CANEGROWERS Around the Paddock
CANEGROWERS advocates on behalf of sugarcane growers in Australia. This podcast series examines some key issues and challenges and celebrates the successes.
CANEGROWERS Around the Paddock
From global dominance to a shifting market
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Jonathan Williams and Stephen Geldart from Czarnikow join from London to reflect on when Australia led global raw sugar exports and the challenge was finding homes for massive crops.
They unpack how quality, logistics and relationships kept Queensland competitive – and why getting the last call from a refiner still matters.
Stephen brings it to today – a tougher market, Brazil’s rise, and where future demand could come from, from biofuels to new industrial uses for sugar.
Welcome And Price Snapshot
SPEAKER_03Hello and welcome to the Cane Growers Marketing Information Service update for April 2026. We've got a really special uh episode today. We've got a couple of guests coming in from London, our friends from Zarneco. So I will introduce Jonathan Williams and Stephen Geldert in a moment. Before we do, just a quick update on the sugar prices. It's been a rather volatile month. Unfortunately, we saw some ups with the um you know tensions in the Middle East, but sugar prices sadly have dropped back from there, and we're now back in the low 420s for the 25 season, but we are seeing price levels move up towards 500 as you move out the curve to 26 and 27 seasons, which is which is good. We want to introduce a couple of very special guests, Jonathan and Stephen. Um you guys are from Zarneco. Uh, Zarneco has a very long history with the Queensland sugar industry. We thought it'd be fitting with our 100-year uh celebration of the anniversary of cane growers to welcome some really good partners like Zarnico to talk about a bit of the history that we've had together as uh as an industry. So Jonathan may not be quite a hundred years, but it sounds like Zarnico has been part of the furniture for a long time with the Queensland industry.
SPEAKER_00Yeah, thanks, Dougle. I think I joined in the mid-80s, and I guess at that part, at that point, Zarneco and CSR, Queensland Sugar, had a long ongoing relationship. I can't remember when it first started, but I think uh Zarnico inherited the relationship through CSR, which in turn used to own things like the Fiji sugar industry. So I think that probably goes back to, I'm not really sure, 30s, 40s, 50s, but a long time. Let's say mirror it mirrors the hundred years of a Kango's anniversary.
SPEAKER_03Well, there you go. Well, it's um great to have you here, Jonathan. And you know, just maybe just to give a quick background of yourself. You know, I got to know you, I think, in the 1990s when you were in Singapore at that stage, but you've been working with Queensland sugar and part of the sugar industry for a lot, very long time.
SPEAKER_00Yeah, I um I pretty much you know joined the Australian sugar desk as we used to call it in Zarneco, um, pretty much from my early days in in Zarneco. And I guess one of the reasons then, you know, we forget how communication has changed, but two of the largest clients for Queensland sugar were Japan and Korea. And uh the Korean and Japanese refineries all used to buy their sugar through their offices in London. Having a an office in London was sort of central to the marketing to two of the key areas.
SPEAKER_03And um, yeah, since then obviously you've travelled around a bit yourself, and you know, Zarnico has also grown as well, I think, hasn't it? So you've now grown your office presence over the years too, which yeah, it sounds like a bit of that was to do with due with Queensland exports too, I'd imagine.
SPEAKER_00Yeah, no, absolutely. Uh I think again, back in the late 80s, early 90s, there were three offices: Singapore, London, and and New York. And as the Queensland industry grew, uh, we then opened an office in Dubai, uh, we opened an office in Mexico, and I think there's probably around about a dozen offices now. Um, not all just sugar focused, obviously, now. The life has moved on. Zarnico largely grew with the Queensland sugar industry during the 90s and early 2000s.
SPEAKER_03And the history, you know, Zarneco um has had some shareholdings from Australia at various points in time as well, hasn't it? Yeah, no, absolutely.
SPEAKER_00In the late 80s, Zarnico traded a lot of commodities and was a very much a private company, and um, probably too small in reality to trade all the commodities it did. So the decision was made in around about 1990 just to refocus on its core, which was always sugar. And its two largest clients at the time were CSR, which was uh, I guess, the major miller in Australia at the time and certainly responsible for the marketing, and um in Europe British Sugar. And so they were two complementary clients of Zarneco, and um they became shareholders in 1991, and strong relationships with both, frankly, ever since, so the last 35 years.
Diversifying Beyond Sugar Trading
SPEAKER_03And um and you know, I know since then you know Zarnico's model has changed, you've broadened your your business, uh, Stephen, to things other than uh sugar. I know you look after a lot of the data and um other some of the other clients. Yeah, thanks, Dougal.
