November 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 Contact link at the left. The cane industry in the US must be wondering what message nature is trying to give it : this is the third month with major hurricane news. STOP PRESS EU REACHES AGREEMENT The EU has just reached agreement on its reforms of the sugar regime but it is a slightly watered down version of the original proposals. We will give you more details in next month's news but the core of the agreement is that the sugar support price will be reduced by 36% over 4 years [instead of 39% over two years] with farmers and processors compensated in the early years and even encouraged with special payments to get out of the industry. The agreement means that the EU can go to next month's WTO meeting with confidence. HURRICANE WILMA This time it was Florida's turn to be battered : Hurricane Wilma passed right across the sugar lands around Lake Okeechobee towards the end of October. We have no reports of serious injuries or deaths thank goodness but the cane is described as totally lodged [flattened] although already starting to recover. One general manager has estimated that his crop will be down by about 20% but, no doubt, that figure will be revised several times before the crop is finished. In the factories, most of the damage seems to have been to raw sugar stores. As the crop is about to start [all factories delayed the start when it became obvious that the hurricane was about to strike] the stores were empty but if you have nowhere to store your production it is a challenge. EU Following the furore we reported last month as the complainants realised what the short term effect would be, the WTO has now set a deadline for the EU to stop excess subsidised exports of May 22 2006. After that date the WTO will only allow 1.273m tons a year with annual expenditure on subsidies limited to € 499.1 million. Meanwhile, within Europe, there doesn't seem to be too much accord as to how the sugar regime should be reformed. Nonetheless, the Agriculture Commissioner is adamant that there should be agreement at the November meeting of the Council as she needs a clear brief to take to Hong Kong for the December WTO meeting. At the end of October there were 11 states dissenting, including three with large block votes : Italy, Poland and Spain. The eleven want lower price cuts, longer transition periods and higher compensation. TONGAAT HULETT FOR SALE It looks as if Tongaat Hulett's major shareholder, Anglo American, has finally decided to disinvest from the company after declaring it a non-core asset. The market is expecting a break-up with the sugar division parting company with its aluminium and corn starch sisters. A figure of ZAR 3.9 billion [US$ 600 million] has been suggested for the sugar division combined with the property division that develops cane land under threat from urbanisation. CHINA The gap between production and demand is expected to reach 2 million tons next year as demand continues to climb while production flounders. Per capita demand is still very low compared to many countries so the demand trend will presumably continue for many years. What is less clear is what the government's policy is with respect to supply. In Guangxi, China's main sugar producer, the land area planted to cane actually fell by 57,300 hectares last year MAURITIUS Mauritius has cut its national GDP growth forecast, in part because of sugar. In the light of the imminent reduction in the EU sugar price one can therefore expect an ongoing problem for the economy. The current reduction in the predicted sugar output is due to weather and brings the expected total down to 535,000 tons, 7% below the original forecast. JAMAICA BITES THE BULLET Now that the independent review of its industry has been digested, the Jamaican government has announced the closure of Long Pond and Bernard Lodge factories. However, it also said that this will not happen in the next two years so perhaps the headline should be "thinks about biting". The Prime Minister was also quoted as saying that he would sell the Sugar Company for $1 to anyone prepared to take it on and invest the money needed. However, as that was what happened in the 1990's with Booker Tate and its partners and their ill-fated attempt one cannot imagine any sane enterprise being ready to stump up the dollar. MUMIAS CO-GENERATION AND ETHANOL Mumias has been selling about 3 MW of power [on a 'continuous' basis] to the national grid for some time. Now, however, it has announced plans to export 20 MW which implies major investment in new plant to achieve much higher HP conditions in the cycle and therefore 'firm' power to help pay for that plant. Part of the thinking seems to be to use an ethanol plant as part of the host arrangements for co-generation, perhaps operating during off-crop as well? BRITISH SUGAR ENERGY INVESTMENTS British Sugar has made a commitment to improve its energy efficiency, having admitted that it is behind its continental competitors and has not really invested in energy reduction since the early 1990's. It is unclear what approach will work best for it : a lot of small activities guided by pinch technology or major capital projects. The company also has a planning application in for a power ethanol plant at its Wissington factory, the largest beet factory in Europe. As the UK government has just indicated its commitment to 'bio-ethanol' and will presumably legislate accordingly, the project is likely to proceed. SWAZI ETHANOL The government of Swaziland has started to make noises about power ethanol at a time when Simunye [essentially a state enterprise] has just placed an order to expand its potable ethanol plant. If power ethanol was produced in Swaziland then it would presumably compete with the potable plant for the molasses available - unless sucrose was diverted to ethanol production. MEXICO v USA Round 99 and the battle continues [but it is not that long until 2008]. This round was about the 'tit for tat' imposition of a levy on drinks with HFCS sweetener by the Mexican government. The WTO has found in favour of the US with respect to the levy being a discriminatory one and therefore against WTO rules. It is not clear what Mexico will do but there has already been talk of removing the levy and imposing a 210% import duty instead ….. 
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