a contract rate ($s per tonne of cane harvested) which does not align the incentives for the harvester operator with the rest of the industry.

This paper describes the Australian system of cane payment and organisation of cane harvesting so that each farmer shares equitably in the proceeds of sugar sales and also outlines a significant deficiency in the current system which excludes harvester operators from taking a similar share of industry profitability.