Wed | Nov 29, 2023

Sugar prices rising worldwide after bad weather tied to El Niño damaged crops in Asia

Published:Monday | November 20, 2023 | 8:34 AM
An employee puts a spoon of sugar into a cup of coffee as he serves a customer at a food stall in Jakarta, Indonesia Tuesday, October 24, 2023. Indonesia — the biggest sugar importer last year, according to the United States Department of Agriculture — has cut back on imports. (AP Photo/Tatan Syuflana)

Skyrocketing sugar prices left Ishaq Abdulraheem with few choices. Increasing the cost of bread would mean declining sales, so the Nigerian baker decided to cut his production by half.

For scores of other bakers struggling to stay afloat while enduring higher costs for fuel and flour, the stratospheric sugar prices proved to be the last straw, and they closed for good.

Sugar is needed to make bread, which is a staple for Nigeria's 210 million people, and for many who are struggling to put food on the table, it offers a cheap source of calories. Surging sugar prices — an increase of 55% in two months — means fewer bakers and less bread.

“It is a very serious situation,” Abdulraheem said.

Sugar worldwide is trading at the highest prices since 2011, mainly due to lower global supplies after unusually dry weather damaged harvests in India and Thailand, the world's second- and third-largest exporters.

This is just the latest hit for developing nations already coping with shortages in staples like rice and bans on food trade that have added to food inflation.

All of it contributes to food insecurity because of the combined effects of the naturally occurring climate phenomenon El Niño, the war in Ukraine and weaker currencies.

Wealthier Western nations can absorb the higher costs, but poorer nations are struggling.

The United Nations Food and Agriculture Organization is predicting a 2% decline in global sugar production in the 2023-24 season, compared with the previous year, translating to a loss of about 3.5 million metric tons (3.8 million US tonnes), said Fabio Palmeri, an FAO global commodities market researcher.

Increasingly, sugar is being used for biofuels like ethanol, so global reserves of sugar are at their lowest since 2009.

Brazil is the biggest sugar exporter, but its harvest will only help plug gaps later in 2024.

Until then, import-dependent countries — like most of those in sub-Saharan Africa — remain vulnerable.

Nigeria, for instance, buys 98% of its raw sugar from other countries.

It's partly due to the El Niño, a natural phenomenon that shifts global weather patterns and can cause extreme weather conditions ranging from drought to flooding. Scientists believe climate change is making El Niño  stronger.

India endured its driest August in over a century, and crops in the western state of Maharashtra, which accounts for over a third of its sugarcane production, were stunted during the crucial growing phase.

India's sugar production is likely to decline by 8% this year, according to the Indian Sugar Mills Association.

The world's most populated nation is also the biggest consumer of sugar and is now restricting sugar exports.

In Thailand, El Niño effects early in the growing season altered not just the quantity but also the quality of the harvest, said Naradhip Anantasuk, leader of the Thailand Sugar Planters Association.

He expects only 76 million metric tons (84 million US tonnes) of sugarcane to be milled in the 2024 harvest season, compared with 93 million metric tons (103 million US tonnes) this year.

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