Sugar Technology
On-line News

May 2005

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The main news of the month was the WTO’s rejection of the EU’s appeal against last year’s finding. The EU will presumably now move forward on its reforms.


WTO FINDS AGAINST EU APPEAL

The WTO has comprehensibly turned down the EU’s appeal against last year’s findings that the EU Sugar Regime contravenes WTO requirements. That leaves the way open for the proposed reforms. The text of the WTO summary is available on this portal and the full text is available on the WTO domain.

The EU has agreed to abide by the findings. Mariann Fischer Boel, EU Commissioner for Agriculture and Rural Development is quoted as saying : “Naturally, I will take account of this verdict when I finalise the reform proposals we are due to publish on 22 June. We will continue to defend the valid interests of sugar producers and consumers in both the EU and the ACP countries. I am determined now to modernise our sugar regime to ensure it has a viable future.” More details are available on the EU domain.

DR-CAFTA DEBATE

The proposed Central American Free Trade Agreement [which now includes the Dominican Republic, hence the DR] is currently passing through the committee stage and the sugar industry is fighting it all the way. The USDA has shown [see the February 2004 News] that the impact of CAFTA will be minimal but the industry’s main concern seems to be more to do with beyond CAFTA. The American Sugar Alliance told the committee that American sugar jobs could be jeopardized by the DR-CAFTA but that the greater threat would be setting a precedent for 21 other sugar-exporting countries waiting to negotiate similar trade agreements.

OECD VIEW OF AGRICULTURAL SUBSIDIES

The Organisation for Economic Co-operation and Development’s view of global farm subsidies is a staggering $320 billion a year but some of that – about $55 billion – is for agricultural support such as research, conservation, irrigation and pest control. The data does not make allowance for whether there are true ‘subsidies’ or not so, for instance, the EU sugar regime is part of the count.

In round numbers, $53 billion of the total is down to the EU with Japan second at $30 billion and the US third at about $18 billion. The total sugar count is $7 billion, of which the EU regime accounts for $4 billion and the US 1.2 billion.

FORECASTS

At the beginning of the month the ISO issued its latest forecast, striking a balanced position for the foreseeable future. It pointed out that India had not purchased large quantities of sugar despite its annual deficit being at least 5 million tons, it had covered from stock and would continue to do so as far as could be seen.

Towards the end of the month, ED&F Man Sugar forecast a switch to demand exceeding supply over the next 15 months as demand from the Far East rises and supply falls, partly due to increased ethanol production in Brazil. Its view of China’s production is 9.4 million tons, 600,000 below the official Chinese forecast.

ZIMBABWE

Hippo Valley’s report on its 2004 crop does not make happy reading : just over 2 000 ha of its own land occupied by squatters [no mention of outgrowers’ land] and overall cane yield down 18,7% year on year to 86,45 t/ha. Total cane crushed was about 1.3 million tons, a drop of about 240 000 tons.

Triangle seems to be faring better, at least for now. Although sugar production was down 16% year on year at 222 000 tons, it paid ZAR 51 [$8.5] million in dividends to its parent Tongaat Hullet : 2.7 times the previous year’s dividend.

LOUISIANA

Following our February news item on the proposed second syrup mill in Bunkie to the north of Lafayette, the state commissioned a report from Landell Mills on its feasibility. [Completed in 30 days and with a very narrow brief it cannot be called a ‘Feasibility Study’.] That report has come out against the proposal but, as you would imagine, it is being heavily criticised by the cane farmers in the area. Their main argument is the savings [fiscal and environmental] of not trucking their cane to the mills which are up to 100 miles away.

Nobody has yet connected the lack of feasibility of Bunkie with its ‘sister’ project in Lacassine which is due to start operating in September this year.

MEXICO

Mexico seems to be on target to produce a record 5.4 million tons of sugar although most is still the semi-refined estándar sugar. Whether or not the current dispute with the US is resolved, the whole North American market will be open to Mexico from 2008 under NAFTA so we can expect to see a continuing increase in capacity and an improvement in quality.

CHINA

China again marked down its forecast for this current year, the new figure being 10 million tons, some 20,000 tons lower than the previous year.

TASMANIAN BEET FAILURE

The trials of beet in Tasmania that we reported last June have not been a success. It seems that the problem is not so much one of agricultural fundamentals as of scale and cost : the demand for ethanol and its price not being sufficient to justify the industry.

TRINIDAD

Trinidad seems to be in trouble still with a forecast some 20% below budget. Ironically the factory is reported to be performing well this year, it is the cane which is in short supply and of poor quality. [On the other hand, if you are processing less cane the factory performance should be good, shouldn’t it?] The country will not even be able to meet its quotas.

WORKER DIES AT APPLETON

A worker was killed at Appleton in Jamiaca last month when he fell into a ‘sugar bin’ and was buried under about 30 tons of sugar.

GUYANESE FLOODS

Guysuco has revised its forecast for the half-crop downwards by 20 000 tons of sugar following January’s floods. Crushing started about six weeks late because of the weather.

KINYARA

The privatisation of Kinyara Sugar Works is about to start again according to the Ugandan government. This time there will be a core investor with 51% of the shares with 20% reserved for outgrowers and employees, 10% for the Bunyoro kingdom and 19% listed on the stock exchange. No mention of which company might take the controlling interest but with Booker Tate, the current managers, now owned by TSB it might not be a one horse race for the Madvanis.

EL NINO AGAIN?

Climatologists / meteorologists are warning that another El Niño event may be developing. They report an unexpected warming of the Pacific Ocean in February that reduced air pressure from Tahiti to Australia to a 22-year low. A similar change eight years ago developed into an intense El Nino that caused an estimated $98 billion of damage to agriculture worldwide.

PETER SKINNER

We were saddened to learn of the death of Peter Skinner as we were ‘going to press’. Peter was one of the great [in more ways than one] characters of the industry who finally settled in Louisiana. He was a sugar process engineer from Trinidad [or was it Barbados Peter?] who was employed by Tate and Lyle for a long time working in various parts of the company. It was as the TLPT local representative that he first settled in LA, living in Thibodaux. Among his many activities he was a lecturer on the Nichol's State sugar courses so readers around the world will know him and remember his humour.





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