Production costs sugar raw materials

Background and Objective

So far, sugar imports from LDC countries have been rather low at around 0.5 million t. However, if the world market price for sugar is significantly below the EU price in the future and if there is a positive economic trend in the LDC countries, imports can increase significantly. Against this background, we want to estimate the price ratios at which sugar exports will become economically interesting for selected LDC countries.

Approach

Using regional statistics, we examine the status of sugar cane production in Tansania, Mozambique and Kenya. On this basis, we establish typical farms in selected regions and calculate the production costs for sugar cane in comparison with European sugar production and Brazil as the main exporter worldwide.

Data and Methods

We determine the production costs based on typical farms that we establish together with our international partner organizations and farmers in the selected countries. We calculate the production costs using the TYPICROP model.

Preliminary Results

The results show that raw material production cost in the selected countries is roughly at the same level as in Brazil and Europe. Due to excellent site conditions for sugar cane cultivation, the yields and thus raw material production are very competitive. However, the transport and processing costs are problematic. Poorly coordinated logistics and inefficient processing processes have a negative impact on the competitiveness of the entire value chain.

Due to political interventions, domestic sugar prices in these countries are significantly higher than on the world market or in the EU. With increasing population and income growth, it can be expected that these countries will produce for domestic needs rather than export to the EU.