SPEAKER_01Um so I'm Stephen Geldart. I've spent 18 years at Zarnico now. So compared to Jonathan and um all of the talk from the eighties and nineties, I'm I'm pretty much a newcomer. And I spent uh most of my time with the company uh analysing the sugar and ethanol market. Um so really trying to understand where sugar will go, who's using it, what it's used for, how much it costs to grow it, and you know where where prices might be heading. Like you said, as as a business, we've uh we've diversified again. So uh we used to do a lot of work um through the whole sugar supply chain for various customers. Um and quite often they'd come back to us and say, We really like what you're doing in sugar. Can you do it with other products that we use as well? And for a long time we'd answer no, you know, as Jonathan said, our core is our sugar, and we're going to stick to what what we have the most expertise in. Um but eventually, around about 10 years ago, we got shareholder approval to move um other products within our system as well. So we now handle a pretty wide range of goods. Generally, if it's something that the food and beverage company would use, then we're interested in it. But that's the the biggest products that we move still are things like sugar, plastic packaging, uh milk powders, grains, uh um things like that. Yeah, so the business has grown a lot in the last 10 years, both in terms of uh the sort of scale of the business and the number of products we we move. And so my challenge now from the analysis point of view is to try to make sure that um the analysis team can keep up with what the rest of the business are doing. Um so that means moving away from just looking at sugar and ethanol and looking at the various other products that we we handle as well.
SPEAKER_03Um, the other part of you know your business, I know that you've worked with a number of the other parties here in Queensland too. And you know, I know just about every milling company, I believe, in Queensland uh probably has had you know very close working relationship with with you guys over the years too.
SPEAKER_00Yeah, I guess so. I mean, I think having close relationships was always the basis of the um uh communication, I suppose, back in the back in the day. That's the reason for having the offices around the world was to have close relationships with clients, but also with the industry, with millers, um, and with growers. And I guess that's continued. So Zarneco's got strong relationships with uh many of the participants in Australia Mip Paul, Nordzucker, Finasuka, Kovko, and Wilmar, of course. So, yeah, strong relationships have continued. That's the bedrock of Zarneco's uh basis, uh business rather.
When Australia Ruled Raw Exports
SPEAKER_03So, Jonathan, I know things have probably changed a little bit over the last 20 or 30 years. But um, yeah, I know one thing you know, when I first joined you know CSR raw sugar marketing back in the 90s, you know, at that stage, I think Australia was the the largest raw sugar exporter in the world. And yeah, the big issue was really about how to find the homes for the sugar at that point in time, wasn't it? And I think it was really fascinating to see some of the the markets where Aussie sugar was going to at that point in time.
SPEAKER_00Yeah, no, absolutely. As you can probably tell already from the uh the brief chat, my knowledge is uh strongest in the 80s and 90s, and then Stephen brings us up to date with the more recent times. It's a bit like my musical tastes. I'm good pre-2000, but after that things get a little bit tricky. So, no, absolutely. Asia, uh Australia dominated in the uh in the in the 90s. It's kind of hard to forget, but I guess Thailand was probably a two to three million ton producer for a lot of that uh time. Um that's total production, so that included domestic consumption and whites as well. So the balancing figure was raw's, and even then they were largely a first half-year um exporter, uh, whereas Queensland was much more geared towards the second half of the year um due to relative at the time relatively limited storage. Brazil wasn't really on even on the radar um for much of that period. So um South Africa, I guess, was a large competitor. South Africa was exporting quite large volumes into uh Japan and Korea in particular, and Thailand looking at some of the other uh Asian markets. But partly to keep Asia tight, and partly, as you said, as you mentioned, Doogle and need for homes, you know, Australia was also the dominant supplier into Canada, both the East Coast and the West Coast, at a time when Canada was probably still buying sugar um from the sort of tail end of the glory days from Cuba. So Brazil was uh still in our rear view mirror, but uh yeah, uh probably late 90s, 2000. Um I do remember sitting at the Singapore refinery when uh the general manager there showed me a sample of Brazilian sugar. And I must admit I thought it was refined sugar. I mean, it was it was so light in colour, and that was really one of the first times that Brazilian sugar had uh had sort of started to encroach uh with any major significance into the Asian area. So Queensland was absolutely dominant, not just in terms of quality of product, but through logistics, through building close relationships, uh a lot of marketing trips from cane growers, from the millers, and that expanded as well to visiting the competitors. So cane growers used to visit Thailand, used to visit Brazil, um, to really understand the competitors as well as visiting their own clients.
