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El Salvador Sugar Production Set to Decrease

30 April 2012
USDA Foreign Agricultural Service

EL SALVADOR - Higher yielding sugarcane varieties, diversification of the industry into the production of energy and alcohol/ethanol, investment in milling equipment to improve sugar yields, additional access to the US market due to CAFTA-DR, and continued favourable international prices will all benefit El Salvador's sugar industry over the next three to five years.

A National Sugar Law for commercialisation, production, and distribution of sugar is an important component to the reengineering process that the industry has undergone.

In addition, assisted by attractive prices and additional access to the US market, the sector seems to be recovering financially after facing debt complications due to natural disasters such as Tropical Storm E12, high transportation costs and lack of government policies to assist sugarcane growers.

Ultimately the success of the industry will depend on compliance with the Sugar Law by all parties involved, continued improvement in sugarcane and sugar yields, and increased diversification into additional energy co-generation projects and an Ethanol Law that encourages investment.

Sugarcane production for the 2011/12 harvest is estimated at 5.35 million metric tons (MMT). Based on new data provided by CONSAA, production for 2010/11 has been increased slightly to 4.652 MMT.

Sugar production for 2011/12 is estimated at 640,000 metric tons (MT). Sugar production for 2012/13 is expected to decrease by approximately 20,000 MT. However, weather conditions will continue to play a major role in future sugar production. Erratic weather patterns caused by the global warming phenomenon can pose threats to the upcoming sugarcane production.

New data provided by CONSAA show exports reaching 317,000 MT for MY2011 and are estimated at 409,000 MT for MY2012.

El Salvador only exports raw sugar. The GOES continues to control wholesale sugar prices. The current average retail price for white sugar is US$0.35 per pound plus a 13 percent value-added-tax.

Higher fertiliser, fuel and other input costs could play a major role in future sugar production.

El Salvador together with the rest of Central America continues negotiating a Trade Association Agreement with the European Union (EU) that could provide access to up to 100,000 MT of sugar duty free from the region. Also, Central America is negotiating a free trade agreement with Canada that could also benefit the sugar industry.

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Sugar (Cane & Beet), Markets/Economics

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