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).
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