THE DEVELOPMENT IN THE INDUSTRIAL USE OF SUGAR IN CHINA FROM 1970-1996
AND ITS FUTURE PROSPECTS
Prepared for the Sugar and Beverages Group, Commodities and Trade Division by Messrs. Jia Zhiren and Jiao Nianmin.
Since the founding of the Peoples Republic of China, and especially since the reform and opening-up, the sugar industry in China has made rapid progress. The national sugar output (that of Taiwan Province of China province is not included) has developed from 260,000 tons at the early stage of her founding to 6,600,00 tons during 1996/97 campaign, the output had reached 7,910,000 tons in the highest year. China has entered the ranks of major sugar-producing countries. Through the development of over 40 years, the Chinese sugar industry has formed a fairly comprehensive sugar industrial complex from growing of sugar-bearing crops to sugar-producing and comprehensive utilization, from equipment manufacture, civil construction and equipment installation to production, education, scientific research, sales and marketing; the industry also has its completed specialized institutions and professional personnel with fairly high level.
Nowadays, China has 497 sugar factories, with processing capacity of 650,000 tons/day and sugar-producing capacity of 8,500,000 tons/year. Among them, cane sugar factories are 411 ones, with cane-pressing capacity of 560,000 tons/day and sugar-producing capacity of 7,000,000 tons/year; beet sugar factories are 86 ones, with beet processing capacity of 90,000 tons/day and sugar-producing capacity of 1,500,000 tons/year. The location of sugar industrial region nation-wide is as follows: there are 23 sugar-producing provinces and autonomous regions, in which cane sugar is distributed mainly over the 7 southern provinces and autonomous regions of Guangdong, Guangxi, Yunnan, Fujian, Hainan, Sichuan and Jiangxi, with the sugar output accounting for 98% of the national cane sugar output; beet sugar is dispersed over the 7 northern provinces and autonomous regions of Heilongjiang, Xinjiang, Inner Mongolia, Jilin, Gansu, Ningxia and Liaoning, with the sugar output amounting to 97% of the national beet sugar output.
The whole sector has 450,000 employees, in which technicians and engineers are more than 20,000 people, the farmers for growing sugar-bearing crops are over 3,000 people. At present, China has 25 scientific institutions of sugar-making and sugar-bearing crops, 9 designing institutes which set up sugar speciality, 15 universities and colleges and technical secondary schools putting up sugar-making speciality, 4 sugar beet seed companies, as well as 8 machinery plants manufacturing sugar machinery in addition to other machineries.
Since 1970s, sugar production and consumption in China have undergone several different developing periods. Between 1970~1978, the sugar production all the time hesitated between 1,350,000 ~ 2,267,0000 tons, in the same period the sugar consumption between 1,604,000 ~ 2,768,000 tons, and consumption per person between 1.0 ~ 2.9 kg, the consumption per person only grew 1 kg during those eight years.
Since 1978, China has practised the policy of reform and opening-up, her economy has developed rapidly, and the peoples living standard has improved quickly. During the same period, the Chinese government has carried out the policy of rewarding grain for growing sugar-bearing crops, thus solving the contradictory issue of contending for farmland between grains and sugar, the development of Chinese sugar industry had been puzzled by this issue for a long period of time. In addition, our state had increased the investment in the sugar industry during the Seventh Five-Year Plan, developing 4 new sugar-producing bases of Guangxi, Yunnan, Xinjiang and Zhanjiang in Guangdong and increasing sugar-producing capacity, all these had made a rapid development of sugar production. The sugar output had hiked to 8,289,000 tons in 1992 from 2,267,000 tons in 1978, with 266% output increase in 14 years and averaging 19% of annual increase. During the same period of time, the total sugar consumption had also jumped from 2,768,000 tons in 1978 to 7,589,000 tons in 1992, with an increase of 235% in the 14 years and averaging 17% of annual growth. The consumption per person upgraded from 2.9 kg to 6.5 kg.
