Argentina Sets Record Sugar Production

By Scott C. Lucas|13 April 2006

On the strength of strong sugar price recovery, Argentina’s sugar production is expected to reach a record 2.3 million metric tons (MT) raw value in 2006/07, reports the US Department of Agriculture’s Foreign Agriculture Service (USDA-FAS).

Following the 2002 devaluation, the economic situation for sugar producers has been good, with strong prices and lower production costs. Much of the crop (650,000 MT) is destined for the profitable export market. It would be Argentina’s highest export total in 23 years.

In the four years there has been significant investment at the farm and mill level to increase efficiency and productivity by increasing cane renewal, using better varieties with higher yield and better resistance, increasing fertilizer and agrochemical use, improving irrigation, and incorporating modern harvesters. The recent strong recovery in world sugar prices will most likely encourage further investment.

Sugarcane area increased marginally in the past two seasons., and USDA-FAS expects Argentina to expand cane acreage moderately in the next few years. Most sources agree that by 2010, Argentina will be producing 2.5 to 2.8 million tons of sugar.

There is currently a bill in Argentina’s Congress designed to promote the investment in and production of biofuels (in Brazil, sugarcane is the main source of ethanol production). This would create more demand and open a new market to sugarcane, but it also would add to expenses and limit exports, causing mills to be split on whether or not to support the law.