A decision support approach to address new sugarcane quality-based payment systems
IN SUGAR industries where growers and millers are independent economic entities, payment systems aim at sharing the annual sugar industry revenue. They have been designed to create incentives to improve milling performance, cane yields and quality. Like most revenue sharing agreements, they tend to be a contentious issue between growers and millers. In some industries, while modifying payment systems can be the key to increasing industry profitability, mistrust between growers and millers can hamper such improvements. The situation is now exacerbated by the development of sugarcane co-products, such as ethanol, electricity or by-products for niche markets, which can generate higher benefits than sugar, thus calling for a rethink of payment systems. This paper presents a decision support approach which aims to assess new cane payment systems while increasing revenue sharing transparency. It is based on a simulation tool called Pempa, which helps to assess the impact of new cane payment systems on growers' revenue and on revenue sharing between stakeholders. Experiments have been carried out for 3200 growers supplying two mills on Réunion Island, to test the impact of implementing a new payment system based on a relative formula. Results showed that the simulation approach could facilitate understanding and implementation of a new payment formula, especially for multiple-purpose sugarcane.
| Main Authors: | , |
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| Format: | conference_item biblioteca |
| Language: | eng |
| Published: |
s.n.
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| Subjects: | E16 - Économie de la production, canne à sucre, Saccharum officinarum, http://aims.fao.org/aos/agrovoc/c_7501, http://aims.fao.org/aos/agrovoc/c_6727, |
| Online Access: | http://agritrop.cirad.fr/554618/ http://agritrop.cirad.fr/554618/1/document_554618.pdf |
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| Summary: | IN SUGAR industries where growers and millers are independent economic entities, payment systems aim at sharing the annual sugar industry revenue. They have been designed to create incentives to improve milling performance, cane yields and quality. Like most revenue sharing agreements, they tend to be a contentious issue between growers and millers. In some industries, while modifying payment systems can be the key to increasing industry profitability, mistrust between growers and millers can hamper such improvements. The situation is now exacerbated by the development of sugarcane co-products, such as ethanol, electricity or by-products for niche markets, which can generate higher benefits than sugar, thus calling for a rethink of payment systems. This paper presents a decision support approach which aims to assess new cane payment systems while increasing revenue sharing transparency. It is based on a simulation tool called Pempa, which helps to assess the impact of new cane payment systems on growers' revenue and on revenue sharing between stakeholders. Experiments have been carried out for 3200 growers supplying two mills on Réunion Island, to test the impact of implementing a new payment system based on a relative formula. Results showed that the simulation approach could facilitate understanding and implementation of a new payment formula, especially for multiple-purpose sugarcane. |
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