Sugar prices have more than doubled due to the dry El Nino weather pattern.
The skyrocketing prices of sugar have left Ishaq Abdulrahim with few options. An increase in the price of bread would mean a decline in sales, so a Nigerian baker decided to halve his production.
For many other bakers who were struggling to stay on the job while enduring the high costs of fuel and flour, stratospheric sugar prices proved to be the last straw, and they closed for good.
Sugar is needed to make bread, the staple food of Nigeria’s 210 million people. For many people who are struggling to put food on the table, it provides a cheap source of calories. Soaring sugar prices – up 55 percent in two months – mean fewer bakers and less bread.
“This is a very serious situation,” says Abdulrahim.
Worldwide sugar is trading at its highest prices since 2011, mainly due to reduced global supply after unusually dry weather caused crop losses in India and Thailand, the world’s second and third largest exporters.
It is the latest blow to developing countries that already struggle with shortages of staple foods such as rice, exacerbated by restrictions on food trade. food inflation,
All of this contributes to food insecurity due to the combined effects of naturally occurring climate phenomena El Nino, war in Ukraine and weak currencies. Rich Western countries can afford the higher costs, but poorer countries are struggling.
El Nino has pushed global sugar stocks to a 14-year low
The UN Food and Agriculture Organization is predicting a 2 percent decline in global sugar production in the 2023-24 season compared to last year, a loss of about 3.5 million tonnes, says Fabio Palmieri of FAO global commodity markets. Researcher.
This is partly due to El Nino, a natural phenomenon that alters global weather patterns and can cause extreme weather conditions ranging from drought to floods. Scientists believe climate change is making El Nino stronger.
In addition, sugar is also increasingly being used for biofuels such as ethanol, so global sugar stocks are at their lowest level since 2009.
brazil It is the largest sugar exporter, but its production will help offset the shortfall only by the end of 2024. Until then, import-dependent countries – such as most of sub-Saharan Africa – will remain vulnerable.
NigeriaFor example, it buys 98 percent of its raw sugar from other countries. In 2021, it banned the import of refined sugar, contrary to plans to build domestic sugar processing, and announced a €67 million project for expansion. Sugar basic infrastructure. But those are long-term strategies. Abuja traders like Abba Usman are now facing problems.
The same 50kg bag of sugar that Osman bought for €60 a week ago is now worth €74. As prices are increasing, his customers are decreasing.
“The prices keep increasing every day and we don’t know why,” says Osman.
How has El Nino affected crops?
India August was the driest in more than a century, and in the western state of Maharashtra, which accounts for more than a third of its sugarcane production, crops were ruined during the crucial growing stage.
IndiaAccording to the Indian Sugar Mills Association, sugar production is likely to decline by 8 percent this year. The world’s most populous country is also the largest consumer of sugar and is now banning sugar exports.
in Thailand, El Nino The early effects of the growing season changed not only the quantity but also the quality of the crop, says Naradhip Anantasuk, leader of the Thailand Sugar Planters Association. They expect only 76 million tonnes of sugarcane to be milled in the 2024 crop season, compared to 93 million tonnes this year.
A report from the US Department of Agriculture predicts a 15 percent decline in production Thailand In October.
Price controls on sugar may further limit production
Thailand reversed sugar price hikes within days, imposing price controls for the first time since 2018. Anantasuk says it will discourage farmers By limiting my income from growing sugar.
“This is like stopping the industry from growing, stopping open competition,” he says.
Wholesale prices were allowed to rise to help farmers cope with higher costs – partly due to the government’s demand that they not burn their fields, making harvesting cheaper but much of Thailand overharvested. Gets covered in. haze,
Look ahead, Brazil’s Crop That’s expected to be 20 percent larger than last year, says Kelly Goughry, a senior research analyst at agricultural data and analytics firm Grow Intelligence. But since the country is in the southern hemisphere, the boost to global supplies won’t arrive until March.
According to the USDA, this is due to favorable weather in Brazil earlier this year as well as an increase in sugarcane planted areas.
FAO’s Palmeri says the next few months are the biggest concern. He says that population growth and increasing sugar consumption will put further pressure on sugar reserves.
The world has sugar reserves for less than 68 days
According to USDA data, the world now has less than 68 days of sugar reserves to meet its needs, compared to 106 days when 2020 began its decline.
“This is the lowest level since 2010,” says Joseph Glauber, senior research fellow at the International Food Policy Research Institute.
According to the USDA, Indonesia – the biggest sugar importer last year – has cut imports and China, the No. 2 importer, has been forced to release sugar from its stocks to offset higher prices domestically for the first time in six years. It happened, so says Palmeri. ,
For some countries, importing more expensive sugar depletes reserves of foreign currencies such as dollars and euros, which are also needed to pay for oil and other vital commodities, says FAO economist El Mamoun Amrouk.
Low rainfall has affected sugar farmers in Kenya
Contains kenya, Once self-sufficient in sugar, it now imports 200,000 tonnes a year from the regional trading bloc. In 2021, the government limited imports to protect local farmers from foreign competition, but it reversed that decision after inadequate rainfall and mismanagement led to low harvests.
amount of sugar added during grinding kenya There was a continuous decline from June to August. To compensate, monthly imports doubled from September to October. Meanwhile, the price of a 50kg bag of local sugar has doubled to €55, says shopkeeper Joseph Curaru.
Back in Africa’s largest economy, the struggle nigerian Bakers are a microcosm of the rising costs of food and fuel and the larger impact of high sugar prices because it is ubiquitous. Many bakeries in Abuja use sugar to sweeten cakes and feed the yeast that makes bread rise.
bread is often the only thing Eat Poor families can afford. When bakers raise bread prices, as they did by 15 percent earlier this year, some people go hungry.
President of the Nigerian Bakers Association, Mansur Umar, says not bearing the high costs is not an option.
“There is no way you can buy high and sell low,” he says.