Global sugar production poised for record fall

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NEW YORK, Feb 26: Tea will be less sweet than before. Varieties of traditional sweets will disappear and those surviving the crunch will become dearer. The global sugar production is poised for a record fall this year mainly due to resource crunch.

Production is forecast to fall 15.2 million tonnes to 155.3 million tonnes in 2008-09 leading to a supply deficit of 10.4 million tonnes, a reputed paper said. Global sugarcane production is projected to decline 12.3 million tonnes while worldwide beet sugar output is forecast to fall 2.8 million tonnes, the same paper said.

Brazil is the largest producer of sugarcane. The sugar output here will rise by 170,000 tonnes but the entire produce will be used for ethanol production. India is the largest consumer of sugar. Sugarcane production in India will drop by 35 per cent with farmers switching to wheat and rice production that provide better returns. India will become an importer from exporter of sugar. India may have to import 5.0 million tonnes of sugar over the next two years.

The economic meltdown contagion moves on inexorably leaving its scar everywhere. Japan's exports have suffered a decline of 46 per cent, the worst in past half a century, precipitating fear that the recession will be protracted and deeper than expected earlier. Exports to the US and China have declined by 53 and 45 per cent respectively.

The fall in demand has forced manufacturers such as Toyota and Sony to slice production and axe jobs. Japan's GDP has contracted by 3.3 per cent in the last three months of 2008. Hong Kong is facing a similar gloomy outlook. Its GDP shrank by 2.5 per cent. Hong Kong's external trade and domestic demands will remain subdued.

China, in its drive to bury the recent tendency of protectionism, is out on a shopping spree mainly to assure Europe that it intends to make new investments. China is making high profile diplomatic offensive to stave off blocking Chinese goods from entering European markets. All top Chinese leaders President Hu Jianto, Vice-President Xi Jinping and prime minister Wen Jiabao have been travelling extensively to Africa, the Middle East, Latin America and Europe.

With the G20 summit due in London in April, the Chinese diplomatic offensive "reflects mounting anxiety in Beijing that a steep recession in the Western countries will lead to new barriers against Chinese exports". China continues to enjoy a big surplus in trading with all regions. What China fears most is the possible threats from the US and Europe asking it to raise the value of its currency 30 per cent. In the event of non-compliance, the US and Europe will add 30 per cent tariffs on all Chinese goods entering their markets.

Chinese economic delegation now visiting Europe is expected to sign business deals worth $15 billion.