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Global Sugar Surge: Worldwide Price Hikes as El Niño-Induced Weather Takes Toll on Asian Crops

The surge in sugar prices has presented Ishaq Abdulraheem, a Nigerian baker, with a challenging dilemma. Faced with the prospect of declining sales if he increased the cost of bread, Abdulraheem opted to cut his production by half. Unfortunately, this story is not unique, as numerous bakers grappling with elevated costs for fuel and flour found the astronomical rise in sugar prices to be the proverbial last straw, leading to permanent closures.

Sugar is a crucial ingredient in bread, a staple for Nigeria's vast population of 210 million people. For many struggling to afford basic necessities, bread serves as a vital and affordable source of calories. However, with sugar prices skyrocketing by 55% in just two months, the repercussions are severe—fewer bakers, less bread, and a looming food crisis. Abdulraheem aptly describes the situation as "very serious."

The global sugar price surge, reaching levels unseen since 2011, is primarily attributed to diminished global supplies. Unusually dry weather has taken a toll on sugar harvests in India and Thailand, the world's second- and third-largest sugar exporters. This exacerbates the challenges faced by developing nations already contending with shortages in staples like rice and disruptions in food trade, contributing to widespread food inflation and insecurity.

Factors such as the El Niño climate phenomenon, the war in Ukraine, and weaker currencies further compound the difficulties for poorer nations, while wealthier Western countries can absorb the higher costs. The United Nations Food and Agriculture Organization anticipates a 2% decline in global sugar production for the 2023-24 season, resulting in a loss of approximately 3.5 million metric tons. Moreover, the increasing use of sugar for biofuels like ethanol has depleted global reserves to their lowest levels since 2009.

Brazil, the largest sugar exporter, offers a potential respite, but relief is not expected until later in 2024. Import-dependent countries, particularly in sub-Saharan Africa, remain vulnerable. Nigeria, for example, relies on imports for 98% of its raw sugar. While the nation has taken steps, such as a ban on refined sugar imports and a project to expand domestic sugar infrastructure, these are long-term strategies.

Traders in places like Abuja, exemplified by Abba Usman, face immediate challenges. The cost of a 50-kilogram bag of sugar has surged from $66 to $81 within a week, posing significant obstacles as dwindling customers mirror the rising prices. As the sugar crisis unfolds, the impacts reverberate across economies, underscoring the urgent need for strategies that address both short-term challenges and long-term sustainability.

"The relentless ascent of sugar prices, veiled in mystery for traders like Usman, is a multifaceted saga shaped by climate phenomena and global dynamics. El Nino, a natural force reshaping weather patterns worldwide, stands as a prime suspect, amplified by the specter of climate change strengthening its impact. In India, a nation grappling with its driest August in over a century, the crucial sugarcane-producing state of Maharashtra faced stunted crops during the vital growth phase, pointing to an anticipated 8% decline in the country's sugar production this year.

Meanwhile, Thailand, another key player in the sugar market, experienced early disruptions to its harvest due to El Nino, impacting both quantity and quality. Naradhip Anantasuk, leader of the Thailand Sugar Planters Association, foresees a significant drop in sugarcane milling for the 2024 season. The U.S. Department of Agriculture's forecast of a 15% dip in Thai output in October prompted swift action, with the country reversing a recent sugar price hike and implementing price controls for the first time since 2018. However, this move, intended to support farmers, has drawn criticism for potentially stifling industry growth and hindering open competition.

Amidst this turbulence, eyes turn to Brazil, with a projected 20% increase in this year's harvest, offering a glimmer of hope for global supplies. Yet, the impact won't be felt until March due to the Southern Hemisphere's seasonal lag. Kelly Goughary of Gro Intelligence cites favorable weather and expanded sugarcane cultivation areas in Brazil as contributing factors. Despite this optimism, concerns loom large for the coming months, as highlighted by Fabio Palmeri of the United Nations Food and Agriculture Organization. Population growth and rising sugar consumption are expected to strain reserves, intensifying the challenge of meeting global demand.

As sugar prices continue their enigmatic ascent, the intricate interplay of climate, agriculture, and global economics underscores the need for adaptive strategies and international cooperation to navigate the uncertain terrain of the world sugar market."

"The global sugar crisis has reached a critical juncture, with stockpiles dwindling to less than 68 days to meet the world's needs, a sharp decline from 106 days in 2020, according to USDA data. This scarcity, reaching its lowest point since 2010, poses a significant threat to nations heavily reliant on sugar imports. Indonesia, the leading sugar importer last year, has curtailed imports, while China, the second-largest importer, released sugar from its stocks for the first time in six years to counter domestic price surges.

The repercussions extend beyond commodity markets, affecting countries like Kenya, which, once self-sufficient in sugar, now grapples with reduced harvests and rising costs. Despite previous efforts to limit imports in 2021 to protect local farmers, Kenya had to reverse its decision as insufficient rain and mismanagement led to a decline in sugar milling from June to August. To compensate, monthly imports doubled from September to October, resulting in a doubled price of a 50-kilogram bag of local sugar to $60.

Nigeria, Africa's largest economy, epitomizes the broader impact of escalating food and fuel costs, with bakers facing the brunt of high sugar prices. Abuja's bakeries, integral to the community, rely on sugar not only for sweetening cakes but also for feeding yeast that makes bread rise. In a nation where bread often constitutes the primary affordable food for impoverished households, any increase in bread prices, such as the 15% hike earlier this year, has direct and profound consequences, leaving some without enough to eat. Mansur Umar, president of the Nigerian Bakers’ Association, emphasizes the stark reality that not passing on higher costs is not a viable option.

Contributions from AP journalists around the globe, including Hanoi, Bangkok, Nairobi, and London, shed light on the far-reaching impacts of the sugar crisis. As the world grapples with this multifaceted challenge, the critical intersection of rising costs, depleted reserves, and the indispensable role of sugar in everyday life underscores the urgent need for sustainable solutions and international cooperation in the face of an increasingly precarious global food landscape."

In conclusion, the current global sugar crisis paints a dire picture with stockpiles dwindling to their lowest levels since 2010, raising concerns about the world's ability to meet its sugar needs. This scarcity is driven by a confluence of factors, including the impact of El Nino on major sugar-producing nations, such as India and Thailand, as well as disruptions in global supply chains. As a result, countries heavily reliant on sugar imports, like Indonesia and China, are grappling with high prices, prompting adjustments in import strategies.

The repercussions are felt far and wide, with nations like Kenya and Nigeria experiencing the ripple effects of rising sugar prices. Kenya, once self-sufficient in sugar, had to reverse its decision to limit imports due to reduced harvests caused by insufficient rain and mismanagement. Nigeria, Africa's largest economy, mirrors the broader impact on everyday life, where bakeries, integral to communities, face the challenge of balancing the rising costs of sugar with the necessity of keeping bread affordable for households that depend on it as a primary food source.

As the crisis unfolds, the international community must grapple with the urgent need for sustainable solutions to mitigate the impacts of rising costs, food insecurity, and depleted reserves. The intricate interplay of economic, environmental, and social factors underscores the interconnected nature of global challenges. Addressing the current sugar crisis requires collaborative efforts, innovative strategies, and a collective commitment to building resilience in the face of an increasingly uncertain and complex global food landscape.