· Sugar is produced from both cane and beet.
· Sugar cane is a perennial crop found in tropical and sub-tropical areas. Sugar mills generally crush cane and convert the juice extract to raw sugar for exports and further processing by refineries.
· Sugar beet is an annual crop grown in temperate areas, and can be directly processed into refined sugar.
· Both raw sugar and refined sugar are traded internationally, each representing 50 percent of total sugar export.
Pattern of production
· From 1970 to 2001, world sugar production averaged 101.2 million tonnes annually.
· Over the last 30 years, the main sugar producers have been the EC, Brazil and India, with an average annual production of 15.7 million tonnes, 10.1 million tonnes and 9.6 million tonnes, respectively. Unlike Brazil, the EC and India are also large consumers.
· Production in Brazil grew steadily between 1970 and the late 1980s, and since 1990 has had a spectacular growth with production reaching 17.3 million tonnes in 2000/01. This significant increase in production contributed to global oversupply and low prices. Production in Thailand and Australia, the other major producing countries, levelled off in the 1990s after steady growth since the mid 1970s.
Pattern of consumption and trade
· Since 1970 world sugar consumption averaged 115.6 million tonnes per year
· Major consuming countries include the EC, the United States, India, the Russian Federation and China. Over the last thirty years sugar consumption has been growing on a steady basis.
· Brazil is the dominant player in world sugar trade. Exports increased fourfold since 1970, to a total of 8.8 million tonnes in 2000.
· The EC is a major exporter as well as importer. Other major sugar exporting countries are Australia, Thailand, Cuba and India.
· Major importing countries include the Russian Federation, China, the United States, Japan, the Republic of Korea and Canada.
Economic and institutional structure
· Apart from structural breaks in the mid 1970s and early 1980s, world sugar prices have been relatively constant.
· From 1990 to 2000, nominal prices averaged US$227 per tonne. World sugar prices reached 14-year lows in February 2000. Since then, large stocks and greater than expected harvests have damped any significant rally in the market.
· The volatility in sugar prices, particularly in recent years, is also due to the short-term rigidity of the supply response to price changes. Increases in sugar production due to higher prices require significant long-term capital investment. When prices fall, production continues at full capacity in order to spread the fixed costs, hence sugar supply tends to be inelastic with respect to price in the short-term.
· Sugar price elasticities of demand range from -0.81 for Japan, -0.11 for the United States and -0.12 for European Community.
· Developing countries rely heavily on sugar as a source of income, and tend to have fewer trade barriers than high-income countries.
· A significant share of the sugar traded takes place under bilateral long-term agreements and/or on preferential terms such as the EC Sugar Protocol and the United States TRQ.
· A number of studies have shown that under complete global trade liberalization in the sugar market, the gains would be large, especially in many of the Latin American and Caribbean countries where production and export would increase as a result of higher world prices.
· Under the European Union Everything but Arms (EBA) initiative, full liberalization for sugar will be phased in between 2006 and 2009 by gradually decreasing the full EC tariff to zero. The benefit from EBA should accrue to the Least Developed Countries.
SUGAR: World Production and Consumption (million tonnes)
SUGAR: World Exports
Sugar: Deflated ISA Prices (US$ = 1990)
Sugar: Exports by major countries 1998 - 2000 average (volume)
Sugar: Imports by major countries 1998 - 2000 average (volume)
· Cocoa is grown on about 7.2 million hectares with major concentrations in West Africa, South East Asia and Latin America.
· Stocks of cocoa beans have declined in recent years due mainly to reduced production, as well as the clearing of buffer stocks.
· The world stock-to-grinding ratio, a proxy for world cocoa availability, is currently at similar levels to those in the 1970s after increasing to unprecedented levels in the late 1980s/early 1990s when the ratio reached a record 66 percent, due to buffer stock levels. The ratio in 2000/01 was 37 percent.
Pattern of production and consumption
· World production increased by 2.2 percent annually between 1970 and 2000, reaching 2.9 million tonnes in 2001.
· Côte dIvoire is the largest producer, accounting for more than 40 percent of cocoa bean production, followed by Ghana (14 percent), Indonesia (14 percent), Nigeria (7 percent), Brazil (5 percent) and Cameroon (4 percent).
