PART TWO

S2 – DIRECTORY OF COMMODITIES

SHEA BUTTER (also known as bambuk, nku)

Production

Commercial production is almost exclusively confined to West Africa.  The major producing countries are Mali, Burkina Faso, Benin, Senegal Ivory Coast, Ghana, Gambia and Nigeria.

Most nuts are collected from the wild tree.  Nuts for export are collected from gatherers or are collected on a large scale by local commercial companies, landowners or cooperatives which hold term contracts with large foreign refining companies Mali, the largest producer, is estimated to produce approximately 150,000 tonnes of nuts per year.

Grades

Individual consumers specify their own quality conditions for purchase of shea butter.  Typically free fatty acid (FFA and moisture content should be no higher than 1 per cent.  Buyers may also specify its iodine value and a melting point of between 30 and 40 degrees C – should be free of foreign bodies.

Users in the cosmetic industry take a very highly refined product ad may require a detailed specification of the different fatty acids contained, the refractive index and saponification value.

Uses

Shea butter is used industrially as a substitute for cocoa butter in the manufacture of chocolate.  Small quantities are used in the manufacture of chocolate.  Small quantities are used as an ingredient in pharmaceutical products and soaps.  The main use of shea butter is as an important cooking oil in the countries where it is produced.

Production method

Shea tress, that bear the nuts from which shea butter is produced, grow widely and naturally in West Africa.  They only begin to bear fruit about 20 years and do not reach maturity for 45 years.  They continue to produce nuts for up to 200 years, however.  The long period taken to reach maturity has discouraged plantation planting, although they are used as shade trees for other crops in certain dry areas.

The nuts, which are embedded in a soft fruit, fall to the ground during the harvesting period between June and August.  They are then buries in pits which causes the pulp to ferment and disintergrate and produces enough heat to prevent germination.

The nuts are dried for a few days and later shelled to reduce moisture content from about 40 per cent to about 7 per cent.

The oil is extracted locally by a process involving the heating and kneading of the crushed kernels and straining the resultant oily presses and hot air ovens.

Shea butter must be stored and transported in cool conditions and in air-tight containers to avoid the butter becoming rancid.

Consumption

The main industrial consumption (almost all for chocolate production) is in Europe, Japan, and Northern America.

In the EU only the UK, the Irish Republic and Denmark are permitted to use shea butter in their chocolate products, but other EU countries are lobbying to be allowed to use upto 5 per cent vegetable fats, other than cocoa butter, in their chocolate.

Main market features

Supply of shea butter to the international market is flexible but demand is not.  Only a fraction of potential production is exported for industrial use.  Although shea butter offers certain useful technical characteristics to the chocolate maker, its use in the chocolate industry depends on its price in relation to that of cocoa butter.  There are very few major refiners and they have a great deal of control of the market through a system of long-term purchase agreements.  New producers of sizeable quantities are unlikely to find a ready market for their product.  It is, therefore, something of a closed market.

The main buyers in the international trade are the refiners in developed countries, often associated with the chocolate and/or food industry.  They prefer to buy the raw nuts rather than the butter in order to have as much control as possible over the processing and quality of the final product.  Another reason for preferring nuts is that they can be stored for up to five years in the right conditions, whereas butter is more expensive to store and deteriorates more rapidly.  Any exports of butter from African countries tend to be of unrefined material.

Prices

1n 1993 unrefined butter traded at about US$1000 per tonne cif European port.

SHELLAC

Shellac is a natural thermoplastic, produced in the form of minute platelets by the tiny lac insect.  These platelets are gathered and melted into flakes.  Shellac is hard at normal temperatures but softens under pressure when heated.  It forms a solution in alcohol.

India exported 12,000 tonnes in1994 and is the most important supplier of the product.  Thailand is the second largest producer (and only important rival to India) with exports of about 8000 tonnes.

Shellac has a wide range of commercial applications, but many of these have been eroded over the last century owing mainly to substitution with various plastics.  It was once used in great quantities to make gramophone records, for stiffening felt hats and for making buttons.

