Knowledge for Development

Feature articles


Mobilizing innovation: Sugar Protocol countries adapting to new market realities

The EU Sugar Reform has negative consequences for the sugar industries in Sugar Protocol (SP) countries as their export revenues will decline sharply. In order to adapt to new market realities the EU is offering the SP countries a significant development assistance package (€ 1.2 billion) to restructure their industries as well as various other forms of assistance. One of them is a five-year ACP sugar research programme to be funded by the European Development Fund. This programme aims to improve the overall competitiveness of the sugar industry in ACP countries (and in particular in the SP countries among them) in order to survive in a less-protected global sugar market. At the same time, the Everything-But-Arms (EBA) agreement has created new opportunities for sugar-producing EBA countries to export to the EU sugar market. (This article was published in Development Economics between Markets and Institutions: Incentives for growth, food security and sustainable use of the environment, edited by Erwin Bulte and Ruerd Ruben. Wageningen:Wageningen Academic Publishers, 2007).

10/01/2008


Repositioning the ACP sugar industries through Science, Technology and Innovation

Sugarcane Global sugar production for 2004/2005 for 110 countries was estimated to be 144 million tons. It is noteworthy that most of the sugar produced is consumed domestically and only about 25% is traded internationally with the top three sugar exporting countries, Brazil, Thailand and Australia accounting for almost 50% of world exports (Illovo, 2005). In addition to providing direct employment for over 300,000 people on estates and on smallholdings, the sugar industry provides indirect employment to hundreds of thousands of people through the value chain and by extension supports the livelihoods of millions of families who are directly and indirectly dependent on the industry. In some ACP countries, sugar is one of the most significant contributors to the national economy. For example, sugar generates over 17% of GDP in Guyana and 24% in Swaziland, while in Fiji sugar production is responsible for over 90% of agricultural output. The decision of the European Union (EU) to make changes to its sugar regime will result in significant loss of earnings by ACP countries resulting in severe hardships in their national economies. Some of the industries will be phased out but others will require considerable readjustment and modernization of both field and factory operations if they are to remain economically viable and globally competitive. The end result of phasing out and or restructuring existing operations will inevitably mean closure of some factories with the attendant loss of jobs and economic and social decline. Recognizing that most of the sugar is consumed locally, ACP countries need to further explore new income streams such as cogeneration, and ethanol production for fuel, while diversifying within traditional products; molasses, rum, packaged sugar and plain and flavoured syrups through new product innovations or embarking on new marketing strategies. However, it is hoped that the ACP sugar industry stakeholders will fully explore all the opportunities that science, technology and innovation offer by building national, regional and international strategic public/private sector partnerships so as to avoid a complete shutdown of factory operations and future reliance on imported sugar to support domestic consumption and sustain other sugar based industries.

23/05/2006