Alberta growers are unlikely to see any improved returns from increasing world sugar prices propped up by a global shortage.
“Right now it doesn’t have any impact on us,” said Bruce Webster, general manager of the Sugar Beet Growers Association.
Alberta sugar beet growers signed a three-year contract with the refiner, Rogers Sugar, ending in 2008.
“When we renegotiate the contract, if prices are still high that would have an impact on what our farmers get,” he said.
Growers are still negotiating contracted acreages. Last year 34,000 acres were seeded in the south producing about 100,000 tonnes of sugar. That provides about 10 percent of domestic production.
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Southern Alberta could seed as many as 50,000 acres if needed, said Webster.
The Alberta beet factory based in Taber can produce up to 150,000 tonnes of sugar from locally grown sugar beets from 400 contracted farmers. Beet acreage varies from year to year depending on land moisture, irrigation water availability and weather conditions during the growing and processing seasons.
Rogers’ website reported a rise or decline in world raw sugar value will have some affect on Rogers’ gross margins because growers are paid a fixed price for the sugar derived from the beets processed.
Rogers sugar prices are based upon the world raw sugar market, traded on the New York Coffee, Sugar and Cocoa Exchange.
A world shortage of sugar exists this year, and in late 2005 the European Union agreed at World Trade Organization talks to remove export subsidies on sugar.
“By May of this year five-sevenths of the EU export subsidies have to disappear and that takes about five million tonnes off the world market because it won’t be economic to ship it outside of Europe,” Webster said.
Hurricanes in the southeastern United States also temporarily impaired sugar production, adding to the shortage.
Brazil and some others are diverting sugar to ethanol production given steep crude prices.
On the supply side, consumers are looking at an expected shortfall in output from key suppliers like top grower Brazil, Thailand and the EU with strong demand in Pakistan, China and Russia, and tight stocks due to another season where production falls short against consumption.
On Jan. 19 the price of raw sugar rallied at its highest level since 1990 on all-around buying. The New York Board of Trade’s March raw sugar contract finished at 16.12 cents a pound, a 16 year high.