The most famous and still the most important use for shellac is as the definitive ingredient in French polish.  It is , however, edible and can be used as a gaze in confectionery.  It is also an ingredient in some hair sprays and sealing wax.  A relatively new use has been found in the perfume industry.

Shellac is traded in two froms, ‘seedlac’ which has been washed but is essentially the product produced by the lac insect , and ‘flake’.

Natural shellac contains a type of wax.  Although 90 per cent of uses require the waxy product, there is a requirement for a dewaxes product.  Dewaxing is a fairly simple process carried out in the country of origin.  The various grades of shellac are determined by the colour, which varies from light yellow to amber to dark brown.  Lighter grades are favoured.

Although the shellac trade is convinced that demand has at last reached a plateau, supported by the recent interest in natural products, they are worried that the demand for wood in India and Thailand will reduce the number of trees, especially Butes frondosa,on which the lac insect feeds.  Since these trees take 10 to 15 years to grow, supply may be in jeopardy even if demand does rise.

In early 1995 the price of seedlac was about US$3200 per tonne, and the price for first grade

Lemon shellac flake was about US$3700 per tonne – both prices on a cif Europe basis.

SILK

Production

1992Main producers (tonnes)

china                                                             64,002

India                                                              12,500

Korea(North)                                                4,500

Japan                                                            4,000

Former USSR                                               3,500

Brazil                                                             2,296

Thailand                                                        1,300

Korea                                                              800

Iran                                                                 537

Vietnam                                                            500

World total                                                    94,523

Source: FAO estimate

China also produces approximately 1000 tonnes of tussah (wild) silk per year

Grades

Silk as a raw material is traded in the form of cocoons, raw silk, waste silk silk noils (short, tangled fibres) and spun silk or yarn.

The quality of raw silk Association and Japanese suppliers after the Second World war and adopted by the Chinese more recently.  In this system there are five internationally traded categories – A, 2A, 3A, 4A and 5A.  ‘5A is the highest quality and ‘A’ the lowest.  Test are made on the strength, cohesiveness and neatness (regularity of diameter along the length) of the thread to determine its grading.  The most commonly traded raw silk is 3A.

Although the man-made fibre industry has gone over to the TEX system of measuring the weight (thickness) of thread, the silk industry still uses the denier system, which is defined as the weight in grams of 9000 meters.  The most commonly traded silk is 20/22 denier – average 21.  This is the type used to make silk scarves, etc.

Consumption

The silk market has undergone a major change over the last decade.  Silk products are relatively less expensive and the greater wealth of many people in the industrialised world means that silk garments are no longer bought only by the very rich.

World trade in silk is divided almost equally between raw silk, fabrics and finished goods.

India converts per cent of its raw silk production into silk fabrics of which 20 per cent are exported.  China makes 90 per cent of the world’s raw silk exports and 40 per cent of the world’s silk fabric exports.

European imports are moving away from raw silk to fabrics and finished garments.  Imports of raw silk into the five major European importing countries fell from 5760 tonnes in 1985 to only 3330 tonnes in 1992.

Italian and Belgian companies handle 85 per cent of European trade.

Japan’s silk production business, once the largest in the world, has shrunk rapidly.  Japan has become a major importer.

Uses

Silk is most luxurious of fibres.  It is used to make lingerie, ties, shirts, dresses (especially saris and kimonos and blouses.  Some soft furnishings, including cushion covers and bed sheets, are also made of silk.

Production method

There are several varieties of commercially exploited silk worm of the genus Bombyx mori, which live on the leaves of mulberry trees.  About five weeks after hatching from the egg, the silk worms spin cocoons in the trees which are especially grown in small groves or in plantations.  The cocoons, which consist of about 900 meters of useful thread, known as filament, are soaked in hot water to soften them and the end of the threads is found.  (The larvae inside the cocoon are killed in the process.  Only a few are saves for egg production.)  The cocoons are then unwound and twisted with other threads into yarn to the required thickness.

Poorer quality thread from broken cocoons from which the larvae have been allowed to hatch are spun into a yarn known as spun silk in a process similar to the worsted process.

