Sugar Technology
On-line News

March 2004

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As you will see below, one way or another, February’s news was more about politics than technology as the sugar price continued to hover around the 6 /lb mark.


The government of Zimbabwe seems to be digging itself deeper into trouble and the sugar industry there [which typically produces in excess of 500 000 tons a year] is appearing more on the wires. In late January the government changed the law specifically to requisition the 70 000 ha Hippo Valley estate, a company already in trouble as a result of its outgrowers having lost their land earlier. Despite an appeal, Anglo American [the controllers of Hippo] have confirmed that it looks as if they have lost the estate – and the country has lost a valuable asset. Anglo is a South African company of course but so far the South African government has not complained about the seizure.

Apparently the government has already started carving up the estate and allocating it in small pockets of land. The problem is that the flood irrigation system is designed to be operated at a macro level, not a micro one. Land efficiency is likely to decline quickly.


Well, we do have a trade agreement and sugar is in – but it is out. Following on from last month’s note about whether sugar would or would not be part of the proposed agreement [Australia was adamant that it had to be in and the US that it could not be] the compromise reached was to include sugar but to leave the preferential quota unchanged so in essence, sugar is irrelevant. What surprised some observers was that it seemed to be the insistence of President Bush that kept sugar sidelined.


As we reported in December, the Philippines has switched from being a net importer to a net exporter, it sugar industry having caught up with demand again. This has resulted in problems for the industry with local prices depressed. The latest crop forecast has been reduced from 2.27 million tons [higher than last year’s 2.16 million] to 2.05, reportedly due to a cut-back in planting as the price sags.

Another impact has been a tightening up by the government on quasi-legal ‘smuggling’ such as the use of pre-mixes. When there was a need to import these activities were not taken to seriously but now they threaten the industry.


The wires are saying that the Greeley beet factory owned by Western Sugar may never run again. The fundamental issue is the amount of beets being grown locally which resulted in the factory not operating at all last campaign. Western are now saying that it is unlikely to operate in the coming campaign so there have to be serious doubts about its future.


Thailand has started down a road towards power alcohol by liberalising alcohol production and awarding the first of a batch of distillery licences. Two of the licenses have been awarded to sugar companies : Wang Kanai and Mitr Phol. Both are for about 200,000 l/d and are considered pilot plants. Apparently the government wants to take about 40% of the sugar production out of crystal sugar and into alcohol.


The USDA is forecasting a record crop for Florida this year with a production estimate of 2.16 million tons. Despite a reduction in land area under cane, the weather has been particularly favourable. The problem is that Florida allocation is only 1.87 million tons so, unless there is a re-distribution from other states not reaching quotas, and the price is relatively poor so growers may opt to forfeit sugar again, as they did at the turn of the millennium.


The EU has decided to extend its ban on Serbian sugar imports following the exposure of the illegal trade we were reporting throughout last year. The response fro Serbia was to increase its tariff on sugar imports from the EU, a logic we have yet to understand, particularly with the world price being as low as it is.


It cannot have been that long ago that we reported that T+L had essentially sold out its interests in sucralose [a high intensity sweetener made by organically modifying sucrose] to their partner Johnson and Johnson. Last month they bought back the product from Johnson and Johnson!


The government has announced an enquiry into Belize’s sugar industry, a major component of the country’s economy. The task force is to analyse the industry in the light of current challenges and to “make proposals for the future of the industry".


Methanol is a hydrogen source for fuel cells and is therefore forecast to be in much demand as fuel cells reach commercialisation. A company has been formed in the USA to develop some research work which has been using sugar beet pulp as the feedstock for bacterial methanol production.


The EU’s Trade Commissioner, Pascal Lamy, was reported to say last month that the EU is willing to negotiate the elimination of export subsidies without exception. In particular, he stressed that ‘without exception’ included sugar and that, with respect to sugar, it was more a question of ‘when’ than ‘if’. When it happens there will probably be some 4 million tons of supply removed from the world equation.


A puzzling item appeared on the wires last month under the above headline. It stated that the two countries have signed a two technical assistance agreement to ‘revamp the ailing sugar industry’. What the report failed to say was which country was helping which.


The low sugar price and the continuing decline of the dollar with respect to their own currencies are hurting both South Africa and Australia. Tongaat, for instance, has announced savage cuts to its head office staff, including many of its most senior technical people. The company made a ZAR 93 million loss in the year just ended compared to a previous profit of ZAR 380 million.

Australia’s situation is made worse by the ongoing drought. As soon a the shock of the US Free Trade agreement hit, the industry was asking for a Aus$ 600 million support package but the government seems to have rebuffed that almost immediately.


It looks as if India’s current crop could be down by as much as 20% from last year’s record 20 million tons. The news sent several analysts into a bullish mode, saying that such a drop will push the world towards a supply and demand balance. However, India has some 10 million tons of stock.


Following a recent court ruling, it looks as if the Mexican government will have to hand back four of the 27 factories that were seized [nationalised?] in 2001. The four factories belong to Grupo Azucarero Mexico, the second largest sugar company in the country. Note, however that the court ruled in favour of the government with respect to another 10 of the factories while no decisions have been handed down on the remaining 13.


Two quite contrasting reports on the wires late last month point up the political pressures in Louisiana. In one report, plans were announced to develop a 25,000 acre [ 10,000 ha] cargo airport on sugar cane fields near Donaldsville on the Mississippi near St James factory. The second report confirmed that a bond for the development of the syrup factory at Lacassine had been fully subscribed so the project will go ahead.


The government intervened directly in the sugar market during February as the domestic sugar price continued to climb, some say because the traders were manipulating the market. The government has reserves of about 11 million tons so the 200,000 tons it released into the market to suppress prices is insignificant.

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