Tradeview japan


Since the volume traded annually has remained relatively static at about 30 million tonnes. Thus we have yet another business conundrum - growth in demand, low world prices and yet most of that new demand satisfied by domestic production. However there is some evidence of the impact of real market forces.

What has changed is that. The question is will this be the end of the matter? Will increased demand continue to be met by more expensive domestic production while efficient exporters compete for a static world trade volume? In seeking an answer to that question, I have looked for evidence of change in the pattern of world trade. Thus we have a clear pattern of "deregulation" of production support in various forms and a strengthening of global purchasing knowledge on the consumption side.

To form a trade or business view of whether these factors will overcome that factor "X" -agricultural politics - and lead to a liberalisation and growth of sugar trade I need to analyse the reason why sugar is so political. In my view sugar is the most political of all agricultural commodities, not directly as a result of international politics in the sense that oil is political, but due to a concentration effect in local politics.

What happens in economic terms when someone builds a sugar mill is that all land holders within a short radius obtain - usually at no cost - one more option for use of that land. As the factory expands more and more of the local land is attracted to cane. The cane growers band together to negotiate with the mill. It is then a good negotiating tactic to accuse the mill of having monopoly power and demand of the local politician that there be regulation. The local organisation of cane growers become a relatively large and effective lobby organisation in the small local area politics.

It can influence even direct the local politician. Grower organisations then link at state and national level. The end effect is that a relatively small percentage of the population can have a disproportionate political power through high concentration in specific areas. This pattern is evident in all sugar producing areas regardless of political persuasions. It derives from the fact that a mill and its cane supply are inextricably linked. The local concentration leads to national cane grower political power and the outcome is predictable - agricultural politics dictating international trade.

In the face of all this, does the pattern of change suggest a new future for the sugar trade in the Asia Pacific region? I think it does. I suspect that while sugar politics will remain real everywhere, and even dominant in some countries, its influence will decline. The fact is that it has already happened in many countries.

Further, price support schemes are under real pressure even in those countries which can afford them e. Cost of production data is notoriously difficult to obtain and interpret. The Oxford based LMC International has undertaken a number of cost competitiveness studies and published trend data. That data suggests that Australia, Thailand, Brazil, India and a group of Southern African units are the low cost sugar producers.

It is important to note here in the Asia Pacific context that it is not overall industry size alone that dictates cost competitiveness. LMC has identified some small southern African nations as low cost producers.

I can independently confirm that from other data. What seems to be most important in the long run is the business framework in which the individual sugar producing enterprise is allowed to operate.

There is ample statistical evidence that the "Real" world sugar price, in common with other agricultural commodities, has been trending down throughout the twentieth century. People like me who are in the business hope that trend will reverse. However we also know only too well that those who don't pay attention to history lessons get to do all the practical classes.

At the least, it suggests that in the very long run, there IS feedback from production costs to world prices". I think it will become the slow tide that the "King Canute" price support regulatory systems cannot hold back.

Therefore, in summary, it is my view that there will be real opportunities for growth in the sugar business and for trade in sugar in the Asia Pacific region, because of the obvious facts that:. However I am not going to predict when those opportunities will be realised. Experience has taught me that anything involving agricultural politics takes longer than a rational person would predict and is invariably preceded by a foul up. Nevertheless, as I said in my introduction, global sugar's future is, in fact, this Asia Pacific region.

In developing policy for the next round of Multilateral Negotiations, it will be important that there is due recognition of the evolutionary change occurring in the sugar trade pattern.

The driving factor will not be regulatory price support mechanisms; rather it will be the cost competitiveness of efficient producers. Mr Chairman, Delegates Before addressing my topic today, I must firstly seek your indulgence in a matter of definition.

What then is the future for the business of sugar in this Asia Pacific region? In seeking an answer to that question, I have looked for evidence of change in the pattern of world trade There is clear evidence of domestic market deregulation in many countries. Annual growth rates during the past two decades have slowed a little to the order of 1. When compounded this still amounts to a lot of sugar - equivalent to Australia's total exports every two years.

But actual trade in sugar has not grown to anywhere near the same extent. Since the volume traded annually has remained relatively static at about 30 million tonnes. Thus we have yet another business conundrum - growth in demand, low world prices and yet most of that new demand satisfied by domestic production. However there is some evidence of the impact of real market forces. What has changed is that. The question is will this be the end of the matter?

Will increased demand continue to be met by more expensive domestic production while efficient exporters compete for a static world trade volume?

In seeking an answer to that question, I have looked for evidence of change in the pattern of world trade. Thus we have a clear pattern of "deregulation" of production support in various forms and a strengthening of global purchasing knowledge on the consumption side. To form a trade or business view of whether these factors will overcome that factor "X" -agricultural politics - and lead to a liberalisation and growth of sugar trade I need to analyse the reason why sugar is so political.

In my view sugar is the most political of all agricultural commodities, not directly as a result of international politics in the sense that oil is political, but due to a concentration effect in local politics. What happens in economic terms when someone builds a sugar mill is that all land holders within a short radius obtain - usually at no cost - one more option for use of that land.

As the factory expands more and more of the local land is attracted to cane. The cane growers band together to negotiate with the mill. It is then a good negotiating tactic to accuse the mill of having monopoly power and demand of the local politician that there be regulation.

The local organisation of cane growers become a relatively large and effective lobby organisation in the small local area politics. It can influence even direct the local politician. Grower organisations then link at state and national level. The end effect is that a relatively small percentage of the population can have a disproportionate political power through high concentration in specific areas. This pattern is evident in all sugar producing areas regardless of political persuasions.

It derives from the fact that a mill and its cane supply are inextricably linked. The local concentration leads to national cane grower political power and the outcome is predictable - agricultural politics dictating international trade. In the face of all this, does the pattern of change suggest a new future for the sugar trade in the Asia Pacific region?

I think it does. I suspect that while sugar politics will remain real everywhere, and even dominant in some countries, its influence will decline. The fact is that it has already happened in many countries. Further, price support schemes are under real pressure even in those countries which can afford them e.

Cost of production data is notoriously difficult to obtain and interpret. The Oxford based LMC International has undertaken a number of cost competitiveness studies and published trend data.

That data suggests that Australia, Thailand, Brazil, India and a group of Southern African units are the low cost sugar producers. It is important to note here in the Asia Pacific context that it is not overall industry size alone that dictates cost competitiveness.

LMC has identified some small southern African nations as low cost producers. I can independently confirm that from other data. What seems to be most important in the long run is the business framework in which the individual sugar producing enterprise is allowed to operate. There is ample statistical evidence that the "Real" world sugar price, in common with other agricultural commodities, has been trending down throughout the twentieth century.

People like me who are in the business hope that trend will reverse. However we also know only too well that those who don't pay attention to history lessons get to do all the practical classes. At the least, it suggests that in the very long run, there IS feedback from production costs to world prices". I think it will become the slow tide that the "King Canute" price support regulatory systems cannot hold back.

Therefore, in summary, it is my view that there will be real opportunities for growth in the sugar business and for trade in sugar in the Asia Pacific region, because of the obvious facts that:. However I am not going to predict when those opportunities will be realised.

Experience has taught me that anything involving agricultural politics takes longer than a rational person would predict and is invariably preceded by a foul up. Nevertheless, as I said in my introduction, global sugar's future is, in fact, this Asia Pacific region. In developing policy for the next round of Multilateral Negotiations, it will be important that there is due recognition of the evolutionary change occurring in the sugar trade pattern.

The driving factor will not be regulatory price support mechanisms; rather it will be the cost competitiveness of efficient producers.