Varieties of silk worm come in monovoltine silk worm adapted to tropical climates, can be harvested 6 to 8 times a year but it is considered inferior to silk from China and other countries that can only use silk worms which thrive in cooler climates but which produce only one or two cocoons a year.

Once the silk has been processed into yarn (or sometimes even into textiles) it is boiled in hot soapy water to remove the natural gum, sericin, leaving the silk soft and lustrous.

Main market features

Silk production, or sericulture as it is called, is highly labour intensive.  The international silk market is dominated by China.  It has a plentiful supply of cheap labour, large scale plantations and mechanised reeling and weaving technology in the industry and the government has decided to subsidise textile production and restrict imports.

The huge volume of Chinese exports tends to put an upper limit on silk prices.  In recent years, this tendency has been exacerbated by finished silk garments between different Chinese regions.

The export market is moving away from silk as a raw material and more towards a market in textiles and finished garments.  Some companies based in industrialised countries are investing in silk-weaving machinery and leasing it to Chinese factories.  Many developed countries, especially the EU, protect their silk fabrication industry from china with strict quotas, however.

In spite of Chinese domination of the market, more traditional, family-scale producers can still make a living from the silk because mulberry trees are drought resistant and can be grown on marginal land.  Indeed, there is a distinct market for hand-dyed and hand woven silk products, especially in Asia.

Ever since the invention of nylon in the late 1930s silk has faced strong competition.  But silk has some unique properties.  It can absorb moisture without feeling damp and its cool-in-summer, warm-in –winter property has yet to be matched by cheaper synthetics.  New developments in silk technology allow silk technology allow silk garments to be hand washed rather than dry-cleaned.

Prices

Political tension between china and the West in 1989 caused silk prices to rise.  But prices then fell sharply, only to rise again between 1993 and 1995.

Chinese 20/22 denier 3A silk, cif Europe, US$ per kilo:

1993 – 22, 1994 – 30, 1995 – 32.

SISAL (also known as agave fibre.

Agave sisalana

Production

1992 Main producers (thousands of tonnes)

brazil                                                             210

Tanzania                                                        35

Kenya                                                           35

Mexico                                                          30

Madagascar                                                  19

China                                                            17

Venezuela                                                         9

Haiti                                                                 8

South Africa                                                     8

Cuba                                                                7

Source: FAO estimates

Brazil consumes much of its own sisal production whereas Tanzania depends very heavily on sisal exports.

Grades

The Tanzania sisal Authority has adopted a system of grading using six catefories.  They are in descending order of quality, Grade !, Grade A, Grade 2, Grade 3L, Grade 3 and Grade UG.  In this system fibres of 3 ft long or move are favoured over shorter lengths, a light (creamy) colour is favoured over dark colours, any fibre ends or improperly decorticated fibre are disfavoured.  UG stands for ‘under-grade’.

Tanzania and Kenyan sisal are of a much higher quality than the Brazilian product, which gives them a higher price.  They are more useful for making more specialised products.

Consumption

Most sisal is spun into cord or twine or other products in the country of origin and much of that processed product is exported.  France and Portugal, however, import raw sisal for spinning.

Uses

Sisal fibres are lustrous, strong and durable , but coarse and relatively inflexible.  Sisal is used mainly as a low –cost twine for agricultural machine bindings, but has lost much of this market to cheaper, more versatile, man-made fibres.  Only about half of the binder twine used by developed countries is now made from it.  Sisal, along with jute, are the two natural fibres sanctioned by the coffee trade for use as coffee bags and Kenyan coffee bags are made from sisal.  It is also used for matting, carpets (often made with a combination of sisal and other natural fibres), carpet backing, dartboards and brushes.  Some is used to make specialist papers.  In the USA lift cables must by law contain a sisal core.  The fibre can be dyed easily.

The sap of one species in the sisal family is fermented to make the intoxicating drink pulque.

