Global sugar shortage
Some manufacturers cutting back to keep products on shelves

At least three local manufacturers are admitting they are reeling from the effects of a global sugar shortage.

In an interview with the Jamaica Observer, director of administration and finance at Cal's Lisa Watson said the crisis is causing her company to cut back on the production of some products which is hurting the bottom line.

"Right now we're going through a crisis, a worldwide crisis and that is sugar shortage, it's really hard for us as manufacturers. We have to be doing a lot of cutting of orders and prioritising our flavours, meaning we do a total of 12 flavours and we have to cut that to six and prioritise the most popular flavours that persons request," she stated.

According to the International Sugar Organization (ISO), there's currently a global sugar deficit of 200,000 tonnes.

As a result of this, white sugar hit a contract high of US$598.6 per tonne in July 2022, its highest since October 2016.

Raw sugar peaked at US$20.42 cents in November last year which was its highest in about four and a half years.

Chief executive officer of the Seprod Group Richard Pandohie said, "There is significant supply constraint re sugar."

He further advised "for the short term we are okay, but we are trying our best to mitigate the medium-term risk."

Another manufacturer, who requested to stay anonymous, said, "Just this morning my usual supplier called and said he was out."

According to a Reuters report, Brazil, which is recognised as the largest producer of cane sugar, cancelled some of its sugar export contracts earlier this year and started focusing on ethanol production instead to benefit from rising energy prices.

Traders say the move undoubtedly resulted in less sugar on the global market.

Watson disclosed that conditions are at a point where she's having to borrow sugar from other manufacturers as her shipments are significantly delayed.

"We have shipments coming but we can't really depend on that, we can't really just sit back and wait. For now we have to be borrowing from other manufacturers and buying locally to produce the product. We use sugar in almost every single product," she lamented.

While there are short-term alternatives, Watson said it's starting to become a burden on the company's purse.

"We have to be buying sugar locally which works out to be more expensive for us," she said.

In contrast to the global sugar shortage, Jamaica produces just enough sugar for local consumption and a little extra which is exported.

The Sugar Industry Authority is reporting that Jamaica produces about 38,000 tonnes of sugar annually with local consumption trending around 28,000 tonnes.

Chairman of the All-Island Jamaica Cane Farmers' Association Sydney Fray told the Business Observer that there might even be a sugar surplus on the island.

"Worthy Park is saying they have sugar that they don't think they are going to sell off for this crop year which is from January to December," he said.

But he argued that local sugar isn't appealing to manufacturers who are used to cheaper imported sugar.

He said, "The price on the local market is far more than what you would import it for."

Some manufacturers told the Business Observer that if the sugar shortage is prolonged, there could be price increases commensurate with the increased production costs. But for now, the producers say they are doing their best to simply keep the products on the shelves.

There's currently a global sugar deficit of 0.2 million tonnes — ISO.
Andrew Laidley

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