Biofuels not to blame for high sugar prices, Brazil avers

The biofuels industry cannot be blamed for the increase in the international sugar prices, states Brazilian Ambassador to South Africa José Vicente de Sá Pimentel.

He says that the current increase of the sugar price on the commodity market has mainly been caused by a reduction of international supply, especially in India. Indian sugar production, which is the second largest in the world, suffered a strong decline in 2009, owing to the reduction in planted areas and irregular rainfall.

Measures taken in recent years have resulted in farmers changing their cultivation. The Indian government also exerts control over the entire sugar production chain, including cultivated areas, plantation, harvest, relations between suppliers and sugar producers and the trading of the product.

However, De Sá Pimentel points out that Brazilian sugarcane production has increased. Despite excess rainfall, the 2008/9 harvest totalled about 563-million tons, well above the 2007/8 harvest of about 495-million tons.

The sugar production has remained stable, even though the greater part of the harvest increase was destined for the biofuels market. He stresses that, not only was there no reduction of the Brazilian sugar production, but there was also an increase in sugar exports. Brazil exported 19 721 t of sugar in 2008, which increased to 24 294 t in 2009.

"High international prices of commodities tend to stimulate the sugarcane industries in Brazil. This diverts their production to supply sugar instead of biofuels to benefit from high international prices. It is important to stress that, contrary to sugar, ethanol is overwhelmingly traded on the Brazilian market," says De Sá Pimentel.

He expects that, in 2010, the world sugar supply will regain previous levels, owing to partial recovery of Indian production, high international prices and the stabilisation of prices of concurrent plantations. However, it is important to bear in mind that the sugar industry remains highly controlled and protected in many countries by quotas, subsidies and import restrictions, which will impair the consistent development of that cultivation and the consistent recovery of sugar supply on the international market in the long- and medium-terms.

source: engineeringnews.co.za