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As usual, there was little real news on the wires over the holiday period and the sugar price has continued to be in the doldrums. It is only when you think how much the dollar has depreciated in the last few months that you realise how bad that is.
CAFTA DEAL REACHED
Mid-December saw the Central American Free Trade Area [CAFTA] negotiations reach some form of conclusion with agreement reached between the US and El Salvador, Guatemala, Honduras and Nicaragua. Those countries already have about 110,000 tons [metric] of the US sugar quota. That will rise to about 200,000 tons in the first year of CAFTA’s existence and then increase by about 2% per annum thereafter.
What is not clear is whether this will mean that countries outside of the US free trade areas will see their quotas reduced by a similar amount. However, an unofficial comment from the US indicated that it wanted to add Costa Rica and the Dominican Republic to the CAFTA pact before it is sent to the US Congress for debate.
The announcement of the agreement, as you might expect, caused a lot of complaints from the US sugar industry but, more interestingly, also from the Mexican industry even though Mexico and the US still seem locked in combat over the sugar aspects of NAFTA.
MOVE OVER WTO, HERE COMES WB
The World Bank has produced a report called “2003 Global Economic Prospects: Realising the Development Promise of the Doha Agenda”. The report envisages freedom of trade by 2015 in its ‘pro-poor’ scenario and highlights the fact that agriculture has never really been part of the world’s free trade. It foresees the EU returning to its post war economy, importing most of its grain, and the US cutting back significantly on its wheat and sugar production : US sugar production in the model is actually 50% less than current levels by 2015, not a welcome scenario on top of the CAFTA deal.
If you want to read more then the overview document is at http://www.worldbank.org/prospects/gep2004/overview.pdf
AUSTRALIA PREDICTS A 300,000 TON CROP REDUCTION
Australia has issued a crop forecast for the current year [July to June] of 5.13 million tons, down from last year’s 5.46 million. When that is added to the nearly 50% fall in the dollar compared to the Australian dollar, things look bleak for the industry. Part of the fall is due to a reduction in cane growing area but most is due to the drought which the country has been experiencing.
BRAZILAN FORECAST UP AGAIN
The Australian forecast may be down but the cane tons prediction for Brazil’s center-south area has increased again to 298 million tons, an increase of 28 million tons over last year and 16 million higher than the original forecast in March 2003. [It is not possible to discuss the Brazilian crop in terms of sugar production because of the variable amount of sucrose diverted to alcohol production.]
In addition the dry weather in the second half of 2003 has meant a high average sucrose content [14.96%] and the crop completing ahead of budget.
COGENERATION IN TROUBLE IN INDIA?
Back in the early 1990’s the Indian government offered considerable incentives to renewable energy projects, including sugar industry co-generation for export. Having established the projects, it is now being accused of removing the favourable tariff rates as the owners will still have to operate the stations to recoup their capital investment.
UKRAINE PLANS LARGE INCREASE IN BEET PRODUCTION
The Ukraine seems determined to climb back from its low sugar crops and is planning a 12% increase in beet growing area for the 2004 crop. Last year’s crop ame from about 830,000 ha and this year 930,000 are planned to be in beet production.
DÉJÀ VU ALL OVER AGAIN
Anyone would think that December 31 had taken over from April 1 as the world’s pranksters’ day : a flurry of news on the wires about Florida cane growers mistreating their cane cutters and not paying them according to contract. It was only when you read carefully that it became apparent that this was all about a court case in the early 1990’s which found in favour of the cutters [and resulted in the complete mechanisation of the harvest and the loss of many seasonal jobs].
The article is dated August 1992 and annotated as ‘corrected’ in December 2003. What on earth happened? Please let us know if you know.