SPEAKER_03Yep, that was uh very interesting. I remember even you know you look think of the current Russian-Ukrainian conflict, and you know, I remember you know Russia was even a major market, and uh, even most of the Middle East and North Africa at various stages, right, Jonathan?
SPEAKER_00Yeah, no, absolutely. I remember sitting in Brisbane at one of the one of the board meetings, and there was a conversation about how to market the six million ton crop. Well, we were struggling, not struggling, but looking for homes for four and a half million wasn't actually straightforward. So six million ton crop was quite a challenge. So at that point, yeah, the Dubai refinery opened, I suppose, in in around the um early mid-90s. New homes were opened up in Egypt, in particular into the Red Sea port of uh Adebaya, and and China um was always a regular buyer, Malaysia was a regular buyer, but places like Taiwan, Indonesia, Philippines uh were just opening up to raw sugar imports.
SPEAKER_03Yeah, and that's it's interesting when you think about that. That you said the um the sort of relationships as well. I think from a trade perspective, you know, I know the the various brands of sugar, everyone sort of, you know, we we regard our high-quality sugar here in Queensland as you know one of the testaments of the industry. But uh, I suppose one of the interesting things is you know that the the actual trade requirements for polarisation actually restricted some of the Brazilian sugar into some markets, didn't it? Because of some really clever trade negotiations to uh to cap the pole levels for some of those um refineries.
SPEAKER_00Yeah, no, absolutely. I mean, for many years, as you know, Queensland produced and probably still does two different types or maybe three different types of sugar. So certainly a 98-degree pole sugar um for Japan. Um, but there were also pole restrictions in Korea as well, which meant that um Australia was the dominant supplier into Korea for all of that period, and largely still is. But there were sort of various uh routes employed, shall we say, to try and find some new markets. Uh we used to use Ostrade to target places like Bulgaria, um, which is uh strange thinking back. An entrepreneur from Melbourne came across a radar who had businesses in Vladivostok, and uh we utilized his services to um put several cargoes of sugar to a refinery just north of Vladivostok. So there were a range of uh marketing ploys, shall we say, utilized. But the key, the key that maintained Queensland in all of these major markets was a consistency of quality, a high quality, and and strong logistics. So even when the competition did materialize in a more significant way, certainly in terms of quality out of Brazil, things like the control of the ports, logistics, cost and freight selling was always one of the key factors for the Australian sugar industry to to ensure that Queensland got the last phone call. Any refiner is going to contact a number of buyers when they want to buy sugar. But the key thing was to make sure that Queensland received the last phone call. And uh, I think invariably it did, frankly, in that in that era.
SPEAKER_03And so, yeah, fast forward and yeah, Brazil and Thailand, I think, would be the uh the br you know the dominant suppliers, uh, yeah, certainly in this this part of the world, um, yeah, for most of the region. But I think in some of the key markets we still maintain a pretty strong presence, which is which is which is great.
SPEAKER_00Yeah, no, absolutely. And it's interesting that you know I mentioned South Africa earlier. South Africa was a very strong competitor into Japan and Korea in particular. Obviously, that has a as an origin, they've large largely uh rescinded from the world market. Um so it has been the sort of strength of Brazil, I guess, that we've seen coming through to every market in the world. And Brazil is obviously made the dominant player these days.
Selling More Than A Commodity
SPEAKER_03So, Jonathan, you want to share any particular highlights of what you experience when you're you know in the Queensland industry or with some specific customers?
SPEAKER_00Well, I think one of the one of the strengths of the marketing for sure was the Queensland industry and how like in any industry there's always friction between uh different regions or between growers and millers and marketing, and that's normal. But that was never presented to the clients. To the clients, it was always presented as one um strong, unified industry, and the visits to Queensland were always fantastic because the refiners got to meet the growers personally, not just in the offices. There were visits to the farms, um, they used to visit the ports, they used to visit the mills, and um it was a very slick operation. I think sometimes we take for granted how slick the operation was and still is. And that was very much appreciated by the clients. Anybody can compete on price, frankly. You just have to be one point cheaper than the other guy, right? And you don't need a marketing team to do that. You can just have one person on the end of a phone. What Queensland actually did very, very successfully, and I think still does, is market generally the whole of Queensland Sugar, which um is everything from the quality, from the logistics, um, from building strong relationships, from responding to customer um concerns, customer initiatives, customer inquiries, and um actually offering the full package to clients. I remember visiting Venezuela, which was another one of these strange markets that we thought might develop it to a strong destination. Um, but they were having issues in their industry. It was never ever going to be self-sufficient. But the team from Queensland Sugar took um one of the representatives from the Sugar Research Institute, SRI, um, to Venezuela to go and address some of the issues they had in the Venezuelan sugar industry. I mean, it was cheap marketing. They thought the the fact that Queensland would send one of their uh representatives to come and assist them was just off the charts. It was unbelievable. And as a result, Queensland sold at that period several cargoes into Venezuela. Venezuela was never going to be self-sufficient, but it was just the approach that Queensland Sugar took to look after clients, build relationships, and offer a first-class service. And I think, as I say, I think perhaps on the inside, sometimes we took it for granted. But the customers very much appreciated it all.
