world sugar business

8/10/2019 World Sugar Business

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GLOBAL SUGAR BUSINESSA case Study of Bangladesh

Submitted to

Dr. MD. Hasibur Rashid

Professor

Dept. of MIS

University of Dhaka

Submitted by:1. Md. Rahat 06-02

2. Abid Hossain Khan 06-45

3. Sraboni Debnath 06-56

4. Farjana Yeasmin 06-64

5. Niaz Mahmud 06-65


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Acknowledgement

Completion of this report has made us grateful to a number of persons. First of all I

would like to acknowledge my teacher Dr. MD. Hasibur Rashid who gave us the golden

opportunity to do this wonderful report, which also helped us in doing a lot of Research and we

came to know about so many new things. We are very grateful for giving us the valuable

opportunity to do our assignment and supporting us with knowledge and resources.


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PrefaceThe production of sugar has

shaped our world throughout

the centuries. From its humblebeginning, to its royal

induction it has now made a

household name as a necessity.

It has changed our society into

sugar addicts with a never

ending urge for sweetness.

Production of this craving has led to an over abundant consumption. Consumption so great that is

has defined humans through culture and history. The journey has marked the path of this once

less then famous compound into a substance that is in everything our society consumes today.The history of sugar can be traced through the years as a milestone in many nations and as an

economical splendor. It is a crop that changed the meaning of the word sweet.

Sugar, chemically speaking, is an organic compound called sucrose, which is made up of two

simpler sugars. It is composed of twelve carbons, twenty-two hydrogens, and eleven oxygen

atoms. They form two structural rings, a glucose and a fructose ring. Sugar can be extracted from

many different sources. Throughout history sugar cane has been the most important. There are

six different types of sugar cane. The one know best is the Saccharum offcinarum which is the

main source of sucrose. The process of extraction is in a series of steps which involved a great

deal in precision of changing temperatures. Changing the state of the juices helps isolate thesucrose from the rest. After the sugar cane has been chopped, grounded, pressed, and submerged

in liquid the temperature raises so the water can evaporate. At this point the water boils away

leaving the solution supersaturated. This means the liquid is holding an over abundant amount of

sucrose, a solution can do this at very high temperature. The liquid is slowly cooled and as it

does a crystallized substance forms. The crystal is the solid form of sugar and the syrup left

behind is molasses and is very sweet.


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Abbreviations

BSFIC Bangladesh Sugar & Food Industries Corporation

ACP African, Caribbean and Pacific

EDF European Development Fund

EPA Economic Partnership AgreementEU European Union

LDC Least developed country

FBA Farm Basic AllotmentFIC Forum Island Countries

FJD Fiji Dollar

FNPF Fiji National Provident FundFSC Fiji Sugar Corporation

FSM Fiji Sugar Marketing

FTLO Fair Trade Labelling Organization

GDP Gross Domestic ProductHRD Human Resource Development

ICT Information and Communication Technology

IMF International Monetary Fund

MFS Minor Field StudyNIP National Indicative Program

NLTB Landlords for Native Land

PACP Pacific ACPPICTA Pacific Island Countries Trade Agreement

SCGC Sugar Cane Growers Council

SCOF Sugar Commission of Fiji

SPARTECA South Pacific Regional Trade and Economic Cooperation AgreementSRIF Sugar Research Institute of Fiji

UK United Kingdom

US United StatesWTO World Trade Organization


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Background of sugar in global perspectives:

Sugar is thought to have originated in New Guinea and was spread to Southeast Asia and India.

It is one of the oldest commodities in the world. Commercial production of sugar was started in

India in the fourth century. India has been known as the original home of sugarcane and sugar.

Indians know the art of marketing sugar since the fourth century. Today sugar is produced in 121countries and the global production now exceeds to 120 million tons a year. Approximately 70

percent of total sugar is produced from sugarcane. The remaining 30 percent is produced from

sugar beet a role crop resembling a large parsnip grown mostly in the temperature zones of the

north. In the mid-18th

century German scientists began to refine sugar from root vegetables.

Background of sugar in Bangladesh perspectives:

The climate of Bangladesh is considerably favorable for cane cultivation. In this country

sugarcane is the only raw material for production of white sugar As it is comparatively a drought

tolerant crop, its cultivation is mainly concentrated in the low rainfall bolt of the northern and

north western regions in the old districts of Rajshahi, Kushtia, Jessore, Dinajpur, Rangpur and

Bogra and also in the district of Dhaka and Mymensingh.

