CEO Update All three mills are now crushing cane, although the first weeks of the season have been plagued by wet weather and some factory issues.

With regard to transport, the balance of the new Mercedes-Benz trucks will be operational this season and we will be trialling the quad-axle trailer in the Tweed. The new trucks not only deliver performance, reliability and fuel economy benefits, but they come with a range of state-of-the-art environmental and safety features. The increased payload of the quad-axle trailers is forecast to reduce the number of truck movements to the factory by around 17%.

As an essential agriculture and food business, the hygiene measures that have been in place since the onset of the COVID-19 pandemic in Australia will remain. These procedures have allowed us to maintain full production in our refinery throughout the recent spike in consumer demand during strict travel restrictions and will ensure our ability to crush all of the 2020 crop.

Since the spike we have seen a marked drop in sales. The last 7 weeks have been below budget by 600 tonne per week. We have not lost any customers but across the board there has been a significant drop. Our customers have advised that it is mainly as a result of the COVID-19 restrictions in place. It is a concern and we need to closely monitor the situation and take actions accordingly.

As you will see in the Market Report prepared by commodity marketing firm Farmarco, the sugar price has recovered a little and the AUD has risen on the back of stronger crude oil prices, high iron ore prices and a fall in the US Dollar.

We are still progressing well with a number of diversification projects. The Sustinent (protein from mealworm farming on sugarcane trash) project continues to develop products suitable for the equine and ruminant market in trials at our Harwood site and we are developing agreements for an ongoing relationship with Sustinent. The MediKane sugar cane fibre project is progressing with preliminary equipment specifications developed. Further market and economic assessment of the project is being undertaken to identify the full potential of this project. Additionally, the sugar cane condensate to water project continues to evolve in partnership with AquaBotanical. The development of a long-term water treatment plant solution is being investigated. Whilst this means that construction of a local plant is unlikely to be achieved in 2020, we will have another season to assess the future potential of this project. Finally, a reminder that the full pre-season CEO milling updates are still available for viewing on Sunshine Sugar’s YouTube channel: https://www.youtube.com/playlist?list=PLsvo_KwLUMSSopfjNWNePoXqH1PasVW1D.

CHIEF EXECUTIVE OFFICER

Chris Connors

June/July 2020

Market Snapshot Global sugar values have thankfully picked up somewhat since the last newsletter. After a promising year was cut down, at least in the medium term, with COVID-19 impacting sugar and ethanol demand, the recent rise in the market has been built on strong nearby demand, good prices for white sugar and a general “risk-on” macro environment as Central Banks pump liquidity into Western Economies. The nearby demand is largely a result of a poor Thai crop, but also poor crops with other significant Northern Hemisphere producers. Unfortunately (or fortunately, depending on which side of the market you are on) CS Brazil is maximising sugar production (at the expense of ethanol) due both to better sugar returns and a collapse in domestic ethanol demand due to COVID-19. Interestingly enough, for now, while CS Brazil is pounding out the sugar (rapid crush pace and high sucrose content), logistical constraints in moving it through the ports is keeping global availability tight. While in the background there is significant debate on the impact of COVID-19 on global demand with some regions higher and some lower – leading to ideas ranging from zero growth to a contraction in global demand of various percentages. We are seeing a significant drop off in demand in the domestic market. Internationally, nearby demand is strong with China making use of lower tariffs, Indonesia attempting catch-up in the face of limited Thai supply, and various regions finding themselves in a relatively tight whites market (supported by high whites premiums). This situation should alleviate itself over time – for now it is supportive of value. Indian sugar is coming onto the market, but mainly through Government to Government deals with Iran and into Indonesia, which works due to high regional premiums. The Government has allowed for 6.0mmt of subsidised exports through into September, though, at this stage, outside of the two mentioned markets, Indian sugar does not easily move into global markets at current prices. In terms of their new crop prospects, the Monsoon is early this year and so far, it is beneficial to crop development. The market expects Indian production to lift back toward 31-33mmt later this year. What the Government intends to do with subsidies for the new crop is uncertain. In other Northern Hemisphere developments, beet areas in the EU are expected to end up lower year on year and the weather to-date has been dry. The EU is unlikely to feature as a major exporter in the coming season. US and Mexican production are expected to bounce back this year (following a year where production dropped nearly a million tonnes in each country), while Russian areas are expected to contract following a record season which created a glut of sugar. The Australian Dollar has also had a significant impact on local prices. Since the last newsletter the currency has risen from near 0.6200 to closer to 0.7000 and currently sits near 0.6800. A one cent rise in the currency equates to around $5.50 a tonne, so the impact is considerable when the currency moves strongly one way or the other. The Aussie Dollar is currently being supported by a “risk-on” macro environment, stronger crude oil prices, high iron ore prices and weakness in the US Dollar.

Did You Know? Stretching is an extremely important practice to add to your daily routine. Even if you spend hours in the cab of a tractor or behind a desk, it is important to stretch in order to receive a multitude of benefits for your body and your mind. Stretching has multiple benefits for both your body and your mind. Incorporating stretching into your daily routine allows muscles to be well circulated and ultimately healthier.

Around our Industry Sunshine Sugar was out and about delivering Stay Safe sanitiser to local schools in May and June. Stay Safe sanitiser is made by our Australian family-owned partner, Manildra Group, who kindly donated product for us to share with our wonderful schools local to the Harwood, Broadwater and Condong sugar mills. We have enjoyed receiving photos from schools like this one just as much as we have enjoyed being able to help out in this small way. Photo courtesy of Karen Rantissi, Empire Vale Public School

PRIMEX is planning to run its annual Field Day later in the year, with 10-12 September set down. In the meantime, Australia’s first virtual field days event, the PRIMEX Online Business Hub.