SPEAKER_03Uh so Stephen, you know, it's great to hear you know Jonathan so share a little bit about you know the good old days and uh how you know Queensland was you know revered. And you know, how do you think we stack up today, you know, as a as a as a supplier to the world market, and obviously went probably not as large as we once were, but it'd be interested to hear your thoughts there.
SPEAKER_01I think funnily enough, a lot a lot of what Jonathan says um still applies today. If you think about the Australian cane industry as a whole, um it's an extremely modern and efficient industry. Um you know, it's mechanised across the whole uh um chain from the field all the way down to the port. The quality of the sugar produced is high quality, it's still a quality that all of the world's refiners want. And the industry has the ability to manage the market extremely well. There's extremely advanced price risk management that's used in the future. And then plenty of raw sugar storage available so that um the industry can, to a certain extent, pick and choose when it wants to export according to the market conditions. And then less to do with the industry, more to do with Australia as a whole, but then you have uh this geographical advantage into the East Asian market, um, which uh East Asia remains a deficit market for sugar, and so Australia is well positioned to take advantage of that. So uh a lot of the advantages that Jonathan has just been talking about that we saw through the the 80s, 90s and 2000s still apply today. Uh I guess uh uh the challenge today is that uh since the mid-1990s, the Brazilian industry has just grown into an absolute uh dominant force in the sugar market. Uh the Brazilian industry has an economy of scale that's just incredibly hard to replicate anywhere else in the world. And also um I think one of the big drivers behind Brazil's growth uh, especially in the last 15 odd years, has been the weakness in the currency as well. But I f I still find it remarkable that when I joined Annika in 2008, the Brazilian real, you it's two real for the dollar, and and today it's closer to five. And so we sort of need to recognise that's been a major uh boost to a commodity exporter as well. So you know, from my point of view, Australia still has so many advantages. The Australian cane industry has all these advantages. I shouldn't lose sight of those. Really, the the the emergence of Brazil means there's a new dominant force in the market, but it's not impossible to compete either.
SPEAKER_03And so yeah, I know you guys do cost of production studies, Stephen. So yeah, I know we're talking general terms, but how do how do if you look at the cost of production in say US cents per pound, how how do you how do you see Australia comparing to Brazil and Thailand, for example?
SPEAKER_01I love this question because effectively what everyone wants the one number, right? You know, where's Brazilian cost of production? And you're looking at 250 different mills with different circumstances, different geography, uh different logistics. And uh so it's almost an impossible question to answer. But uh if I go ahead and give a single number anyway, and um hopefully all of your listeners will appreciate that there's a pretty big spread around this number. But in Brazil today, we would think uh cost of production very roughly is around 16 cents per pound. And of that, uh around nine and a half cents per pound is around um the cane planting, cane growing, cane maintenance, um, land acquisition and things like that. So that means with today's market, and uh speaking today, we're I think around 14 cents per pound. So uh today, most Brazilian mills, almost all Brazilian mills, will also not be making money on sugar. This is a sort of uh global phenomenon where you look at low sugar prices and wonder who's uh who's surviving, who's competing. I even in Brazil, I think it's a struggle. And then uh if I look at Thailand, again, uh very roughly, I think the cost of production for Thailand at the moment is around 16 cents per pound. Um it's slightly different with Thailand because the cane price that the mills pay to their farmers is uh itself linked to the world market returns that the industry achieve. And so as the world market falls, that Thai cost of production should fall as well, although there's a lag between the world market coming down and it being expressed through the cane price, and that lag also makes life slightly tricky for the mills. So uh I I guess the message at the moment is uh even the most efficient producers in the world will struggle to make money where the world market futures are at the moment. And that means that uh any advantage a producer can get through superior logistics, good storage, consistent quality in sugar does actually count for quite a lot.