Sugarcane is one of the crops cultivated mostly around the world for sugar and lot of purposes.

Brazil is the largest sugarcane producer country in the world. Bangladesh also produces a portion

of the total sugarcane. And this sugarcane is the main ingredients for producing the sugar in all

over the world.


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Bangladesh Sugar & Food Industries Corporation

Bangladesh Sugar & Food Industries Corporation (BSFIC) emerged as a single corporate body

from 1st July, 1976 due to merging of two separate Corporations vlz. Bangladesh Sugar Mills

Corporation (BSMC and Bangladesh Food & Allied Industries Corporation (BFAIC)which were

established under presidential Order No. 27 of 26th march , 1972.

Aims & Objectives of the Corporation: Production of high yielding A high sucrose content sugarcane In mills zone through

extension activities,

Maintain stable price of sugar in the domestic market through efficient marketing.

To undertake BMR/BMRE works of existing sugar mills as well as to take steps for establish

sugar mills with a view to attain self- sufficiency in sugar.

Regaining Bangladesh market for sugar mill machinery

In 2011 Prime Minister Hasina Wajed announced to make the eight loss-incurring sugar millsprofitable through undertaking balancing, modernization and replacement (BMRE) and

diversifying the products/bye-products by installing ethanol refineries and distilleries in another

three sugar mills.

Bangladeshs sugar industry is dominated by the public sector and all the 15 integrated sugar

mills are managed by the Bangladesh Sugar and Food Industries Corporation (BSFIC). The

cumulative installed capacity of these sugar mills is 7.5 million tons of cane crushing, or 215,000

tons of sugar, annually.

Production of sugarcane in Bangladesh perspectives:

Year Area (hactors) Production (tons)

2012 107621 4603003

2011 116175 4671348

2010 117500 4490812

2009 126261 5232649

2008 129473 4983656


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Production of sugarcane in Asia perspectives

Country Production Percentage

India 347870000 82%

Pakistan 58397000 13%

Iran 6000000 1.5%

Bangladesh 4603003 1%

Nepal 2930047 0.69%

Srilanka 673470 0.16%

Afghanistan 77500 0.018%

Bhutan 14000 0.003%

Production of sugar in Bangladesh:

On an average every year Bangladesh produce 7.3 million metric tons sugarcane from 0.43

million acre area. On the other hand, Country total demand is 10-12 lacs metric tons sugar where

1.5 lac tones produce by the country and rest of the demand total come from abroad by

importing. Without government industry In Bangladesh three private sugar industries also

produce sugar. Among them the total production of Meghan group is assume to be 6 lac metrics

ton. Country total demand is 10-12 lacs metric tons sugar where 1.5 lac tones produce by thecountry and rest of the demand total come from abroad by importing. Most of the portion of

importing sugar is come in an invalid way in our country.

A list of sugar Manufacturers Company in Bangladesh

Zeal Bangla Sugar Mills Ltd.

Thakurgaon Sugar Mills Ltd.

Shyampur Sugar Mill Ltd.

Setabgonj Sugar Mills Ltd. Rangpur Sugar Mills Ltd.

Rajshahi Sugar Mills Ltd.

Panchagar Sugar Mills Ltd.

Pabna Sugar Mill Ltd.

North Bengal Sugar Mills Ltd.

Natore Sugar Mills Ltd.

Mobarakgonj Sugar Mill Ltd.

Kushtia Sugar Mills Ltd. Jaypurhat Sugar Mills Ltd.

Faridpur Sugar Mills Ltd.

Carew & Co (Bd) Ltd.
http://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/zeal-bangla-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/zeal-bangla-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/thakurgaon-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/thakurgaon-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/shyampur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/shyampur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/setabgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/setabgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rangpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rangpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rajshahi-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rajshahi-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/panchagar-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/panchagar-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/pabna-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/pabna-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/north-bengal-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/north-bengal-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/natore-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/natore-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/mobarakgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/mobarakgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/kushtia-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/kushtia-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/jaypurhat-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/jaypurhat-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/faridpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/faridpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/carew-co-bd-ltd.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/carew-co-bd-ltd.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/carew-co-bd-ltd.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/carew-co-bd-ltd.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/faridpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/faridpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/jaypurhat-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/jaypurhat-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/kushtia-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/kushtia-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/mobarakgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/mobarakgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/natore-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/natore-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/north-bengal-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/pabna-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/pabna-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/panchagar-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/panchagar-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rajshahi-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rajshahi-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rangpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/rangpur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/setabgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/setabgonj-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/shyampur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/shyampur-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/thakurgaon-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/thakurgaon-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/zeal-bangla-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/zeal-bangla-sugar-mill.htmlhttp://www.bsfic.gov.bd/index.php/mills-factories-under-bsfic/zeal-bangla-sugar-mill.html


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Lists of sugar importing country in Bangladesh:

Moon trading company.

