SWP3O This paper is intended fov st. use and not for publication. Jle views e)xressed are those c. the author and not necessarily those of '-he Bank. IVWR1ATIOUAL BAAK FR RECOATSTRUCTION AND DEVMOPIEIT INTERNATIONkIAI DEiVLOPIENT ASSOCIATION Economics Department WIorking Paper NTo. 30 PROELETIS ON THE IWTEIMiATIOiMAL SUGAR M4AKET AND SUGGESTMD SM1LUTIOLdS December 9, 1968 This paper, completed in September 1968, was prepared as a contribution to the study on the Problem of Prices of Primary Products carried out jointly by the staffs of the International MIonetary hund and the International Bank for Reconstruction and Development. Since completion of this paper an International Sugar Agreement has been negotiated and adopted. Its main features are described and discussed in Economics r-partment Wlorking Paper No. 31. Tride Policies and Ecport Projections Division P-mn-A I-- el-r -A t- a- y The author wishes to tha,nk iHessrs. R. E. Liddiard, Chairman, and -'. Goodwin, Chief Statistician, of C. Czarnikow Ltd. for their valuable advice, and 14r. Thomas Geer, 3conomics Department, IBRDf, for helpful comments and suggestions0 The assistance of lir. FRaffaello 11a.rsili in the preparation and computation of statistical material is much appreciated. TABLE OF COT0TSUS Pare i;o. DEFfIITIONS AAD SY111MLS SM-D4.RY Af4D CONCLUSIONS £ - iii I. DEVELOF NENTS 0.'T THE I11TE1'MT310NL SUGAR W.RKET 1 A. The Declining Role of Wozld Trade 1 B. ETergence of the Present Structure of Trade 7 C. Growing Ymbalance between Production and Consur'ption 9 D. Organization of the Market 12 The U.S. Orbit 12 The Commonrrealth Sugar Agreement 13 Agreement bctween Cuba and Centrally Pla:uned Countries 14 Western E'urope and L3pendent Overseas Territories 15 II. PRICE MEVOIOFPMaTS AMD TliHEIR E7EC-TS 16 A. Zffects of Price Fluctuations on Production 17 Aftermath of the Price and Production Boom 16i B. Direct Effects of Price iNo-vements on 3cpoit Receipts 19 Effect on Individual Countries' EXport Receipts 20 Average Prices (Unit Values) Received by Selected Countries 22 The Share of Sugar in Total EXports 23 III. TH3 PROBLEIM AID SUGGES-TED SOLUTIO! 25 A. The Basic Problem Restated 25 B. Scope of International ilarket Regultntions 26 C. Choice of Techniques in the Light of Coniditions Prevailing on the Sugar iMarket 28 The Agreement under ilegotiation 31 Main Features 31 Appraisal 33 Page No, Long Term Contracts as an Alternative 34 The Special Case of the U.K. 37 Markets in Developing Countries 38 Participation of Cuba and the EEC Group 38 Appraisal 39 Ccmpensatory Transfers - an Auxiliary M4easure 40 Reserve otoclc 42 How Large a Reserve? 42 The Cost of a Reserve 45 Reserve Stock Operations 47 WAhy Reserv6 but not Buaifer Sto & 48 STATISTICAL APPENDIX D1MNtTIQIS AND Sn1iBOLS The term "sugar" in the text and in all tables refers to centrifugal sugar, i.e., sngar processed by modern techniques, in particular centrifugal separation of molasses and sugar. The term "ton" refers to metric ton, unless otherwise indicated. Grouping of Countr es: Developed U.S.A. (including insular areas), Canada, Western Europe, Japan, South Africa, Australia, New Zealand and Israel (except in text Table 5 and Annex Tables 4 and 5 where Israel is included with developing countries). Centrally Planned USSI, Eastern Europes China (Mainland), North Korea and iuorth Vietname Develo2ing All other areas. Symbols: (.) signifies "figure not available". (-) signifies "nil or negligible". (*) signifies "partly estimated". ,014ARY AD COICLUSIOMJS 1. The basic problems onl the international sugar market are not new; sharp fluctuations of pri.ces around a declining trend, resultiig from re- current surplus production, as well as from erosion of export markets through rising self-sufficiency in importing countries, have beer; of major concern for mar.y decades. ilatural conditions have favored these develop- aients: sugar cani be produced in almost every part of the world, in the form of either cane or beet, and the great majority of importing count'ies has encouraged expansion of output through heavy protection and price support. Institutional factors have led to fragmentation of the market into a number of sectors - the U.S., the Corinonwealth, the French and the Sinc.-Soviet trading areas. Trade within these sectors moves urder special arrang3ments at prices more stable and, as a rule, considerably above those prevailing on the reriaining 'free market', Prices on the latter, as a result of its rclatively small siz h have been subject to wide fluctuations. 2. For a number of years the International Agreement, concluded in 1953 and renegotiated in 1958, has been able, through restricting exports, to maintain free market prices within narrover limits and to prevent them frcm declining significantly below the agreed minimum (3.25 cents per pound). 