Low Prices and Taxes Make Sugar Industry Difficult

The outlook for sugar producers in Nicaragua is complex, since they must face a fall in international prices, coupled with rising operating costs at the local level.

Tuesday, September 17, 2019

According to international reports, from January 2018 to September 2019, the average price of a quintal of sugar has remained below $14, even dropping to $10.46 in August 2018.

You may be interested in "Crops in Central America: Main Figures in 2018

José Antonio Mayorga, president of the Association of Private Sugarcane Producers of the West (Aprico), explained to Elnuevodiario.com.ni that "... the price they receive per ton of cane is linked to the international price of sugar, therefore, this fall is affecting the guild. The prices we are currently having are the lowest in recent years."

The drop in international prices is reflected in the fall in export value, since between January and August Nicaraguan sales abroad totaled $134 million, a figure that is 16% lower than that reported in the same period of 2018.

Mayorga added that "... on the other hand, producers are being hit by the increase in the price of agricultural inputs, because of the tax reform that was approved earlier this year."

Sugarcane growers are not the first to complain about this situation, since weeks ago banana growers explained that before the Tax Concentration Law approved at the end of February of this year was reformed, agricultural inputs were exempt from 15% Value Added Tax. However, with the changes, costs have increased considerably.”

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More on this topic

Sugar: Protectionism and the Eternal Struggle

January 2020

In Costa Rica, sugar producers are asking the government to raise tariffs or entry taxes on imports, and importers are opposing, as this would raise the final price to the consumer.

In July 2019, the Sugar Cane Industrial Agricultural League (LAICA) asked the Ministry of Economy, Industry and Commerce (MEIC) to launch an investigation with the aim of imposing additional tariffs on imported sugar, arguing that purchases from abroad would damage local production.

Sugar Sector Challenges

October 2018

The downward trend in international prices and the climate impact are part of the challenges facing producers in the region for the next harvest.

According to data from CentralAmericaData, the average price per kilo of sugar exported by countries in the region fell 38% between May 2012 and June 2017, from $1.13 to $0.70.

Nicaragua: Sugarcane Growers and Mills to Share Revenue

September 2015

It has been announced that sugar cane producers will receive 53.5% of the income received by the mills from the sale of sugar and molasses.

The low price of sugar on the international market, coupled with drought in the region has led to cane growers pressuring the industry to receive part of the income received from power generated using the bagasse they provide.

El Salvador: Less Sugar Exports Projected

October 2014

Sugarcane growers estimate that exports from the 2013/2014 crop will be reduced by 10% due to the negative effects of climate and oversupply in the global market.

In recent months, a decrease in the price of sugar has been more evident, "... a hundredweight went from being quoted at $24 two years ago, to $19 in March 2013 and now to $15 ... therefore producers have lost between 5% and 10% of their income. "

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