Richi international.

Al-hasan and company.

Panacea international limited.

Problem of sugar production in Bangladesh:

Cultivators fall in continuous loss curve for

Production cost high where low price from manufacturer mills factory.

Insects Attract and lack of proper prevention on time.

Soil erosion in the cultivated field and damage of crops.

Ancient machinery of mills factory.

Importing curve upright

Improper control of the statutory body.

Govt. less compensation to the industry Recovery Problem

Sales Problem

These problems hamper the production of sugar in Bangladesh. So the production rate is

decreasing day by day and we have to import sugar to meet our daily demand. So, we the general

public and the government should work hand in hand to remove the problem and grows more

sugar.

Recommendations for Sugar Mills Ltd:

The first and foremost recommendation is to increase the price of sugar according to the

production cost.

The recovery of the sugar must have to be increased.

Ensuring quick procurement of the cane and quick payment of price.

Managing training facilities for the farmer to develop their efficiency.

Purchasing sufficient Vehicles to remove the transportation problem.

Purchasing modern machinery and equipment to remove the machinery problems.

Removing production problem by implementing modern technique.

Sufficient credit should be given to the farmers. Ensuring political stability to produce the normal production.

Eradicating illegal pressure by the labor union and establishing good industrial relation.

Government has to reform import policy to protect the sugar industry.

Reduce intermediates between mills factory and farmers.

Supplying sufficient capital etc.


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If the recommendation methods are used properly the problems have to be overcome in some

ways. So, these steps should be taken carefully to increase the production and also inspire the

farmers to grow more sugarcane. So the mills produce more sugar to use the sugarcane.

Number of diabetic patient in Bangladesh:Total number of diabetic patient in Bangladesh is 84 lac. Health and family ministers

Mohammad Nasim said that in April 2014. Data is given by BBS. (News today 3rd

April 2014)

As the number of the diabetic patient is increasing in Bangladesh the uses of sugar is also

decreasing because the patient is not using sugar. As the rate of the sugar uses is decreasing the

production is also decreasing.

Uses of sugarcane:

Extract sugar from the juices to purify into table sugar.

Suck the juices out of section of the cane as a kid treat.

Burn the empty cane as fuel.

Business market operation of sugar:

By following the supply chain model the sugar is transported from the various stages of the

supply chain and finally goes to the consumer from the supplier.


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World

Sugar is an important global trading commodity. In countries with a moderate climate, especially

Western, Central and Eastern Europe, as well as the United States, China and Japan, sugar is

produced from sugar beets, whereas in tropical and subtropical areas it is extracted from sugar

cane. The most important sugar producing countries are: Brazil, India, Thailand, China,Australia, Mexico, Cuba and the United States. In total, sugar is produced in 113 countries

around the world. Seventy-one countries produce sugar from sugar cane, thirty-five only from

sugar beets, and seven from both plants.

Development of total world sugar production in comparison to cane and beet sugar

production

Since the end of the eighties, increases in global sugar production have been mainly attributable

to sugar cane. In contrast, beet sugar production during the same period has remained relatively

steady at about thirty-three million tones. Sugar cane and beet sugar production will reach 138

million tonnes and thirty-eight million tonnes respectively in fiscal 2011/12. Beet sugar accounts

for about twenty-two percent of total production.

World sugar production and consumption

Since the late eighties, the growth of world sugar production are ascribed to the cane sugar. In

contrast, the beet sugar production is moving in the same period, with around 35 million tonnes

at virtually the same level. In the marketing year 2012/13, around 145 million tonnes of cane

sugar and 38 million tonnes of beet sugar produced. The proportion of beet sugar to total

production is around 21%.


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Production

More than 130 countries produce

either sugarcane or sugar beet,

and ten of these produce sugar

from both cane and beet crops.2Sugarcane, on average, accounts

for 75 to 80 percent of global

production per year, and

developing countries produce

about 70 percent of total global

output. Production has become

increasingly concentrated since 1980, when the top ten producing countries accounted for 56

percent of global output compared to 2004, when the top ten accounted for 69 percent.

