Australia Second Largest Sugar Exporter Economics Essay

Australia operates as a really competitory in the universe market as a 2nd largest exporter of sugar in the universe whereas Brazil is the 1 of the leader in bring forthing and besides exporting the sugar. Australia can bring forth big figure of sugar because they have educated husbandmans, work forces in the sugar factory. They besides grow harvests that by and large are grown in the 3rd worlds states. Transportation besides plays a critical function for doing a sugar industry an efficient one in the Australia. As sugar Millss have own railroad lines that conveying cane to the Millss. Therefore, Australia integrates efficient turning, efficient Millss and a good incorporate selling system which makes it a 2nd largest exporter and powerful manufacturer of sugar in the universe.

In 2006/07, Australian sugar exports were deserving $ 941 million. The major markets for natural sugar in majority ( by volume ) are.


1,000,450 metric tons


610,000 metric tons

Dutch east indies

536,900 metric tons


520,000 metric tons

Chinese Taipei

238,000 metric tons

-ABARE, Australian Commodity Statistics 2008.

The sugar industry must be cognizant of the monetary value control mechanisms of authorities when finding the equilibrium monetary value and measure of supply and demand for sugar. Price controls can be seen in certain lodging markets, agribusiness markets and labour markets throughout the universe. Therefore, the monetary value control mechanisms are monetary value ceilings and monetary value floors. Price ceiling is a maximal monetary value at which goods can be bought and sold. For illustration: some metropoliss in India have monetary value controls on rental lodging. Landlords are non permitted to bear down a rent higher than the maximal stipulated by the rent control jurisprudence in these metropoliss. Governments impose monetary value ceilings in response to ailments that the market monetary value is excessively high. As a consequence, if the authorities prevents houses from bear downing more than a certain sum for their merchandises, so a deficit is likely to ensue. When the maximal monetary value remains below the equilibrium monetary value on the market, there is a relentless deficit ; Sellerss are unwilling to provide every bit much as purchasers want to purchase. Another monetary value control that authorities uses is monetary value floor, a minimal monetary value which helps the providers of goods and services. The Australian Government, for illustration, operated the Wool monetary value Stabilization Scheme until 1991 to forestall the monetary value of wool falling below a certain degree. In the labor market, the authorities requires that houses pay workers a pay no less than a minimal, name the lower limit pay. If a authorities imposes a monetary value floor, so a excess will happen. When the monetary value above the equilibrium monetary value, providers of goods and services want to sell more than people are willing to purchase, so there is a excess.

Monetary value alterations whether a sugar industry is a monetary value taker or monetary value shaper. Monetary values change really frequently. For illustration: alterations in production and demand at different times of a twelvemonth, monetary values change. Factors such as conditions and works disease do the supply of sugar to change from clip to clip. Similarly, monetary values besides play an of import function on the handiness of viing cane. Consumers have a wider pick if there is a different scope of viing merchandises Although the measure of a merchandise may remain the same, the monetary value could travel down if the consumer decides to exchange to a viing merchandise. The monetary value decrease would happen to hopefully pull consumers.

Monetary values that are found vary for the different degrees of the supply system. We know that at every phase of the supply system there are markets. Each market will typically hold a different monetary value. For illustration there will be the sugar maker ‘s monetary value that sells sugar straight from the farm. There will be the rural merchandisers purchasing monetary value and merchandising monetary value. Buying monetary value means the monetary value that the rural merchandiser will pay for sugar bought. Then there will be the merchandising monetary value at which he or she sells to jobbers or retail merchants or concluding consumers there will be the jobbers purchasing monetary value and merchandising monetary value as there will be the retail merchants purchasing monetary value and merchandising monetary value.

Importantly and vitally it must be understood that for sugar industry monetary value for a merchandise is the lone beginning of money i.e. income. Price is the lone component that will bring forth income. Money generated from monetary values is really of import for sugar industry.

To do effectual determinations, concerns, authoritiess and public governments need a manner of mensurating how much the measure demanded is affected by alterations in the monetary values and by the alterations in consumer ‘s income and the extent to which providers are able to react to increase in monetary value. Thus, snap is a step of how sensitive one economic variable is to another economic variable. There are figure of factors that determine the snap of demand for sugar. They are as follows:

  • Substitutes merchandises: the more the merchandises are substitutes the higher is the snap, as people can easy exchange signifier one good to another if a small alteration is made in monetary value.
  • Percentage of income: The higher the per centum that the merchandise ‘s monetary value is of the consumer ‘s income, the higher the snap, as people will be careful with buying the good because of its cost
  • Necessity: The more necessary a good is, the lower the snap, as people will try to purchase it no affair the monetary value,
  • Duration: The longer a monetary value alteration holds, the higher the snap, as more and more people will halt demanding the goods.
  • Breadth of definition: The broader the definition, the lower the snap.

