ECONOMIC MAXIMISATION OF GROWER AND MILLER SUGAR CANE PROFITS: OPTIMISING THE LENGTH OF MILLING SEASON AT SOUTH AFRICAN SUGAR FACTORIES

摘要

Sugar mills in South Africa experience long milling seasons. While this ensures high capacity utilisation, it has contributed to declining season average cane quality as a result of the seasonal nature of cane quality under South African growing conditions. To facilitate the introduction of mill area season length controls, the South African Cane Growers Association developed an economic model to estimate the optimum economic season length for individual mill areas. The model optimises season lengthfor a mill area by considering growers and millers as a single business entity, and then estimating the point at which marginal losses due to declining cane quality exceeds the benefits of increased capacity utilisation. The model was run at 12 of SouthAfrica's 15 sugar mills. A comparison of the results from the different mill areas allows for the identification of important drivers determining optimal season length. The main factors identified include the extent of cane quality variations throughoutthe season and the extent of mill economies of scale, which is a factor of mill fixed costs and size. Other important factors include costs incurred in harvesting and crushing under unfavourable climatic conditions, and the nature of the cane payment system.