3, Events in the early 'sixties had far-reaclhing effects on the market, greatly aggravating the problem of shrinking export markets and of price instabil5 uy. The cessation of U.S. imports frcm CubL late in 1960 has led to drastic changes in traditional trade routes; the U.S. has shifted to other sources of supply and Cuban exports have been largely re- directed to the centrally planned countries. The latter, in turn, have been draurn more closely into the netwrork of world trade, as a large part of sugar im1ported from Cuba is re-exported to other (mainly developing) areas. Since Cuban exports to the centrally planned countries move under contracts at special prices, the sphere of special arrangements on the mar- k.et has considerably widened and the free sector has becomie smaller MAill, accounting in recent years for hardly more than 40 percent of net exports. iloreover, the changes in the market structure and subsequent failure to accommodate quota claims on the free market has caused suspension of the operative clauses under the International Agreement which, in turn, has greatly accentuated instability ofz world prices. he Thus a temporary shortage of suppl.,, caused by short Cuban crops in 1962 and again in 1963, coinciding with increased :Uestern European import demand, caused an upsurge of 'lworld' prices to unprecedented levels. Production in most areas responded with a charp advance, and wTithin less than twio years heavy surpluses reappeared on the market, leading to a steep and protracted dotmnturr. of prices, inflicting he-vy losses on exporters. Yet analysis of the consequences of the ;harp price boom suggest that the stimulus towrard raising production and achieving greater self-sufficiency in importing cotntries had even more serious after effects. The impact of depressed free market prices on average receipts for sugar exports has been modified, though not to the same degree for all exporters, by considerably higher and more stable prices for sales under special arrangements. But there can be little doubt about the need for concerted action to cope with both the 'price' and the 'access to markets' problems. 5e Conditions on the sugar market, natural as wiell. as man-made, limit the scope of regulations as well as the choice of techniques which might be applied. Since special arrangements cover a large part of the market, international regulations -have been (and presumably !all be in the future) confined to the remaining 'free' sector. As to techniques avail- able, the aLmost unlimited physical potantial of producing sugar in most areas precludes buffer stocks as the main, and probably even as a supple- mentary, mechanism. Recent developments on the rarket - sizeable exports of Cuban sugar to the centrally planned countries under special arrange- ments, reappearing in large part on the free market, as vell as the ex- pected advance in exportable supplies f.ran the EM group - present serious difficulties for reviving an Agreement based on export quotas, the tradi- tional device for regulating the sugar narket. Yet, if these problems could be met, a quota Agreement, uLpplemented by additional neasures, presently under negotiation, could provide a workable solution. 6. The draft under negotiation wouldie as in previous i.,greements, -upport prices by export restrictions, reinforced by iLnitations on imports from non-menber couxtries. Additional measures would ensure access to developed importers' markets through special obligations to that effect. If wide participation can be secured, this type of Agreement could operate effectively and could successfully deal with both the 'price' and 'access to markets' problems. If, however, a significant proportion of free market trade woV i remain outside, the chances for success would be dimmed. 7. Under ch circumstances an Agreement based on long term contracts might offer better prospects. Such an 1greement calls fo. : mutual obliga- tions, undertaken by importers and exporters, to purchase cr sell specified quantities at piices not below the minimum or not exceeding the maximum of an agreed range. A Sugar Agreement based on this technique would primarily aim for contracts between develooed importing countries and their sources of 'free market' supply, and could indeed be regarded zs an extension of existing similar arrangements. Jnder this type of Agreemient the main emphasis would be placed on maintaining and widening export marlcets, par- ticularly in developed countries, at prices within agreed ljiits. Ln contrast to regulations under a ciuota Agreenent, there would remain a residual market not subject to controls, and prices on that market (which would be much narrower than it is nowT) could decline to very low levels, Yet exporters would be assured of stable and remunerati.ve prices for the major share of their trade and temporary low prices on the. residual markcct could be taken in stridle. The beneficiaries would be developing importers, the main buyers on that market. 8. In order to ensure adcquate supplies at any time and to avoid recurrence of a sharp price boom writh its disastrous consequences, it is suggested that a reserve stock be maintained, in addition to conmmercial stocks held in individual countries. SUch a stock should be sufficiently large as to provide the desired safety margin writhout, however, exerting pressure on prices or inducirng the reduction of cornmercial stocks, i*iore- over, the cost would have to be reasonable in relation to the benefits derived. There is no way of determining with certainty the volume of a - iii - reserve which woilld fulfill thesc requirments. 