In a context of falling international prices, increasing production and improving efficiency are the main objectives of Guatemalan sugar producers for the 2019-2020 harvest.
Official figures detail that during the 2018-2019 harvest the production of sugar in Guatemala reached 2.9 million metric tons, and for the current harvest that has just begun the harvest of a similar volume is projected.
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 "...
The World Trade Organization created a special group to address a complaint filed by Guatemala for alleged export subsidies granted to sugar cane producers in India.
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.
Both countries agreed to increase from 60,000 to 125,000 tons the export quota of Guatemalan sugar that enters the Asian nation free of tariffs.
In the framework of the Second Meeting of the Administrative Commission of the Free Trade Agreement between Guatemala and the Republic of Taiwan, held in Taipei, Taiwan on July 8 and 9, both parties agreed to eliminate tariffs for the entry of certain products, informed the Ministry of Economy of Guatemala.
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"]
Peruvian producers are against the import quotas that were approved in the trade agreement between the two countries, arguing that sugar production in Guatemala is subsidized.
The dispute goes back several years, since the imposition of tariffs on Guatemalan sugar is the reason why the entry into force of the trade agreement was postponed, which had been signed by both countries in December 2011.
Guatemalan producers estimate that for the 2018-2019 harvest production will reach 752,575 metric tons of sugar, a volume that would be slightly higher than that recorded in the 2017-2018 cycle.
The Asociación de Azucareros de Guatemala (Asazgua) projects a slightly higher growth than the previous year because of climate factors, which will be confirmed when they have the final figures for closing production.
Guatemala asked the WTO to review domestic support measures and alleged export subsidies granted to sugar cane and sugar producers, which are carried out in the Asian country.
Luis Miguel Paiz, manager of Asociación de Azucareros de Guatemala (Asazgua), explained to Prensalibre.com that "... Guatemalan producers are concerned about the impact of Indian subsidies on sugar production, transport, storage and export."
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 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.
The fall in international grain prices in recent years has increasingly affected producers in the region, who at current prices do not even reach the production costs.
Since years ago, international sugar prices have reported a clear downward trend, and in the last twelve months the quintal price registered a fall of 23%.
In September, the FAO food price index decreased 7% compared to the same month in 2017, because of lower prices for meat, dairy products, cereals, vegetable oils and sugar.
From FAO's monthly report:
» The FAO Food Price Index* (FFPI) averaged 163.5 points in October 2018, down 1.4 points (0.9 percent) from September and some 13 points (7.4 percent) below its level in the corresponding period last year. The October decline in the FFPI was the result of falling dairy, meat and oils prices, which more than offset a surge in sugar prices and a more moderate increase in the prices of cereals. The October FFPI is at its lowest level since last May.
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