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Still more politics this month with the WTO / EU case rumbling on and the ACP having its say with respect to the proposed reform of the EU sugar regime.
In case you missed last month’s ‘stop press’ :
We warned you in June about the Murray and Robert's imminent sale of BT to the [relatively small] South African sugar group TSB. After that, all went quiet and it still is quiet on the wires. However, we understand that the deal was finalised on October 8 2004 [even though the Booker Tate web site still says BT "is a Murray and Roberts group company". We will let you know when the new TSB man arrives in Thame.
Since then : nothing! The web site still says that BT is an M+R company [although we understand that all letterheads / visiting cards bearing that logo have been recalled] and nothing has been announced
EU SUGAR PRODUCTION
The EU has published a production estimate for the enlarged Union for the first time. The figures include the estimate for 2004 / 05 together with the final figures for 2003 / 04. Figures for the new members are included for the previous year to allow a comparison. A small increase [1.7%] is forecast for next year, about half of that from the longer term members of the Union and half from the new members :
What is interesting to see is the strength of just three countries : France, Germany and Poland produced nearly 54% of the last year’s total between them. Other than Poland, the table also shows what little significance there is in the production of the new members : just over 6% without Poland or just over 17% with.
EU SUGAR REGIME
October saw the Brussels meeting of the African, Caribbean and Pacific [ACP] group of former colonies to discuss the proposed reforms of the EU sugar regime and the 37% drop in guarantee price in particular. As might be expected, the ACP roundly rejected the proposals and demanded compensation “with an automatic and predictable mode of disbursement” if they did take place. In essence the ACP relies on history to make its case : ‘you have done it in the past so you should carry on doing it in the future’. The full text of the press release is available to read on the internet
The EU seems sympathetic : Pascal Lamy, the outgoing Trade Commissioner, is reported to have said that the EU hoped to have compensation packages in place by mid-2005. What is not clear is whether the compensation will apply just until the Cotonou Agreement runs out in 2008 or whether it will be ‘permanent’ compensation.
The World Trade Organisation published its findings on the EU sugar regime in the middle of October and the EU stated that it would be appealing against the finding. The EU, in making its statement, did say that appealing would not delay the proposed reforms of the regime.
One of the puzzling aspects of the findings is that the WTO says that EU exports of white sugar are illegal because a footnote to a WTO schedule [presumably prepared by the WTO] allowing the exports ‘has no legal effect’.
If you want to read the findings then they are available on the internet but you will have to read three very lengthy documents as there is one for each of the three complainant countries.
At the end of October, the US Sugar board approved a plan to expand the Clewiston factory in order to be able to close Bryant. The expansion and modernisation project at Clewiston is being phased over three years and will ultimately create a 38 000 tcd raw factory with a co-located refinery. Bryant will close at the end of the 2006 / 07 crop and the new facility will be fully operational at the start of the next one in October 2007.
Maragra sugar, owned by South Africa’s Illovo Sugar, has purchased the derelict Buzi sugar company from the government of Moçambique for US$ 1.25 million. The sale applies from November 1. The company hopes to have the estate producing sugar again in five years.
The ongoing drought is impacting on the Thai harvest : officials are predicting a 12% drop year on year for the current crop. Cane harvested is expected to be between 57 and 58 million tons compared to over 64 million last year. To help the farmers [and perhaps his vote?] the Prime Minister has increased the initial cane payment by 40% to 650 baht [US$ ~16] per ton.
The Brazilian industry is starting to talk about leaving standing cane at the end of the Centre-South crop although it is unclear why this should be. The figures, of course, are staggering : 330 million tons of cane in that region alone. The forecast is also staggering : a 10% increase in field area for 2004 / 05 compared to 2003 / 04. However, a fall in recoverable sugar is also forecast so the increase in production will ‘only’ be about 8%.
What is difficult to call is how much of that sucrose will go to ethanol production. The oil price rise has pushed ethanol prices so much that they have more than doubled in the last six months. That means that ethanol production is now more profitable than sugar production.
SERBIA / BOSNIA
Although the EU has re-opened its doors to sugar imports from the Balkans following the fraud cases, it has now imposed quotas on the various countries concerned. Serbia’s quota is to be 150 000 tons and Bosnia’s 12 000.
The Indonesian government is expecting to import 800 000 tons of sugar to tide it over the off-crop period. What is less clear is why that amount is needed when the country produces about 2 million tons, consumes 2.4 million and struggles with illegal smuggling in of sugar.
As we predicted, the newly co-operatised Monitor sugar has merged with Michigan to forma single, larger co-operative. The new organisation will be the third-largest beet sugar co-operative in the US with annual sales of around $300 million. Meanwhile, much further west, the Western Sugar co-operative has confirmed that it will again not be running Greeley this year. It seems increasingly unlikely that the factory will ever process beets in the future.
The beets themselves, on the other hand, have been enjoying something of an Indian Summer : the temperature on the plains climbed above the 55 °F maximum allowed for harvesting so all harvesting was suspended. [Above that temperature the beets cannot be cooled down by the chill blasters and start to deteriorate.]
A short news item on the wires last month demonstrates how serious the infrastructural problems are in Cuba : the government has nine of its sugar mills supplementing the utility’s power production by burning oil.
Embraer, the Brazilian aircraft manufacturer has developed an ethanol firing engine for a crop sprayer which it has named ‘Ipanema’. The company is confident that it will get its airworthiness certificate soon and expects to be selling the machine by the first quarter of 2005. It predicts that the price will be within 3% of the conventional version but that its fuel cost will be 80% less.