Sugar mills produce a range of by-products during the process of sugar extraction. Mill mud is one of the by-products produced in significant volume. The practice of spreading mill mud over nearby cane fields has been the primary means of disposing of mill mud for many years. The continued application of mill mud at high rates, without appropriate recognition of its nutrient content, the soil condition, crop nutrient requirements, slope and proximity of application sites to environmentally sensitive areas has raised a number of concerns in recent years, including over-fertilization, heavy metal contamination, leaching, and offsite impacts from drainage to waterways. This study develops a regional mathematical programming model to determine optimal rates of mill mud application for various soil types and distances from the mill in Mackay region in central Queensland.