Sugar Technology
On-line News

July 2005

Welcome to our news page!

We try to bring you the latest news and comment on this page but it will always be a better place if you send us your news. You can write to us by clicking on the E-mail link at the left.

To quote one news article last month : “There is no crop in the world more political than sugar.” June saw the EU announcement from the EU and the CAFTA talks getting closer to finality in the USA : articles leading up to, about and subsequently commenting on these issues almost eliminated any other news.


As regular readers will know from the ‘Stop Press’ article last month, the long awaited EU announcement on the reform of the sugar regime was published on June 22. The full announcement is available on line.

In summary and to repeat the contents of the stop press article, the reforms are :

  • A 39 percent price cut over two years beginning in 2006/07 to ensure sustainable market balance.
  • Compensation to farmers at 60% of the price cut. Inclusion of this aid in the Single Farm Payment and linking of payments to respect of environmental and land management standards.
  • Validity of the new regime, including extension of the sugar quota system, until 2014/15. No review clause.
  • Merging of ‘A’ and ‘B’ quota into a single production quota.
  • Abolition of the intervention system and the replacement of the intervention price by a reference price.
  • Introduction of a private storage system as a safety net in case the market price falls below the reference price.
  • Voluntary restructuring scheme lasting 4 years for EU sugar factories, and isoglucose and inulin syrup producers, consisting of a high degressive payment to encourage factory closure and the renunciation of quota as well as to cope with the social and environmental impact of the restructuring process.
  • This payment will be 730 euros per tonne in year one, falling to 625 in year two, 520 in year three and 420 in the final year.
  • A top-up payment for beet producers affected by the closure of factories in the first year for which they have delivery rights.
  • Both these payments will be financed by a degressive levy on holders of quota, lasting three years.
  • Sugar beet should qualify for set-aside payments when grown as a non-food crop and also be eligible for the energy crop aid of 45 euros/hectare.
  • To maintain a certain production in the current “C” sugar producing countries, an additional amount of 1million tonnes will be made available against a one-off payment corresponding to the amount of restructuring aid per tonne in the first year.
  • Sugar for the chemical and pharmaceutical industries and for the production of bio-ethanol will be excluded from production quotas.
  • Increase of Isoglucose guota of 300.000 tonnes for the existing producer companies phased in over three years with an increase of 100.000 tonnes each year.

The new price, at 39% less than the current price, will be € ~385. Predictably, there were only a few welcomes for the reforms. Those against them ranged from the internal – some EU countries are predicted to abandon sugar production all together, to the external against them because they will reduce ‘aid through trade’ to them, in particularly the ACP and LD countries and on to the external against them because they don’t go far enough.

You can also read the speech of the Agricultural Commissioner, Mariann Fischer Boel, on the internet.


As reported here last month, the EU has long been suffering leaks with respect to its planning for reform of the sugar regime. A week before the official announcement, an internal document examining the impact at various price levels appeared in the press.

In the document, four countries were identified as most susceptible to price cuts : Greece, Ireland, Italy and Portugal. However that susceptibility was discussed at prices around € 500 so if the price really does drop below € 400 [always remember that these are just proposals : they will be strongly fought against] presumably production will cease in all four. That represents 9% of current production.

The document also identified a second group of countries – Denmark, Finland, Hungary, Spain and the Czech Republic – where “production was likely to be maintained but at a significantly lower level”. That represents another 17% of current production.

In the final analysis, the document predicted that EU sugar production would stand at 12.4 million tons, some 5mn lower than now, by 2012/13. However, with the proposed ‘get-out’ incentives declining with time, it may be that production will fall much sooner than predicted.


The Bush administration’s Central American Free Trade Agreement made several steps forward – and some back – during June. First of all the Senate Finance committee gave it the nod, albeit by a small margin and through an informal vote. [There seems to be a two stage voting system in the USA with a show of hands to see where things are and then a formal vote later if it is clear that a motion will pass (or fail?).]

That was shortly followed by a similar approval by the House of Representatives’ ‘Ways and Means’ committee but everything assumed some undefined appeasement for the sugar lobby. [The sugar lobby was reported as suggesting that NAFTA should be renegotiated!] By mid-month it looked as if the appeasement might be a sugar to ethanol programme so that all new imports were diverted to power ethanol but this was quickly rejected by the Florida industry which continued to assert that CAFTA was “fundamentally flawed”.

The Senate does seem to have passed the bill later in the month and even Florida’s two senators voted in favour. The main vote – in the House of Representatives – is expected this month. With the EU reform on the table, it is unclear whether the US sugar industry will be able to avoid defeat this time.


The world sugar price showed a steady rise from April as the impact of the expected EU reforms was worked out. It broke through the 9 ¢/lb barrier again at the end of June. In addition to the EU, Sucden was quoting Indian weather as a factor to watch with the monsoon rains still lower than the long term average. This is the year when India is supposed to return to normal following its two very poor years.


The Guyana Sugar Corporation has reported a $14 million pre-tax profit last year from producing just over 325 000 tons of sugar. It is also predicting a better crop this year, estimating production at 338 000 tons, the “largest sugar production in 12 years”. However, as it also estimates that the EU reforms will reduce income by about $40 million when fully implemented, that does not leave much hope for the long term.


The merger of the Alma and Cinclare processing facilities, announced in June, is set to see the closure of Cinclare factory within a few years. The exact date of closure will presumably depend o the expansion schedule for Alma which will have to expand from about 800 000 tons of cane per annum to about 1.3 million tons.

Two factories in Louisiana – New Iberia and Jeanerette closed at the end of last crop. Cinclare will almost certainly won’t be the last.


Jamal Al-Ghurair is proposing to expand his Dubai refinery from its current 4 500 t/d [its not clear whether the figures are melt or RSO but as he ‘refines’ extremely high purity sugar there is little difference between the two] to a staggering 7 500 t/d. The refinery is already the largest in the world so such an expansion would take it way out in front : 2.4 million tons if the demand is there.


By the time that you read this, Australia’s Sugar Research Institute will have nominally migrated from Mackay to Brisbane, becoming part of the Queensland University of Technology. The physical move is likely to be phased over the next 12 months and does not include the commercial operation which has, of recent years, been selling SRI technology around the world.


Suedzucker, through its French company Saint Louis Sucre, is actively seeking to acquire and interest in the Brazilian sugar industry. It has stated that it is in talks with “several Brazilian sugar manufacturers”.


North Queensland is reporting an infestation of ‘grey back’ and ‘frenchy’ grubs but there is no clear explanation : a change in weather patterns or farming practices have both been suggested.

In the same area, a dispute between the farmers and Bundaberg [the local processor] seems likely to delay the start of crop.


Brazil is predicting that its ethanol exports will triple if its stated owned oil company, Petrobras, can conclude its current negotiations with Japan. Japan has authorised the addition of 3% ethanol to gasoline to meet its Kyoto protocol targets, equivalent to 3.5 million m³ of ethanol. That means less cane juice going to sugar so the world price should benefit.

Homepage  Return to Current News  Page Top