Previous PageTable Of ContentsNext Page


3.6.3 Cocoa

Cocoa shares some of the characteristics of coffee in the sense that it is produced exclusively in tropical developing countries and consumed mainly (two-thirds of world consumption) in the industrial countries. However, consumption growth, at 2.4 percent p.a. in the last ten years, has been faster than that of coffee (0.7 percent p.a.). In parallel, the importing developing countries are increasingly providing export outlets: they now account for 12 percent of the exporting countries' net exports, up from only 3 percent in the mid-1970s.

On the exporter side, there have been some radical changes in the relative positions of the different countries. Côte d'Ivoire continues to be the world's largest exporter and has increased its share considerably, to almost 50 percent of the aggregate net exports of the exporting developing countries, up from 33 percent in the mid-1980s and only 17 percent in the mid-1970s (Table 3.22). In contrast, Brazil, the world's second largest exporter up to the late 1980s, had almost disappeared as a net exporter by the late 1990s, mainly as a result of disease that hit production but also because a growing part of production went to increase domestic consumption. Meanwhile, first Malaysia (from the early 1980s) and then Indonesia (ten years later) emerged as major and growing exporters. Between them (but with Indonesia growing and Malaysia declining recently), they have been providing 15-20 percent of the aggregate exports of the net exporting countries in recent years, up from less than 4 percent in the early 1980s.

Consumption per capita is likely to continue to grow in all country groups, although at slower rates than in the past (Table 3.22). The growth of world production, which decelerated sharply in the second half of the 1990s (to under 1 percent p.a. in the five years to 2001), will resume higher rates, but still below those of the longer-term historical period, given the slower growth of per capita consumption and of population. Cocoa prices have been characterized by short booms and long periods of oversupply with depressed prices. The latest trough in prices was in the second half of 2000, with prices around US$900/tonne, down from the previous peak of around US$1700 in mid-1998. Prices recovered to US$1380/tonne in January 2002. World Bank projections foresee little further recovery up to 2015 in real terms.

Table 3.22: Cocoa and products, production, consumption and trade: past and projected

 

'000
tonnes

Growth rates, percentage p.a.

1997/99

1969-99

1979-99

1989-99

1997/99
-2015

2015
-2030

Production*

Developing countries

3000

3.1

3.8

2.1

1.8

1.4

World

3000

3.1

3.8

2.1

1.8

1.4

 

Food consumption (kg/person/year)*

1964/66

1974/76

1984/86

1997/99

2015

2030

Developing countries

0.08

0.06

0.08

0.14

0.17

0.21

Industrial countries

1.37

1.42

1.65

2.08

2.38

2.62

Transition countries

0.40

0.70

0.73

0.87

1.15

1.48

World

0.38

0.37

0.40

0.49

0.52

0.55

 

Net trade ('000 tonnes)*

Industrial countries

-1011

-1070

-1352

-1802

-2310

-2625

Transition countries

-133

-266

-288

-375

-475

-580

Developing countries

1114

1310

1614

2126

2725

3160

   Exporters in 1997/99

1159

1354

1688

2413

3145

3715

       Côte d'Ivoire

133

233

557

1170

   

       Ghana

458

369

194

329

   

        Indonesia

0

0

28

322

   

        Nigeria

232

228

157

163

   

        Cameroon

86

99

108

122

   

        Malaysia

-1

9

102

95

   

        Ecuador

34

64

86

63

   

        Dominican Republic

26

26

35

43

   

        Brazil

107

229

325

31

   

        Other

83

98

97

75

   

   Importers in 1997/99

-45

-43

-75

-287

-420

-560

        Mexico

6

7

4

-40

   

        China (incl.Taiwan Prov.of China and Hong Kong SAR)

-10

-10

-17

-39

   

        Argentina

-11

-10

-14

-26

   

        Philippines

-9

-3

0

-25

   

        Turkey

-1

-2

-4

-20

   

        Korea, Rep.