However, since 1992, because the reform of the production and marketing of grains and sugar brought new contradictions and problems which were not solved properly, and because the readjustment of grains price which made the price ratios between grains and sugar-bearing materials lose their balance, and made the sugar-bearing crops decrease in production, resulting in the drop of the national sugar production for 3 years running, and by 1995, it went down to 5,310,000 tons. But it rose again to 6,337,000 tons in 1996, and it is estimated that it will pick up to 6,650,000 tons in 1997. Since 1992, the sugar consumption has fluctuated for a time, the main reason is the increased utilization of the substitutes.
Over a long period of time, the sugar output in China is not enough for the sales, China imports sugar every year to supplement her domestic insufficiency, and its one of major net sugar import countries (but China once became a net export country in 1992 and 1993).
Before 1991, China carried out fairly strict planned management of sugar purchase and sales, and the sales flow direction was quite clear. Tables 3.1, 3.2 and 3.3 show the breakdown of sales of the industrial use of sugar. From the tables, it can be seen that the main fields in the industrial use of sugar in China are the sectors of confectionery, bakery products,, cans and snacks etc. The percentage of industrial use of sugar makes up about 50% of the national sugar sales. In Table 3.2, this percentage was below 40% after 1983, but considering that sugar directly sold by the sugar factories besides the commercial sale was basically sold to the big sugar end user for industrial use, therefore the percentage of total consumption in the industrial use of sugar should be between 50% ~ 60%. Since 1991, the flow direction of sugar sales has been set free, so it is difficult to find the statistical figures of sales by breakdown, but the basic situation of the industrial use of sugar after 1991 can be calculated according to the development of sugar-use products. From Table 3.3, it can be seen that, at present, the industrial use of sugar in China still concentrates on the sectors of soft drinks, confectionery and bakery products etc., and the proportion of the industrial use of sugar in the total consumption escalated from 55% in 1991 to 66% in 1995. The biggest sugar-use provinces and municipalities are those fairly economy-developed ones along the southeastern coast, such as Guangdong, Shanghai, Jiangsu, Zhejiang, Beijing, Shangdong and Fujian etc.
Industrial use of sugar by sectors
The confectionery industry is a conventional sugar-consuming industry in China, and used to be the sector consuming most sugar in history, the percentage in the industrial use of sugar had once reached as high as 40%. From the beginning of 1970s to the end of 1980s, its sugar consumption increased simultaneously with the development of our national economy. At the end of 1980sand in early 1990s, the confectionery demand had changed with the improvement of the peoples living standard. The output and consumption of conventional and popular candies decreased, while the output and consumption of high-grade sweets and chocolate rose: the total sugar consumption showed slow increase. In the recent years, the confectionery industry has developed in a rapid speed, and its sugar consumption grows fairly fast. In 1991, the sugar consumption in the confectionery industry was 628,000 tons, and in 1995 the sugar consumption in the industry was 801,000 tons, accounting for 17% and 16% of the total sugar consumption in the industry use in that year respectively. It is estimated that the confectionery industry will still be the major sector in the industrial use of sugar in the future 10 years. The Chinese confectionery industry mainly concentrates on the economy-developed provinces and municipalities, such as Shanghai, Guangdong and Beijing etc.
The bakery industry is both an ancient and a rapid developing sector, its sugar consumption has surpassed that in the confectionery industry, only behind that in soft drinks industry. The ends of 1970s and 1980s were the golden age of the industry, when its sugar consumption jumped. In the bakery industry, the production of biscuits and moon cakes consumes more sugar than that of other bakery products. In 1991, the biscuit segment consumed 173,000 tons of sugar, and moon cake segment consumed 200,000 tons of sugar. The total sugar consumption in bakery industry was 693,000 tons in 1991, 785,000 tons in 1995, amounting to 19% and 18% of the total sugar consumption in the industrial use respectively. It is estimated that the sugar consumption in this sector will reach 1,085,000 tons by the year of 2000.
