Selected Key Drivers Shaping the World Sugar/ Ethanol Economy Dr. - - PowerPoint PPT Presentation

American Society of Sugar Beet Technologists General Session Orlando, Florida – February 25 – 28, 2009 “Selected Key Drivers Shaping the World Sugar/ Ethanol Economy”

• Dr. Peter Baron, Executive Director, International Sugar Organization

I nternational Sugar Organization I nternational Sugar Organization

Biggest Commodity Organization Worldwide

Membership consists of 84 countries representing:

g

__________________________________________________________________________________________________

– 83% of world sugar production

65% of

• ld
• tio

– 65% of world consumption, – 95% of world exports, and

40% f ld i t

– 40% of world imports

Selected Key Drivers Selected Key Drivers

Market fundamentals (Production/ Consumption, Trade Balance) Diversification (ethanol production Diversification (ethanol, production, consumption, trade) Ad t i h d t h l Advancements in research and technology Policy drivers: y

• WTO – Doha Round
• US Farm Bill

EU S P li R f

• EU Sugar Policy Reform

World Sugar Balances

(mln tonnes raw value) (mln tonnes, raw value)

2008/ 09 2007/ 08 Change in mln t in % in mln t in % Production 161.527 168.611

• 7.084
• 4.20

Cons mption 165 801 162 241 + 3 560 + 2 19 Consumption 165.801 162.241 + 3.560 + 2.19 Surplus/ Deficit

• 4.274

+ 6.370 I t d d 49 621 45 942 3 673 7 99 I mport demand 49.621 45.942 + 3.673 + 7.99 Export availability 49.608 46.245 + 3.363 + 7.27 End Stocks 66.272 70.533

• 4.261
• 6.04

Stocks/ consumption ti i % 39.97 43.47 ration in %

World Sugar Production World Sugar Production, Consumption and I SA Prices

World production, Consumption and ISA prices

165 170 14 15 145 150 155 160 mtrv 10 11 12 13 ents/lb 125 130 135 140 145 mln m 6 7 8 9 10 US ce 120 125 1 9 9 7 / 9 8 1 9 9 8 / 9 9 1 9 9 9 / 2 / 1 2 1 / 2 2 2 / 3 2 3 / 4 2 4 / 5 2 5 / 6 2 6 / 7 2 7 / 8 e 2 8 / 9 f 5 6 Production Consumption ISA price

Consumption by region Consumption by region

30 35 15 20 25 nes, raw value 1984 1989 1994 1999 5 10 15 Mln tonn 2002 2007 S.S. Africa

• N. America

Eastern Europe Middle East and N. Africa Western Europe Indian Sub. Latin America Far East

32.2 47.2 39.6 39.7 11.7 32.5 17.1 14.8

Percapita in kg

Comparative advantages of sugar Co pa at e ad a tages o suga crops as feedstocks

__________________________________________________________

• Productivity per hectare is highest;
• Production costs per unit are

p lowest;

• The energy balance is the most

gy positive one; and

• CO2 footprint gives sugar crops

2

p g g p the best environmental credentials.

Fuel ethanol programmes Fuel ethanol programmes

_____________________________ _____________________________

Established Established programmes programmes Fledgling Fledgling programmes programmes Planned Planned programmes programmes programmes programmes

Sugar and fuel ethanol Sugar and fuel ethanol

M i t i d i th l f

• Main countries producing ethanol from sugar

cane juice: Brazil, Colombia;

• Main countries producing ethanol from sugar

beets: European Union countries (France, Germany, UK, Czech Republic, Austria), Turkey

• Main countries producing ethanol from sugar

cane molasses: India, Thailand, Colombia

World Fuel Ethanol Production

90 100 60 70 80 T R ES 30 40 50 BLN LIT 10 20 2002 2003 2004 2005 2006 2007 2008f 2009f 2010f USA Brazil Other

Fuel Ethanol Production outside Fuel Ethanol Production outside Brazil and US

4 5 3 4 itre s 2006 2007 2008 2009F 1 2 b ln li 1 d i a a n d i n a E U a l i a a d a I n d i T h a i l a n C h i n E U A u s t r a l i C a n a d

World Sugar and Fuel Ethanol World Sugar and Fuel Ethanol

Fuel Ethanol Consumption Projections Fuel Ethanol Consumption Projections ue t a o Co su pt o

