The international sugar market is characterized by low and volatile prices.
Below you can find out about:
- Problems facing sugar producers
- Benefits of Fairtrade for producers
- Fairtrade certified producers
- Buying and selling Fairtrade sugar
- Fairtrade Standards for sugar
Problems facing sugar producers
There are 135 million tonnes of sugar produced each year from millions of farms and plantations in 127 countries around the world.
Sugar is one of the most important world commodities, produced and consumed around the world. There are 135 million tonnes of sugar produced each year from millions of farms and plantations in 127 countries around the world. For many countries it is one of the most important sources of national income. For example, sugar accounts for 70% of Cuba’s exports and 40% of exports from Belize. However, for the millions of farmers and plantation labourers working to cultivate sugarcane, there are significant obstacles to earning a decent livelihood.
Low and volatile prices
In the first instance, the international sugar market is characterized by low and volatile prices. While the price of sugar fluctuates constantly, there is a clear downward trend. Sugar prices have plummeted 76% in real terms between 1980 and 2000. Any change in international sugar supply or demand can cause a sharp jump in sugar prices. For example, in the early 1980s the Coca Cola Company decided to substitute a corn base for sugar in its soft drinks. At the time, Coca Cola was using 600,000 tonnes of sugar annually and was the biggest buyer of sugar in the world. The change in demand made by this single company plunged the sugar industry into a long and deep crisis.
In addition to volatile low prices, farmers in developing countries must compete with wealthy, more powerful countries with greater financial resources to dedicate to sugar production and greater political power to subsidize and promote their sugar industries.
Sugar prices have plummeted 76% in real terms between 1980 and 2000.
The European Union (EU) has recently taken the decision to cut protection of its sugar industry. This should lead to a small rise in the international price of sugar and a reduce price fluctuations. Before, the EU maintained a tariff of 225%, making sugar prices within the EU almost three times that of the international market. These high prices encouraged an overproduction of sugar in Europe, producing beyond what could be consumed by Europeans. The extra sugar was then sold off in other countries at prices below the cost of production. Besides denying important markets for sugar-producing countries of the South, this 'dumping' also caused the international price of sugar to plummet.
The EUs decision is positive. However, many other important sugar producers in rich countries continue to maintain high tariffs, in particular the United States, with a tariff of 150%.
Benefits of Fairtrade for producers
Sugar farmers who can sell to the Fairtrade market are paid a Fairtrade Premium to invest in social, environment and business development.
Fairtrade Standards for sugar growers ensure that:
- Producers are organized in cooperatives (or associations) which they govern democratically.
- Environmental standards restrict the use of agrochemicals and encourage sustainability.
- Pre-harvest lines of credit are given to the cooperatives if requested, of up to 60% of the purchase price.
- A Fairtrade Premium is paid directly to the cooperative or association and is used for social and economic investments such as education, health services, processing equipment, and loans to members.
Fairtrade certified producers
You can read a case study about Fairtrade sugar producers on the Fairtrade Foundation website.
To find out which sugar producer organizations are currently Fairtrade certified, you can check the database available on the FLO-CERT website.
Find Fairtrade Minimum Prices and Premiums