Last week, we talked about the Sugar Price component of your cane payment*. While the Sugar Price makes up by far the largest part of your overall marketing return, there are other parts to your return.
Some marketers offer an additional per-tonne amount (or bonus) if you ‘sign on’ for a specified period of time. A bonus may sound appealing, but remember it is only a tiny part of your overall return. A $1 per-tonne bonus is of little value if your Sugar Price component is substantially less than that of another marketer.
It’s also important to understand that the costs your marketer incurs in managing sugar pricing and sales, such as the costs of renting office space and employing staff, are paid by the growers using that marketer’s services. There’s no such thing as ‘free’ pricing and marketing services, regardless of your marketer’s corporate structure.
Growers supplying Mackay Sugar have a ‘Shared Pool’ element included in their cane supply agreements. The costs of managing sugar pricing and sales are included in the Shared Pool.
The Shared Pool also includes the revenues and costs associated with the US Quota allocation. Under the US Quota system, Australia is allocated a quantity of raw sugar to supply to the US market, at a significant premium over world sugar prices. Quotas are limited—in Australia’s case, to between 2–5% of production.
You receive a proportional share of the US Quota, regardless of who you market with. However, the returns aren’t the same for everyone. Your marketer still plays a key role in determining returns for the US Quota. The timing of your marketer’s pricing and sales decisions are still key to achieving a good US market price.
Also included in the Shared Pool are premiums to ICE futures achieved in physical raw sugar sales and premiums for raw sugar delivered above 96 degrees polarisation.
There are also costs associated with physical sugar supply, such as storage, handling and freight costs.
And lastly, the financing, bank and brokerage fees not directly attributable to specific pricing pools or products are also included.
Remember though, all the various components add up to the final return—and that’s the number that’s really important to you. At the end of the season, what did you earn, per tonne, for the cane that you delivered?
* as a grower in the Mackay region supplying cane to Mackay Sugar
19 October 2018