El Nino's Sweet Revenge: Sugar Prices Soar as Crops Wither
By April Fowell
The world's sugar prices are at their highest point since 2011, mostly as a result of reduced global supply following extremely dry weather that harmed harvests in Thailand and India, the second and third-largest sugar producers, respectively.
For underdeveloped countries already dealing with shortages of essential foods like rice and trade restrictions that have increased food prices, this is only the latest blow. Because of the combined consequences of the conflict in Ukraine, lower currency, and the naturally occurring climatic phenomena El Nino, all of these factors lead to food insecurity.
(Photo : by JAM STA ROSA/AFP via Getty Images)
The world's sugar prices are at their highest point since 2011, mostly as a result of reduced global supply following extremely dry weather that harmed harvests in Thailand and India, the second and third-largest sugar producers.
Poorer countries are having difficulty absorbing the greater prices, whereas wealthier Western nations can.
According to FAO global commodities market researcher Fabio Palmeri, the organization is projecting a 2 percent drop in world sugar production in the 2023-24 season as compared to the previous year, or a loss of roughly 3.5 million metric tons (3.8 million U.S. tons).
Global sugar stockpiles are at their lowest point since 2009 as a result of rising consumption of sugar for biofuels like ethanol.
Brazil's Sugar Shortage Raises Concerns for Global Import-Reliant Nations
Although Brazil is the world's largest sugar exporter, its crop will only be sufficient to fill shortages in 2024. Until then, nations that rely heavily on imports, such as the majority of those in sub-Saharan Africa, continue to be at risk.
For example, Nigeria imports 98 percent of its raw sugar from foreign nations. In 2021, it launched a $73 million initiative to improve sugar infrastructure and outlawed the import of refined sugar, which went against the aim to increase domestic sugar processing. However, those are longer-term tactics. Abuja merchants, like as Abba Usman, are currently having issues.
Usman now has to pay $81 for the same 50-kilogram (110-pound) bag of sugar that he paid $66 for a week earlier. His clientele is diminishing as costs climb.
El Nino's Impact on Global Sugar Production
The El Nino, a natural phenomena that modifies worldwide weather patterns and can produce extreme weather conditions ranging from flooding to drought, is partially to blame. According to scientists, El Nino is getting stronger due to climate change.
India saw its driest August in more than a century, and crops in Maharashtra, the western state that produces more than a third of the country's sugarcane, were stunted during the critical growth season.
The Indian Sugar Mills Association predicts that this year's sugar production in India would drop by 8 percent. The most populous country in the world, which also consumes the most sugar, is currently limiting sugar exports.
According to Thailand Sugar Planters Association chairman Naradhip Anantasuk, El Nino influences early in the growing season changed both the amount and quality of the crop. Compared to 93 million metric tons (103 million U.S. tons) this year, he anticipates that only 76 million metric tons (84 million U.S. tons) of sugarcane will be processed in the 2024 harvest season.
According to a U.S. The Department of Agriculture forecast Thailand's output to decline by 15 percent in October.
In a matter of days, Thailand reversed a rise in sugar prices and instituted price controls-a first since 2018. Anantasuk said that by limiting their earnings, this would deter farmers from cultivating sugar.
Due in part to government orders that they not burn their crops, which lowers harvesting costs but covers a large portion of Thailand in thick smog, wholesale prices have been permitted to increase in order to assist farmers in meeting their increased expenses.
Looking forward, Kelly Goughary, a senior research analyst at the agriculture data and analytics company Gro Intelligence, predicted that Brazil's crop will be 20 percent larger than that of the previous year. However, because the nation is located in the Southern Hemisphere, the increase in worldwide supply won't occur until March.