Sugar Market

Sugar is a food additive used in drinks and foodstuffs of all kinds. It is produced from sugar cane1 and sugar beets, which currently account for approximately 75 per cent and 25 per cent of the world’s sugar production, respectively.2 Sugar cane is a tall perennial grass native to New Guinea and was first used to produce crystalline sugar in India around 300 BC. Following its migration to Indochina and the Mediterranean by AD 1000, sugar cane production eventually found its way to Latin America through colonialism. Today, the majority of global production comes from Brazil, India and China, and Brazil alone accounts for more than half of all cane sugar exports (Higman, 2013). In 2012, 143 million metric tons of cane sugar were produced from sugar cane harvested on 26 million hectares, equivalent to 0.5 per cent of the world’s agricultural area.3 About one-third of all cane sugar was exported in 2012, for a value of US$17.1 billion (see Table 13.1).

Sugar cane cultivation is an important part of the rural development strategy in many countries, perhaps most notably in Brazil, where in the Cerrado region sugar production was shown to be positively correlated with higher levels of economic and social development (Martinelli, Garrett, Ferraz, & Naylor, 2011). Notwithstanding, the crop has long been the subject of media campaigns highlighting specific cases of forced labour, child labour, and land tenure issues, as well as health-related issues affecting sugar cane cutters.

Sustainability issues within the sugar sector have driven the development of production compliant with four voluntary sustainability initiatives: Organic, Fairtrade, Rainforest Alliance and Bonsucro. Working conditions among sugar cane cutters (Fairtrade) and soil and personal health (Organic) were the main drivers of certification until 2011. The entry of Bonsucro and Rainforest Alliance certified production points toward the use of sugar standards to enable better supply chain risk and environmental management in mainstream channels. In 2012, standard-compliant sugar accounted for 2.7 per cent of all cane sugar production (see Figure 13.1; Figure 13.2 breaks this down by voluntary sustainability standard), and its sales accounted for 1 per cent of global exports.

 

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1. [Sugar cane crushing involves the production of sugar cane juice, which can be used for the production of ethanol or raw sugar, and bagasse, a fiber that is used for energy production, often to power the processing facilities. Additionally, molasses is a by-product of the conversion process of sugar cane juice into raw sugar, and it can be used for the production of alcohol (e.g., rum), ethanol, animal feed or table molasses. Sugar cane processing factories can be one of three types: factories used for the production of raw sugar only (from sugar cane juice), factories used for the production of ethanol only (from sugar cane juice), or integrated factories where sugar cane juice is used for both the production of sugar and ethanol and the molasses by-product (created from raw sugar production) is used for the production of ethanol. Roughly 80 per cent of factories in Brazil use this integrated method, allowing for the production of varying amounts of ethanol or sugar depending on the respective opportunity costs of producing either product (Gopal & Kammen, 2009). This section focuses on sugar production; for more information on ethanol and bagasse produced from sugar cane, see
Section 6.] 2. [Sugar and syrups are also produced from the saps of certain species of maple trees and from sweet sorghum, although total production volumes are insignificant on a global scale (UN Development Programme, 2010b).] 3. [4,911,622,650 hectares in 2011 (Food and Agriculture Organization, 2013).]