The largest sugar producing countries in the world consist of both beet and cane sugar producers,

which combined account for more than 70 percent of global output. Brazil, Australia andThailand, included amongst the list of the top ten sugar producing countries from sugarcane, are

also considered amongst the lowest cost and efficient of global sugar producers. All three are

also ranked amongst the top ten sugar exporting countries. Sugar output in the United States,

China and Pakistan is derived from both sugar beet and sugarcane crops. Domestic production in

the EU and the Russian Federation is derived from Sugar beet.

World sugar production- 1 000 t Rw -

2010/11 2011/12 2012/13

EU 15 524 18 604 17 143

Europe 24 656 30 751 28 599

North America 18 857 20 515 22 725

South America 46 214 42 997 50 456

America 65 071 63 512 73 181

Asia 61 406 66 192 65 225

Africa 10 324 10 667 11 414

Oceania 3949 4217 4658

Overall 165 406 175 339 183 077

Rw = raw


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Consumption

Developing countries account for 67 percent of global sugar consumption, and are expected to bethe primary sources of future demand growth, particularly in Asia. Global consumptioncontinues to expand, averaging between 1.5 to 2 percent, driven largely by rising incomes,

population growth and shifting dietary patterns.

The top ten sugar consuming countries account for 64 percent of global sugar consumption,

largely based on population balance, particularly in the case of the EU, and the United States,

where sugar demand is largely saturated and mostly keeping pace with population growth rates.Sugar consumption is only one part of total sweetener consumption in the case of the United

States, where more high-fructose (corn-based) sweetener is consumed annually per capita than

sugar. Globally, sugar consumption has continued to grow over the past decade, from 20.7 to

23.2 kgs, driven primarily by higher population and income growth in developing countries,particularly those in the Far East.

World sugar consumption

- 1 000 t Rw -

2010/11 2011/12 2012/13

EU 18 709 18 831 18 929

Europe 30 710 31 076 31 131

North America 19 585 19 741 20 273

South America 20 575 21 018 21 198

America 40 160 40 760 41 471

Asia 71 794 74 914 76 751

Africa 16 356 17 086 17 635

Oceania 1703 1703 1707

Overall 160 723 165 538 168 695

Rw = raw


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Top 10 Largest Sugar Cane Producers in the World were as follows

Rank Country Production

(Tonnes)

1. Brazil 672,157,000

2. India 285,029,000

3. China 116,251,272

4. Thailand 66,816,400

5. Pakistan 50,045,400

6. Mexico 49,492,700

7. Colombia 38,500,000

8. Philippines 32,500,000

9. Australia 30,284,00010. Argentina 29,000,000

Brazilis the worlds Biggest Sugarcane producing country in all over the nations with a total

production of 672,157,000 tonnes. While India is the 2nd biggest producer after Brazil.

International Sugar Exporters


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The international export market is dominated by Brazil. This concentration is set to increase

over the next decade, giving Brazilian producers greater power to influence prices. Even

countries which can produce sugar relatively cheaply face being undercut by Brazil, since itsproducers can turn large volumes onto the world market at any one time.

International TradeInternational trade is largely defined by preferential trade agreements in which sugar producingcountries enjoy access to the higher priced domestic markets of the EU or USA through

preferential access. Trade under preferential agreements is very important to the sugar sectors of

many developing countries. Sugar trade between African Caribbean and Pacific countries (ACP)

and the European Union, for example, is regulated by two agreements: the ACP/EU Sugar

Protocol and the Agreement on Special Preferential Sugar (SPS). Other significant trade

agreements in international sugar markets include everything but Arms (EBA) initiative,

Caribbean Basin Initiative (CBI), African Growth and Opportunity Act (USA), North American

Free Trade Agreement (NAFTA), and the Southern Africa Customs Union (SACU). FAO studies

have found that EU sugar policy reform implies an erosion of preferences for the ACP countries

that export to the EU under the Sugar Protocol, with potential gains for LDCs due to the

implementation of the EBA initiative, primarily over the medium to longer term.