Partnership to pave the way for new planting technology for Australian cane industry

New Energy Farms (NEF) and Sugar Research Australia (SRA) have entered into a License Agreement to undertake research and development to introduce the NEF CEEDS (TM) technology into the Australian sugarcane industry. NEF is a crop technology company, established in 2010, to develop artificial seeds for crops

that do not produce conventional seeds, such as sugarcane. NEF developed and patented the CEEDS (TM) technology for the multiplication and planting of sugarcane crops worldwide. CEEDS (TM) are small coated propagules directly drilled in the field like conventional seed. NEF have already licensed CEEDS (TM) for commercial sugarcane use in other key sugarcane markets including Brazil and Central America. https://sugarresearch.com.au/partnership-to-pave-the-way-for-new-planting-technology-for-australian-cane-industry/ The SIX EASY STEPS nutrient management program is a comprehensive, integrated and science-based nutrient management program that is recognised by industry and government as nutrient best practice.

The SIX EASY STEPS nutrient management program recognises the range of districts, soil types and soil properties within the sugar industry, while promoting balanced nutrition and sustainability. https://sugarresearch.com.au/growers-and-millers/nutrient-management/

Seed Cane Prices

In light of current crops, low prices and to assist growers impacted by the 2019 frosts it was agreed by the Agricultural Advisory Committee to decrease the price to $55/t (inc GST) for billets plus $15/t delivery. It was also decided that whole stick would no longer be offered.

The SIX EASY STEPS to improved nutrient management

1. Knowing and understanding our soils 2. Understanding and managing nutrient processes and losses 3. Soil testing regularly 4. Adopting soil specific fertiliser recommendations 5. Checking on the adequacy of fertiliser inputs 6. Keeping good records and modifying nutrient inputs as necessary

From the Mills Condong Mill – Phil Scroope Season start: 9th June 10am Crop estimate: 530,000 tonnes We had a reasonably good start to the season, after some initial teething problems. We had high mill loads on the first day and process house started well. Then the wet weather came, which limited cane supply and caused crushing rate to be lowered. The Mill struggled with high mud loadings at times. In the first two weeks we crushed 27,000 tonnes of cane with CCS averaging 9.4. We experienced 5 stoppages due to wet weather which also created some work with high mud levels in the clarifier. The season production plan is to make 15,500t DC Raw and 2,400 Low GI. Welcome • Duanne Granger, fulltime Boilermaker • Sean Hart, Fugal Operator • Sugar Baggers Scott Whittaker, Sharma Walsh, Bill Mitchell, Sam

Davison, Greg Hawkins, Luke Burgess • Labourers Adam Durkot and Craig Willis • Nicole Robertson, Lab Analyst • Jade Kenwood is continuing as an Admin Trainee having finished Cert III

and now starting Cert IV

Broadwater Mill – David Wood

Season start: 22nd June Crop estimate: 540,000 tonnes (plus 20,000 from CDG to be crushed at BWR) Wet weather has delayed the start of the season by a few days, but on the positive side, the crop continues to grow on. The focus for the site has been on the operator rationalisation program, training for new positions, and preparing factory and workforce for the season start. Welcome and Congratulations • Simon Cristaudo, Extension Officer • Neil Watson and Kane Sincock as Labourers • Recruiting for an Operator/Maintainer is underway

Harwood Mill & Refinery – David Wood

Season start: 10th June Crop estimate: 550,000 tonnes The Mill had a rough start to the season, with the failure of a Variable Speed Drive on No 1 Mill. The No 1 Mill has been bypassed whilst replacement parts are being sourced and commissioned. We hope to be back to normal operation soon. Boiler Fuel Supply continues to require heavy management, with droughts, smaller crops and bushfires all impacting fuel supplies. On a positive, Refinery efficiency has been good maintaining ~ 98% and the new Fleet of Mercedes have started to arrive in Harwood, with the whole fleet being changed out in the next few weeks. Welcome and Congratulations • Debra Rickert, Accounts Officer • Peter McGrath promoted to Mill Sugar Boiler • Robert Corbett promoted to Boiler Station

Operator

Simon Cristaudo

Jade Kenwood

Currently recruiting for a Steam Operator, Forklift Operator, Operator/Maintainer, Mechanical Fitter/Welder, Electrician, Boilermaker, Lab

Supervisor and Syrup Plant Operator

Farewell and Best Wishes

Agriculture Services Manager, Rick Beattie, is retiring from his role with Sunshine Sugar after 20 years of service. Rick joined the NSW Sugar Milling Co-op in October 1999 as the Agricultural Services Manager based at Broadwater. Prior to that he had worked for CSR as a cane inspector and BSES as an extension officer and researcher. During his long and distinguished career in the sugar industry, mostly in NSW, Rick has been involved in a number of major projects that have been essential in underpinning the future of our industry. These include Acid Sulfate Soils, water quality monitoring, improved farming systems, whole crop harvesting, Six Easy Steps nutrient management guidelines for NSW and frost research.

Rick has been an integral part of the Broadwater cane growing region in particular and his knowledge, experience and professionalism will be missed. Simon Cristaudo has been appointed to the Extension Officer at Broadwater and Malcolm Warren, based at Condong, will be taking on the Agricultural Manager role from 1st July. Simon joins us from Tully in Far North Queensland where he recently completed the Graduate Extension Officer Trainee program. To support Simon in his new role, arrangements are in place for Rick to provide mentoring and other support through to the end of the year. Rick will be going on pre-retirement leave from the 26th June and we extend our heartfelt thanks to him on behalf of everyone and Sunshine Sugar and the NSW sugar industry and wish him and his partner Lea all the best for the future.