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The April wires were dominated initially by the story of an Oxfam report on the EU sugar regime – and all of the spin-offs from that – and then later by speculation on what the Australian government would do to help its sugar industry.
OXFAM GETS REACTIONS
When Oxfam published its highly critical report on the EU’s sugar policy it certainly got a lot of reactions from around the world and set the wires buzzing. What is confusing is that the report focuses on one authority’s involvement in the industry but it ignores all of the others : why not tell politicians everywhere to stop meddling? If you want to read the report then it is available at the Oxfam web site.
Following on from last month’s article about the dispute over the Talisman land leases, it seems that US Sugar has backed down graciously and agreed to vacate the land ‘this year’ [presumably after cropping it, the crop starting in October]. Florida Crystals is taking a different view however and is asking that the authority follow the requirements of the lease.
CSR BUYS OUT MAN
CSR has announced that it has agreed to buy the 25% of Sugar Australia and New Zealand Sugar that is owned by ED + F Man. That leaves CSR with 75% of the companies and Mackay with 25%. The price was about US $ 46 million.
It does not look as if Trinidad’s new sugar arrangements are being successful. Although Ste Madeleine has been operating since January, only 40% of the estimated outgrowers’ crop had been crushed by the end of March. The company [temporarily? called ‘Sugar Industry Team’] has agreed to extend the crop by two weeks but has appealed to farmers to deliver clean cane, not the trash laden material delivered to date. The farmers want the company to stop crushing its own cane until theirs is all harvested.
Following last month’s news item about the expected demand for imports from China, the country increased its domestic production forecast which, in turn, depressed the market’s view of its import demand, knocking 400 to 900 000 tons off the expectations [depending on which one you believed].
CONSOLIDATION IN JAPAN
Shin Mitsui, Japan's biggest refiner, has taken over two of the smaller companies with which already had relationships. The background to the move has been described as tough conditions with weak demand import competition.
BELARUS DOES A SERBIA?
Regular readers will remember the ongoing saga of Serbia’s EU sugar quota being suspended due to smuggled sugar being passed through the country. Russia has now suspended imports from Belarus for the same reason, citing the detection of cane sugar in the imports. Belarus, of course, can only grow beets.
At more or less the same time, the Ukraine temporarily cancelled free sugar trade with Belarus and Moldova while permanently cancelling similar arrangements with Russia and Georgia.
The privatisation of Kinyara in Uganda seems to rolling again – although rolling might be an over-statement. The current government proposal is for 51% to go to a ‘core investor’ with sugar experience and capability, 10% each to go to workers, outgrowers and the Kingdom of Bunyoro and 19% to be sold on the stock exchange. Predictably, the kingdom wants more [30%] and some MP’s are seeing the ‘core investor’ argument as a ‘stitch up’.
We hear that Durban based Bosch Projects has been awarded a technical support contract to assist Mumias into the future. Once it became clear that Booker Tate [which had a long term management contract at Mumias until last July] had not won the job, it announced that it was selling its 5% stake in the company. Having just taken advantage of the recent lay-offs at Tongaat Hulett to strengthen its team, Bosch will be able to offer strong support to Mumias.
SANTOS TERMINAL EXPANSION
COPERSUCAR is certainly convinced that Brazil’s sugar exports will continue to climb : it is already talking of expanding its Santo export terminal. The terminal, less than year old, has a nominal annual throughput of 2 million tons with a 100 000 ton storage capacity. The expanded version will have a throughput of 3.3 million tons and storage for 220 000 tons.
There was a burst optimism at one stage in April when some traders were forecasting the return of a ‘bull’ market and maybe 10 ¢/lb in the next 18 months.
SUGAR DUST EXPLOSION
A sugar dust explosion in Sydney, Australia, was reported in a bref note on the wires during April but no details are available. The location, in the Pyrmont district, is where the old CSR refinery used to be.
NEGROS EXPORT COGENERATION
It would seem that the export co-generation project originally planned for VMC is now intended for First Farmers. UK company Bronzeoak has been promoting the project for severla years now so it was interesting to see a deal signed between it, Philippine National Oil and First Farmers to build a 30 MW station.
Meanwhile VMC has announced results which indicate that it is slowly recovering from its problems although it is still making a loss due to its debt burden and the interest paid on that.
NEW ESTATE FOR NIGERIA?
Kogi State in Nigeria is reporting that it has signed an agreement with the government of China for a $60 million to establish a sugar estate. The turnkey deal was reported as providing “200 tons per day” of sugar so is presumably based around a 2 000 tcd factory. The only drawback seems to be that it requires the federal government to guarantee the loan ….
Moçambique’s sugar harvest continues to expand along with many other crops : the Minister of Agriculture recently reported last year’s sugar production at 212 000 tons, the largest in 25 years, and predicted a level of 250 000 for 2004. He also revealed that the industry employs 27,000 people.
Holland is reducing its beet planting, at least marginally : the Dutch research organisation reports a 3% reduction year on year to 100,000 tons. However, the yield last year was 63 tons per ha, up from 60 tons a year earlier so there is no saying that sugar production will be down.
UK planting is also well advanced with a forecast 140 000 ha, virtually the same as last year. Last year’s crop was excellent : over 65 t/ha and a mean sugar content of 18.74%.
The Thai government has announced changes to current cane payment system which are expected to be introduced next year. The current system is a revenue sharing scheme but the new system will be a straight forward purchase contract. What is not clear is whether the payment system, currently based on first expressed juice, will also be changed. At the moment, this essentially precludes the use of diffusion for more efficient extraction.
AUSTRALIA RESCUE PLAN
After much speculation and following its failure to include sugar in the recently announced US free trade agreement, the Australian government announced a rescue package for the sugar industry. [The fact that it is an election year is quite coincidental.] The plan is not dissimilar to the package which expired not too long ago, involving money for the millers, incentives for farmers to leave cane growing and community support money.
PAKISTAN EXPORTS TO INDIA
Pakistan has been hoping for the chance to export sugar to India for a long time but it has not happened, presumably for political reasons more than anything. It now seems that molasses is a different matter. Molasses prices ex Pakistan where in the low £30’s per ton but Indian demand for their molasses has pushed prices up to the low $50’s and the exports are flowing. Maybe sugar will be next, if the politics allow.
JAMAICA TO TRY ETHANOL AGAIN?
It must be nearly 20 years since Jamaica started making power ethanol from molasses and juice as a means of supporting the flagging sugar industry. In those days it was on the basis of Jamaica’s preferential trading partner with the US, the ethanol being exported the short ditance to the ‘mainland’. This time the Government is investigating the ‘Brazilian Model’ for domestic consumption power ethanol which would save them 10% of more of their imported gasoline.