For lack of markets, Bolivian sugar price drops… how about the future?

There are no better ways to undermine production like what is happening in Bolivia… El Deber, Carla Paz reports:

Drops the price of sugar for lack of markets

Product. Because of the oversupply, the price of a 5 kg bag fell from Bs30 to Bs27.  Industrialists and sugar cane producers express their concern. The IBCE warns about possible negative effects.

The price of the quintal (q) of sugar at retail (46 kg) dropped from Bs275 to 200 from January to date. The lack of markets for export has overwhelmed the supply centers, but industrialists are waiting the release of quotas.

Marcelo Fraija, Executive of Unagro, pointed out that the fall in prices is due to the oversupply in the market and that the situation will become critical because a surplus of sugar of 700,000 q is expected until the end of the harvest, so they expect the licenses to export. He pointed out that this factory will allocate 70% of the production for domestic consumption of 3.5 q million, which they are seeking to industrialize until October.

Fraija noted that the export quota that freed the Government is minimal for the surplus that will have San Aurelio, Don Guillermo, Guabira and Bermejo. However, due to low international prices, there have only been sold 24,149 of 32,500 tons permitted.

Guabira wit executives pointed out that from April to date there is a decrease of 73% in the value of the q which sold (Bs 140 split and 135 retail). [fraccionado y granel]

In a visit undertaken to the markets of La Ramada, Abasto, Los Pozos and El Trompillo it was observed that per kilo cost fell from Bs6 to 5.50 and a bag of 5 kg from Bs30 to 27. In the Ramada, the q at retail is Bs200.

Consulted in Guabira on the supply at Bs200 against 240 of that industry, explained that it is a premium product and with legal invoice.

Juan Ascarrunz, leader of the sugarcane industry, argued that an important market, which is the lost USA quota for sugar, which will impact negatively on the  future crop since the surface will decrease. “Sale was reduced between 10 and 15 percent,” said the producer.

In Tarija, the Manager of the Bermejo, Ivar Durán, said they lowered the quintal price from Bs270 to 250 in the past months.

Gary Rodríguez, Manager of the Bolivian Institute of Foreign Commerce (IBCE), indicated that, surely someone will say that it is good that the price of sugar is down, but the risk is that, if sugarcane producer sees this as a problem, it is likely that in the next campaign they won’t risk much, they will not renew sugar cane fields or expand the sowing area, and thereby in the future the supply could decrease and generate scarcity. “It is recommended to authorize the rapid export of surplus to generate liquidity”, he said.

Production

– Growth. This year is expected to produce some 4.53 million tons (t) of sugar cane, which represents a growth of 20% compared to the 2011 harvest which reached 3.78 billion. Sugarcane producers say that the increase is subject to weather conditions.

– Surface. In Santa Cruz there are 126,000 hectares of plantations, of which 25,200 were renewed.

– Neighbors. While in Bolivia the quintal is priced between BS200 and 240, Argentina is Bs189; in Peru Bs245, Colombia Bs220,and in Chile Bs241.

http://www.eldeber.com.bo/vernotaeconomia.php?id=121010224458

This is a no-brainer, current government MUST abolish quotas and let the market take its course… only then, there would be sufficient sugar at reasonable prices for national consumption.

A final warning to prevent sugar fall and scarcity, of course, the way public policies are driven, government will want to “produce” the cane and the sugar on their own… absurd demagogue and useless action which only reflects on the quality of existing public servants… from top to bottom.

2 responses to “For lack of markets, Bolivian sugar price drops… how about the future?

  1. Interesting, the same thing is happening with the comestible oit, I think its the government’s way of controlling inflation, which has been very low this year, I recently purchased a quintal in Cbba and it is at 200 bs(it was close to 300 last year if you could find it.) One thing I found curious I used to purchase brown sugar, which was always cheaper and healthier than the over-processed withe sugar and its nowhere to be found, I found just one and it was selling at 250? I wonder why? brown sugar take less processing to make and therefore should cost less, I wonder if producers are hoarding it to sell it abroad since they get more $ for it and it cost them less to produce, since its less unrefined..

    • Bolivian Thoughts

      THank you Hector. Over the long run, this product as will as others who have export restrictions may experience a downfall in their supply, thus raising the prices on the market… I agree with you on the brown sugar, although the market for that product has risen its price as it is considered ‘healthy’ and there are niche markets who are willing to pay more for it. I remember a tiny company who was producing “chancaca” and after some marketing and little cost involved, they turned their product into organic brown sugar, and ended up exporting to Japan, at a much higher price than before! On a final note, I’d say that current government should better and use other mechanism had they want to control inflation…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s