SPEAKER_00If you look on the bright side, Stephen, I remember making a presentation in Mackay in the late 1990s where I was asked exactly the same question. And I think I said the cost of production in Brazil at the time was about four cents or four sixty to be precise. I was nearly stoned to death by a bunch of irate cane growers who thought they may as well stop now. So it's good to see the industry still continued 30 years after that. And I've managed to survive my uh presentation.
SPEAKER_01Okay. Jonathan, if if it makes you feel any better, I'm um I how my my invitations to go to visit various cane industries around the world has dried up because um I guess we'll come onto this in a moment, but um, so far for the last couple of years, our our market outlook, uh view on price. Has been quite bearish. And so, um, you know, like I say, all the invites to go out to Santos to see the port or to to travel to Thailand or or Australia, they've all dried up. No one wants to talk to me anymore. So I know the feeling.
SPEAKER_03Well, hopefully, yeah, thinking of the longer-term outlook, uh, Stephen, from where we are today, you know, 14 odd cents, are you feeling a bit more bullish longer term?
SPEAKER_01It we're in a really funny place for sugar because I think clearly the sugar consumption as a food globally is not growing as we we uh we were used to it growing. Uh really for me, 2014 was the sort of point where everything changed. Before 2014, I think most people in the sugar market assume that global sugar consumption grew at 2% a year, give or take. You know, if if it was a really good year, it grew at 3%, if it's a bad year, it grew at 1%. But we sort of had two percent a year consistent growth. That has changed. Um, sugar consumption as a food isn't growing very strongly, and that is a massive drag on the market. And so I that that's making life pretty difficult. And there's there's lots of different reasons behind this. I I think the increase in sugar taxes around the world, uh I don't think the taxes themselves necessarily changed consumption habits very much. But because of the the introduction of new regulations, people became far more aware of how much sugar they were eating. Uh the example I always give is if 15 years ago you said to somebody, did you know there's sugar in ketchup, I think they'd be genuinely surprised. Whereas nowadays I think it's sort of broadly accepted that sugar finds its way into lots of different foods. And then you also have things like just taste change through time, and then also the emergence of Azempic and other GLP1 drugs, which may in the future also act as a bit of a dampener. So sugar consumption is struggling. I think that automatically makes it difficult for prices to rally. Um and I'm I'm also nervous because in Brazil, um, the corn ethanol industry has grown a lot in the last couple of years, and that makes it slightly harder for the cane mills in Brazil to start and to produce more ethanol. So it makes them a bit less responsive to low sugar prices. Having said all that, uh sugar cane and sugar beet are energy crops, and the energy doesn't have to go into food. And one of the themes that I think will emerge in the next couple of years will be a lot of countries will look at their food security and their energy security and wonder how they can improve those things. If I look in England for the last five years, we had a really bumpy ride because the COVID pandemic meant that a lot of supply chains got upended. We've had really bad food price inflation through the early 2020s. Um at one point, I think we had 20% food price inflation, which is just you know it re-jigs how everyone thinks about their food shop. And then when Russia invaded Ukraine, suddenly a lot of Europe's natural gas um supplies had to be rejigged, and the the price inflation there was horrendous too. And now uh we have this new conflict with Iran where again energy security is back on the table. So if you're in a position in the future where countries around the world are re-examining food security and energy security, then I I think sugar cane and beet have a role to play in that.
SPEAKER_03So, Stephen, just one of the things you mentioned there was obviously um, you know, that the demand for sugar is not growing as fast, but probably it just it it is still growing, though, isn't it? So demand is still sort of, you know, it's not not you know dropping, you know, like a stone or anything like that. We still are seeing you know, su d demand is out there and it's just growing not quite as much. Is that right?
SPEAKER_01Yes, that that's true. So the only year that I I think sugar consumption actually fell um year on year was 2020 when large parts of the world were in COVID-related lockdowns. And so the out-of-home sugar consumption collapsed. You know, people weren't going to cinemas, theatres, sports events, and they weren't consuming um soft drinks, that that that those those sorts of things. I remember saying at the time that it was perfectly normal. If you went to the cinema in the evening and you watched a movie, it was normal to buy half a litre or whatever it was of soda and drink that while watching the movie. Whereas if you were at home watching Netflix and you sat on the sofa and you know, if I said to my wife, do you fancy having half a litre of Fanta? She'd say, you know, are you mad? So we had a year-on-year drop in 2020, but since then, every year since sugar consumption has grown. It's just been a lot slower than you would expect.
