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El Salvador's Sugar Industry to Benefit from Higher Yielding Varieties

22 April 2014
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, and additional access to the US market due to CAFTA-DR will all benefit El Salvador's sugar industry over the next three to five years.

A national sugar law for commercialization, 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, 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 the stakeholders, 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 2013/14 harvest is estimated at 6 million metric tons (MMT). Based on new data provided by CONSAA, production for 2012/13 has been increased to 6.48 MMT.

Sugar production for 2013/14 is estimated at 650,000 metric tons (MT). Sugar production for 2014/15 is expected to increase by approximately 15,000 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; forecasters predict an El Niño phenomenon could cause drought conditions by the middle of 2014. New data provided by CONSAA show exports reaching 479,846 MT for MY2013 and are estimated at 380,000 MT for MY2014.

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 per cent value-added-tax. Higher fertilizer, fuel and other input costs could play a major role in future sugar production.

In November 2013, El Salvador, together with the rest of Central America, signed a Trade Association Agreement with the European Union (EU) that provides access to up to 100,000 MT of duty-free sugar from the region and a 25,088 MT quota for El Salvador. Furthermore, Central America is negotiating a free trade agreement with Canada that could also benefit the sugar industry.

Further Reading

You can view the USDA GAIN: El Salvador Sugar Annual 2014 report by clicking here.

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