The drought caused a decline of 18% in the 2015/16 harvest, and exporters project a reduction of $40 million in foreign sales.
Sugar producers are backing a plan to improve productivity per hectare in the next harvest in order to try to recover some of what was lost in the 2015/16 harvest.In the current harvest the climate phenomenon reduced total production to 2010 levels, falling from 790 thousand tons in the period 2014/15 to 650 thousand tons in 2015/16.
Preparations are being made for the first export in the next few weeks of 50,000 tons of sugar, after the Asian country gave El Salvador approval for an import quota in December.
This shipment to China represents more than 10% of the production of exportable sugar in the country, as currently 60% of domestic production is exported and 40% is for local consumption, which has not changed its demand in recent years .
With the delay in the entry into force of the AA, sugar producers in El Salvador will lose out on $2.5 million this year, from not exporting 10,000 tons to Europe.
"We could lose out on about $2.5 million, that's both producers and millers," said Julio Arroyo, CEO of the Sugar Association of El Salvador (AAES), adding that they still have the possibility to make the shipment and they have not looked for other recipients for the 10 thousand tons. "Before taking a decision we are waiting for the authorities to resolve this issue as soon as possible."
Sugar millers in El Salvador have announced new investments to increase power generation using waste from sugarcane processing.
Initially mills worked on producing energy for their own consumption, however, in recent years they have generated more energy than they need and they are transferring it to the national grid. One example of the large investments on the horizon for the country can be seen at La Cabaña mill in Paisnal, where $35.5 million was invested for the purchase of machinery and technology to generate 20 MW starting from the 2014-15 harvest.
The sector, which was ready to export 10,000 tonnes of sugar to the European Union, must wait two more months to do so.
Non-acceptance by dairy farmers in El Salvador and Costa Rica of the geographical indicators for Italian cheeses has caused a delay of at least 60 days of the entry into force of the Association Agreement with the EU.
With the entry into force of the AA in August, 90% of Salvadoran products will be able to be sent to European Union countries duty free.
"What will happen is that Central America, instead of exporting to the international market, will export to Europe. It will change the export destination," said Julio Arroyo, CEO of the Asociación Azucarera.
The sugar sector exceeded its production goals for the 2012/13 season, closing with 16.8 million quintals of sugar, 12% more than in the previous harvest.
"The sector is counting on productivity, for which the mills with cane growers have invested in new technologies and farming methods in order to increase efficiency and productivity," said Mario Salaverria, president of the Sugar Association (AESA ).
Producers and refineries anticipate production to total 625,000 metric tons of sugar and 210,000 of molasses, a considerable increase on the previous cycle, when there were 574,000 tons of sugar and 197,000 of molasses.