The Sugar Trade
Many developing countries depend on cash crops like sugar to bring in much needed foreign exchange. Changes in the way sugar is traded in the future could change the lives of many of these sugar producers.

Cane or Beet
Most of the world's sugar comes from cane, a grass that can reach six metres in height. Sugar cane grows well in the tropics but unlike other tropical cash crops like bananas and coffee, cane farmers have to compete with the production of a completely different plant called sugar beet. Grown in temperate climates like Northern Europe, sugar beet is a root crop that looks a bit like a large turnip

Which countries produce the most sugar cane and beet?

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Sugar cane is often grown on plantations, taking up large areas of land. Working on a sugar plantation is hard and unpleasant work, and the pay is often low.

� Duncan Simpson/Panos Pictures.

Whether they produce cane or beet, sugar farmers are dependent on the price they can sell their sugar on the world market. As there are relatively few buyers and sellers in sugar, prices can change easily. If there is a sudden and unexpected fall in the world price, countries that rely heavily on the money earned from sugar can suffer great hardship.

Security for EU Beet farmers
Sugar beet farmers in the European Union (EU) have benefited from the Common Agricultural Policy (CAP) to protect them from the fluctuations in world sugar prices. With the CAP, EU farmers are guaranteed a price 2.5 times higher than the world price for their sugar crop. At the same time, tariffs on sugar imported from outside the EU help keep out competition. This is such a good deal that EU farmers have been producing masses of sugar beet, but this also means that too much sugar is produced for the European market. This surplus sugar is sold cheaply elsewhere; almost four million tonnes were 'dumped' onto world markets in 1998/9 alone. 'Dumping' of cheap sugar on other countries undercuts local sugar producers, often driving them out of business, and the excess supply brings the world price of sugar down, leaving sugar growers across the world with smaller profits.

In sugar mills, both cane and beet need to be processed so that natural sugar is separated from the cane stalk or beet root.

� Penny Tweedie/Panos Pictures.

Help for the poorest:
the Sugar Protocol EU farmers are not the only ones to benefit from special trading arrangements. Since 1975, the Lome Convention helped the 77 former European colonies that make up the African, Caribbean and Pacific (ACP) group. According to the UN, 41 of the world's 50 poorest countries are ACP members. Part of the Lome Convention called the 'Sugar Protocol' offered help to ACP countries that export sugar cane. The Sugar Protocol allowed them to sell sugar to the EU market tariff-free, and at a higher price, much like European beet farmers. This way, these countries could compete more successfully with developed economies.

Winners and Losers
The Sugar Protocol was particularly good news for countries that depend heavily on sugar sales. In Fiji, where the sugar industry employs nearly a quarter of the workforce and sugar accounts for nearly 40% of its exports, the benefits were felt right through the economy:

However, in countries that are not ACP members, the Sugar Protocol has made life harder. In the Philippines, 400,000 people depend on the sugar industry, most of which are small-scale tenant farmers. When world sugar prices fall, Filipino farmers have to grow more sugar cane to get the same return, yet many lack the machinery to harvest the cane efficiently, and they have to use lots of expensive fertilisers to boost productivity. When prices fell below the cost of producing sugar in 1982, hunger and malnutrition was widespread as many Filipino farmers could not afford to feed their families.

Free Trade = Fair Trade?
With the WTO's push for more open trade, this is all set to change. In June 2000, EU and ACP countries signed a new agreement in Cotonou, Benin to replace the Lome Convention. Part of Cotonou agreement marked a big step towards 'free' trade in sugar. The EU will have to cut its subsidies to sugar beet farmers by 36% and get rid of the tariffs on sugar imports altogether. The new agreement also ended the special trading arrangement in sugar for ACP countries. Sugar producers in Fiji may have to make some difficult decisions as they are faced with a more open market without the protection of the Sugar Protocol. However, these developments in the process of globalisation may help improve the lives of sugar producers in countries like the Philippines. By creating a more level playing field in trading sugar, the new agreement will offer new opportunities for all poorer countries that depend on sugar.