Method of production

Sisal is a long-leave desert plant that can be grown in very dry conditions.  In Africa, where it was introduced from South America towards the end of the nineteenth century, it is grown in plantations, but in South America, it is also grown by smallholders.  It lives for about 10 years before it flowers and dies.  The plant is normally grown in nurseries for the first year or so and matures in 3 to 5 years.  The fibres are contained in the spiky leaves of the plant and reach 1.5 metres long.  The leaves are cut twice a year from the outside of the plant by hand and mechanically decorticated by being crushed between rollers.  The fibres are washed and dried, either mechanically or by hand.

Brazilian sisal is often shipped in bulk, whereas African sisal is shipped in tighter bales in containers

Main market features

The sisal market is a good example of the modern tension between natural and synthetic raw materials.  Sisal’s main use as an agricultural binding twine has been eroded greatly over the last few decades by synthetic materials such as polypropylene.  Prices declined through the 1970s and 1980s.

However, sisal producers and traders, backed by the Swedish government and with some funding from the FAO and others, are fighting back with some very strong arguments.  Sisal production does help development in the many tropical countries that produce it.  The fibre has greater knotting strength and is easier on the farmer’s hands.  As a renewable natural resource, it is very much more environmentally friendly than its synthetic rivals.  It is fully biodegradable and it can be ingested by livestock without doing any harm, it requires no fossil fuel to produce (polypropylene is made from oil), and its production does not pollute the atmosphere.  The promotion campaign is also helping to promote a greater range of coloured sisal products.

There is, however, a massive potential capacity for sisal production.  Tanzania spinning mills are working only at one tenth of their capacity as Tanzania production has fallen from 23,000 tonnes in 1964.  This factor, combined with competition from synthetics is likely to keep prices down even if consumption trends were to be reversed.

After a spell of increasing prices, the recession in the early 1990s combined with the peaking of agricultural production, very high stocks held in Brazil and East Africa and the economic collapse of the former Soviet Union, an important consumer of sisal, have caused a significant fall in sisal prices.

The sisal industry is very labour intensive and if revived, could provide many jobs in third world countries.

Most sisal is produced by large transnational corporations or by state-owned plantations.  These organisations are also responsible for much of the processing of the raw fibre into useful products.  The small international trade in raw fibre is conducted by a few specialist trading companies which also trade in sisal products.

Prices

Tanzanian/Kenyan No 1 cif Europe. US$ per tonne:

1991 – 770, 1992 – 600, 1993 – 550, 1994 – 750, 1995 -= 750.

SORGHUM (also known as durra, kaffir corn)

Genus sorghum

Production

1992 Main producers (thousands of tonnes)

USA                                                             22,455

India                                                              13,000

China                                                            6,015

Mexico                                                          5,106

Sudan                                                            4,320

Nigeria                                                          4,100

Argentina                                                       2,766

Burkina Faso                                                 1,238

Ethiopia                                                         1,100

Australia                                                        1,072

World                                                           70,448

Source: FAO estimates

Most sorghum is produced outside the tropics but it is, nevertheless, an important staple food in about 100 tropical and subtropical countries.

Grades

the quality of sorghum is based partly on the size of grain, usually measured as the weight of 1000 grains.  Larger grains are preferred.  The Kansas City Board of Trade, which host a market in sorghum, recognises three grades, Number 1, 2 and 3.  Grade Number 3 allows for up to 7 per cent damaged grains and up to 10 per cent foreign material.

Uses

Almost all sorghum in temperate countries is used as animal feed, mainly in the form of cattle-cake.  In many tropical countries, dough made from sorghum is made into porridge, bread and pasta as well as being used to make beer.  It is also added to wheat flour when wheat supplies are not plentiful of expensive.  The leafy part of the plant is used for forage.  A variety of sweet sorghum is grown for its sap, known as sorghum syrup.

Production method

Sorghum is planted in the early spring in warm arid climates or in late spring in more temperate conditions.  Red and brown varieties contain tannins in the outer layers of the seeds and they need to be hulled mechanically or by hand to remove the bran before flour production.  Although white, non tannin varieties are readily available, some farmers prefer to grow the red and brown varieties because of their resistance to third attack.