· World grindings of cocoa beans, a proxy for world cocoa consumption, increased by 2.5 percent yearly during the same period, reaching 3.0 million tonnes in 2001.
· The EC is the worlds largest consumer and accounts for 39 percent of the world total, followed by the United States at 15 percent.
· Grindings at origin accounted for about 32 percent of the world grindings in 2000/01, an increasing trend over the last decade
Pattern of trade
· World exports grew yearly by 2.3 percent over the 30 years reaching 2.2 million tonnes in 2000.
· Côte dIvoire is the major exporter accounting for 53 percent of the global total followed by Ghana (16 percent), Indonesia (15 percent) and Nigeria (5 percent).
· World imports grew by 28.8 percent annually to reach 2.5 million tonnes in 2000.
· The EC, the United States and the Russian Federation were the largest importers.
Economic, market and institutional structure
· During 1970-2001, ICCO daily prices increased by 1.6 percent p.a. from 67 cents per kg to 109 cents per kg in nominal terms, however declined by 3 percent p.a. from 268 cents per kg to 104 cents per kg in constant 1990 terms.
· The relative rigidity of short-term supply coupled with low price elasticity of demand in consuming countries (Germany:-0.120 United States: -0.199), and the long gestation period of the crop (between 3-4 years), cause alternating short periods of booms and long periods of oversupply with depressed market prices.
· As with coffee and tea, international trade in cocoa is dominated by 4 large companies accounting for nearly 80 percent of global trade.
· Tariffs on cocoa beans are generally low, but those on cocoa products are high.
· Major cocoa exporting countries have liberalized their national marketing boards.
· In late 2001, the Government of Côte dIvoire decided that cocoa beans for exports are to be bagged in small bags.
· Four West African producers (Cameroon, Côte dIvoire, Ghana and Nigeria) agreed on an establishment of a scheme to withdraw and destroy 250 000 tonnes of cocoa beans to improve world market prices in 2001. However, a detailed implementation schedule and the likely impact of this scheme are still uncertain.
World Cocoa Production
World Cocoa Consumption
World Cocoa Exports
Cocoa exported by Exporting Countries 1990 - 2000 average. Percentage of world total
World Cocoa Import
World Cocoa Prices. ICCO Composite Prices
· Coffee is grown on about 10 million hectares of land in countries in Africa, Asia, and Latin America.
· Arabica and robusta are the two main varieties of coffee produced and traded. Arabicas account for about 70 percent of total world production.
· Robusta prices have generally been considerably lower than Arabica prices.
Pattern of production
· World coffee production increased at 2.1 percent annually from 1970 to 2000 reaching 6.6 million tonnes in 2001.
· During the same period, world production of arabicas grew by 2 percent annually, from 2.5 million tonnes to 4.4 million tonnes, while that of robustas increased from 1.0 million tonnes to 2.2 million tonnes.
· Brazil is the largest coffee producing country, accounting for 26 percent of the world total, followed by Viet Nam (12 percent), Colombia (11 percent), Indonesia (6 percent) and Mexico (5 percent).
Pattern of trade
· World coffee exports have grown annually by 1.8 percent over the last 3 decades reaching 5.4 million tonnes in 2000.
· World net-imports of coffee have grown at an annual rate of 1.7 percent from 2.9 million tonnes in 1970 to 4.8 million tonnes in 2000.
· The EC is the largest importing country followed by the United States, Japan, Canada and Poland.
Economic market and institutional structure
· Since the late 1970s world coffee prices have experienced a long-term declining trend.
· During 1970-2001, ICO composite prices declined from 51 cents per kg to 46 cents per kg in nominal terms, and from 201 cents per kg to 44 cents per kg in constant 1990 terms.
· Recent important trend of the world coffee market is growing demand for high-valued specialized coffee from selected origins. Demand for other types of value-added coffee such as flavoured coffee, organic coffee, decaffeinated coffee, has also been growing though their share is still very small.
· The relative inelasticity of short-term supply with low price elasticity of demand in importing countries cause alternating short periods of booms and long periods of abundant supply with low world market prices.
