The large crop reflected continued expansion of sugar cane area. Sugar production increased to 5.73 mmt due to the increase in the area harvested and a higher yield of sugar cane harvested. Australian sugar production was reduced due to cyclone Justin and low rainfall and water allocations for growers in the Bundaberg area of Queensland.

This was balanced by favourable seasonal conditions in the Mackay area of Queensland which resulted in higher than average yields. Record cane production in NSW was soured by low sugar content. The season experienced a wet start and mid season industrial dispute saw the crush extended far beyond the optimal harvest period.

The expected increase in land undercane in both NSW and Queensland is forecast to result in record sugar production in the 1999 season. Australian sugar production is forecast to reach 6.9 mmt in the 2003 marketing year.

The Australian sugar industry is currently in an expansionary phase, with land assigned to cane growing increasing significantly and new growers entering the industry.

The Australian sugar refining industry is also undergoing a period of significant change. A number of joint ventures has seen refining capacity increase rapidly. Sugar Australia (the joint venture between CSR and Mackay Refined Sugars) was formed in early 1998 and controls around 60 per cent of the Australian refined sugar market, with Bundaberg, and Manildra holding the remaining market share.

Australian sugar exports increased during the 1997 year. Canada remained the largest customer, while the Republic of Korea displaced Japan as Australia's second biggest sugar export market. Malaysia slipped from third to fourth, but actually increased the volumethat it imported. Exports to China fell marginally during 1997 and it remained in fifth place.

The current Asian economic crises has cast doubt over the volume of exports to Asia during the 1997-98 and 1998-99 years. The Australian industry is confident that while sales may slow it's continued commitment to it's traditional customers will hold it in good stead. The Queensland Sugar Corporation (QSC) will also continue to develop new markets and work with financial institutions in Australia and the region to establish favourable terms for it's Asian customers.

Sugar cane is predominantly grown along 2100 kilometers of north eastern Australia, between Maclean in northern NSW and Mossman in North Queensland. Most farms are within 50 kilometers of the coast. Approximately 95 per cent of sugar cane is grown in Queensland and the remainder in northern NSW, and the Ord River irrigation area in the Kimberley region of Western Australia.

This area was the subject of speculation and false hopes for a number ofyears, however it appears that earlier problems have now been solved, with the first cane harvested in 1996 producing 50,000 mt of raw sugar. It is estimated that the Ord River will eventually produce around 75,000 mt of raw sugar for the domestic market.

A joint venture between growers and CSR constructed a mill which will have a through put of up to 560,000 mt of cane a year. The new industry is expected to target the domestic market in Western Australia which consumes around 50,000 mt annually, with the remainder going to near Asian markets of Indonesia and other South East Asian countries.