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Sugar prices for this year, according to the experts, should be high because despite increased production it will not suffice to meet demand. According to ‘Cosan SA Industria & Comercio’, which jointly controls the world’s largest sugar-cane processor with Royal Dutch Shell Plc., sugar prices will rise as record production in Brazil and Russia is not expected to exceed demand.
“An output recovery in Brazil and Russia doesn’t mean we will have enough sugar to surpass global demand by a large margin,” Cosan Chief Financial Officer Marcelo Martins told reporters yesterday in Sao Paulo, Brazil. “We see a tight scenario and are bullish on sugar prices,” he posited.
Brazil’s Centre South, the world’s largest sugar- producing region, will have a record 34 million tons of sugar output this year, up from 30.8 million tons last year. Output in Russia, the world’s seventh-largest producer of the sweetener, will be a record 5 million tons of sugar this crop year, which runs from October 2011 to September 2012, German research firm F.O. Licht said.
For two seasons running, global sugar demand has outstripped supply, creating a deficit of 15 million tonnes, according to the International Sugar Organization. Stocks are currently so low that the 2011/2012 harvest is unlikely to restore reserves to a healthy level.
Skyrocketing demand, particularly from the world’s many emerging economies, combined with policies favouring biofuel production and adverse weather conditions in several of the world’s leading sugar- producing countries, have caused prices to rise to unprecedented levels.
Another factor contributing to sugar scarcity stems from a change in EU policy, effected back in 2006, when the trading bloc overhauled its “sugar regime”, which had been in place virtually untouched for four decades, in response to a WTO ruling.
The revised regime was to guarantee a regular supply, moderate price fluctuations and make the EU sugar industry more competitive on the world market. As part of the plan, and in an effort to curb overproduction, the EU provided financial incentives for the closure of sugar refineries. Imports were also reduced and supplies diminished accordingly.
The increase in prices for sugar should be good news for our sugar industry which has been grappling with low production, financial and technical problems and a difficult industrial relations atmosphere in recent years.
And frequent, inclement weather has compounded problems with production.
However, the situation in Guyana during the second sugar crop for this year has been filled with optimism and is very likely that the national target of 236,000 tonnes would be met with some 30,000 tonnes needed.
Once the weather holds out, the target should be met. However, CEO of the Guyana Sugar Corporation Mr. Paul Bhim has pointed out that the industry has been hit by another snag and that is poor turnout by workers which in recent weeks stands at an average of 54%.
This, indeed, is cause for alarm and GUYSUCO along with the unions representing sugar workers should examine this issue seriously because it is pivotal with respect to increased production and turning around of the industry.
One of the factors contributing to the low turnout by sugar workers is the lure from the booming construction industry where many of them are opting to work with contractors because the pay is handsome.
One of the solutions to the labour shortage could be the recruiting of workers from non-sugar producing communities such as the Essequibo Coast and islands, and even outside of Guyana. But before this could be done, a proper feasibility study will have to be carried out as well as consideration of other factors such as whether this will not trigger industrial unrest.
What is certain is that GUYSUCO cannot afford to continue to be bogged down by labour shortages as this will definitely have an adverse impact and affect the long-term viability of the sugar industry and the national economic well-being.
“An output recovery in Brazil and Russia doesn’t mean we will have enough sugar to surpass global demand by a large margin,” Cosan Chief Financial Officer Marcelo Martins told reporters yesterday in Sao Paulo, Brazil. “We see a tight scenario and are bullish on sugar prices,” he posited.
Brazil’s Centre South, the world’s largest sugar- producing region, will have a record 34 million tons of sugar output this year, up from 30.8 million tons last year. Output in Russia, the world’s seventh-largest producer of the sweetener, will be a record 5 million tons of sugar this crop year, which runs from October 2011 to September 2012, German research firm F.O. Licht said.
For two seasons running, global sugar demand has outstripped supply, creating a deficit of 15 million tonnes, according to the International Sugar Organization. Stocks are currently so low that the 2011/2012 harvest is unlikely to restore reserves to a healthy level.
Skyrocketing demand, particularly from the world’s many emerging economies, combined with policies favouring biofuel production and adverse weather conditions in several of the world’s leading sugar- producing countries, have caused prices to rise to unprecedented levels.
Another factor contributing to sugar scarcity stems from a change in EU policy, effected back in 2006, when the trading bloc overhauled its “sugar regime”, which had been in place virtually untouched for four decades, in response to a WTO ruling.
The revised regime was to guarantee a regular supply, moderate price fluctuations and make the EU sugar industry more competitive on the world market. As part of the plan, and in an effort to curb overproduction, the EU provided financial incentives for the closure of sugar refineries. Imports were also reduced and supplies diminished accordingly.
The increase in prices for sugar should be good news for our sugar industry which has been grappling with low production, financial and technical problems and a difficult industrial relations atmosphere in recent years.
And frequent, inclement weather has compounded problems with production.
However, the situation in Guyana during the second sugar crop for this year has been filled with optimism and is very likely that the national target of 236,000 tonnes would be met with some 30,000 tonnes needed.
Once the weather holds out, the target should be met. However, CEO of the Guyana Sugar Corporation Mr. Paul Bhim has pointed out that the industry has been hit by another snag and that is poor turnout by workers which in recent weeks stands at an average of 54%.
This, indeed, is cause for alarm and GUYSUCO along with the unions representing sugar workers should examine this issue seriously because it is pivotal with respect to increased production and turning around of the industry.
One of the factors contributing to the low turnout by sugar workers is the lure from the booming construction industry where many of them are opting to work with contractors because the pay is handsome.
One of the solutions to the labour shortage could be the recruiting of workers from non-sugar producing communities such as the Essequibo Coast and islands, and even outside of Guyana. But before this could be done, a proper feasibility study will have to be carried out as well as consideration of other factors such as whether this will not trigger industrial unrest.
What is certain is that GUYSUCO cannot afford to continue to be bogged down by labour shortages as this will definitely have an adverse impact and affect the long-term viability of the sugar industry and the national economic well-being.
