ABARE's Chief Commodity Analyst Terry Sheales told the conference that world sugar prices will be driven by increasing demand for biofuels.

"Growing demand for ethanol produced from sugar cane is likely to underpin world sugar prices over the medium term, despite steadily increasing sugar cane production in Brazil, the dominant world sugar exporter," Dr Sheales said.

"The world indicator price for sugar is projected to be maintained above US10c/lb in real terms through most of the projection period to 2012-13, considerably above the depressed levels of the early 2000s."

CSR Sugar"s Executive General Manager Sugar Mills, Mark Day, said it is critical for the industry to be cost competitive with Brazil.

"The stronger parts of the Australian sugar industry are competitive with the Brazilian sugar industry but small and lower performing farms will continue to be amalgamated, increasing viability," he told the conference.

Mr Day said an Australian sugar industry that is sustainable in the long term will offer individual price risk management options, maintain productivity improvements, take up new opportunities, and be valued by the community for its commitment to environmental and social goals.

The Sugar Industry Oversight Group"s Chairman, Bruce Vaughan, warned that even with reasonable world prices, achieving industry-wide sustainability is still not a given.

"This will depend on action taken to further reform and restructure industry practices and to simultaneously attack costs," he said.

"The industry needed to overcome mindsets born of a hundred years of tight regulation."