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Tuesday, 28 March 2017

Europe Is Waving Goodbye to Sugar Cane

Europeans’ taste for sugar transformed the world. West Indies plantations built from the 17th century to feed demand drove a nexus of commerce, capital and manufacturing that fomented the industrial revolution and modern financial markets. More than three hundred years later, Europe is set to deliver a crippling blow to a trade that once made up almost a fifth of its entire imports, and has sustained developing-country sugar cane farmers since. The European Union’s decision to remove limits on its own beet-sugar output from October means less demand for cane growers from Jamaica in the Caribbean, to the Pacific island of Fiji, and Swaziland in southern Africa.  "The challenge from the Caribbean perspective is what they can do, if anything, to ensure the future of their industry." Jamaica, Belize and Mauritius were among a group of more than 10 nations that benefited from quota- and duty-free access for 1.6 million metric tons of mostly raw-sugar shipments to the EU in 2015-16. The amount, which can vary year-by-year, represented about half the European bloc’s imports of the commodity. Europe’s Sugar Market Consolidates as Efficient Producers Grow While the countries will retain those privileges, their high-cost cane plantations may struggle to compete against EU beet farmers who are boosting yields and increasing scale. European output may expand by about 17 percent to more than 20 million tons and imports sink by about half with the changes, Rabobank says. Fiji, Mauritius, Belize and Guyana have been shipping about 80 percent or so of their sugar exports to the EU, and Jamaica at least 60 percent, according to a 218-page report from LMC International Ltd. funded by the trading bloc. Some also have among the highest costs. Belize and Guyana produce less than 6 tons of sugar per hectare cultivated, compared with an average of about 10 for giants like Brazil, LMC says. EU trade cooperation with the African, Caribbean and Pacific sugar nations dates to the birth of the European Economic Community in 1957. The European beet sugar industry that now threatens cane farmers itself has roots in one of the defining events of the continent’s history.

Source: Bloomberg