· Four transnational companies (roasters) account for more than 75 percent of world trade in coffee.
· Import tariffs on coffee are generally low for developed countries.
· Major coffee exporting countries have deregulated their national marketing boards and farmgate prices are now determined by market forces.
· Current price levels make it difficult for many coffee producers to generate profits as their costs exceed world market prices. The ACPC coffee retention scheme, which was tried in 2000/01 did not improve price levels.
· Low farm revenue has caused reduced investment and this in turn could adversely affect the quality of coffee and prospects for price recovery.
World Coffee Production
World Coffee Consumption
World Coffee Exports
World Coffee Imports
World Production by Coffee Type
Coffee Exports by Country
Coffee Price: ICO Composite
Area Planted with Coffee
· Tea is grown on about 2.5 million hectares of land in Asia (89 percent of global tea cultivated areas) and Africa (8 percent).
· Camellia Synensis, the tea plant, is a multi-stemmed evergreen shrub originally grown in China and India. It takes 4-6 years to mature and has an economic life of nearly 100 years. Tea manufactured from Camellia Synensis is roughly grouped into three types: black, green and oolong.
· Tea plays an important role in generating foreign exchange for the country and regular cash income to farmers.
· Tea production is labour intensive and provides substantial employment opportunities.
Pattern of production and consumption
· World tea production increased at an annual growth rate of 2.8 percent between 1970 and 2000 expanding from 1.27 million tonnes to 2.97 million tonnes.
· Most of the growth was due to the increase in productivity rather than an expansion in area.
· Major producers are: India, which accounts for about 29 percent of global production; China, 23 percent; Sri Lanka, 9 percent; Kenya, 8 percent; and Indonesia, 6 percent.
· Black tea accounts for more than 70 percent of world tea production and green tea, 22 percent. Over the past decade, production of black tea has increased at 1 percent per annum, while that for green tea at 2.5 percent.
· Tea is consumed in both producing and importing countries. India is the largest producer and consumer of tea and accounts for more than 20 percent of global tea consumption, while the United Kingdom, the Russian Federation, the CIS countries, Pakistan and Japan each account for about 5 percent of the total tea consumed globally.
· Over the past decade, world tea consumption has increased by 1 percent annually.
Pattern of trade
· World tea exports have grown by 2.2 percent annually between 1970 and 2000, from 674 000 tonnes to 1.29 million tonnes. Growth in export values, however, was 4.6 percent annually during this period, rising from US$573 million to US$2.3 billion in 2000. Sri Lanka, the largest exporter, accounts for about 20 percent of world exports, Kenya (18 percent), China (17 percent), India (16 percent) and Indonesia (8 percent).
· World net-imports of tea grew at 1.9 percent between 1970 and 2000, to 1.2 million tonnes. Major importers continued to be the United Kingdom, the Russian Federation, Pakistan, the United States and Egypt.
Economic and market institutional structure
· Tea prices are mainly determined at auctions in major producing countries. Major auctions included Colombo, Mombassa, Calcutta, Chittagong and Jakarta. Prices vary among auctions as well as within auctions because of the differences in origin and quality. In the decade from 1985 prices experienced a declining trend with annual fluctuations caused by supply disruptions. Since 1995 prices have shown a brief recovery. Prices averaged 157 US cents/kg in 2001.
· The relative rigidity of short-term supply coupled with low price elasticity of demand in consuming countries, and the long gestation period of the crop (between 4-6 years), cause alternating short periods of booms and long periods of abundant supply with depressed market prices.
· Three multinational companies account for nearly 80 percent of tea traded globally.
· Value addition is significant in international trade.
· Current tariff levels for value-added teas are high while those for bulk teas are very low or at zero.
· Erosion of market shares in the total beverages market, coupled with stagnant consumption in some markets, has reduced prices.
· New strategies particularly aimed at enhancing consumption, increasing value-addition as well as further reduction in production and marketing costs are required.
· Maximum Residue Levels (MRLs) should be harmonized.
World Tea Production
World Tea Consumption
World Tea Exports
Tea Exported by Major Exporting Countries. Average 1990-2000
World Tea Prices
Tea Imported by Major Importing Countries. Average 1990-2000