7 Reasons Why Sugar Cane Export is a Lucrative Business
Sugar cane is one of the most widely cultivated crops in the world, producing about 80% of the global sugar supply. Sugar cane export is a lucrative business for many countries, especially those with favorable climatic conditions and low production costs. Here are seven reasons why sugar cane export is a profitable venture:
1. High demand and consumption
Sugar is an essential ingredient in many food and beverage products, as well as a source of energy and nutrition. The global consumption of sugar was estimated at 174 million tonnes in 2020, and is expected to grow at a compound annual growth rate (CAGR) of 2.9% from 2021 to 2026. The major consumers of sugar are India, China, the European Union, Brazil, and the United States.
2. Diversified products and markets
Sugar cane can be processed into various products, such as raw sugar, refined sugar, molasses, ethanol, bagasse, and electricity. These products have different applications and markets, ranging from food and beverage, pharmaceutical, cosmetic, biofuel, animal feed, to power generation. This diversification reduces the risk of market fluctuations and increases the value-added potential of sugar cane.
3. Competitive advantage and preferential access
Some sugar cane exporting countries have a competitive advantage over other sugar producers due to their natural endowments, such as fertile soil, abundant rainfall, long sunshine hours, and low labor costs. For example, Brazil is the world’s largest sugar producer and exporter, accounting for about 40% of the global market share in 2020. Brazil has a low cost of production of about $0.12 per kilogram of sugar, compared to $0.35 in India and $0.40 in Thailand. Some sugar cane exporting countries also enjoy preferential access to certain markets through trade agreements or preferential tariffs. For example, the African, Caribbean, and Pacific (ACP) countries have duty-free and quota-free access to the European Union market under the Economic Partnership Agreements (EPAs).
4. Environmental benefits and sustainability
Sugar cane production and processing can have positive environmental impacts, such as reducing greenhouse gas emissions, enhancing soil quality, conserving water resources, and promoting biodiversity. Sugar cane can also contribute to the transition to a low-carbon economy by providing renewable energy sources, such as ethanol and electricity from bagasse. Ethanol can be blended with gasoline to reduce fossil fuel consumption and emissions, while electricity from bagasse can be used to power the sugar mills or sold to the grid. According to the International Renewable Energy Agency (IRENA), bioenergy from sugar cane can potentially avoid 1.8 gigatons of carbon dioxide equivalent (CO2e) emissions per year by 2050.
5. Social benefits and development
Sugar cane production and export can generate social benefits and development opportunities for many rural communities in developing countries. Sugar cane can create direct and indirect employment for millions of people along the value chain, from farmers to mill workers to transporters. Sugar cane can also improve the livelihoods of smallholder farmers by providing them with income, food security, and access to credit and inputs. Sugar cane can also support rural development by stimulating infrastructure development, such as roads, irrigation systems, schools, and health facilities.
6. Innovation and technology
Sugar cane production and export can benefit from innovation and technology adoption, which can improve productivity, quality, efficiency, and profitability. Some examples of innovation and technology in the sugar cane sector are:
Precision agriculture: The use of satellite imagery, drones, sensors, GPS, and artificial intelligence to monitor crop growth, soil conditions, pests, diseases, and weather patterns.
Mechanization: The use of machines to perform tasks such as planting, harvesting, transporting, and milling sugar cane.
Genetic improvement: The development of new varieties of sugar cane that are more resistant to pests, diseases, drought, and frost, and have higher yields and sucrose content.
Biotechnology: The application of biotechnology techniques such as tissue culture, genetic engineering, and gene editing to enhance the traits of sugar cane or create new products from it.
Circular economy: The adoption of circular economy principles such as reducing waste, reusing materials, and recycling resources in the sugar cane value chain.
7. Future prospects and opportunities
Sugar cane export has a bright future ahead, as there are many prospects and opportunities for growth and innovation in the sector. Some of these are:
Increasing demand for biofuels
As the world seeks to reduce its dependence on fossil fuels and mitigate climate change, the demand for biofuels such as ethanol and biodiesel is expected to increase. According to IRENA, the global biofuel consumption could reach 750 billion liters by 2050, up from 150 billion liters in 2018. Sugar cane ethanol is one of the most efficient and sustainable biofuels available, as it has a high energy balance and a low carbon footprint.
Expanding markets for non-food products
Sugar cane can be used to produce a variety of non-food products, such as bioplastics, biochemicals, biopharmaceuticals, and biomaterials. These products have high value-added potential and can replace petroleum-based or synthetic products in various industries, such as packaging, textile, cosmetic, and medical. According to a report by Grand View Research, the global bioplastics market size was valued at $6.7 billion in 2020 and is projected to grow at a CAGR of 16.1% from 2021 to 2028.