SPEAKER_03And and um, Stephen, I think one of the things you mentioned there was that, you know, about like alternative uses for the you know, the cane or the beet. And you know, growers in Queensland, they you know, I think they think that's a bit of a phantom dream in some cases because we hear these huge, huge numbers that could be out there in terms of the the uses. But I I know you guys work in that space a bit. Are you seeing some big transitions or you know, uses usage of of cane or beet or you know, sugar or molasses in in terms of biofuels starting to come through in a big way?
SPEAKER_01I guess the problem with all these things is the story always moves much quicker than the reality. So you get all of the hype around you know different ways that you can use sucrose or sugar, and and then it takes a long time to come to fruition. But just because it takes a long time doesn't mean it doesn't happen. So we are seeing, for example, new bioplastics projects coming through in places like Thailand and India, which use um sugar as a fermentation uh feedstock and then ultimately into a biodegradable plastic. Um so that is starting to come through. And I I expect that that uh that sector will grow in the future, partly because of environmental concerns. You know, people are worried about um persistence of plastics in the environment, but also partly again because of things like energy security, where most plastics are made from crude oil derivatives. And we've seen even now in the last couple of weeks with the Iranian war how tricky crude oil supply chains can be. And so if if you can diversify into other sorts of plastic, I think that that becomes interesting and should still be interesting in the future. We've also seen interest in using sucrose for biotextiles as well. There's a new factory in Vietnam which is starting to use raw sugar to make textiles, and again, that could be a growth growth market in the future. And then the other one that I find interesting is is looking at uh liquid transport fuels still. Obviously, we've used ethanol and gasoline for a long time. In places like Brazil, uh we have E10 in Europe. Um in Thailand, there's E10 moving to E-20. But uh the big sector that hasn't really decarbonized yet is aviation. And it's a tricky one because uh when you change fuels and aircraft, the the safety checks that you do take years and years. It's not a quick change. Um so it's difficult to see how, for example, in the next uh couple of decades you get things like electric aircraft. So I think an aircraft will still need liquid transport fuels in the future. And it's possible that some of those fuels become derived from ethanol in the future. At the moment, the amount of ethanol used in aviation fuel is really, really low. But it's possible that changes in the future. So there are uh different areas of development at different they're at different stages, but you can definitely see that the growth coming through. People are recognising that cane and beet are energy crops, and you don't have to use that energy just for food.
India Ethanol And Producer Pricing
SPEAKER_03So, Stephen, just building on what you're saying there, you know, I know India, yeah, one of the biggest swing markets, has probably started to become less of a swing market in recent times because they're now using surplus roars for uh ethanol, I believe. So you guys seeing that as a growing trend in India?
SPEAKER_01India is always complicated. So to begin with, the the the Indian government um they they supported the growth of the ethanol industry pretty strongly. And the main aim was to try to soak up the extra sucrose, extra sugar that India was making um through the 2010s. And India was being challenged at the World Trade Organization for subsidizing the export of that surplus sugar. So the government directed quite a lot of resources into making um ethanol from the excess sucrose. And at the time, the plan was that India would move to um a 20% blend of ethanol and gasoline, and that would use up roughly six million tons of sugar a year. As time's gone on, that that program has been a rap massive success. So India does now blend 20% of ethanol into gasoline, um, which is a wonderful achievement. Um but the narrative has changed a bit. And now, if you look at the Indian ethanol program, a lot of the narrative, especially from the politicians, is around things like energy security, how having ethanol um in gasoline has reduced import dependence on for for crude oil and oil products. And more than 50% of the ethanol actually comes from the grain sector. So we're only seeing four or five million tons of of Indian sugar being diverted into ethanol. And so from my point of view, it's been a successful programme. It's it's good that India has has found a way to put its ex excess sugar into the road fuel market. But I think there if India wanted to, there is more, it could do more. It could could divert more sugar into road fuels. And that's an ongoing debate at the moment because India still in a good year will produce excess sugar and have to find a way to manage that excess sugar.
SPEAKER_03So, Jonathan, before we we sort of look to wrap up, you know, you know, what you you've obviously seen a lot of industries and work with the uh the the Queensland industry for a long time. What what do you think from the you know Zarnico perspective would be some of the the great achievements you know that you know we should we should reflect on at this hundred hundred year anniversary and you know give ourselves a bit of a pat on the back as an industry uh here in Queensland?