Key characteristics of the international sugar market

Cane sugar is the primary source of internationally traded sugar, as sugar beets are grown and

processed almost exclusively for internal domestic markets, and the most efficient sugar beet

processing technologies result in one-step production for refined (white food grade standard)

sugar. Sugarcane is harvested and milled into raw sugar (non-food grade) to further refine at

some later date or immediately refined into white (food grade) sugar. Specifications for sugar

purchases will vary according to the specific applications of the end users, with trade volumes

and prices broadly categorized as raw or refined types of sugar. Sugar polarity, or degree ofrefining purity, is a measurement of the degree of purity of the sugar (based on molasses

content), how close the color of the sugar is to pure white and dextran content. Dextran is the

fibrous content of the sugar that develops when sugarcane is cut during harvest, which tends to

make refining the cane more difficult. Polarization is what distinguishes raw from refined sugar,

with polarity at 100 percent signifying pure refined sugar. Raw sugar trades according to various

polarity specifications, based upon the specific needs of refining and processing facilities as well

as refinery sugar production costs. There are four general sugar product types trade in

international markets based on polarity: refined (white) sugar; semi-refined or direct white (also

called plantation white); very-high polarity raw sugar (VHP); and standard raw sugar. Polarity is

also a key determinant of raw and refined sugar pricing.


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Global Sugar Trade

According to ISO data, world sugar trade averages some 46 million metric tons per year, with

nearly 90 percent based on ocean or seaborne trade. Raw sugar accounts for more than 50

percent of internationally trade volumes. Nearly 12 million tons of global raw sugar trade is

conducted under preferential agreements. Although many countries produce sugar, ten countriesdominate global raw sugar exports, with Brazil, Australia, Thailand, Cuba, Guatemala, South

Africa, Mauritius, Colombia, El Salvador and Fiji, accounting for nearly 90 percent of global

export trade. Brazil, as the largest producing and exporting country in the world, dominates

world trade, accounting for 51 percent of global export trade in 2005, up from 21 percent in 2000

and evidence of the significant expansion of the sugar-ethanol complex in Brazil over the past 10

years. The Russian Federation, EU-25, United States, South Korea and Japan are the worlds

largest importing nations, although India also emerged as an important importer of raw sugar in

2004 and 2005.

Global trade in refined sugar

The top ten exporters of refined sugar account for nearly 80 percent of global refined trade. The

EU, Brazil and Thailand account for a major proportion of global trade, with sporadic entry with

high volumes into the global refined market by India. As the largest white sugar exporter until

2006, the EU consistently exported to the Middle East and West Africa. Although the EU has

been the major exporter of high quality refined sugar in past years, Brazil has steadily gained

market share through exports of a lower quality white sugar. Large destination refineries in the

Persian Gulf are increasingly important as domestic and regional suppliers of refine sugar.

Destination refineries usually import high quality raw sugar (VHP) which helps defray refining

costs. Globally, refined sugar import volumes are much less concentrated amongst the top ten

importing countries than in raw sugar trade. The role of quality in sugar trade Trade in raw sugar

is typically differentiated polarity and color, based on ICUMSA ratings.13 Refineries paypremiums for raw sugar with polarity over 96 degrees.14 The higher the polarity, the less

additional refining throughput is necessary, lowering overall refining costs. Payments of

premiums above or below the notice price against the New York Number 11 raw sugar contract

are determined through polarization samples upon delivery. A standard discount of 5.5 percent is

charged against the contract price when the sampled raw sugar is between 95 to 96 polarities.

Premiums are paid polarity above the contract standard of 96 percent, ranging from 1.5 percent

for 96 to 97 polarity to 3.79 percent for 99.3 percent polarity.

Origin and quality typically differentiate refined sugar trade. The European Union was a

consistent exporter of four to six million tons of high quality refined sugar to the world market,

irrespective of world market prices for 25 years, due to EU subsidies of surplus domestic sugar.

The export subsidies essentially shielded EU exporters from the need to capture sufficient

refining margins in world prices received for their refined sugar, and ensured that the EU would

become the primary supplier for nearly 60 percent averaging four to six million tons - of total

world trade in refined sugar. The WTO ruling against EU sugar export subsidies restricts total

EU exports to an annual limit of 1.3 million tons from 2006/2007, and represents a serious

structural shift in global refined markets.


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Brazil emerged as a major refined sugar exporter in the mid-1990s, introducing very high pol

(VHP) that ranged (in terms of sucrose content, color and purity) between raw and refined sugar.

VHP sugar must have a minimum 99.4 percent polarity. Brazilian cane refiners are generally

able to produce a very high polarity, almost semi-refined, sugar very economically and

efficiently, primarily due to co-production of ethanol and sugar. Brazil VHP sugar currently

dominates world trade in raw sugar and has become benchmark for high quality raw sugar trade.

