As the global economy entered a period of price inflation in 2022, the input cost structure of many goods and services was pushed higher. For the sugar industry, these inputs include the cost of agriculture, from seed to harvest, as well as the cost of processing, distribution, and sales. While each sugar industry has an individual structure, with varying exposure to inflationary pressures, the study aims to review general operational aspects and their associated input costs, to distil possible changes in the sugar industry’s competitive position.
Sugarcane and sugarbeet are high yielding crops, but both require extensive husbandry, continuous investment and maintenance of their capital assets to maximise yields. The cost of achieving these yields changes as input prices change. While it is broadly recognized that good agronomic practice will return a higher, and more remunerative, yield, the business case for growing sugar crops, relative to other crops, changes with rising costs.
Beyond the farming element of the cost structure, there have also been significant increases in the input costs for processing, transport, and other aspects. A review of these supply chain elements and their changing costs sets out the case for the sugar industry during these inflationary times and provides a basis for a comparison against other crops.
Introduction 1 Agricultural input costs Sugarbeet Sugarcane Fertilizer use Harvesting costs 2 Processing Boiler fuel Process inputs Sale and Marketing costs 3 Input Costs and Price Dynamics Futures markets Historic results Reacting to a changing landscape 4 Competition with other crops Planting and land preparation Cost and use of fertilizer Harvesting and return realisation The cost of land & the quality of return Crop selection Macroeconomic considerations 5 Balance and Trade Impact on consumption and trade 6 Conclusion