Exploring new markets and regions
Sugar cane export can explore new markets and regions that have a growing demand for sugar and its derivatives, such as Africa, the Middle East, and Asia. These regions have a large population and a rising income level that drive the consumption of sugar and sweetened products. Sugar cane export can also take advantage of the trade liberalization and market integration initiatives that are taking place in these regions, such as the African Continental Free Trade Area (AfCFTA), the Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Sugar cane export is a lucrative business that offers many benefits and opportunities for the producers, processors, traders, and consumers of sugar and its derivatives. Sugar cane export can contribute to the economic, environmental, social, and technological development of many countries and regions, as well as to the global efforts to combat climate change and achieve the Sustainable Development Goals (SDGs). Sugar cane export can also leverage its competitive advantage, diversification potential, innovation capacity, and future prospects to expand its market share and profitability in the global sugar industry.
Sugar Cane Export: A Global Overview
Sugar cane is a tropical crop that serves as both a food and a fuel source. It supplies 86% of the world’s sugar and is also used to produce ethanol, a biofuel. The global market for sugar cane is influenced by various factors, such as consumption patterns, weather conditions, trade policies, and environmental concerns. In this blog post, we will explore some of the trends and challenges of sugar cane export in the world.
Sugar Cane Production and Consumption
According to the International Institute for Sustainable Development (IISD), the global production of sugar cane reached 1.9 billion tonnes in 2016, with Brazil, India, China, Thailand, and Pakistan being the top five producers. The global consumption of sugar cane was estimated at 1.7 billion tonnes in 2016, with India, China, Brazil, Indonesia, and Pakistan being the top five consumers. The main drivers of sugar cane consumption are population growth, urbanization, income growth, and changing dietary preferences. The demand for sugar cane is expected to increase in Asia and Africa, where per capita sugar consumption is still below the world average.
Sugar Cane Trade and Export
The global trade of sugar cane and its products (raw sugar, refined sugar, ethanol) was valued at USD 24.7 billion in 2017, according to the Observatory of Economic Complexity (OEC). The main exporters of raw sugar were Brazil (USD 11.4 billion), India (USD 1.57 billion), Australia (USD 1.1 billion), Thailand (USD 668 million), and Mexico (USD 439 million). The main importers of raw sugar were Indonesia (USD 2.3 billion), the United States (USD 1.7 billion), Bangladesh (USD 1.1 billion), China (USD 1 billion), and Algeria (USD 857 million).
The export of sugar cane and its products is influenced by various factors, such as exchange rates, production costs, subsidies, tariffs, quotas, and sanitary and phytosanitary measures. The global market for sugar is characterized by high volatility and price fluctuations due to supply and demand imbalances. For instance, between 2020 and 2021, the exports of raw sugar grew by 11%, from USD 13.4 billion to USD 14.9 billion, while the exports of sugar cane decreased by 96%, from USD 1.82 million to USD 73.4 thousand.
Sugar Cane Sustainability and Certification
The cultivation and processing of sugar cane have significant environmental and social impacts, such as greenhouse gas emissions, water pollution, soil erosion, biodiversity loss, land use change, labor rights violations, and health risks. To address these issues, several voluntary sustainability standards (VSSs) have been developed to promote best practices and certify sustainable sugar cane production. Some of the most prominent VSSs for sugar cane are Bonsucro, Fairtrade International, and Organic.
According to the IISD, VSS-compliant sugarcane accounted for at least 3.2% of total sugarcane production in 2016. Bonsucro was the largest VSS for sugarcane in terms of production volume (51 million tonnes), followed by Fairtrade International (7 million tonnes) and Organic (4.9 million tonnes). The main benefits of VSS-compliant sugarcane are improved productivity, reduced environmental impacts, increased market access, enhanced reputation, and better social conditions.
References:
http://www.worldagroforestry.org/sea/Publications/files/poster/PO0251-10.PDF
https://www.iisd.org/system/files/publications/ssi-global-market-report-sugar.pdf
https://oec.world/en/profile/hs/raw-sugar-cane
https://oec.world/en/profile/hs/sugar-cane
https://www.fas.usda.gov/data/commodities/sugar
https://en.wikipedia.org/wiki/Sugar_industry_of_the_United_States
https://en.wikipedia.org/wiki/Sugarcane
https://oec.world/en/profile/hs/sugar-cane
https://www.iisd.org/system/files/publications/ssi-global-market-report-sugar.pdf
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