Canegrowers chief executive Ian Ballantyne will brief banking and commercial partners on the state of the market this Thursday, in the wake of news that the EU would dump an additional 500,000 tonnes of out-of-quota sugar onto the world market in the 2009/10 marketing year, causing a larger than warranted sugar price decline throughout February and into March.

The 2010 production is responding to the supply deficit with increased area planted to cane worldwide.

“Australian growers are following this trend, and even in the face of the EU inspired decline, are buoyed by the more attractive prices on offer,” says Mr Ballantyne.

“On the back of a short, dry season in 2009, and with access to forward pricing mechanisms which are enabling them to lock in the still more attractive prices on offer, continuation of reasonable conditions Australian cane production could well increase by as much as 15 per cent,” he said.

This response will be contained to some degree into coming seasons by the limited land available. According to Canegrowers, the sharply declining number of cane farms is expected to level during the next 12 months.

“Australian industry farm numbers have contracted by over 40pc from around 6,200 to 3,800 cane farming businesses in the past decade. During this time the area under cane has declined by a smaller 20pc and seen growth in average farm production,” Mr Ballantyne said.

Changes to the agricultural profile including climate, corporatisation and diversification, have seen the average cane farm change dramatically in the past 10 years.

Some smaller operators have sold to larger neighbours - the average cane farm is getting bigger - average cane production has risen some 40pc despite the fact that 20pc of cane growers have made an active move to diversify farm income.

“The capacity for mills and individual growers to manage a proportion of price exposure three plus years forward has been well taken up – the strong market has encouraged participation in forward pricing,” said Mr Ballantyne.