'Iouever, analysis in these respects has suggested that a reserve of about 165 million tons could meet these purposes; moreover, if acquired in the near future while sur- pluses are still depressing the market, the cost involved would be well in line writh the benefits to be derived. I. D)EiLH r.'iTS Ol TN!S RITEPATI0IAL SUGA2.. !R'L T A. The Declining Role of Wforld Trade 1. For many decades the i6ndustrial countries of i'orth America, lWestern Europe as well as Japan have been the major net importers of sugar, supplemeniting domestic output (mainly beet) by imports. The latter have been largely derived from cane pro&dcing developing areas, primarily the 'Wlestern Hemisphere. This basic structure still prevails, although political evento have led to significant shifts in the direc- tion of trade and in the position of individual countries on the market. Moreover, continued striving toward greater self-sufficiency in import- ing areas has resulted in a gradual decline in the role of world trade of sugar. 2. Currently by far thi. greater part of world consumption is met by domestic production in the consuming countries; during the last decade less than 30 percent of requirements have been covered by imports. This very high and rising degree of self-sufficiency is of comparatir: y rec3nt vintage; up to the early 'thirties countries relied to a much larger extent on foreign supplies. Before World Wlar I and again during tihe 'twenties,, when per caput and total consumption of sugar were rapid- ly rising,9/ the share of trade in total consumption amounted to well over 50 percent (see Table 1). The depression of the early 'thirties brought about radical changes: per caput intake stagnated; the slov increase in total consumption hardly kept pace with population grcwth and trade showed a sharp decline. Policies adopted in many importing areas during and following the depression were directed toiward raising domestic output and reducing imports. As a result, in the later 'thirties harcly more than 35 percent of world consumption was covered by imports, as compared to nearly 55 percent in the late 'twenties. 3, Alter Wlorld War It the advance in per caput consumption was resumed,a/ bit the trend toward increasing self-sufficieincy has continued. Importing countries have further expanded domestic output under the shel- ter of heavy protection and the share of trade in total co,nsumption has further declined to less than 27 percent (see Table 1). In many of the importing countries the course followed with respect to sugar forms part -'' their geeneral agricultural policy, designed to maintain, partly for s .al reasons, a strong and prosperous agricultural sector in their 1/ It has been estimated that per caput consumption has risen from some 7.3 kilograms in 1920 to sone 12.3 kilograms in 1930, or at an annual rate of some 5.5 percent. In the late 'thirties it had declined to some 11.4 kilograms, 2/ However, the rate of growth was considerably smaller than in the 'twenties. Through the 'fifties the annual average was roughly 3.4 percent, declining to 2.3 percent in the 'sixties, The much slower growlth is partly explained by the fact that during the early 'fifties per caput consumption in many of the developed countries had come close to or had reached the saturation level. Table 1: SUGAR: DEVSLOMEMNT OF CQITSMUTIMAT A.;D (;ET) T1iADE (Million metrj.c tons) 1909- 1926- 1934- 1952- 1955- 1958- 1961- 1964- Pkurial Averages 1913 1930 1938 1954 1957 1960 1963 166 WbOAld consumption 13.911 22.22/ 2403 35.9 41C 47.0 5303 59.4 !cport3 (net) :.orld 7.2 12.1 8.6 11.6 12.8 14.1 16.0 15.9 DevelopinG countries . . 7.5 9.7 11.0 12.1 12.7 12.6 World exports (net) as p?rcent of consumption 51 55 35 32 31 30 30 27 tr7eloping countriesf ex- Dorts (net) as percent of: Wsorld exports (net) . . 88 84 86 85 80 79 Wlorld consunption . . 31 27 27 26 24 21 1/ World production. .'/ Estimated on the basis of producti±-n and changes in stocks. N,ce: Percentages calculated from unrounded figures. 3.nrces: International Institute of Agriculture International Yearbook of Agricultural Statistics, various issues; FAQ Trade Yearbook 195; International Sugar Council The World Sugar Economy, 1963sVol.II; Sugar Yearbook 1964, 1965 and1 966. economies. This is closely linked with the desire to reduce dependenca onI foreign supplies of basic foodstuffs, a tendency which has been greatly enhanced by wTartime scarcitias, ilorcover, in the early postwar years and through most of the 1950's, balance of paymeats considerations - the need to limit foreign exchange (particularly dollar) expenditure - provided additional incentives to-expand domestic output and, in some instances, to encourage development of sugar production in dependent or affiliated cverseas territories4 Temporary sharp advances in the "world" price, triggered by speculative rise of demand during the Xorean and the Suez crises and, later on, by shortage of supply resulting from crop failure in Cuba, gave further impetus toward reducing dependence on inports. 