ON THE LEFT: Global sugar production will grow

UN FOOD AND AGRICULTURE ORGANISATION,

Added 11 January 2017

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WORLD SUGAR PRODUCTION is projected to grow by 2.1 per cent per annum to reach 210 metric tonnes (Mt) by 2025, up nearly 39 Mt, 19 per cent above the average for the base period.

Higher increases are expected to occur in developing countries with 79 per cent of global sugar production in 2025 compared to 77 per cent during the base period.

In the developing world, the leading regions are Asia and Pacific and Latin America and the Caribbean, which are expected to account for 40 per cent and 33 per cent of global sugar production in 2025 respectively, up from 38 per cent and 34 per cent during the base period.

Growth in Asian sugar production is expected to increase by 2.4 per cent per annum to 2025, compared to 2.2 per cent per annum in the previous decade, whereas growth in Latin America should increase by 2.4 per cent per annum compared to 2.1 per cent per annum in the previous decade.

This expansion should be driven mainly by higher output growth in India, Thailand, Pakistan and Latin America.

In Africa, sugar output is projected to increase by 49 per cent by the end of 2025 as a result of production expansion in Sub-Saharan countries.

Regarding developed countries in the coming decade, production is expected to grow at a much slower pace than in the developing. The main increases would occur in Australia, averaging 1.7 per cent per annum, followed by the United States and the European Union (EU), both growing at 0.6 per cent per annum.

It is projected that sugar cane will account for about 86 per cent of sugar output over the next decade, although some expansion of beet sugar production is anticipated in the Russian Federation, Egypt, the Ukraine, and the EU following the abolition of quotas in 2017.

Brazil will maintain its leading position on the sugar market although high levels of debt are expected in the sector for several years at the start of the outlook period due to difficulties linked to unfavourable weather and economic conditions.

Taking into account the continued fiscal policy for fuels, depreciation of the currency, and assuming no weather shocks, it is foreseen that production will return to its previous high levels after 2021 and reach 42 Mt at the end of the projection period.

The EU is the leading producer among the developed countries and will face major reforms.

After October 1, 2017, sugar and HFCS quotas and guaranteed prices will be abolished, which will force the market to be guided by market fundamentals, leading domestic prices to be more in line with world prices.

Competition will occur between sugar beet and other crops, and mills will be able to process sugar beet for different products, both for food and non-food use, without a price differential.

Pressure to become competitive on the global market is expected to lead some producers to increase output through higher yields and lengthening of the production campaign.

This is expected to foster very modest increases in EU sugar production, which will never reach the production levels seen before the 2006 sugar reforms.

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