0

-1

-7

-14

   

        Chile

-2

-1

-4

-13

   

        Other

-20

-23

-33

-110

   

* Cocoa and products in bean equivalent

3.6.4 Sugar

Consumption has been growing fast in the developing countries, which now account for 72 percent of world consumption (up from 52 percent in the mid-1970s), including the sugar equivalent of some 60-65 percent of Brazil's sugar-cane production used in ethanol production (USDA, 1998a). In contrast, consumption has grown very little in the industrial countries, and has declined in the transition economies in the 1990s. An important factor in the stagnation of sugar consumption in the industrial countries has been the rapid expansion of corn-based sweeteners in the United States, where they now exceed consumption of sugar (11.8 million short tonnes dry weight, versus 9.4 million short tonnes of refined sugar). Production of the major sweetener, HFCS, shot up from negligible quantities in the mid-1970s to 5 million short tonnes in the mid-1980s and to 9.7 million short tonnes currently.44

Sugar is produced under heavy protection in the industrial countries, with the exception of the traditional exporters among them (Australia and South Africa) (OECD, 2002). Under this shelter, production grew at 1.5 percent p.a. in the last three decades, at a time when total consumption in industrial countries was not growing. The result has been that these countries turned from net importers of 7.4 million tonnes in the mid-1970s to net exporters of 3.8 million tonnes in 1997/99 (Figure 13.16). This reflected partly the growing exports of Australia, declining imports of the United States and nearly stagnant imports in Japan, but above all it reflected the shifting of the EU from a net importer of 1.9 million tonnes to a net exporter of 4 million tonnes. As a result, the net exports of the developing exporters showed little growth from the late 1970s to the mid-1990s and shot up only in the second half of the 1990s as several developing countries became major importers.

A major characteristic of these developments is that the low prices prevailing in world markets acted as a disincentive to production in countries that failed to improve productivity and, together with the rapid growth of their own consumption, contributed to turning several traditional exporting developing countries into net importers. These include countries such as the Philippines, Peru and Taiwan Province of China. Collectively, they were net exporters of 2.2 million tonnes in the mid-1970s. They now have net imports of 0.7 million tonnes.

Consumption in the developing countries is projected to continue to grow, from 21 kg person/ year currently to 25 kg in 2030 (Table 3.23). Growth could be higher if China's policy to limit saccharin consumption succeeds (Baron, 2001, p. 4). Much of the growth would occur in Asia, as Latin America and the Near East/North Africa have already attained fairly high levels of consumption (Table 2.8). Per capita consumption will probably remain constant in the industrial countries, compared with declines in part of the historical period during which corn sweeteners were substituting for sugar in the United States. This process, very pronounced up to the mid-1980s, has by now been largely exhausted. It could be reversed if sugar prices were not to be supported at the high levels set by policy. Some increases are expected in the transition countries, making up for some of the declines suffered during the 1990s.

A significant unknown that may influence the sugar aggregates in the future is the fate of the use of sugar cane and its main by-product, molasses, as feedstocks for the production of fuel ethanol. There has been renewed interest in this option during the recent (year 2000) peak of world petroleum prices, which coincided with low sugar prices in world markets.45 Several countries, including«Australia, Thailand and India began to consider the feasibility of large-scale ethanol production while Mexico had proceeded as far as to undertake pilot ethanol programmes to combat urban air pollution» (Jolly, 2001). Enthusiasm with this option weakened as price relationships returned to more«normal» levels. Obviously, the prospect that interest will be rekindled in the future will depend on developments in the oil/sugar price ratios. The latest World Bank price projections to 2015 indicate that developments will probably not favour this option. If anything, price prospects point in the opposite direction: one barrel of oil may be worth about 80 kg of sugar in 2015 (World Bank, 2001c, Table A2.12).

The trade implications of these trends in consumption are shown in Table 3.23. By and large, recent trends in the pattern and rates of expansion of the world sugar trade would continue. This means that the fairly rapid expansion of imports into the deficit developing countries will provide scope for the main developing sugar-exporting countries to continue to expand production for export. The main divergence from past patterns is the likely arrest and some reversal of the trend for the industrial countries to be growing net exporters. The traditional exporters in this group (Australia and South Africa) should continue to expand exports, but the EU is unlikely to continue on the past path of rising net exports and may see some reduction in net exports under the WTO rules (Poonyth et al., 2000).

