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Chee Hong
Jerome
Sugar
Jerome
Chee Hong
History of the trading of the
product
Among the most widely produced and
broadly supported of all agricultural
commodities in the world.
 Price is affected by a wide range of
factors.
 3/4 of the world supply of sugar is
produced from Sugarcane.
 Before 1990, sugar beets represented 40
percent of world sugar production but its
share of world production has fallen during
this period because of the lower relative
cost of cane sugar Production.

The World Sugar Market – The
Major Players




World sugar production and consumption
is around 140 million metric tons per year.
Brazil is the largest sugar producer in the
world.
In the 2004-05 season, Brazil produced
28.15 million metric tons
and it represents nearly 20 percent of
total global sugar production and is truly
the giant in the world sugar industry.
Brazil- What has it done for us?
Brazil’s massive sugar
production and exports
has placed downward
pressure on world
sugar prices.
As a result, the generous
terms of the EU sugar
protocol have been the
target of continued
legal challenges from
Brazil and other major
sugar exporting
nations.

Producers

Main Sugar Companies (distributor)

Raw producers
- Small scale farmers in Brazil joining
Bariri Sugarcane Suppliers Association, the
largest sugar cane producer in the world.
Traded at the Chicago Mercantile Exchange


What Goods are made from Sugar?
The Price History of Sugar
Conditions responsible for large
fluctuations in price.
Natural disasters such as droughts,
hurricanes .
 Appreciating currencies.

 short-term
inflexibility of the supply
response to price changes.
Conditions responsible for large
fluctuations in price.


Subsidies and High
Tariffs
short-term rigidity of
the supply
response to price
changes
Industry Groups / Trade
Agreements
North American Free Trade
Agreement (NAFTA)
NAFTA
In the agreement, net surplus producer of
sweeteners was defined in the following
manner:
 Mexico’s sugar production must exceed its
consumption of sugar plus its consumption of
other sweeteners If Mexico did not attain net
surplus producer of sweeteners status, then its
share of the U.S. sugar quota would be 7,258
MT.
Supply Demand Table
Supply Demand Table

First, sugar consumption in Mexico continues to expand.

Second, note the pattern of HFCS
HFCS - sweeteners derived from high fructose corn syrup
HFCS

The outcome for producers in both countries hinges on the level
of adoption of HFCS by the Mexican food industry.
If the Mexican soft drink industry were to adopt HFCS as its
primary sweetener source, vast amounts of Mexican
sugar would become available for export to the United
States…..
Dominican Republic-Central
American Free Trade Agreement
(DR-CAFTA)

The agreement was approved by the U.S.
Congress in late July; as this paper was
being prepared, however, it had not been
implemented.

The DR-CAFTA contains provisions that
relate directly to the U.S. sugar industry.

The U.S. TRQ system is a two-tiered tariff
system.
DR-CAFTA

The Office of the U.S. Trade Representative dismisses these increased
sugar import volumes as insignificant and argues that these provisions
“would not have a destabilizing effect on the U.S. sugar program

Once the minimum TRQ import level is reached, the only mechanisms
USDA will have left to control domestic sugar supplies that are decreasing
the domestic marketing allotments or decreasing the U.S. sugar market
stabilization price (MSP).
Industry Group
Florida Sugar Industry

Florida Crystals Sugar Corporation/FloSun Incorporated and U.S. Sugar
Corporation.
Florida sugar mills are modern and efficient, but
labor costs are extremely high by world standards
 lowest cost producer of sugar in the United States

Bibliography
Buzzanell, Peter. 2000. “The North American Sugar Market: Recent Trends and
Prospects Beyond 2000.” Food and Agriculture Organization of the United
Nations. Sugar and Beverages Group, Commodities and Trade Division. Rome,
Italy. http://www.fao.org/DOCREP/005/X0513E/x0513e15.htm.
Buzzanell, Peter and Ron Lord. June 1995. “Mexico: Sugar and Corn Sweetener, and
Update.” Sugar and Sweetener Situation and Outlook. Vol. 20(2). U.S.
Department of Agriculture, Economic Research Service. Washington, D.C.
International Centre for Trade and Sustainable Development. 8 October, 2003.“FTAA:
US-Brazil Standoff Dims Prospects for Miami Ministerial.” Geneva, Switzerland.
http://www.ictsd.org/weekly/03-10-08/story4.htm.
International Sugar Organization. 5 May 2004. “The EU enlargement – implications
for
the ISO membership.” Press Release by the International Sugar Organization
(ISO). London, England.
http://www.sugaronline.com/iso/editorials/editorials.asp?cat=7.
Sano, Diasuki. 2004. “Analysis of U.S.-Mexico Sugar Trade: Impacts of the North
American Free Trade Agreement (NAFTA) and Projections for the Future.” Ph.D.
dissertation. University of Florida, Institute of Food and Agricultural Sciences.
Food and Resource Economics Department.
Schmitz, Troy G., Andrew Schmitz and James L. Seale, Jr. 2003. “Brazil’s Ethanol
Program: The Case of Hidden Sugar Subsidies.” International Sugar Journal. 105,
1254. pp. 254-265.
Thelen, Martin. January, 2004. “Sugarbeet versus sugarcane: What are the main
forces operating on the world market?” in Courier, The Bayer CropScience
Magazine for Modern Agriculture. Bayer CropScience AG, Monheim am Rhein,
Germany. http://www.agrocourier.com/index.cfm?PAGE_ID=1803.
Trade Info. “European Union Agricultural Products – Sugar.” 25 November, 2004.
Publication from the Europa External Trade “i” Center. Directorate General Trade
of the European Commission.
http://tradeinfo.cec.eu.int/doclib/docs/2004/november/tradoc_120339.pdf.
U.S. Department of Agriculture. June 1, 2005. “Sugar and Sweetener Policy” U.S.
Department of Agriculture, Economic Research Service. Washington, D.C.