SUGAR MARKETS

world sugar
markets and
support policies

Field

how the sugar market is shaped and influenced

Sugar beet

in summary

Sugar is a high profile commodity both politically and in terms of trade in many of the world's key producing regions. Its production (whether from cane or beet) is also highly capital intensive, requiring large scale operations to be competitive. This summary covers how a handful of leading producers and their countries' support policies impact the market.


For more information, download an introduction to the global sugar markets pdf.


DOWNLOAD PDF

Illovo sugar

production
is highly
capital
intensive

...requiring
large scale
operations
to
be competitive

In summary - factory
seven influential producing countries
and key facts

World sugar production and trade is dominated by a small number of influential producing countries. The seven producers reviewed in this summary (Australia, Brazil, Canada, the EU, India, Thailand and the USA) contribute to over half of global production, and Brazil and Thailand account for about half of cross border trade.

Select an influential producing country to reveal key facts.

Brazil

Brazil is the single most important player and price setter on the world sugar market, accounting for one-fifth of global production and over 40% of its exports.

produces

40.0

million tonnes annually

1/5

of global production
domestic consumption

11.2

million tonnes annually

Thailand

Thailand is the world's second largest sugar exporter after Brazil. It operates one of the most protectionist sugar policies in the world.

produces

11.0

million tonnes annually
sugar price 2014/15

30%

higher than the world market price
domestic consumption

2.8

million tonnes annually

India

India is the world's largest sugar consumer and its the second largest producer. It is one of the most influential "swing suppliers" to the world market.

produces

26.0

million tonnes annually
Cane price is

20%

higher than the national average
domestic consumption

25.5

million tonnes annually

EU

Until 2005 the EU operated a protectionist sugar policy. This has been progressively dismantled by two substantive reforms in 2006 and 2013.

produces

18.0

million tonnes annually
one-quarter of sugar production is worth

€180

million per year
domestic consumption

16.5

million tonnes annually

USA

The USA is a deficit producer with minimal exports, and its support policy is differently structured from most other countries.

produces

8.0

million tonnes annually

85%

Domestic Sugar Consumption
domestic consumption

11.1

million tonnes annually

Australia

Australia is a relatively small producer in global terms, but is a significant net exporter. It has relatively little support for its sugar sector due to EU arrangements.

produces

5.0

million tonnes annually

  4,000

cane
growers in
seven milling
companies
domestic consumption

1.2

million tonnes annually

Canada

Canada has only a small domestic sugar industry and imports the majority of its domestic requirements in the form of raw sugar, processed by its portside refineries.

produces

0.1

million tonnes annually

90%

of demand
comes from
3 port side
refineries
domestic consumption

1.3

million tonnes annually

operating in a residual market

The world sugar market is a residual market characterised by extreme volatility, which often trades below global costs of production1. Government sugar policies in a handful of countries, notably Brazil, Thailand and India, have a substantial effect on the world sugar market’s supply-demand balance and consequently on its trading price level. It is therefore not a normal clearing market and cannot be used as a sustainable ‘benchmark’ on which to base sugar industry policies or strategies.

support policies and subsidies

Most global producers – in particular Brazil, Thailand and India – have responded to these conditions by developing a substantial mix of policies and subsidies to support domestic production. Collectively these support policies have a profound distortionary effect on the world sugar market (see country case studies for policies and subsidies).


MORE ON CASE STUDIES


sugar

designated

sensitive

as a result of these factors
sugar is normally designated a 'sensitive' product in international trade negotiations, a status which is recognised by the World Trade Organisation (WTO)








schedule of safeguards and concessions

WTO notifiable


These are usually WTO notifiable and include: quota systems, export subsidies, sugar and cane price
setting, and direct aid for farmers or processors. These are commonly used in Thailand, India and the USA.

These are often not WTO notifiable and include: general (decoupled) agricultural support, loans,
debt write-off, taxation schemes, differential import duties, market intervention tools and cross-subsidies.
These are more prevalent in Brazil, the EU, Australia and Canada.


not WTO notifiable


countries' support policies case studies

The following case studies review the sugar support policies used by seven influential producing countries.

References

  1. USDA 1970-2015, LMC International 2014, compiled by the American Sugar Alliance
Making sense of sugar


For more information, download an introduction
to the global sugar markets.


AB Sugar China Azucarera British Sugar Germains Seed Technology Illovo Sugar Group Vivergo Fuelds