Further pressure leading to increased EU imports (hence lower net exports) will come from the implementation of the Everything but Arms Initiative (EBA) of free access to exports from the least developed countries, with sugar liberalization being phased in during the period 2006-09 (Baron, 2001, p. 6). However, the potential effect of EBA on the EU's sugar imports from this source is unlikely to be dramatic (Stevens and Kennan, 2001). In addition, the United States may revert to being a growing net importer, mainly as a result of the gradual reduction of tariffs on sugar imports from Mexico under the NAFTA rules leading to tariff-free market access from 2008 onwards (USDA, 2002, p. 45). Finally, the world's largest importer, Russia (1997/99 net imports 4.5 million tonnes, 73 percent of consumption) is likely to continue to hold this role for some time and only lose it in the second half of the projection period, as other countries become larger importers and Russia itself moves towards 50 percent self-sufficiency (Gudosnikov, 2001).

Table 3.23: Sugar, production, consumption and trade: past and projected

 

'000 tonnes

Growth rates, percentage p.a.

1997/99

1969-99

1979-99

1989-99

1997/99
-2015

2015
-2030

Production*

Developing countries

128814

3.2

2.8

2.6

1.8

1.4

Industrial countries

36049

1.5

1.1

1.7

0.1

0.3

Transition countries

8553

-1.2

-2.4

-5.6

0.8

0.7

World

173415

2.4

2.0

1.8

1.4

1.2

 

Food consumption (kg/person/year)*

1964/66

1974/76

1984/86

1997/99

2015

2030

Developing countries

14

16

19

21

23

25

Industrial countries

37

39

33

33

33

33

Transition countries

37

45

46

34

35

36

World

21

23

23

24

25

2

 

Net trade ('000 tonnes)*

Industrial countries

-7425

-7519

12

3755

2850

3570

   Australia

1228

1919

2539

4304

   

   EU15

-2675

-1857

2595

4125

   

   South Africa

426

780

861

1142

   

   Japan

-1451

-2535

-1880

-1608

   

   United States

-3536

-4196

-2246

-2309

   

   Other industrial

-1417

-1630

-1857

-1899

   

Transition countries

-748

-3281

-5281

-5863

-5350

-4270

Developing countries

7908

11107

6993

5833

6000

4000

   Exporters in 1997/99

8803

12391

16143

22696

28850

34400

        razil

672

1783

3535

9304

   

        Thailand

64

725

1702

3348

   

        Cuba

4570

5667

6706

2924

   

        Guatemala

46

215

259

1179

   

        Colombia

85

142

239

975

   

        Mexico

509

196

11

877

   

        Pakistan

-28

-16

-77

592

   

        Mauritius

575

573

566

531

   

        Other

2310

3106

3203

2969

   

   Importers in 1997/99

-895

-1283

-9150

-16864

-22850

-30350

        Korea, Rep.

-41

-215

-591

-1021

   

        Iran, Islamic Rep.

-395

-377

-496

-1119

   

        Egypt

-103

-114

-790

-1236

   

        Indonesia

62

-137

-23

-1535

   

        Other

-417

-440

-7249

-11953

   

* Sugar in raw sugar equivalent


Figure 3.16 Sugar, net trade positions, 1970-99

3.6.5 Bananas

Bananas are an important food crop in several tropical developing countries (see earlier discussion of roots and tubers). There are 12 countries with a production of over 1 million tonnes annually, ranging from India (12 million tonnes) to Venezuela (1 million tonnes). However, in only four of them are bananas produced primarily for export, with the part of total production going to exports ranging from over 90 percent in Colombia and Costa Rica, to 70 percent in Ecuador and 33 percent in the Philippines.46 Among the major producers, China is a significant net importer.

Traditionally, markets for banana-exporting countries were overwhelmingly in the industrial countries (western Europe, North America and Japan). Only in recent years have a number of developing countries and transition economies become significant importers. These two groups now take 26 percent of exports from exporting countries, up from only 9 percent ten years ago (see Table 3.24). These trends are likely to continue and their share could rise further to 33 percent by 2030, as both the transition economies and the importing (largely non-producing) developing countries will be increasing further their per capita consumption and imports. However, the industrial countries will continue to hold a dominant position as major importers, with their consumption per capita increasing further, although at a slower pace than in the past.

