Betting on the latest technology projects, agriculture 4.0 and seeking alternative products derived from sugarcane so as not to depend on international prices, are some of the lines of action on which the Guatemalan sugar sector will focus in the coming years.
Although sugar prices in the international market have improved between October 2020 and April 2021, in previous years there was a downward trend that pressured mills to explore new market opportunities for sugarcane-derived products.
Arguing that the unusual growth in sugar imports is harming local production, the Alvarado administration decided to raise the tariff on products entering Costa Rica from 45% to 73% for a three-year period.
The Ministry of Economy, Industry and Commerce (MEIC) concluded the investigation requested by the Agricultural Industrial League of Sugar Cane (LAICA) and 4 mills, on the safeguard measure against imports of solid state, granulated sugar, known as white sugar, used for domestic and industrial consumption, justifying a deterioration in the main economic indicators of the National Production Branch (RPN), details an official statement dated June 15.
Salvadoran businessmen assure that for now the sector has not been impacted by the propagation of covid-19, since for the next few weeks they are preparing shipments for 70 thousand tons of sugar.
In a turbulent context, caused by the global spread of covid-19, Salvadoran sugar producers are in the middle of the harvest period and are preparing significant shipments of their product, they remain on alert.
In El Salvador, the union of sugarcane growers estimates that for the 2019-2020 harvest will be produced about 17 million quintals, a volume that would be 15% higher than that recorded in the previous cycle.
The Sugar Association of El Salvador projects that between the 2018-2019 and 2019-2020 harvests, 2.2 million more quintals will be harvested, going from 14.8 million to 17 million quintals.
If the international prices of bananas, coffee, sugar and palm oil do not improve, and if combined with a global economic recession, Guatemala, Honduras and El Salvador could stop exporting as much as $2.268 million altogether in 2021.
According to the report "Proceso de integración Centroamericana del Triángulo Norte: Escenarios de riesgo en la matriz de exportación" (Central American Integration Process of the Northern Triangle: Risk Scenarios in the Export Matrix), prepared by the Asociación de Investigación de Estudios Sociales (Asíes), garment making is another activity that could be affected in the coming years.
Costa Rican businessmen complain that because of export subsidies granted to sugar producers in India, there has been an artificial increase in production, causing prices to fall below costs.
Édgar Herrera, executive director of the Industrial Agricultural League of Sugarcane (Laica), explained to Elobservador.cr that "... These subsidies are greater than those allowed by the World Trade Organization, in the order of $10 billion annually.
By signing the Association Agreement with the European country, Central America achieved an export quota of 56 thousand metric tons of sugar free of tariffs.
Days ago it was reported that the association agreement signed guarantees Central American countries that with the departure of the United Kingdom from the European Union, there will not be a legal vacuum that interrupts trade relations with that country, while maintaining tariff preferences and legal guarantees for companies exporting to the United Kingdom.
Last year, the main regional crop sold abroad was coffee, with $2.671 million, followed by banana, with $2.594 million, pineapple, with $1.097 million and sugar, with $722 million.
Data from the Trade Intelligence Unit at CentralamericaData:
The main coffee export destinations were the U.S., Germany, Belgium, Italy, Japan and Canada, which together represent 70% of the volume exported by the region, equivalent to approximately $2,050 million. [GRAFICA caption="Click to interact with the graphic"]
For the 2018-2019 harvest was reported in the country the production of 17.1 million quintals of sugar, 5% more than the 16.4 million quintals recorded in the previous harvest.
Data from the Salvadoran Council of Sugar Agroindustry (CONSAA), specify that the 17.1 million quintals of sugar harvested in the 2018-2019 cycle, represents the highest production recorded in the last six years in the country.
The Constitutional Chamber of El Salvador declared the demand of the sugar manufacturers inadmissible, arguing that there is no link between the cancellation of the FTA with Taiwan and the application of constitutional norms.
After the Salvadoran government decided to finalize the trade agreement with the Asian country in December last year, an act that was not consulted with the country's productive sector, the guild presented in February this year an appeal of unconstitutionality.
During the first nine months of 2018, the main regional crop exported was coffee, with $2,493 million, followed by banana, with $1,939 million, pineapple, with $825 million and sugar, with $645 million.
Figures from the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]
Because of the cancellation of the FTA between El Salvador and Taiwan, the sugar sector is opposed to negotiations with the Asian giant, because they say the government is trying to "buy the silence of the guilds," after they filed a legal appeal.
After the Salvadoran government made the decision to finalize the trade agreement with the Asian country in December last year, a situation that was not consulted with the country's productive sector and will affect sugar exports, the executive proposes to seek new markets.
Because of the decline in the international price of sugar in recent years, agricultural businessmen in Guatemala have decided to migrate to more profitable crops, such as bananas and African palm.
Last year, Guatemalan banana exports totaled $815 million, 4% more than the $782 million reported in 2017, a rise that is partly caused by the increase in the cultivated area in the country.
In Guatemala, the business sector has already begun to analyze the market opportunities that will arise after the Salvadoran government decided to cancel the FTA with Taiwan.
The decision taken by the Sánchez Cerén administration in December last year will be implemented as of March 15, when the Free Trade Agreement between Taiwan and El Salvador will expire.
As of March 15, the FTA between Taiwan and El Salvador will be null and void, a situation that will prevent the Central American country from selling 80,000 tons of sugar at favorable prices.
The Salvadoran government concluded the trade agreement with the Asian country in December last year, a decision that was not consulted with the country's productive sector and will affect sugar exports, as it will no longer have preferential treatment.