Soft drinks industry
The soft drinks industry is a developing sugar-using industry, and develops most rapidly among the sugar-using sectors. According to the statistics done by the Ministry of Light Industry, at the end of 1970s, the total production of the soft drinks industry was only 200,000 tons or so, with the sugar consumption of about 20,000 tons. Its output has shot up since entering 1980s, and up to 1996, its total production reached 6.5 million tons (the production having not counted up approximately made up 50%), with sugar consumption of
about 1,050,000 tons. When breaking down into regions, the soft drinks production in Guangdong province reaches 2 million tons, accounting for 30% of the national total production; the production in the ten provinces of Liaoning, Zhejiang, Beijing, Shanghai, Fujian, Hubei, Jiangsu, Guangxi, Hainan and Sichuan, is between 100,000 ~ 400,000 tons respectively; the production in the 6 provinces of Shandong, Hebei,, Tianjin, Heilongjiang, Henan and Jilin all surpasses 100,000 tons; the production of the above 17 provinces and municipalities amounts to over 93% of the total soft drinks production nation-wide.
The soft drinks output having not counted up is mostly produced by the small-sized enterprises in the small towns, with mainly using saccharin for their soft drinks production.
It is estimated that the future ten years will still be the highly developing 10 years of the soft drinks industry, and its annual sugar consumption will reach 1,500,000 tons. The soft drinks industry is a sector which uses more of synthetic sweeteners such as saccharin etc. The percentage of sugar substitution with sweeteners such as saccharin depends on the attitude our country takes towards to the utilization of saccharin.
Among the canning industry, fruit cans and the convenience congee cans developed in the recent years are the main varieties using sugar. Since 1970s, the output of fruit cans has been steadily growing up to now, from 77,400 tons in 1970 to 1,050,000 tons in 1996, its sugar consumption has crept up from 10,000 tons to 160,000 tons in the same period of time. The main producing areas of fruit cans concentrate on the provinces and autonomous regions of Zhejiang, Sichuan, Hunan and Guangxi. The convenience Congee etc. are the new sugar-using segments suddenly coming to fore in the 1990s, their present consumption is about 50,000 ~ 60,000 tons/year.
Preserved fruits industry
It is a traditional, sugar-consuming industry, its sugar consumption makes up about 70% of its product output. The highest year of sugar consumption once reached 100,000 tons. In the recent years, its output and sugar consumption have no big changes .However, according to the insiders, with the development of fruit planting, the fruit processing industry is sure to have a big development. Besides the varieties of fruit juice and fruit cans etc., the traditional fruit product ¾ preserved fruits will have a certain development. It is estimated that the sugar consumption of preserved fruits will exceed 170,000 tons in the year of 2000.
Dairy products industry
During the initial stage of the founding of the Peoples Republic of China, the output of dairy products in our country was only several hundred tons, it developed to 47,000 tons by 1978. Since 1978, it had been the most rapid developing period of the Chinese dairy products industry, the output had advanced from 47,000 tons in 1978 to 450,000 tons in 1995. Among the output of dairy products, 80% is milk powder, about 15% is condensed and evaporated milks and the others are yoghurt. Their total sugar consumption is 145,000 tons. The main producing areas of dairy products are: Heilongjiang (28.7%), Zhejiang (9.4%), Hebei (6.6%), Inner Mongolia (6.4%), and Shandong (6.0%). China is one of the countries the consumption per person is low, but at the same time China is one of the countries which develop dairy products fairly fast. With the improvement of the peoples living standard, the dairy products will surely have a big development. The dairy products industry will be one of the sectors which sugar consumption grow fairly fast.
Alcoholic drinks industry
China is a big alcoholic drinks producing and consuming country, the production of fruit wine, wine, rice wine and some spirit all need sugar. At present, their total sugar consumption is at about 138,000 tons. For a period of time in the future, the developing trend of alcoholic drinks in China is towards the low alcohol drinks, with the emphasis on developing fruit wine and rice wine. The sugar consumption in alcoholic drinks industry will show the rising tendency, and it is estimated that by 2000 the sugar consumption in alcoholic drinks will surpass 352,000 tons.
Ice cream industry
Its main products are ice cream etc., its sugar consumption amounts to about 9% of the total sugar consumption in the industrial use. In the recent years, the ice cream industry witnesses rapid development, especially the establishment of large-sized joint ventures in Guangdong, Beijing and Shanghai etc. has promoted the development of ice cream industry.
The sugar consumption in the pharmaceutical industry is one of the most difficult figures to collect. In the planned economic period, the breakdown of sales showed that its sugar consumption was approximately 100,000 tons, mainly used for the Chinese medicine of bolus and concentrated drugs (chongji), the sugar coating of the western medicine as well as some fermented products. All kinds of oral liquid drugs etc. emerged in the recent year are one of the new sugar-using varieties. It is estimated that the sugar consumption in the pharmaceutical industry surpasses 150,000 tons at present.