The International crops Research Institute for the Semi-Arid Tropics (ICRISAT) has discovered that sorghum can be effectively protected from ergot, one of its most devastating diseases, by spraying the crop during the flowering season with a spray of a 50/50 mixture of garlic and water.

There are very many varieties of sorghum to suit different needs and climates.

Main market features

There has been a long-term trend away from sorghum as a staple food in tropical countries in favour of other grains, particularly wheat.  Wheat bread is perceived as being more ‘modern’ and so more desirable than sorghum.  As any developing country becomes richer, therefore, imports of wheat, which cannot always be grown successfully in tropical countries, increase and the prospects for exporting sorghum diminish.  In the long run, however, the demand for sorghum as cattle food might increase as meat consumption increases.

The World Bank, in its 1993 edition of price prospects for major primary commodities, puts forward the view that international prices for sorghum will increase slightly by the end of the century.

Since most sorghum is used in the country of origin, international trade is largely confined to exports and imports of cattle-feed products containing sorghum.  These deals, usually of a minimum of 5000 tonnes at a time, are done by large trading companies mainly between agro-industrial countries and are, therefore, of little relevance to small-scale tropical producers.

Prices

Sudanese sorghum, fob Sudan, US$ per tonne:

1994 – 1000 to 110, 1995 – 110 to 130.

SOYA

Genus Glycine

In commercial terms soya is the most important bean in the world.  It is turned into oil or flour and it represents one of the most economical sources of protein for human food.  It is also used for feed cattle and poultry.  Most soya is grown in temperate climates but it is an important crop in some tropical countries.

1992 Main producers (thousands of tonnes)

USA                                                             59,780

Brazil                                                             19,161

Argentina                                                       11,315

China                                                            9,707

India                                                              2,950

Indonesia                                                       1,881

Italy                                                               1,434

Canada                                                         1,387

Paraguay                                                       1,315

Russian Federation                                           500

World                                                           114,011

Source: FAO estimates

The plant is an annual which grows to about 1 metre in height.  Several varieties have been developed especially for the humid tropics, including ‘Chipewa’ from Nigeria.  The plant reaches maturity in about 100 days in equatorial regions.  The beans, which contains 35 per cent protein by weight, are contained in a pod which is harvested before the pod splits.  This is done mechanically or by hand from small plots.  After threshing, the beans are dried.  The international standard for soya beans specifies a moisture content of international standard for soya beans specifies a moisture content of no more than 14 per cent and maximum impurities of 2 per cent.  Like other leguminous plants, the bean fixes nitogren in the soil and so is cheap on fertiliser.

The flour of the bean, known as soya meal, is specified by its combined protein and fat content.  The meal is used to feed farm animals and as an emulsifier in various food products.  Soya milk is made directly from the flour.  Other food uses are in soy sauce and bean curd.  The flour can be texturised to resemble meat.  Industrially the bean is used in glues and paints.

The bean contains about 18 per cent oil, which can be separated by continuous screws presses (expellers) or more efficiently, by solvent extraction.  Phosphatides, which are present in the natural oil, are removed as a by-product first by ‘degumming’, ie hydration and centrifugation, and then by adding excess alkali and removing the precipitate.  The by-product (known as lecithin) has several chemical applications in the food, cosmetic and pharmaceutical industries.

The oil is then bleached and deodorised.

Most oil is made into margarine, salad oil or cooking oil.  Industrially it is used to make soap and in varnishes and paints.

The proportion of world supply produced in the USA has been falling for many years, but US exports of soya products compete with those of less wealthy countries.  At present the US subsidises its soya farmers, but under changes in the GATT these subsidise may be cut with the effect of reducing the US share of the market still further.

Although China is a large soya producer, Chinese demand, buying, particularly from Brazil, is a major bullish factor in the market.  Demand generally is growing and, in spite of increased production in India, Brazil and Argentina, the market is expected to remain tight for the next few years.

The growing number of vegetarians has increased interest in meat substitutes, but such products made form soya are still an insignificant part of its market.  Ironically, it is the use of soya as a food for cattle that is likely to become a more dominant feature of the market, especially in Latin America.