The trade policy reform in prospect in the EU (shift from the preferential tariff-rate quotas granted to the African, Caribbean and Pacific Group of States [ACP] to a tariffs-only regime from 2006 onwards) will remove one of the major sources of friction and may encourage consumption in the EU by increasing supplies at lower prices from the more efficient Latin American producers. Naturally, this shift in policy has the potential of damaging the ACP countries that will lose preferential access to the EU market, particularly those that are not in the LDC category. As noted, the latter will have tariff-free access under the EU's EBA.

Table 3.24: Bananas, production, consumption and trade: past and projected

 

'000 tonnes

Growth rates, percentage p.a.

1997/99

1969-99

1979-99

1989-99

1997/99
-2015

2015
-2030

Production

Developing countries

57933

2.5

3.0

3.0

2.0

1.5

Industrial countries

996

1.3

0.8

0.9

0.7

0.7

World

58929

2.5

2.9

3.0

2.0

1.5

 

Food consumption (kg/person/year)

 

1964/66

1974/76

1984/86

1997/99

2015

2030

Developing countries

7.1

6.9

7.7

8.5

9.6

10.4

Industrial countries

6.1

7.2

7.8

9.3

11.8

13.3

Transition countries

0.2

0.6

0.3

3.2

4.5

5.9

World

6.2

6.4

7.1

8.2

9.6

10.6

 

Net trade ('000 tonnes)

Industrial countries

-3954

-5310

-5964

-4012

-10900

-12600

Transition countries

-52

-219

-133

-1421

-1900

-2350

Developing countries

3922

5361

5951

10447

13600

16000

   Exporters in 1997/99

4113

5765

6417

12240

16800

20400

        Ecuador

1287

1236

1129

4250

   

        Costa Rica

323

1070

917

2272

   

        Colombia

245

388

932

1522

   

        Philippines

0

761

815

1204

   

        Guatemala

65

282

351

663

   

        Panama

490

648

555

     

        Honduras

560

572

788

353

   

        Mexico

14

5

52

220

   

        Côte d' Ivoire

130

136

98

204

   

        Others

1161

825

685

997

   

   Importers in 1997/99

-192

-403

-465

-1793

-3200

-4400

        Korea, Rep.

0

-6

-4

-129

   

        Saudi Arabia

-12

-35

-88

-144

   

        Chile

-33

-43

-37

-148

   

        Iran, Islamic Rep.

-3

-103

0

-190

   

        Argentina

-177

-123

-102

-263

   

        China

23

2

-28

-491

   

        Others

11

-96

-206

-429

   

3.6.6 Natural rubber

Developments in natural rubber have some similarities with those in the sugar sector. In the first place, a good part of the growth in world consumption originated in developing countries, which now account for 50 percent of the world total, up from only 28 percent in the mid-1970s. This growth reflected, among other things, large increases in consumption in some of the main producing countries such as Malaysia and India including, in the case of Malaysia, domestic consumption used in the production of rubber manufactures for export. Second, the growth of exports of the developing exporting countries has become increasingly dependent on the growth of imports of other developing countries (Table 3.25). And third, natural rubber faces strong competition from synthetic rubber in the industrial countries and transition economies. However, unlike sugar, such competition does not come from substitute agricultural products produced under protection in the industrial countries. Therefore, in contrast to the case of sugar, policy issues relating to the rubber trade and export earnings of the developing countries transcend the agriculture-specific aspects of the trade policy debate, and extend into the more general issues of, for example, price stabilization schemes, commodity development and tariff escalation with degree of processing.

The demand for rubber (both natural and synthetic) is a close correlate of overall economic growth and industrialization, in particular the growth of the automotive sector (65-70 percent of total rubber use is for tyres). The share of natural rubber in total rubber consumption is influenced by prices, technology and the mix of final rubber products. This latter factor can be particularly important; the increase in the share of radial tyres and those for heavy trucks (which require a higher component of natural rubber) in total tyre production will favour natural rubber. This now accounts for about 40 percent of aggregate rubber consumption, 47 up from some 30 percent in the 1980s. This increase in the share reflected some radical changes in the geographic patterns of consumption of both natural rubber (above-mentioned increases in consumption in the major producing countries) and synthetic rubber, following the decline of total rubber consumption (mostly synthetic) in the transition economies. These factors, particularly the second, will be less influential in the future and the rise in the share of natural rubber is not likely to continue.

