The mood was upbeat at the 26th annual consultation of the World Association of Beet and Cane Growers (WABCG) and the International Sugar Organization (ISO) in London. A record number of delegates attended the event at the International Coffee Exchange Nov. 16 that preceded the ISO seminar Nov. 17-18. Participation has been steadily increasing.
More than 130 delegates representing 31 countries attended. This year the WABCG welcomed new member countries Nicaragua, Honduras and Belize.
While sugar growers all over the world continue to face challenges, the overall outlook is optimistic for the sugar industry. Economists at the ISO forecasted that world production will fall short of consumption this year, for the first time in six years, and again next year.
“There is a strong optimism that the recent recovery of the world price—from 11 to 12 cents in October to 14 to 15 cents in November—is not a fluke,” said Jack Roney, director of economics and policy analysis at the American Sugar Alliance. “There is an expected deficit this year of 3.5 million tons and possibly 7 million tons next year. World stocks have been high but as these are drawn down in 2015 and 2016 a return to 20-cent prices could occur.”
After opening statements from WABCG President Roy Sharma of South Africa and ISO Executive Director Jose Orive, delegates discussed trends in the beet and cane industry and gave updates on their respective countries.
“There are many weather concerns,” said David Thompson, the United States delegate to the WABCG. “Thailand and Tanzania are experiencing drought conditions, and Japan is also very dry. Growers worldwide are worried about warmer temperatures resulting from El Nino. In the U.S., we are concerned about the effect these warmer temperatures could have on our beet piles.”
Delegates also heard about efforts to improve the relationship between growers and millers in India and received an overview of the potential impact of the Trans-Pacific Partnership on Japan’s sugar industry. There was also discussion about sugarcane diseases in South Africa and Australia and the conversion of rice farms to sugar plantations in Thailand.
In Brazil, sugar mills continue to experience significant financial difficulty. More are closing and no new ones are currently being built. However, the falling value of the Brazilian Real to the strong U.S. dollar has shielded Brazil from the world sugar market price decline. It was noted that although the world price declined 10 percent from January to October in terms of the U.S. dollar, in Brazilian Reals the price rose 32 percent. Therefore, as long as the dollar remains strong, world commodity prices, which have virtually all declined this year, will have difficulty recovering.
Plinio Nastari, president and CEO of Datagro Consulting Ltd., told delegates that the sugarcane outlook in Brazil continues to be driven by ethanol. The recent increase in the amount of ethanol allowed to be blended with gasoline rose this year from 25 to 27 percent, and ethanol use of cane rose to 58 percent. Nastari said that the rising flex-fuel make-up of Brazilian cars suggests that the ethanol share of cane could rise to 65 percent within the next 10 years. No predictions were made on whether there will be sufficient cane expansion to accommodate Brazil’s huge level of sugar exports.
Sustainability and agricultural biotechnology were also heavily discussed in London, during a four-speaker session.
“There are different ideas around the world about what ‘sustainability’ means,” said Thompson. “Sustainability was discussed from the perspective of agricultural producers, as well as from a consumer and manufacturer perspective.”
Thompson said that Americans think of sustainability in terms of the environment, whereas Europeans think of sustainability in terms of human dignity.
“In Columbia and Guatemala, ‘sustainability’ is viewed as good worker health and safety and long-term employment,” Thompson said. “Delegates from those countries described the efforts they are making to ensure worker health and safety.”
During a session called “Efficiencies in Beet,” American sugarbeet grower Duane Grant explained the many environmental benefits of agricultural biotechnology in sugarbeets in the U.S. and the resulting yield increases. Grant serves as chairman of the board of directors of the Amalgamated Sugar Company in Idaho and was at the event on behalf of the American Sugarbeet Growers Association.
Consumer perception of agricultural biotechnology is an important topic to sugar growers worldwide.
Australia has developed GMO sugarcane but has not adopted it due to consumer resistance. Brazil will be adopting GMO sugarcane in the next three years, because of its traits for drought, disease and insect resistance. There was heavy discussion among delegates about how it will be received by consumers.
The WABCG made public a study conducted among its 33 members on “How the value of the final product such as sugar, ethanol, or electricity from bagasse is shared between growers and factories throughout the world to determine the price either of beet or cane.”
Bagasse is the fibrous matter that remains after sugarcane or sorghum stalks are crushed to extract their juice. It’s used as a biofuel and in the manufacture of pulp and building materials. Brazilian sugarcane mills learned to harness the energy stored in bagasse by burning it in boilers to produce bioelectricity. As a result, these mills are energy self-sufficient, producing more than enough electricity to cover their own needs. A growing number of mills also generate a surplus, which is sold to distribution companies and helps to light up numerous cities throughout Brazil.
Timothe Masson, WABCG secretary, presented the results. The study concluded that almost everywhere in the world, the price for beet or cane is calculated according to the application of a predefined formula based on the value of the final product, such as sugar, ethanol or electricity from bagasse. It was recommended that this should not be changed in areas where it is currently successful.
Masson said the study found that if the rules are more precise, and more based on a clear segmentation of the share of the final products sold by the factory, then the subsequent discussions are more limited.
“Nowadays, the segmentation, when it exists, is very largely focused on the share of sugar, occasionally on ethanol and very rarely on bagasse used for electricity, despite the strong development of cogeneration over recent years,” according a statement from the WABCG. “In the cane sector, and because of the new uses of bagasse, the balance of the value sharing between grower and miller has thus shifted to the detriment of the grower and the priority is now to adapt the rules of sharing to take account of this new situation.”
The WABCG encourages growers and processors to engage in negotiations in order to set up a mechanism to recognize the value of the whole crop that growers deliver.
“Cane and beet growers welcome the new world sugar market situation,” Masson said. “Entering a new cycle of world deficit, prices should return to a normal level that allows growers to receive a more remunerative price for their production.”
The WABCG/ISO consultation is a valuable experience for grower organizations to learn about what’s happening on an international level, according to Thompson.
“There is a need for more worldwide cooperation,” he said. “We’re all part of the worldwide market whether we like it or not.”