Brazil is the biggest manufacturers and exporters of sugar among the three states India and the European Union ( EU ) . Different factors such as natural, economic and political influence the competiveness of sugar production in each state and find the ability of local production to vie on the universe market. It occupies more than 50 % of South America and is the 5th largest state in the universe consisting different topography like hills, mountains, fields and scrublands. It besides occupies country along the shores Atlantic Ocean, with uninterrupted supply of H2O and moving as backwoods for trade activities. Factors such as different clip Zones and location is progressively playing a planetary offshore service finish for Brazil. Brazil is rich in natural resources that are why it exports with small attempt. Similarly, with immense population base it provides inexpensive labour which helps in the production of sugar.

Therefore, Brazilian sugar manufacturers have a competitory advantage over Australia as they have integrated production systems so that there is a complete ownership from the field, through conveyance, right through the mill and down to the ports and they have inexpensive labor. The chief grounds the Brazilian came to vie in the universe market are:

  • Deregulation of the industry in the late 90 which encouraged the growing of productive efficiency, engineering diffusion and acceptance of managerial tools in sugar palts and distilleries.
  • State Law of S. Paulo which imposes manufacturers to be followed refering the combustion of sugar cane. The jurisprudence encourages the mechanised film editing of the sugar cane, to cut down production costs and better the quality.
  • MODERFROTA Program from BNDES which encouraged the mechanisation of agricultural operations and of logistics, leting the technological redevelopment in agriculture with involvements rates lower than those charged in the market.
  • Program of recognition for acceptance of information engineering which stimulated the acquisition of integrating systems of procedures of direction, production and of distribution
  • Institutes of agronomic research and agriculture which support the technological preparation for agricultural and industrial production, and the mechanisation of operations of planting and film editing.

Because most sugar is exported and there is no domestic support monetary value or subsidies. If one has a universe ‘s best pattern in production, managing and selling and a repute for quality, supply dependability and service success come in their door. At the farm gate, Australia has maintained export fight by following advanced patterns, peculiarly through mechanization, new agriculture patterns and variegation.

Australia is one of the lowest cost sugar cane and sugar manufacturers in the universe. Australian cane agriculturists are universe renowned as efficient, advanced manufacturers who have demonstrated a capacity to react to altering conditions. The productiveness on their farms is among the highest in the universe. Cost efficiencies have been achieved mostly through mechanisation and acceptance of advanced patterns.

Pricing & A ; Marketing Sugar

Australia has no domestic support monetary value, unlike most other states which regulate monetary values, frequently far above universe market values. Its success has been built on universe ‘s best pattern in production, managing and selling. Many of the universe ‘s major sugar importers prefer to beginning their demands from Queensland because of its repute for quality, invention, dependability and service. The industry ‘s high market portion and long-standing client relationships reflect its efficiency, dependability and cost fight.

Milling & A ; conveyance

Around 4500 concern endeavors around Australia supply more than 35 meitnerium of cane to25 sugar Millss. Most Millss crush an mean 10,000 metric tons of cane day-to-day and employ around 150 people during the season. Cane is transported to the Millss on cane railroad and route systems. Glenn millers, agriculturists and reapers determine reaping and conveyance agendas that guarantee cane is crushed every bit fresh as possible. Average cut to oppress clip is less than 12 hours.

Australian cane agriculturists are universe renowned as efficient, advanced manufacturers who have demonstrated a capacity to react to altering conditions. The productiveness on their farms is among the highest in the universe. Cost efficiencies have been achieved mostly through mechanisation and acceptance of advanced patterns.

In recent old ages agriculturists have sought to keep viability and universe fight in an progressively tougher export market environment by following new agriculture patterns which are more profitable and sustainable. There has been a steady tendency towards larger farms and less dependance on labor.

The sugar industry in Australia is turning twenty-four hours by twenty-four hours with knowing, autonomous, dedicated, confident and proficient advancement. Productivity is high and all parts of the industry, including research are geared towards fostering attempts to keep and heighten Australia ‘s competitory place. It maintains its export fight by following new and efficient patterns, peculiarly through mechanization, new farming techniques and variegation. Therefore, Australia being a sugar manufacturer has a competitory advantage and can derive from trade even if it is more efficient at bring forthing every merchandise than other states like Brazil, China and European Union with a lower chance cost.