Soya bean oil competes with the other major vegetable oils and so is unlikely to become their domestic vegetable oil production.

Soya bean products are traded on the Chicago Board of Trade Commodities futures market.

Prices

Brazilian beans, ex northern ports, US$ per tonne:

1991 – 236, 1992 – 231, 1993, - 240, 1994 – 280, 1995 – 239.

Crude soya ban oil, ex tank Liverpool, £ sterling per tonne:

1991 –249, 1992 – 252, 1993 – 304, 1994 – 440, 1995 – 475.

In 1995 Brazilian meal pellets, 48 per cent combined fat and protein, cif Rotterdam were trading at US$201 per tonne.

STAR ANISE (also known as Badian seed)

Illicium verum

This product should not be confused with seed from the Mediterranean umbelliferous plant Pimpinella anisum.  Star anise is the seed of a small, evergreen tree which grows widely in southern China and Vietnam and which may continue bearing fruit for up to 100 years.  The seeds are carried in hard, reddish-brown pods arranged in the shape of a star.  The seed and pods are dries before sale.  Star anise is used of a star.  The seed and pods are dried before sale.  Star anise is used in oriental cooking and its essential oil is used more widely in baking, etc as well as in flavouring drinks such as absinthe.

International trade is dominated by supplies from China which offers two grades, ‘whole’ and ‘broken’.

In early 1995 ‘whole’ star anise was traded at US$3900 per tonne and ‘broken’ star anise art US$3300 per tonne.

STAR FRUIT (also known as carambola)

Averrhoa carambola

The star fruit is exported from several countries including Brazil, Israel, Malaysia, Mexico, Thailand and USA.  The star fruit tree is grown at altitudes below 500 meters and does not start fruiting for 4 or 5 years after planting.  The fruit is eaten fresh, often in salads and is made into drinks.  It has become fairly well known in developed countries over the last decade.  Unfortunately, it has a short shelf-life of only about seven days at room temperature.

It is most commonly packed in 3 to 4 kg cartons.

In early 1995 the wholesale price of Brazilian star fruit on the London market was £12 sterling for a carton of 20 fruit.

STRAWBERRIES

Genus fragaria

Out-of-season strawberries exemplify more than anything else the changes in the global fruit and vegetable markets brought about by refrigeration and the relative cheapness of transport compares with wages in the developed world.  They are now available, at a price, all year around.  They are, of course cheap and plentiful in the summer of the Northern Hemisphere, but become very expensive outside of this short period.  They are grown for export in Costa Rica, Colombia, Ecuador, Egypt, Guatemala, Kenya, Mexico, Peru, Zambia, Zimbabwe.

They are usually packed in 250g or 500g punnets with 8 or 12 punnets in a carton.

In the early 1995 the wholesale price for Kenyan stawberris on the London market was £0.65 sterling for a 250g punnet.

STROPHANTHUS

Genus strophanthus

This drug is extracted from the bark and seeds of a number of related small, woody trees of the dogbane family native to tropical Africa and South-East Asia.

In high concentrations it has been traditionally used as a poison for arrows, but it has found a use a modern medicine as a cardiac and vascular stimulant.  One species of the tree, strophanthus sarmentosus is a source of the drug cortisone, an anti-inflammatory steroid.

STYRAX

Styrax benzoin

Styrax is collected by tapping the pools of excudate, which accumulate between the bark and wood of a tree, which grows in parts of Asia (notably Sumatra and Turkey) and in Central America.  Its active ingredient, benzoin, is a fixative for perfume and is used locally as incense.  It medicinal use is as an inhalant for treating respiratory infections.

Prices

Turkish natural, £ sterling per kilo, cif London:

1991 – 7.85, 1992 – 7.85, 1993 – 7.85, 1994 – 7.85, 1995 – 7.85.

SUCKING MANGO

Mangifera indica

Almost all exports of this small variety of mango, used only for its juice, are sold to ethnic communities in the importing country.  It is exported by some Caribbean countries and by Ghana.