Generally speaking, the development in the industrial use of sugar in China follows the development of the Chinese national economy and the natural growth of the population. Before 1978, both sugar production and consumption were at a low level. The 20 years since the reform and opening-up have been the quickest developing period of the Chinese economy, and the quickest developing period of the industrial use of sugar, as well. Tables 5.1 and 5.2 show GNP and the population growth in China between 1978 ~ 1995, and Table 5.3 shows sugar price and consumer indices
The influence of substitutes
The main non-sugar sweeteners nowadays used in China are those several kinds: saccharin, stevioside, cyclamates, aspartame as well as polyhydric alcohols and starch sweeteners.
Saccharin is a kind of sweeteners with largest amount of and the longest history of use, its price is the lowest, too. In 1996, the market price of saccharin was RMB 35,000 yuan/t, or RMB 100 yuan/t.s.e., it is the biggest substitute for sugar. Since 1992, our government has taken measures to limit the production and use of saccharin: its production is limited within 12,000 tons, its use is limited within 6,000 tons. The measure had played its role for a time. However, because of a great disparity of price between saccharin and sugar and not effectively enforcing the measure by some departments, saccharin production and use have gained ground at the expense of sugar in the recent years. However, its production and use are often underground. It is very difficult to do the official statistics for those figures. It is estimated that in 1996 its production surpassed 20,000 tons and its use exceeded 10,000 tons, or exceeded tons s.e..
Stevioside. China has started to plant and produce stevioide since 1980s, its output is about 300,000 tons s.e., but its use is not so big. In the recent years, China has been exporting stevia leaves and raw stevioside, and her domestic use is equivalent to about 100,000 tons s.e.. Since its production cost is relatively high, the substitution of stevioside for sugar is not obvious.
Cyclamates. China has started her production since the end of 1980s, and has developed fairly rapidly in the recent year. Its output in 1988 was several hundred tons, and reached 1,500 tons in 1990, and 4,600 tons in 1996, or 230,000 tons s.e.. Cyclamates is one of the limited-use sweeteners like saccharin. Its price is about RMB 36,000 yuan/ton, or equivalent to RMB 720 yuan/ton s.e..
Aspartame and other new-type sweeteners. Since early 1990s, aspartame has been started the production in the cities along the southeastern coast. Its development is not fast because of its fairly high cost. However, the imported aspartame enters the Chinese market with its strong propaganda offensive in the recent years, its consumption begins to rise. It is estimated that the consumption had reached 100,000 tons s.e. in 1996.
In addition, the productions of polyhydric alcohols and starch sweeteners have developed slowly, since their prices have no competitive advantages compared with sugar. The output of polyhydric alcohols is about 45,000 tons s.e.. In addition to export, it is mainly used for the special food for the special group of people (such as diabetics). The production of starch sweeteners has started since the early 1980s. Its production scale is small, its cost is high, and transport and use conditions have also limited its development. Its output is approximately 300,000 tons of commercial quantity. Its future development will depend on the degree of self-sufficiency in grain and grain price in China.
Among all the non-sugar sweeteners, the production costs and selling prices of polyhydric alohols and starch sweeteners are all higher than those of sucrose. However, the using prices of saccharin, stevioside, cyclamates and aspartame etc. are all lower or far lower than that of sucrose, the degree of their substitution for sugar will depend on the product properties itself, the consuming consciousness of the consumers and the attitude to which the country takes.
In the last few years of this century and at the beginning of next century, the economy in China will develop with a fairly high speed, and the average growth rate of her GNP will reach 7%, in which the developing speeds in the industrial use of sugar in foodstuff, beverage sectors etc. will be higher than the everage growth rate of GNP. The following factors will influence on the development in the industrial use of sugar:
It is estimated that by the year of 2010, the sugar consumption in China will be over 11 million tons, in which the proportion of the industrial use of sugar will rise to 70% from about 65% at present, reaching 7.7 million tons. Its main application fields will be the sectors of beverages, confectionery, bakery products and dairy products etc.