Features International Sugar Journal

Reflections on the year

This year has been pretty ordinary for the global sugar industry as a whole. The old adage that sugar operates in a bear market with the odd bull spike, has defined it. We had the latter for the previous two years as drought impacted crop production in top producing countries in Asia (India and Thailand) and Brazil. The sugar price at the beginning of the year was around USȼ21/lb. This has dropped to currently around 15ȼ amidst global surplus.

Return of normal weather is driving production in Asia. Pakistan is arguably the rising star, eclipsing India as the likely wild card in tipping balance in global price movement. According to FO Licht data, the 2017/18 sugar output is forecast to increase to over 8.4 million tonnes (mlt) from estimated 2016/17 at 7.7 mlt (against the local demand of 5.7 mlt) as cane acreage increases from 1.95 million acres (0.79 mln ha) to 2.13 mln acres (0.86 mln ha). Reform of the EU sugar regime has resulted in major sugar companies expanding output, adding to the global surplus and casting a long shadow over the competitiveness of the standalone refineries in the Gulf states while putting pressure of Brazilian exports which dominate the raw sugar market. But let’s not forget expansion in production in Russia. Some ten years ago it was a major sugar importer. Its output has increased from 3.4 mlt in 2009/10 to over 6.7 mlt in 2017/18 – giving it an exportable surplus of around 300,000 tonnes.

Hurricane Irma during September caused significant damage to the sugar industries in Cuba and Florida, but this has caused little impact on global sugar price. Arguably, what is concentrating the minds of the industry executives and analysts is the onslaught on sugar by health campaigners. Combination of persistent negative press and politicians not only in the west, jumping on the bandwagon to tax mainly sugar-sweetened drinks, are having an impact on demand. Some leading analysts have predicted a significant drop in the rise in demand annually from 2% to around 1%. But not all analysts, notably the OECD1, predict a significant squeeze on demand. Indeed, there appears to be “little statistical evidence proving either the slowing down in growth rates or decreases in per capita consumption in recent years at the global level.”2 While the per capita consumption has been dropping in the West, the emerging and developing economies continue to be major drivers of consumption growth. Besides the mix of rapid urbanisation and rise in middle classes fuelling demand in these economies, particularly via the use of industrial sugar3, mobility revolution4 which has promoted overseas travel has fostered exposure to foods of other countries impacting changing tastes in local fare. “Every year, an estimated 320 million people fly to attend professional meetings, conventions, and international gatherings – and their numbers are steadily growing.”5

Agricultural production and productivity remain a persistent challenge. A recent report from Brazil noting that Raizen, the largest cane sugar producer globally, is idling two of its mills due to inadequate cane supply exposes a chronic problem in the cane sugar sector. Admittedly with few exceptions, the problem largely resides where outgrowers factor in the equation. It is within the wit of the sugar companies to replicate the collaborative structure in the beet sugar sector in the EU whereby the effective links between the growers, processors and researchers have contributed to the significant growth in beet productivity. The resource-poor outgrowers could do with proactive support from sugar companies who will doubtless be winners from ensuing success.


  1. In the OECD-FAO Agricultural outlook 2017-2026. ISBN 978-92-64-27547-8, pp 136, they projected sugar consumption over the next decade at 1.75%, rising to 203 million tonnes in 2026.
  2. Personal communication – Sergey Gudoshnikov, Senior Economist, Int Sugar Organization
  3. Demand for industrial use of sugar rises with growing middle classes due to increase in demand for ready-made foods (where sugar is used extensively) as working couples take advantage of this option.
  4. Moses Naim coined this phrase in his book The End of Power, published in 2013 by Basic Books, xi +306pp
  5. Ibid. The figure comes from World Bank’s 2010 World Development Report.