4. The rising degree of self-sufficiency over the twelve-year period ending in the mid sixties (measured by the proportion of cCil- sumption covered by domestic production in net importing countries) i.s indicated by the data in Table 2.o/ The increase was much less pronoun- ced in the first six years when it reflected mainly the rapid expansion of production in India. In the second period the movement gained momen- tum and became muchi more widespread, particularly in the developed net importing countries. Table 2: SUGAR: PRODUCTIOIJ, COWSTJ7ITIOiO AID iMEREE OF SaF?SUFFICIEKICY IN !Z-7T UJPORITG COU±ATRIE3,A1 A.RUAL AVERIGES (ifllion metric tons) Production Production Consum-ption Balance Consumption./ Ratio ilet inmorters in 1952-54 1952-54 12.3 22.5 10.2 54.7 1958-6G 160o 28.0 -12.0 57.0 Net importers in 1958-6cG/ 1958-60 13.5 25.7 -12.2 52.6 1964-66 13.5 30.5 -12.0 60.6 1/ r.ot including centrally planned counvries. 2/ Calculated before rounding. 3/ Excluding India, which became a net exporter, but including the E-C countries, treated as one unit, which as such in 1958-60 las practi- cally self-sufficient. 2xclusion of the group would not have affected the movement of the production/consumption ratio; see Annex Table 1. Source: Annex Tables .' and 2. See also notes to those tables. 1/ The centrally planned countries have not been incluaed since available data, particularly those on consumption, are not sufficie;atly firm. 5. For these countries taken as a group the ratio or production to consumption during the first six years uinder review rexnoined practically unchanged. Increasirng reliance on imports by the Jnited States and the United Kingdom offset the effect of opposite movements in other areas (see Tabla 3 and Annex Table 1). In the early 'si;ties, however, follow- ing the cessation of imports fronL Cuba, U.S. domestic production was con- siderably expanded; the sharp rise in wiorld prices in 1963 gave further impetus to the drive toward greater self-sufficiency both in the U..S. and in other countries. 6. As shown in Table 3, consumption rose by some 3 mi'llion tons in each of the two periods. However, while in the firs' one the balance to be covered by imports increased. by about 1.5 million tons, the sharp advance of prodaction over the next six years led to a shrinkr'ne of the 'deficit' by .25 millisn tons and thus to an actual losS on 'ihe market of developed importing countries. The potential loss, attributable to the increase in the degree of self-sufficiency, was considerably greater. A rough measure of that loss in terms of both volume and value can be obtained by comparing actual import requirements (i.e., consumption not covered by production) in 1964-66 with potential requirements if the degree of self-sufficiency had remained the same as in 1955-60. Tn viewr of the different prices received for exports to the U.S. (and of the provisions in U.S. Suigar legislation that a certain percentage of any increase in consumption has to be allocated to domestic producers) it appeared convenient to segregate the U.S. market frmi the rest. Compu- tations made on that basis (set out in detail in Aunnex Table 3a)indicate a loss on the U.S. market of scme 970,000 tons and of 613,000 tons on other markets, giviag a total of roughly 1.58 million tons. iDriving the respective value data by applying the 196h-66 average f.o.b. price of 5.9 cents per pound for exports to the U.S. mnd of 3.2 cents per pound for those to other markets gives a total, on all markats, of some $170 million (on the 1964-66 average). These figures refer to the total loss of all exporters; the corresponding figure for the developing countries which supply most of the net sugar imports of these miarkets (some 93 per- cent to the U.§, and about 60 percent to others) may be put at roughly $143 lmili ;on.9 I/ Referenice si;ruld be made in this connection to a set of hypothetical computations mede by the U!CTAD staff (Comnodity Pro.olens and Policies, TD 8, Supp.l, .Sovember 17., 19 77 Table V1/3, p.108). The last of these computations attempts to estimate the gain which would accrue to developing countries if the share of developed countries' imports were raised to the 1953-60 level (which should be equal to the potential lo:;s resulting fron the decline in this share). The 1YICTAD cormputatio,n has been based on data for 1963-65 (against 1964-66 in this p".per). iioreover, a uniform hypothetical price of four cents pez pour:I has becn used. Aevertheless, the figure derived by R;JCT^AD (e . . illion) is almost the same as the one obtained from the computations presented here. Table 3: SUGAUR: PRODUCTIOiJ, CO:SUUPTIO:J AiTD THE DEGREE OF SEF-SUFFICIEWuY IN MET WIPORT=l; DEVELOPED AR-AS, 1952-54 - 1964-66 (Million metric tons) Change from previous period shown Annual averages: 1952-54 1958-60 1964-66 195A-60 1-9-64- U.S.A. Production 4.25 4.35 5.75 .10 1.4 Consumption 7.6 8.5 9.3 .9 .8 Balance -3e35 -4.15 -3.55 - .8 + .6 Western Europel/ Production 5.7 7.3 9.0 1.6 1.7 Consumption 8.3 10.2 12.0 1.9 1.8 Balance -2.6 -2.9 -3.0 - .3 - ol Others_' Production .2 .3 .7 .1 .4 Consumption 1.8 2.3 3.0 .5 .7 Balance -1.6 -2.0 -2.3 - .4 - 3 Total Production 10.1. 