MECAS(23)05 - Input Costs and the World Sugar Industry

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.



1 Agricultural input costs 			 			
       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									

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