SPEAKER_00Well, I think there's many things, Dougle, to be honest. I think I've alluded to quite a few of them. I think I mean I've say I'm very biased because my career has been attached to the Queensland sugar industry, so I've got a great affection for the Queensland sugar industry. But things like producer pricing, for example, again it's slightly taken for granted now to some extent, but when it was introduced, um that was super creative, super innovative, giving growers very much control over the price that they get, or the option to uh to to to give that to someone else to manage for them. It's evolved massively from from the early days, but I think that was very creative when it was when it was brought in, and that's got to be one of the key achievements. Logistics, um, the way the Queensland industry manages the the terminals is still, I think, second to none. It was certainly one of the the defining factors on marketing sugar. There were never ever any cues in the Queensland sugar industry, the way Queensland managed the terminals, and that that is that is still world-class. And I think, yeah, Queensland can be proud of many things, frankly.
SPEAKER_03So, Stephen, you know, just looking around the world, Jonathan mentioned the producer pricing. I mean, how many other industries do you know of that actually do you know use producer pricing in this way, whether it's for beet or cane? Are there many others out there that you know that are are in this sort of space?
SPEAKER_01There's a pretty big spread of how people would manage their risk. Uh so for example, in Brazil, quite a lot of the mills in Brazil own the majority of the cane that they process. And so where that mill is also hedging its sugar futures exposure, then to a certain extent they're they're hedging their own cane production, as it were, the the sucrose and their own cane. But a lot a lot of the mills don't own all of their cane. And so in that case, you you have a sort of cane pricing formula which which um the Consicano formula which then decrease how much the farmers will get paid, etc. We've also seen somewhere like Europe, where I think a lot of the industry in Europe, the beet farmers um are paid a price of their beet which is agreed with the local processor um ahead of the season starting. And the processor will will will try to what's the right way of putting it? The processor will agree that beat price with with the farmer according to uh partly according to where the world market price is. Um and uh from a farmer's point of view, this is uh not not always satisfactory because when the world market price comes down, then a beat price comes down and and obviously that makes a beat less attractive. But for the processor as well, that that makes life tricky because effectively they they're promising a fixed price to the growers for the season coming, but the the return they're going to get for their sugar varies according to the world market, and so they have a sort of risk exposure in there as well. And so one of the areas that that we've been active in in recent years is is trying to help the European industry move to something which resembles a bit more what the Australian industry do, where the beet growers themselves can take a bit more responsibility for the the how the sugar in their beet is priced. So there's a range of different ways that people manage their sugar price risk. But I guess, Jonathan, do you think it'd be fair to say in time there's there's a bit more interest in looking at what Australia does and and moving in that direction?
SPEAKER_00No, absolutely. I think yeah, the the a lot of the farmers' unions in Europe, in particular, for example, the NFU in the UK, have got very close relationships with cane growers through various conferences over the years. And through conversation about um producer pricing, several of those groups you know eventually found themselves to us and asked to see if we could develop something that resembles producer pricing in Australia. I think one of the tricky bits is people forget that the producer pricing in Australia has been developed for the last 20 years now, um, and Europe is sort of starting from scratch. So there is producer pricing in Europe, there's producer pricing certainly in the UK, but it's it's it's very much early days and it resembles Queensland 101. Um, but that's fant that's fantastic. And I think more and more industries are going to move towards the Queensland model. Um, but I think in general, Queensland is uh is 20 years ahead of lots of parts of the world.
SPEAKER_03So so Jonathan, it sounds like there's not too many other producers out there that are using the individual pricing uh capabilities for a farmer to do their own pricing, then besides Europe, as far as you guys are are seeing at the moment. No, I think that's correct.
SPEAKER_00I mean, but but each industry is different, each industry has different stresses and strains. But uh it's certainly yeah, Europe, I think, is the is probably the uh the main example that is trying to uh look at um the Australian system for some sort of the way forward.
SPEAKER_03So, guys, you know, you've been doing the sugar pricing on the sugar market or trading on the sugar market for for many years yourselves. Growers in Queensland are doing their own pricing. Um if you could give them you know one little piece of advice on something to keep an eye on. I know there's like lots and lots of things out there to keep an eye on, but if you could sort of give them a little bit of advice on what to keep of an eye on, whether you think prices are more likely to go up or down, what would be the the thing that you'd be sort of keeping a bit of an eye on yourself?