In the longer term, the competitive position of natural rubber vis-à-vis synthetic will depend on its price relative to that of the main feedstock for the production of synthetic rubber - petroleum. The latest World Bank projections foresee a recovery in the natural rubber price by 2015 from its very low current levels, and a decline in the price of petroleum.48 Therefore, the share of natural rubber may not continue growing and indeed may fall,49 leading to a slowdown in total demand compared with the past. This is reflected in the projections of Table 3.25: world demand is projected to grow at around 2.0 percent p.a. compared with 2.6 percent p.a. in the last ten years. The historical trends of faster growth in the consumption of natural rubber in the developing countries compared with the industrial ones are likely to continue, leading to further increases in their share in world consumption, to 60 percent by 2030.

The predominance of the industrial countries as major importers will continue although it will be somewhat less pronounced than at present. These countries now take 65 percent of the exports of the producing/exporting developing countries. They may still account for 56 percent in 2030. The importing developing countries undergoing rapid industrialization (e.g. China, the Republic of Korea and Brazil) will be gradually increasing their share in world imports. However, prospective changes in the role of the importing developing countries as growing outlets for the exports of the producing/ exporting countries of natural rubber will be nowhere near as revolutionary as those that have characterized, and are still in prospect for, the sugar sector.

Table 3.25 Natural rubber, production, consumption and trade: past and projected

 

'000 tonnes

Growth rates, percentage p.a.

1997/99

1969-99

1979-99

1989-99

1997/99
-2015

2015
-2030

 

Production

Developing countries

6601

3.0

3.4

2.9

2.1

1.9

World

6601

3.0

3.4

2.9

2.1

1.9

 

Total demand ('000 tonnes)

 

1964/66

1974/76

1984/86

1997/99

2015

2030

Developing countries

3252

6.0

6.1

3.5

2.9

2.4

Industrial countries

3091

1.7

2.0

2.2

1.1

1.2

Transition countries

170

-4.9

-6.8

-3.5

2.0

2.3

World

6512

2.8

3.2

2.6

2.1

1.9

 

Net trade ('000 tonnes)

Industrial countries

-1500

-2044

-2349

-3090

-3750

-4500

Transition countries

-383

-493

-379

-170

-240

-350

Developing countries

1902

2452

2728

3424

4150

5000

   Exporters in 1997/99

2220

3033

3555

4767

6250

7950

        Thailand

210

356

680

1982

 

 

        Indonesia

684

798

990

1498

 

 

        Malaysia

928

1507

1493

589

 

 

        Viet Nam

56

17

36

193

 

 

        Côte d'Ivoire

3

16

41

96

 

 

        Other exporters

339

339

316

409

 

 

   Importers in 1997/99

-318

-581

-827

-1343

-2100

-2950

        China*

-171

-275

-294

-516

 

 

        Korea, Rep

-13

-72

-163

-304

 

 

        Brazil

-6

-45

-65

-104

 

 

        Other importers

-129

-189

-305

-419

 

 

* Includes net trade of Hong Kong SAR and Taiwan Province of China.



44 Data from www.ers.usda.gov/briefing/sugar/Data/data.htm/
45In the first half of 1999 a barrel of oil (US$14, average monthly price January-June 1999) was worth about 100 kg of sugar at the then prevailing world free market price of US$140/tonne. A year later (first half of 2000) it was worth almost twice as much (195 kg of sugar). The latest six-month average price data (August 2001-January 2002) indicate a return to more normal levels (127 kg). Price data from the World Bank: http://Worldbank.org/prospects/pinksheets/
46Other countries that produce predominantly for export include Guatemala, Panama, Côte d'Ivoire, Jamaica and several of the smaller Caribbean countries whose banana production, and often their overall economies, depend on exports to the EU under the preferential access regime (tariff-rate quotas) of the ACP, which however is to terminate in 2006 when the EU will shift to a tariffs-only regime (WTO, 2001f).
47Average 1999/2000, from Rubber Statistical Bulletin, 56 (6). March 2002.
48Changes to 2015 from the three-yerar avarage of 1999/2001 (World Bank, 2001 c, Table A2. 12).
49A recent projections study suggests that the share of natural rubber may fall back to 35 percent by 2020 (Burger and Smit, 2000, Figure 5.4).


Previous PageTop Of PageNext Page