December 13, 2010
Increased Brazilian Sugar Production Needed to Meet World Demand
During the annual meeting of the International Sugar Organization (ISO) held in London in November, economist Lindsay Joly presented information concerning sugar's participation in the total sweetener market. According to Joly, between 1985 and 2009, the world's consumption of sweeteners increased from 104 million tons to 177 million tons of sugar equivalent. During the same period, the world consumption of sugar increased from 91.5 to 148 million tons.
The consumption of artificial sweeteners during the period increased from 7.2 million tons to 16.9 million tons of sugar equivalent and the consumption of corn fructose and glucose increased from 6.2 million to 12.5 million tons of sugar equivalent. Sugar's percent of the total sweetener market was 87.2% in 1985, but it declined to 82% in 2000 and then rebounded to 83.4% in 2009.
According to the ISO, sugar production in the world needs to increase by 50.8 million tons per year by the year 2020 in order to keep up with the increased world demand especially from expanding economies such as China and India. The question now is which country is best suited to increase its sugar production to meet the increased demand.
Brazil is already the world's largest sugar producer and it is expected to produce 38.9 million tons of sugar during the 2010/11 growing season. It appears that Brazil is best suited to rapidly increase its sugar production due to the following factors: its large scope of its existing production capacity, available land for expanded sugarcane production, a suitable climate for sugarcane production, cutting edge technology, and an existing infrastructure.
The biggest obstacle to increased sugar production in Brazil is an infrastructure that is already overtaxed, especially at the ports. The Port of Santos is the principal port for Brazilian sugar exports, but major improvements are needed at the port before it can handle increased volumes of sugar exports.
At one point in mid-2010, more than a hundred vessels were waiting to load at the port and 40 of those vessels were waiting to load sugar. The main problem at the port is that there is no way to cover the holds of the ships in case of rain. Sugar is exported from Brazil in both sacks and in bulk and loading operations must be suspended any time there is even the possibility of rainfall. During periods of extended rainfall, sugar loading operations at the port becomes completely paralyzed. When loading operations are suspended, then truck and rail operations supplying the port must also be suspended, further complicating the entire process.
The U.S. could increase its sugar production, but recent court actions have put a cloud over the entire U.S. sugar sector. Sugar production in the U.S. is primarily from sugar beets grown in the northern states of Minnesota, North Dakota, Idaho, and Michigan, but recent action by environmental groups opposed to GM sugar beets could result in reduced sugar production at least in the near term. Over 90% of the sugar beets grown in the U.S. are GM varieties these environmental groups have petitioned a judge in California to order the destruction of GM sugar beet seed production in the state. It is unclear what the final disposition of the seed production will be, but if the plants are eventually destroyed, sugar production in the U.S. could decline by as much as 20% over the next two years.