SUGAR INDUSTRY

Sugar Industry dates back to the very founding of the New World, and has been intricately

entangled with its history. Because of its role in the slave trade, sugar played an important role

not only in the economy but also in how social relations developed in the New World. In theinfamous "triangle trade," English colonies in the Caribbean shipped sugar to England for

refining, and the products went to Africa where traders exchanged them for slaves, who were

brought to the Caribbean plantations to raise more sugar. Sugar plantation work was among the

most brutal and dangerous, as workers labored in oppressive heat and swampy conditions, andwith dangerous tools.

MODERN SUGAR MARKETDespite the end of European colonial rule, many of the tariff agreements continue to follow the

trade patterns established in colonial times. With the emergence of the European Union (EU) asan economic union in the closing years of the twentieth century, agricultural policy coalesced

into the Common Agricultural Policy (CAP) of Europe. The CAP established a system of tariffs

to protect domestic producers from foreign competition. Historically, African, Caribbean, andPacific (ACP) sugar producers were given access to the European market under the CAP through

the Sugar Protocol of the Lom Convention and its successor the Cotonou Agreement.

At the beginning of the twenty-first century, most countries that support their internal sugar price

use a form of the tariff rate quota (TRQ) which is allowed under the Uruguay Round Agreementon Agriculture. The TRQ is a system of two tariffs. The first tariff allows the sale of a fixed

quantity (or minimum access) of a commodity at a lower or first tier tariff. Any quantity of thatcommodity imported above this fixed quantity is charged a higher (typically prohibitive) tariff.Given that the second tariff level is prohibitive, the country can increase the price received by

domestic producers by reducing the fixed quantity imported under the first tier tariff. This is the

policy instrument used by both the United States and the EU to increase the price of sugar for

their respective producers. However, apart from supporting domestic producers, the TRQ givescountries in the EU a mechanism to honor its commitments to the ACP. Specifically, former

colonies can be allocated portions of the minimum access quantity, in essence giving ACP

countries access to a higher internal price of sugar at a low tariff rate. The United States allocates

its first-stage quota in a similar way to a group of forty countries.

Apart from its grounding in historical trade patterns, the international sugar market is alsoaffected by a myriad of regional and global trade agreements. Regional trade agreements involvea small number of countries in the same geographic region. In this context, the agreements

forming the EU are a regional trade agreement. Other regional trade agreements include the

North American Free Trade Agreement (NAFTA) and proposed trade agreements such as the

Free Trade Area of the Americas (FTAA). The effect of each of these trade agreements on sugarmarkets is dependent on the role sugar plays in each group of economies.


17/17

ConclusionBangladesh is pretty much behind in the sugar business compare to the global competition.

Bangladesh produces average quality of sugar and being an importer country in global sugarbusiness, it will take a lot of effort to be a well-known exporter in sugar business. Addressing the

above figures the tragic fact is that in farther ahead Bangladesh will have no bright future in the

international sugar marker. The global sugar market is complex and experiencing fundamentalshifts in terms of the recent focus on sugar as a feedstock for ethanol, the loss of the EU as the

major refined sugar supplier and loss of preferences by many traditional ACP sugar exporters

due to EU sugar reform. At the national level, the range of sugar products and qualities is muchmore extensive than the product quality traded internationally, particularly for large industrial

users and food processors. Sugar should continue to play a key role in the development of the

agricultural sectors of sugar-producing LDCs, many of which have attracted capital investment

in either the expansion of current farm gate production, refining capacity or green fieldingsugarcane refineries. Rapid growth is already underway as some of the most efficient sugar-

producing LDCs start to expand production and processing facilities to capitalize on duty-free

access.

References:Encyclopediaen.wikipedia.org

Suedzucker
http://www.encyclopedia.com/topic/Sugar_industry.aspx#2http://www.encyclopedia.com/topic/Sugar_industry.aspx#2http://en.wikipedia.org/wiki/Sugarhttp://en.wikipedia.org/wiki/Sugarhttp://www.suedzucker.de/en/Zucker/Zahlen-zum-Zucker/Welt/http://www.suedzucker.de/en/Zucker/Zahlen-zum-Zucker/Welt/http://www.suedzucker.de/en/Zucker/Zahlen-zum-Zucker/Welt/http://en.wikipedia.org/wiki/Sugarhttp://www.encyclopedia.com/topic/Sugar_industry.aspx#2

world sugar business

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