Surplus hits sugar price
NORTH Queensland sugarcane farmers are bracing themselves for a rough financial ride this year.
They should prepare for what looks like a long stay in the saddle. The predictions are that the bad times will roll on into 2019.
Massive production increases in India, Pakistan and Thailand have sent shockwaves rolling through the $ 2 billion sugar industry in Queensland. And with the possibility of Europe dumping sugar on to what already looks to be a glutted world market, the situation could get a lot worse.
Prices are plummeting, leaving farmers no alternative, but to cross their fingers and hope that the free fall soon hits a hard surface and prices start heading north.
Canegrowers Queensland chairman Paul Schembri is one of those who is hoping for the best. He said the current price of US12.27 a pound or $ A347 per tonne of sugar would barely cover growers’ cost of production.
“The price is a low US12c which is not good for our industry. Growers will not be happy with this price,” Mr Schembri said.
He said farmers were facing a global surplus he suspects was triggered by generous government subsidies in India, Pakistan and Thailand.
He said suspicions Europe could have excess sugar which might be exported added more fuel to the fire. He said the once tightly controlled pro- duction levels of sugar in Europe have been eased.
He said there were concerns European production might have increased to the extent that surplus sugar would be dumped on the world market and this loosening of production control mechanisms effectively amounted to partial deregulation of the sugar industry in Europe.
Mr Schembri said it was an anxious time for growers in Queensland.
“But I should stress that cyclical downturns like this are not new. It is part of the ebb and flow of pricing in the industry,” he said.
Rabobank in its Global Sugar Quarterly painted an even gloomier picture continuing into 2019.
The Dutch- based agribanker estimated India’s production to be up by three million tonnes this year and Thailand’s up by one million.
“Our current forecast is that this surplus will reach 7.6 million tonnes ( this year),” a Rabobank spokesman said.