EU’s Sugar Exports Cuts Lead to Brazilian Sweet Invasion in the Middle East

Brazil is already the main sugar supplier to the Middle East and Northern African countries, and should reinforce this position even further, after the World Trade Organization (WTO) limited European Union exports of the commodity.

An open panel discussion at the WTO concluded that the EU was causing distortions in international trade, especially due to the subsidies from the bloc’s governments to its producers, therefore the WTO condemned the EU to limit its shipments to 1.4 million tons per year.

The consequences of the decision, which became effective towards the end of May, have not yet been felt in the 2005/2006 European crop, which ended in September, but beginning in the 2006/2007 crop, the limit for shipments will be observed, according to International Sugar Organization (ISO) economist Leonardo Bichara Rocha.

He claims that the EU output, which totaled 21.8 million tons in the last crop with exports of 7.5 million tons, should close at 17.1 million for the next crop.

"Exports from Europe to the Middle East and North Africa are basically white sugar for direct consumption. With the forecast of decline in these sales, some of these countries have established their own refining capacity, and began importing more raw sugar from Brazil," Rocha said.

Even some Brazilian companies are investing in refineries in the region, as is the case with Cristalsev, currently building a plant in Syria in partnership with Cargill Africa and local companies.

This trend has been happening for some time now, but should become more pronounced from now on. According to Rocha, until the end of last decade, Gulf countries imported approximately 500,000 tons of sugar from Brazil per year, a volume that presently revolves around 1.5 million. "Refineries are emerging in the Middle East that sell Brazilian VHP sugar," said Rocha.

The VHP acronym means the product has a very high polarization ratio, i.e., not refined but almost there, thus lowering refinement costs. Besides this differential, production costs in Brazil are low, and the country is fully capable of meeting the demand.

According to the specialist, more than 20 new plants should be inaugurated in Brazil in 2007 alone, which should increase production capacity by approximately 2 million tons.

"The companies doing their own refining in these countries are profiting, since the VHP cost is lower than that of ready-for-consumption white sugar," Rocha claimed.

"And the countries with no refineries, which used to buy from the EU, are now importing from their refinery-equipped neighbors," he said.

Whereas the EU output should decrease to 17.1 million tons in the 2006/2007 crop, Brazilian exports alone should go up from 17.8 million to 20.8 million tons, in a market that should exceed 46 million tons throughout the world during the same period.

In the long run, though, Rocha claims that Brazilian exports should not continue increasing at the same rate; instead, they should remain at around 2% after the market reaches a balance. "There is a natural limit for consumption growth," he concluded.

Anba –



You May Also Like

US-Brazil Team Studies Links Between Alzheimer’s and Child Diarrhea

Researchers at the University of Virginia School of Medicine and Federal University of Ceará ...

Brazil & Co’s Bank of the South Will Have To Undo Neoliberalism’s Work

The launch of the Bank of the South is an ambitious and strategic gambit ...

Story that Lula Tried to Rape Someone Was Just a Joke, Says Another Witness

For another person present at the 1994 meeting in which Lula told the story ...

Rio: Army on the Streets to Secure Brazil’s Mercosur Summit

Former Brazilian president José Sarney (1985/1990) admitted that Mercosur was undergoing a "crisis situation" ...

UN: In Brazil, Justice Is Slow and Impunity High

The Special Rapporteur on the independence of judges and lawyers of the United Nations ...

Brazil’s Sergio Mendes: 40 Years of Bossa

Piano man Sergio Mendes was a young man barely in his 20s when the ...

Brazilian Astronaut Will Use Space Trip to Advance Brazil’s Space Program

Brazilian astronaut Marcos Pontes, speaking to reporters as he recovers from his eight-day sojourn ...

Brazil’s Lula in Rare Victory Makes the Speaker of the House

The victory by the government’s candidate for the presidency of the Chamber of Deputies, ...

Lucky Brazilians! They Have Six Obamas to Choose From

Barack Obama is running for mayor in Belford Roxo, a little town close to ...

Brazil’s Lula to Bush: Stop Subsidies

Brazilians want a greater access to world markets in order to compete on an ...