Sugar Technology
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October 2007

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This month's new seems dominated by the European Union ...

European Union

The EU’s Council of Ministers approved the changes to the reform of the sugar regime – announced earlier this year – at the end of the month. In essence [you can read the full press release if you prefer] the deal is now somewhat better for all parties that pull out of sugar production.

EU and ACP

The EU also confirmed the end of the ACP preferential market for sugar from 2009 but held out the possibility of ‘Economic Partnership Agreements’ with all 79 members of the ACP group. Those are supposed to be in place by January next year.

Of course, it could be argued that the EU’s EBA initiative will substitute – after all, a glance at the list of Least Developed Countries [i.e. those eligible to use the EBA] shows that 80% of them are also members of the ACP group. The problem is that many of the 18 strong ACP sugar exporters are not LDC’s, perhaps in part because of the preferential market which is now more than 30 years old.

There is a lot of discussion required in the next few months.


The ‘fire’ referred to in last month’s news did break out : the EU suspended its sugar industry assistance grant because of the re-activation of the Public Emergency Regulations by the military regime. The regime has now said that it will lift the regulations in early October but whether and when the EU will lift its suspension is another matter.


Indian crystal sugar production is forecast to overtake that of Brazil in the new year just starting –but that doesn’t apply to sugarcane production of course. The Indian output is expected to exceed 33 million tons next year, ten percent of which will [hopefully for the producers] be exported. If Brazil did not divert sucrose to ethanol to the extent that it does, it would produce in excess of 50 million tons.

In order to support the industry, the government has increased strategic reserves to 5 million tons [annual domestic demand is estimated to be about 19 or 20 million tons] and provides ‘monetary support’ to the industry. It has now announced that it is seriously considering allowing secondary juice to be used directly for ethanol production. Ethanol addition to gasoline is scheduled to double to 10% within 12 months.


Some entrepreneurs in Iowa has announced their intention to build a ten million gallon/year [38 million ℓ/a] ethanol plant using beet and cane molasses as the feedstock. There is also talk of using beets but the site is located in the south east of the state on the Illinois border, well away from the beet areas of neighbouring Minnesota and the Dakotas.


Further to last month’s news item, it turns out that the Colombian company that bought St James is Andino Energy, the major shareholder in the Lacassine syrup mill. It also bought the mill at New Iberia last year but it is not clear what it intends to do with all this equipment which doesn’t come with cane rights.


Ethiopia’s Sugar Development Agency has announced plans to quadruple output – at a cost of US$1.4 billion. The expansion will be partially funded with a $640 million loan from India, the rest coming from within Ethiopia. WonjiShoa will quadruple to 300,000 tons [currently 75,000], Metahara will increase to 126,000 tons [63,000] and Finchaa will triple to 255,000 tons [85,000]. The rest will come from the proposed new estate at Tendaho that we told you about in February.


Mat International, the company that was the original partner of the Tana River Development Authority, has returned to the fray with a “ US$ 2 billion” sugar project in the Tana delta region. It claims to have already acquired 90 000 ha of land but, as it seems to be building the project on using outgrowers rather than a core estate, acquisition may be the wrong description. The project is reported to be further down river than the proposed Mumias project.


At least we have solved one mystery : the Central African Mining and Exploration Company, listed on the London AIM market, is the company behind the Pro-Caña project that we reported last month.

There could be another project competing for the available irrigation water though : an Indian company and the International Crops Research Institute for the Semi-Arid Tropics have announced a sweet sorghum based ethanol project in collaboration with the country’s state-owned fuel company, Petromoc.


As regular readers will know, the future of the north Queensland cooperative at Mulgrave has been fought over by Bundaberg and Maryborough. The Bundaberg deal, supported by the board of Mulgrave, has now been fleshed out : a new company [TQ Sugar] will be formed by merging Bundaberg's Tablelands, Babinda and South Johnstone mills with Mulgrave and floating it on the stock exchange. Mulgrave shareholders would own 40% of the new company.

However, the real question is whether Maryborough, favoured by some of the Mulgrave shareholders, will just accept defeat or continue to fight and spoil the chances of a clear win in the mid-October vote on the Bundaberg offer.


It looks as though Ste Madeleine may crush again : the government is in talks with a cooperative of local farmers to buy the factory [but not the refinery] for “$7 million”. It is not clear whether that is US dollars or TTD [which would make the price the about US$ 1 million]. The plan is to then form a joint venture with a French company which wants to use bagasse to make paper. How that will work when, last time we looked, the factory was a net consumer of fossil fuel is not at all clear.


It looks as if the Iraqi sugar industry may be starting on the long road to recovery – with the help of Iran. The country’s ‘General Company for Sugar’ has been allocated US% 25 million from an Iranian loan and intends to spend $18 million of that on the sugarcane factory at Maysan [about 300 km south east of Baghdad] and the rest on the beet factory at Mosul in the Kurdish part of the country [about 350 km north of Baghdad].


China is forecasting a record crop next year : 14 million tons compared to 12 million during the year just ending/

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