• ject o s

ue t a o Co su pt o

• ject o s

Country 2008 2008 2015 2015 Consumption potential: Bln litres ( Consumption potential: Bln litres ( source: MECAS(08)17

source: MECAS(08)17 – – Fuel Ethanol Trade) Fuel Ethanol Trade)

Country 2008 2008 2015 2015 Brazil Brazil 20.0 20.0 38.0 38.0 USA USA 34 0 34 0 77 9 77 9 USA USA 34.0 34.0 77.9 77.9 EU EU 3.7 3.7 12.0 12.0 Japan Japan

• 1.8

1.8 China China 1.9 1.9 4.2 4.2 I ndia I ndia 0.3 0.3 1.7 1.7 Thailand Thailand 0.4 0.4 1.1 1.1 World TOTAL World TOTAL 65.7 65.7 148.6 148.6

Ethanol blending requirements

Country Blend% Time y

Argentina) Peru ) E-10 2010 Uruguay ) l Bolivia E-10 2010 Brazil E-25 2007 (+ flexi) Canada E-5 2008 China E 5 2008 China E-5 2008 Colombia E-10 2008 Dominican Rep. E-7.5 authorised India E-5 in 17 of 25 states India E 5 in 17 of 25 states India E-10 2008 put on hold Indonesia E-10 2009 Jamaica E-10 2009 a a a 00 Mexico E-5 2012 Philippines E-5 2009

Philippines E-10 2011 Philippines E 10 2011 Thailand E-20 by 2015 Vietnam E-5 2009

Ethanol import tariffs

Brazil Canada Japan China USA EU 50 100 150 200 250 300 350 400

$ / m 3 Source: F.O. Licht Source: F.O. Licht

• Food versus biofuel issue often led

by polemics

• There is a general consensus that

biofuels should be produced biofuels should be produced sustainably, be market-driven, and have a minimum impact on food have a minimum impact on food production

US Farm Bill 2008 - New Sugar Programme Main elements:

• Loan rate remains at 18cts/lb for 2008 crop, then incrementally

increased to 18 75 cts/lb until 2012/13

Main elements:

increased to 18.75 cts/lb until 2012/13

• Loan rate for refined beet sugar will be increased from 22.9

cts/lb step by step to 24.09 cts/lb till 2013

• 85% guaranteed share of domestic consumption regardless of

import volumes under TRQ or NAFTA – production in excess of 85% share still to be stored at producers’ expense p p

• Any accumulation of excess sugar in case of high import levels

(NAFTA) will be diverted to ethanol production

• TRQs for raw cane and refined sugars to be established at
• TRQs for raw cane and refined sugars to be established at

minimum level necessary to comply with obligations under international trade agreements (WTO+ CAFTA+ Peru): 1.256 mln sho t tonnes In case of sho tages domestic ma keting mln short tonnes. In case of shortages domestic marketing allotments and TRQ can be increased.

Market I mpacts of the EU p Sugar Policy Reform

_______________________________________________________

• 36% price cut
• 6 million tonnes less domestic production
• 6 million tonnes less domestic production
• Market access increases from 1.3 to 4-5

million tonnes million tonnes

• Main beneficiaries mainly ACP countries

and LDCs, via Economic Partnership and LDCs, via Economic Partnership Agreements (EPAs) and Everything but Arms (EbA) scheme.

Structural changes in EU (27) sugar industry

12,000 workers laid off in rural areas  48,000 beet growers to give up production  Sugar production disappeared completely

in Estonia, Ireland, Latvia and to a large part in Greece, Italy and Spain

Conclusions

• Most constructive world sugar market outlook

since 2005/06. M i l t t ti l f

• Massive long term potential for sugar

consumption growth.

• Production, consumption and trade outlook

Production, consumption and trade outlook for fuel ethanol world wide is very positive; despite a possible slow down in investments in sugar and ethanol projects due to the in sugar and ethanol projects due to the global financial crisis.

• The EU Sugar Policy Reform is bearing fruit

d h i lt littl if t and showing results: little if any exports, increasing market access up to 4 to 5 million

• tonnes. Beneficiaries mainly ACP and LDCs.

Thank you! Thank you!