AUSTRALIA is in the box seat to capitalise on an increasing push by food manufacturers seeking sustainable sugar production practices.
With moves already underway to incorporate blockchain technology within the sugar supply chain, Australia could hold an edge against its much larger and more dominant global competitors.
Speaking at the CaseIH Step Up conference in Bundaberg last week, Queensland Sugar Limited (QSL) senior manager Andrew Phipps said the cane industry had an opportunity to vault ahead of the likes of Brazil and India by proving its environmental, social and corporate governance (ESG), something high production companies were seeking out.
The trend is a consumer-led change, which in turn is prompting investors to go where the people are heading.
QSL is a pass-through organisation which sells and markets Queensland raw sugar to the world market, typically directly to customers in Asia.
Mr Phipps is responsible for QSL's physical marketing function, overseeing customer relationships, sugar sales and the execution of sales contracts.
He said the best, and most probable, future scenario would be a world market where a premium is paid for sustainable sugar.
"Australia is right at the forefront in terms of compliance and the ability to meet the world market," he said.
For manufacturers such as The Coca-Cola Company, it goes beyond a feel-good move.
"It's not just good enough to be doing it; they have to be seen to be doing it," he said.
He said with new American president Joe Biden in the Whitehouse, many expected an increased focus on ESG as a dealmaker or breaker with the finance sector looking to invest in companies that can prove sustainable credentials.
He said millennials actually prioritise sustainable companies over returns.
RELATED READING
Mr Phipps said the pressure from buyers for accredited suppliers had been mounting for several years.
In the past three years, he would have fielded a few inquiries per year from companies chasing sustainability certainties. Now, he is answering about three or four per month.
"Food manufacturers have made a lot of commitments and they are struggling to get these implemented," he said.
He gave the example of global consumer goods manufacturer Unilever adopting its Responsible Sourcing Policy.
The Unilever website devotes a section to its sustainable sourcing, outlining its goals and progress on each commodity it uses, including sugar.
"In 2018 we increased our sustainable sugar supplies to 69 per cent," the site said.
"The proportion of self-assessed and physical, certified sugar rose to 42pc (this covers both sugar beet and sugar cane). We achieved the rest of our sugar requirements with Bonsucro credits."
The fact there is no slave labour within the Australian sugar industry automatically puts it ahead of some other parts of the world.
"The industries we compete against, they struggle with this. A lot of the places we compete against are still cutting by hand. That's compared to our GPS-driven harvesters," he said.
But Mr Phipps warned Australia risked losing its advantage if it stopped advancing its technology, methods and data tracking, allowing competitors to catch up.
"Aussie sugar is the best in the world and we receive a premium for that but that can change very quickly and we would have to settle," he said.
"We don't want that - we want to control the outcome."
Tech steps up to help
BEING able to prove exactly where Australia's sugar is coming from and the practices behind it will be helped by data technology.
A Smartcane BMP project is looking at using blockchain (pieces of data progressively "stamped" on the product as it moves through the supply chain) to provide certainty of sugar's sustainable credentials.
Smartcane BMP is an accreditation program for Queensland cane farmers which records and verifies their practice improvements in areas such as soil health, nutrients, irrigation, drainage, weeds, pests, diseases and workplace health and safety.
Smartcane BMP program manager Kate Gowdie said blockchain could be used to guarantee the amount of sustainable sugar in the supply chain, help buyers differentiate sugar on the world market and also help growers achieve a premium for their sustainable product.
The project has utilised the skills and platforms of KPMG to assist in identifying areas of value leverage for the industry.
One part of the potential platform would be the ability for growers to automatically share their credential certificates when requested by an interested customer or partner.
Smartcane BMP is widely regarded as a success story already with about 35 per cent of cane production areas audited under the program.
The program not only meets the sustainable sourcing needs for international customers such as Coca-Cola, but is also an alternate pathway to meeting the Queensland Government's Reef Regulations.
Ms Gowdie said the health of the Great Barrier Reef was a particular focus for many consumers so being able to prove best practices in Reef catchment areas was critical.
"Regrettably, meeting these needs does not guarantee a more profitable outcome," she said.
Ms Gowdie said the next steps would include a proof of concept and a trial shipment going off shore using blockchain to trace its progress.
She said there was also work being done on using blockchain to create alternate finance to manage and reward risk.