11.95 15.4 1.85 3.45 Consumption 17.7 21.1 24.3 3.4 3.2 Balance -7,6 -9.15 -8.9 -1455 + .25 Production/Con- sumption Ratio: U.S.A. 55.9 51.4 61.8 W;estern Europel/ 68.6 71.0 75.1 Others./ 9.2 13.6 22.6 Total 57.0 56.7 63.4 2 U.K., EEC, and other Continental Western Earope, excluding Denmark and Turkey. EEC figures are those for crop years (1952/2, 1953/4 etc.). 2/ Canada, Japan, New Zealand and Israel. Source: Annex Tablo 1. 7. Computations based on the alternative assumption that import- ing developed countries would have altogeTher refrained fran further expansion and maintained production on thc 395a-60 level Ldicate a nuch greater loss - $325 million - ($265 million Tor developed and $60 rmillioll for other exporters).l/ 8. Data for net importing deve'Loping countries (not including India which had bocoma a net exporter in the late 'fifties) indic-ate a rapid and accelerating growth in the degree of self-sufficiency (see Table 4). Table 4: DEVELO21T OF PRODUCTIO!, COMSU1 PIO;M1 MID OF THE DEGRE1?/ OF SELF-SUMFFCIEJCY I-N 1KT fPORTIifL DEVELOPr.G COUATRIES (Thousand metric tons) L:hang3 from previous period .Sothm 1952-54 1958-60 1964-66 1953-60 i96EiZ6 Production 855 1,545 2,750Y 690 1,205 Consumption ,105 h65 6,120 1,500 1,515 Balance 2,250 3,060 3,370 - 810 - 310 Degree of self- sufficiency 27.6 33.6 44.9 1/ *Jt impcorting on the 195° 0 average, thus not including India. 2/ The actual production figure of 3,040 thousand tons has been ad- justed to exclude exports of countries (Colcmbia, Thailand and Southern RThodesia) which by 1964-66 had become net exporters. Since these exports (290 thousand tons) were not available for domestic consumption in the countries concerned, their inclusion uould have overstated the degree of self-sufficiency of the countries covered. Source: Pnnex Table 2. 1/ The figure of "325 million includes $179 million for the U.S.; 1 irt of the computed loss on that marlcet is attributable to provisions added to the U.S. Sugar Act in 1)56 requiring that 55 percent (raised to 65 percent in 1962) of any increase in consumption will have to be allocated to domestic producers. The 'loss' on that account, in- cluded in the figure of -M179 million, amourts to ,360 million. For further detail see Annex Table 3. at7 - Consumption in this group of countries nearly doubled between 1952-54 and 1964-66, rising by 1.5 million tons in the first and by again as much in the second half of the pcriod. Althougli the proportion of additional consumption met by growing domestic production increased fron lcss than halP to nearly 80 percent in the twio periods, we canrot attempt to measure the potential loss on the narket.arising fron greater self-suifficiency as was done in the case of net importinig developed countries. It would be unrealistic to assume that consumption wJould have continued its fast gro..-th had it not been sustained, to a large extent, by expanded production. D. Emeraence of the Present Structure of Trade 9. The broad framework of international trade in sugar has remained much the same over the past thirty years; the industrial countries con- tinue to be the principal net importers and the developing countries the major sources of supply. Events during World 'ar II and in the innediate postwar years have caused some changes within this general frameuork: camparing trade in the early 'fifties witlh the 1936-38 average shous a Eharp gain in exports of Cuba and some expansion in those of other 11estern Hemisphere countries, of4sctting the decline in supplies frorn other sources, largely on account of the virtual cessation of exports by Indo- nesia. The USS.' emerged as a net inporter, deriving supplies from Eastern Europe and later on, at a sharply increased rate, from Cuba (see Table It and Annex Tables 4 and 5). 10. Tn the course of the 'fifties the network of tradc in. sugar changed very little - the cxpansion of exports to developed co .ntries was fairly evenly shared among major supplying areas. Drastic sh.,ts took place, houcever, in the early 'si:ties, following the suspension of U.S. imports Ircm Cuba anid subsequent allocation of import q-,o1>as to altc:-ra- tive soui-ccs of supply. These events caused a largc scale re-routing of supply lines: the greater part of Cuban sugar exports, Lormel7ly a)x.ozt entirely absorbed by the United States and other developed cou-tries, has been re-directed to tne U3SR and other centrally planned countries under a series of bilateral agreements. A considerable proportion of tlhese supplies is re-exported, largely to cleveloping areas (see Table 5). Thc United States has turned to alternative sources of supply, narinly in the Western Hemisphere; imports frcm other developing areas have also been raised and, in addition, quotas have becn allocated to AustraLia and South Africa. Exports by these twro countries to other develooed areas als, have greatly expanded. 