Next Century Outlook For Growers
SPEAKER_01Wow. Um that is that is a challenging question, Dougle. I mean uh from my point of view, uh I'm afraid I don't really bring great news. Uh sugar still is in a bear market. And like I said earlier, when you're at 14 cents per pound, I don't really think that's sustainable for many growers around the world. It's it's below cost of production for virtually everybody. But as we know with sugar, it sugar can stay below cost of production for quite some time. And so I I think the first bit of advice is the really obvious one, is that you you've got to take advantage of the price strength when it comes. So as we're speaking today, sugar, we went through a year from January 25 through to February 26, where there were virtually no rallies in the sugar market. It's uh it's either fallen or gone flat. Um, and then during March 2026, we had this quick bump up to 16 cents around the time of the Iranian War. And that, you know, saying it with hindsight now was an opportunity for producers around the world to hedge. And I think quite a lot of producers did hedge. And so, you know, the like I say, it's really obvious advice, but you know, when we get a quick counter-trend rally like that, you really have to take advantage, and and not all producers can. Um, not all producers have the flexibility that the Australian growers have to manage their own price risk. And so that that can become a sort of key advantage for the Australian growers. The other thing to say, obviously, then is is when you look around the world, is every farmer around the world now is really intensely focused on fertilizer prices and diesel prices. They really do matter. And the same thing applies there, really. Some farmers around the world, where they can switch to other crops, if those crops are less fertilizer-intensive, it it may be worth them switching into those crops to try to bring the sort of cost of the field inputs down. Um, for farmers who can't and are sort of committed to canal beet, then again it becomes about trying to manage your um procurement plan as best you can. And if you have a plan to make sure you stick with it, you know, the discipline in your risk management, discipline in your procurement becomes really, really important at times like these.
SPEAKER_03So, Jonathan, you know, been great to have you on. Thank you so much for making the time um to join us. And you I know you've been around for a big part of that hundred years working with Queensland. What yeah, what what's your outlook for the next in the next hundred or so years for the Queensland industry?
SPEAKER_00Okay, thanks, Dougall. Well, it's it's great to have been part of it. As I say, I spent most of my career involved in Queensland, so that's been that's been absolutely fabulous. Look, I mean, there are always challenges, right? When I started, nobody knew where Brazil was, let alone saw where it was coming now. And so there will be differences going forward. And as Stevens alluded to, many of them could be in the in the form of transport, uh could be alternative uses for sugar, etc. etc. I think I think the key thing for the Queensland sugar industry is it's been through the highs and it's been through some of the lows, and it's been super consistent and is valued by all of its clients. And I think that's the that's the key mantra to for Queensland. Keep focusing on its clients, make sure the mills receive that last phone call, which is so important. Um, and I think they they always will. It's a it's a fabulous industry that sometimes has a tendency to um to put itself down. But I think if you look from the outside in, uh it's a fabulous industry with a fabulous future.
SPEAKER_03And Stephen, any last last words? Um, yeah, thank you very much for your time as well. And yeah, obviously great perspective. What do you what's you know, you you're obviously close to the numbers. What's your sort of thoughts on on uh the next hundred years for Queensland Sugar?
Workshops Invite And Disclaimer
SPEAKER_01I mean, it's tricky right now because you know we are in a bear market, but at some point the cycle turns. This is this is how commodity markets work. The the prices will come back at some point in the future, and obviously um, when that happens, the industry has to make sure it takes as much advantage as possible to secure the the next downturn, as it were. If you take a much longer-term point of view, there's so many different reasons to be positive because there are more people alive today than there ever have been. Um, you know, we've got more than 8 billion people on the planet at the moment. When I was born, that there were 4 billion people on the planet. So the human population's doubled in my lifetime. It'll keep growing into the future. And all of those people will need feeding, all of those people will need sources of energy. Everybody in the world eats sugar, and personal mobility is rising. So whether you look at sugar, cane, sugar beet as being energy crops for food, energy crops for travel, energy crops for textiles, whatever it is, these are genuinely useful crops that are relatively cheap to grow and that are grown in widespread areas around the world. So there is always going to be a role for the sugar industry to play. It's just as with any industry, the sugar industry has to adapt um to changing circumstances. And as Jonathan said, you know, Queensland and other industries around the world have been able to do that in the past and should continue to be able to do that in the future. So I'm I'm even though we're we're struggling at the moment on price, I'm I'm pretty confident about the future of the industry. I think the world will always need strong sugar, cane, and beet growers.
SPEAKER_03So thank you very much, Stephen and Jonathan, for coming on the uh the podcast. I think everyone will really appreciate the uh the view of the Zarnico team and you know obviously appreciate your support over many, many years as well. So thank you very much uh for tuning in, and we'll look forward to catching up with you some of the business essentials workshops which will be going on uh in the North Queensland region in the next uh month or so. Thank you very much.
SPEAKER_00Thank you. Thank you.
SPEAKER_02Please note that Cangros does not have an Australian financial services licence, so all the information contained in this presentation is general information only.