In 1995 sucking mangos were retailing in London at £0.69 sterling a pound.  This suggests that the cif Europe price at the time was about US$1.20 per kilo.

SUGAR

Saccharum officinarum (beet sugar – Beta vulgaris)

Production

1992 main producers (thousands of tonnes)

brazil                                                             270,672

India                                                              249,300

China                                                            77,548

Cuba                                                             58,000

Mexico                                                          39,955

Pakistan                                                        38,865

Australia                                                        29,300

Colombia                                                      28,930

Philippines                                                     27,300

USA                                                             26,703

World production                                          1,104,580

Source: FAO estimates

Grades

Sugar can be produced from either sugar beet or sugar cane.  The refined versions of both are virtually indistinguishable.  Beet sugar is only traded in the white form as well as the unrefined ‘raw’ form.  Quality is judged according to sucrose content.  Other quality indicators include colour (the whiter the better ) an ash and moisture content.

Uses

Sugar is used as a sweetener in many forms of food and drinks.  It is also used in the production of alcoholic drinks and for conversion into ethyl alcohol which is used in brazil with petrol as fuel for internal combustion engines.  Sugar is also used as a raw material in the manufacture of several important chemicals.

Consumption

Consumption has declined in developed countries owing to health fears about overconsumption, the increased use of substitutes and the artificially high price in those countries.

Production method

The sugar cane plant can last up to 20 years.  The first crop can be harvested between 12 and 18 months after planting (achieved by sticking a small length of cane in the soil) and cutting takes place annually thereafter from the cane sprouting from the same rootstock.  Harvesting is still done by hand in many poor countries but by machine in the developed world.

The bulk and weight of the cane means that it can only be processed close to where it is grown, but sugar is often shipped to other countries, especially developed countries, for refining.

Sugar cane is passed through rollers to extract the juice, which is then heated to between 95 to 100 degrees C.  Lime is added to clarify the juice.  Evaporators are then used to turn the sugar in the juice into crystals, which are separated by centrifuges and dried.

Main market features

Sugar (beet or cane) can be grown almost anywhere.  Many developed countries operate policies to protect domestic production, which take the form of a subsidy to local farmers and restrictions on imports.  This results in the restriction of potential trade to that between the few countries that do not produce enough and those that are willing to produce a surplus, albeit at a very low price.  Only about 20 per cent of world production is traded between countries (china, the former Soviet Union and the USA are major importers) and half of this trade is tied up in bilateral agreements.

Annual sugar production from the beet amounts to about a quarter of cane sugar production from beet, in addition to US cane production, is enough to keep control of the world market in the hands of the developed world.

The policy used in the European Union (EU) fixes internal prices at about two and half times the going world price.  Imports and production are restricted by quotas.  This system not only blocks a potential market for poor, cane sugar-producing countries but, since internal production quotas exceed domestic consumption, the exports of EU surpluses depress the international price for non-EU sugar – and this from a group of countries that are supposed to believe in free trade.

The EU also operates a scheme known as Sugar Protocol which sets small quotas for sugar from 15 ACP countries to be imported into the EU above world prices.

The USA operates a similar system of import quotas to a group of favoured nations for raw sugar, but these quotas can be regularly adjusted to maintain high domestic prices

Trading method

Sugar is traded on several formal commodity markets including those in New York (raw sugar), London (white sugar) and Paris (white sugar).  These exchanges set the price for the world market and offer producers and consumers the facility of hedging transactions, ie fixing a price for forward sales or purchases.  A standard sugar contract and sampling and arbitration service is offered by the Sugar Association of London (SAL).

Prices

The sugar market is unstable.  This is due to the very few major buyers and sellers in the market and, to a lesser extent, the effect of climatic changes on production.  It is likely to become even more unstable now that Cuba no longer sells its production to the Soviet Union and other Eastern bloc countries under a preferential trade agreement.

Tate &Lyle export price, white sugar, £ sterling per tonne, ex European port:

1991 – 225, 1992 – 230, 1993 – 242, 1994 – 292, 1995 – 432.

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