11. The full impact of these shlifts can only be appreciated by tak- ing account of the unique position of Cuba ammong txportcrs of sugar. The island s soil and geographic location make it particularly suited for cane groting. Host of its sugar is produced for export; only a small fraction is domestically consumed. The country has traclitionally been by far the largest single exporter; cluring the 'fifties it supplied 40 *- 8 - Table 5: SUGAR: TRADE Ai40IGn MAIN MMAS, SE1ZCTED PERIODS (Lillion metric tons) Centrally Of which Developed LDC'3 Planned 'World Re-ixports 1936-38 Y Daveloped 1.0 .65 - 1.75 0 LDC's Cuba 2.65 .05 - 2.7 0 Other 4.05 1.25 - 5.35 USM,, E.Europe .4 .1 - .5 a 1World 8.1 2.05 - 10.3 1.7* 1953-55 Developed 1.2 1.3 .1 2.6 1.35 LDC's ^uba 4.1 .55 .15 4.0 - Other 4.25 1.05 .05 5.35 .2 Cent. Planned .35 .3 .6 1.25 .35 horld 9.9 3.2 .9 14.0 1.9 1958 Developed 1.5 .9 - 2.4 1.3 LDC's Cuba 5.0 .4 .25 5.6 - Other 4.75 1.8 .05 6.6 o3 Cent. Planned .5 .45 .25 1.2 World 11.75 3.55 .55 15.3 1.9 1965-66 Developed 2.6 .7 - 3.3 1.0 LDC's Cuba 1.0 .55 3.35 4.9 - Other 7.05 1.45 - 0.5 2 Cent. Planned .9 I.;., - 2.5 1.8 WZorld 11.55 4.3 3.35 19.2 3.0 I Totals for 1S936-38 include .15 ;iIllion not speciiied. In that period exports to ilainland Clhina, estimated at .3 million tons, are included in exports to LDC's. * Partly estimated. NTote: For details on 1953-55 and 1965-66 data see Annex Tables 4 and 5. Source: Based on data published by the Inteniational Sugar Council: The -Jorld Su,7ar_ conozmy 1963, Vol.II and Sugar Yearbook, variouz issueo, percent of sugar exports.2! The close proxinity of the United States, the largest single importer of sugar, offered a mutually very convenient trading relation. Severance of this relation had far-reachiing reper- cussions on the international market and existing problems have been fturther aggravated. It is true that a number of countries profited through gainin, access to the U.S. market; but since half of the quotas assigned would be revoked in the case of relationa with Cuba being re- sumed, no long run plans can be based on current quotas. The admittance of Cuban supplies to centrally planned countries at fixe, prices has widened tlhe scope of assured outlets, but the large scale re-exports of Cuban sugar have further complicated tne international market structure. Perhaps the most sericus after-efTect was the suspension of operations under the £nternational Sugar Agreement (owxing to failure to solve the proble-ni of quota readjustnent), which has accentuated imbalance oii the market and fluctuaticns of prices. C. Growfing Imbalance between Production and Consum,)tion 12. Recurrentm imbalance and depressed prices have been for -many decades a serious problem on the international su,ar market. Txcess production persisted through most of the internwar period, in spite of concerted efforts by major exporters to restore equilibriumi.? A r.ore comiprehensive Agreement, finally reached in 1937, wias suspended shortly thereafter trith the outbreak of the Second IJorld :Jar. A1fter thie tsar brief periods of near-balance or shortage have alternated writh years of surpluses, the latter tending to become increasingly heavy. Altlhouglh the movement itself suMgcsts a recurrenit cycle, the underlying reasons differ- ed widely from one 'cycle' to the next. 13. The first one, starting with stringent shortages and high prices in the inmeiiate postwar years, reflects effort.s in producing areas, particularly pronounced in Cuba, to step up production in order to provide adequate supplies. The Korean price boom gave further impetus 1/ Li recent years the share has declined to about 30 percent but Cuba remains the most important source of e-portable supplies (see Annex Table 9). The data also indicate the wide scattering o^ re:iaining exports among a multitude of couatries, none of them accoiunting for as much as 10 percent of nct export trade. 2/ This refers to the so-called Cha6bourne 'greement of 1931, conlcluded among sugar industrics in a nu,aber' of major producing countries. Failure to restore balance ras attributed to inzuf.izicnt coverage; expansion in non-member countries (includting net importers) more than offset restrictions under t1he plan. (International ou-ar Council: The World _sugar Econoin7, 1963, Vol. II, p.211.) 10 - to this movemert and, in the early 'fifties, world production had out- paced demand._ Prices responded with a sharp downturn. 14. These developments prompted negotiation and conclusion, in 1953, of a new International Agreement with the purpose of stabilizing prices and restoring balance. Achievement of these aims was facilitated by rising consumption and demanid in major importing areas; thus a scaling ;.wn of production in Cuba, even though expansion elsewhere continued, su.ftZiced to bring world production in line with demand (see Table 6 and Chart I). Table 6: SUGAR: BEAIDCES (PRODUCTIOal INIUS C0MISU2ITTION) WCGLD AjID 1MAIl AXR7\S (ilillion tons) 1952-514 1955-57 1958-60 1961-63 1964-66 World production 37.4 41.1 49.7 52.9 63.0 World conzumption 35.9 41.o 47.0 53.3 5P.4 Balances Wiorld 1.5 .1 2.7 - .4 3.6 Developed Importin -7.45 -8.85 -8.8 -9.7 -8.9 Exporting .7 1.0 1.4 1.6 2.3 Developing Excluding Cuba 2.4 3.0 4.1 3.9 5.5 Cuba 5.5 4.7 5.6 4.7 4.7 Centrally Planned .3 .3 .4 - *9 - *05 Addendum - Cuba: ax-ports to: Centrally Planned - .35 .9 3.5 3.05 Rest of W;$orld 4.9 4.8 4.5 1.5 1.6 1/ Including EMX group. Source: Based on Ann_::: Table 6. 