Extreme climate events, poor harvests and bioethanol. These are some of the factors behind the dramatic increase in sugar prices. The repercussions of this are already being felt in exporting countries such as Thailand and India, as well as in importing countries such as Nigeria; but they may soon spread to Italy and other European countries, where sugars have “invaded” our diets. So far, Western markets have managed to absorb the increases, but the consequences suffered by developing countries are likely to have global repercussions. Especially in Africa, where this ingredient is essential to have low-cost but high-energy food.
If bakers close
Sugar is trading at the highest prices worldwide since 2011. Global supplies fell after unusually dry weather damaged crops in India and Thailand, the world’s second and third largest exporters. Only Brazil, whose harvest is expected to increase by 20%, will help fill the gaps in the later months of 2024. By then, they will be import-dependent countries like most countries in Sub-Saharan Africa. remains particularly vulnerable. For example, sugar is needed to make bread, which is the staple food of Nigeria’s 210 million residents and a low-cost source of calories. While many bakers have closed their shops due to a 55 percent increase in prices in just two months, it is no longer possible for many families to spend so much on bread.
Bioethanol provides greater efficiency
The Food and Agriculture Organization of the United Nations (FAO) expects global sugar production to decrease by 2% in the 2023-24 season compared to the previous year. There is a risk of losing around 3.5 million tonnes, Fabio Palmeri, FAO’s expert researcher on the global raw materials market, told AFP. The use of sugar as a biofuel source such as ethanol also affects prices. Importing countries are trying to take precautions. For example, Nigeria, which purchases 98 percent of its raw sugar from other countries, announced a $73 million project to expand the infrastructure of the sector by banning refined sugar imports in 2021 to support domestic processing. These long-term strategies are not yet producing the desired results.
Between drought and flood
Lack of sugar also contributes to this effect El NiñoA natural phenomenon that changes global weather patterns by exacerbating extreme conditions ranging from drought to floods. For example, in India, August 2023 was the driest month in more than a century. Crops in the western state of Maharashtra, which accounts for more than a third of India’s sugarcane production, were affected. The expected decrease next year is 8%. It’s a fact that frightens the world’s most populous nation, which is also the largest sugar consumer. Prime Minister Narendra Modi decided to ban sugar exports to avoid domestic problems.
Hand Niño It also hit Thailand, with negative effects occurring at the beginning of the growing season. Besides the quantities, climate changes also affected the quality of the crop. Only 76 million tonnes of sugar cane will be milled in the 2024 season, compared to 93 million tonnes this year. The Thai government has imposed controls for the first time since 2018 to prevent excessive increases in retail prices, but experts say the measure will deter farmers from growing sugar as it limits their income.
Stocks are falling
According to data from the United States Department of Agriculture (USDA), the world’s sugar supply currently has fewer than 68 days to meet its needs, compared to 106 days when it began to run low in 2020. While it reduced its sugar purchases last year, China, the second-largest importer, was forced to remove sugar from its stocks for the first time in six years to offset high domestic prices.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
