Nov 4, 1992

BOOST IN SUGAR PRICES SEEN FOR NEXT YEAR

Mexico City, Nov 2 (IPS) -- Though the price of sugar in the world market continues its downhill trend, a predicted improvement in the economies of industrialised countries could pull up prices by next year, experts say.

There are visible signs of economic recovery in developed countries and this year, First World economies grew by about 2.6 percent, said a study by economist Patrick Chaussepied which was released recently in Brussels.

Chaussepied said the sugar slump could be traced directly to present recession in industrialised countries.

The report also predicted that due to the slump in the sugar industry for the past three years, many farmers all over the world will abandon the activity.

This would revitalise the price of sugar by about two percent next year, Chaussepied said.

But the British research firm E. D. and F. Man said the world prices would remain in the defensive next year. The firm says the increase in the sugar production of Thailand and Australia will be compensated by a possible fall in Cuban production as a result of the recently enacted US Torricelli law for tough economic sanctions against Cuba.

As if in anticipation of the sugar industry's recovery next year, South Africa last week announced the construction of a new sugar mill capable of producing about 130,000 tonnes of refined sugar yearly. The mill will start operations in April next year.

This year, Russia produced about 30 million tonnes of sugar beet, over 23 percent more than in 1991. Before the collapse of the Soviet Union, Russia was one of the major importers of Cuban sugar and Cuba used to be the world's top sugar exporter.

In the first part of this year, Cuba exported about 3.188 million tonnes. In 1991, it exported 3.209 million tonnes. Cuban authorities say they will find a market for their product at all costs.

But experts say Havana may have to content itself with sugar prices in the surplus markets of London and New York, rather than the preferential prices it enjoyed before 1990. After the collapse of the Soviet Union, preferential prices began to apply only to quota imports by the United States, Cuban exports to China and exports from African, Caribbean and Pacific countries to the European Community (EC).

These preferential transactions amounted to about 3.5 million tonnes in 1992 -- 65 percent less than 10 years ago.

According to the London research firm 'Czarnikow', stressed that except for some countries like the United States which maintain protectionist policies, the international sugar trade is greatly influenced by "free market forces".

The firm observed a general trend toward the elimination of state sugar subsidies, and said this trend would go on regardless of the results of the Uruguay Round, whose conclusion has been hampered by differences over agricultural subsidies amongst Europe, Japan and the United States.

While the lifting of protectionist barriers would greatly increase world trade, countries are already taking actions.

Mexico is working on eliminating trade barriers and privatising its sugar industry. Australia has also ended its protectionist measures while Brazil has abandoned its system of sales through state firms and has given private firms control over sugar sales.