1/ The cyclical movement of balances has been described in terms of three year annual averages, starting with 1952-54. The second and the fourth period (1955-57 and 1961-63) show approximate balance or shortage, the other three indicate (increasing) surpluses of wzorld production over consumption. Three year averages have been used so as to reduce the impact of crop variations. The 'cyclical' movement of tho EWihnces does not depend on. the choice of years: a similar movement wr. Ald be observed if the years 1951-53, 1954-56 etc. had been taken. CH\ART I SUGAR: WORLD PRODUCTON9 ,CONSUMPTION AND PRICE, 949 TO 1966 80 , _,,,,|,,,16.0 70 14.0 60 12.0 PRODUCTION _s 50 . ~~~~~~(-LEFT SCALE_)O. 50 10.0 / ~~~CON5UMAPTIOiN v 1<~~~.-LE'T SCALE ) 40 X.0 30 30__ + _ 6.0 r'i 2 25 ~~~~~~~~~~~~~~~~~~~5.0 c o "WORLD" PRICE Z l (RIGHT SCALE-' 0 15 3.0 ° 0 2X.0 SEMI-LOGARITHMIC SCALES I I I I I I I __ I I _ I I 1.5 '49 '50 '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 61 '62 '63 '64 '65 '66 IBRD- 3769 But it was not a lasting success. a-pansion of outg t, particularly in non-member countries, persisted as prices improved;y expectation of a further swift rise in inport deriand may have been a contributing factor. Yet the growth of consumption and deianid ir. major importing arte.-s slowed C ~rn and, by the late 'fifties, large surpluses reappeared. Fr.n 1959 on and through 1962, prices remained bel .w the floor level. 15. The behavior of the world balance in the 'sixties suggests a re- petition of the previous cycle, but the underlying causes were quite diff- erent. Although low prices and restrictions under the terms of the Agree- ment had probably some bearing, the gap between production and consumption which emerged in 1962 and continued in 1963 did not result from voluntary action. The principal factors determining the sudden turn included: (1) two consecutive short crops in Cuba; (2) diversion of Cuban exports to the centrally planned countries where, in view of these large supplies (anticipated to continue), consumption was allowed to rise at a fast rate, though expan- sion of output slowed da m; (3) a sharp rise in Wlestern 2airopean demand, where adverse weather conditions had enhanced the effect of deliberate acreage reduc- tion, undertaken by a number of countries in order to bring down surplus stocks (see Table 7). As a result a world surplus of 1.5 million tons in 1961 gave way to short- falls - 2 million tons in 1962 and .8 million in 1963,, WJith an increased proportion of sugar moving under special arrangements pressure of demand was concentrated on a shrinking residual market, which accounts for the wi- precedented price advance in 1963. Table 7: -STGJ0A!: CRAEGE 03 YE.4R EN1D STiOCKS (Tliousand metric tons) _ Developed Develop i Centrally End of Year W.Eurone Others Cuba Others Planr,ed1/ Total 1961 to 1962 -1,303 + 75 -689 -416 +377 -1,956 1962 to 1963 + 141 +110 -155 -710 -707 -1,321 1963 to 1966 +1,950 +840 +177 +3,558 +950 +7,475 1/ Stocks in countries for whicih data are available. Source: Annex Table 11. 1/ E&pansion of output in the later 'fifties (1955-57 to 1958-60) was most pronounced in the centrally planned countries, but this expansion hardly contributed to the subsequent imbalance, since in those countries con- sumption advanced in line with output. - 12 - 16. The very high level of prices prevailing through most of 1964, and perhaps also an.ticipation of continued smallor sunclies from Cuba, stimulated expan3ion of output in all areas. The cen;-rally plarnel, coun- tries resum,ed sharp increase in production, thlus restoring the cu=tamary 'balance' between production and consumptuion in that area. importing countries intensified their efforts toward greater self-sufficiency; exporters (except for Cuba), now uninhibited by restrictions under the International Agreement,l/ expanded production at a greatly accelerated rate (see Annex Tabie 6). The grorth of consumption, however, slowled down in most areas and world surpluses became greater than ever bciore. These_ developmnnts brought prices cn the wzorld market down to less thain twJo cents per pound and led to the accumulation of stocks, largely in the hands of (exporting) developing countries (see Table 7). D. Org!anization of the 11arket 17. Currently some 60 percent of (net) sugar exports a-c subject to special arrangements amcng exporting (nainly developing) and importing (mainly developed) countries. Prices of sugar traded under these arrange- ments havo been, as a rule, considerably h7 lher than the 'world' price prevailing on the residual 'frce' market.