INNOVATION AND COMPETITIVENESS IN THE AUSTRALIAN SUGAR INDUSTRY

INNOVATION IS CONSIDERED to be one of the main drivers of productivity and growth in the primary industries. In Australia, over the past two decades or so, the agriculture, forestry and fisheries sectors have shown the highest average annual productivity growth rate in comparison with other sectors of the wider economy. Although much of these productivity gains have been attributed to the introduction of innovations, there is less understanding of why these gains have been uneven across the sub-sectors or how micro (firm)-level innovation contributes to productivity gains. This study compares innovation prevalence at the firm level in the sugar industry with innovation prevalence within other agricultural and industry sectors. The paper is based on Australian Bureau of Statistics data supplemented with an innovation activity survey of sugar mills. In contrast to what the productivity data might suggest, recent firm-level annual innovation activity data for the Australian agricultural sector indicates a relatively low prevalence of innovation (23% of firms on average, 2010–2014) compared with other key sectors (38% of all Australian businesses). Reported innovation activity within the sugar industry reveals slightly higher activity levels (approximately 32% of businesses) than for the agricultural industry overall. Importantly, the type of innovation undertaken within the sugar industry has been constrained to two forms: process innovations and organisational/managerial innovations (27.3%) in the sugar manufacturing sector; and process innovation only (24.4%) in the cane growing sector. Reported innovation levels in the sugar industry do not appear to be lower in comparison with other industry sectors within Australia, in contrast to what productivity data might imply. It appears that a strong focus on cost control has underpinned recent innovation activity.