-2 The largest sin,gle irmorter under special arrangemiŽrnts is the United States, absorb-ing roughl.y one fourth of total net Ln rts; thie United K'ingdom accou,ts for 10 prercent, the central7y planned countrics for about 20 percent, iFrance and Portugal for about two and one percent respectively. Hor7cover, s.nall quantities are traded under special arrangemeiets ariong former British Last African and anong former French African countries, The U.S. Orbit 18. Sugar i-mports into the United States (as well as deliveries of mainland and off chore sugar) arc regulated by the U.S. Sugar Act. Initially adopted in 1934, the Act was renewed in 1948 and has since been repsatcdly amended and revised, last in 1965 when it was extended to the end of 1971. The essential features renained unchanged: pros-rective requirements, esti- mated by the Socretary of Agriculture for each calendar year (sublert to later revision) serve as a basis for cquota a]lontion. Spec5.fic ql:otas have been assigned to mainland and offshore producers as well as to the Philippines; the remaining balance has been allocated to other sources of suoply, up to 1960 mainly to Cuba.2/ Pollo7wing suspension of imports from 1/ The operational clauses of the Agreement hlad been suspenaded since December 1961. 2/ There have been some brief periods, e.g., during 1963, when the t'world price' exceeded prices under special arrangenents. 3/ Between 1948 and 1952 the share of Cuba in the balance was 98.6 percent, thereafter it was reduced to 96 percent. Cuba quotas have beezi rea1l ocatcd, 12efe'y to otlcr 'Zeie:.n Ilemisplhere countries, but also to Australia, Soiuth Africa, China (Taiwan) and some other African and Asian exporters. Provisions to that effect have been repeatedly revised; under the latest (1965) amendnent 50 percent of the market not assigned to domestic proclucers and the Philirpines remains reserved for Cuba; the other half has been perm-anently allocated to (29) other countries. The reserved part has been prorated to the same countries, subject to cancellation if relations writh Cuba are resumed. 19. According to the Act of 1948 importing countries failing to fill their quota (ezeept for reasons beyond their control) are subject to a penalty in the form of a permanent reduction of their quota ry the amount of the shortfall. Iioreover, under the 1965 aai=ednent importing countries have to give advance assurances that they will fill their quotas. 20. Protection of domestic producers provided by the original Sugar Act has been further strengthened by subsequent amendnents. Up to the end of 1956 any balance between the domestic (and Philippine) quota and actual requirements had been allocated to other countries. Starting in 1957 55 percent of any increase in requircments above 8.35 million short tons (i.e., their estimated level in 1956) had to be assi-nod to domestic (largely mainland) producers, The 1962 amenct.ent raised this propoltion to 65 percent of any increase beyond 9.7 million short tons (i.e., actual requirements at thattime). In both years the mandatory 'marginal' shara exceeded the actual proportion covered from domestic snpply at the time of enactment. 21. The U.S. price of rawi sugar (which has to be adjusted by sub- tracting the duty of .625 cents per pound6/ as well as Vy freight and insurance, and by adding bag allowancc in order to arrive at the f.o.b. equivalent) is not rigidly fix-ed. The USDA determines for each month a 'price objective' on the basis of the 1957-59 average p_ice of 6.2 cents per pound, adjusted by the parity inzie:,; it then undertakes, through quota manipulations, to maintain actual prices close to the 'objective'. This has, as a rule, been achieved; occasicnally, however, most recently in 1963, when the high level of tlhe 'wrorld' price made exports to other areas highly attractive, the U.S. price had to be allowed to c,xeed the 'objec- tive' level in order to obtain sufficient supplics. The Commonuealth Sugar Agreement 22. Currenit provisions reGulating sugar trade between the U.K. anid Commonwealth sugar exporting countries date back to the Agreernent of 1951, which in turn replaced previous wartime and early postwar purchase arrange- ments. The 1951 Agreement provided for mutual obligations for the U.li. and participating Commonwcalth exporters to purchase and sell specified quantities of sugar at a ncgotiated price (l1egotiated Price Quotas). 1/ Currently the rate for sugar imports fron the Philippines is lower (.3 cents per pound) hut is gradually being raised and by July 1974, the expiration dato of the present U.S.-Philippines Trade Agreerment, should reach the general (.625 cents) levol. - 14 - These Quotas, originally set at 1,568,C00 loilg tons, have been repeatedly raised in line with increasing U.".. consumption (of which they cover roughly 60 percent) and revised to take account of changing nembership. Tho cur. nt total Iegotiated Price Quotas amount to 1,742,000 long tons (1,770,000 metric tons). 23. The initially adopted base price (c.i.f. London) has been sub- ject to annual review and to adjustments in accordance with cost of pro- duction and othier ralevant price developments. In 1965 provisions relating to price determination were re-ised; moreover, starting in 1966 prices have been expressed on an f.o.b. basis and fixed for a period of three (in lieu of one) years. The price for the three years 1966 to 1968 has been set at i43.10.0 per long ton.!/ Developing mernber countries (presently all except Australia) receive in addition special payments, replacing benefits formerly derived under the 'Colonial Certificaic; system. Those payments consist of a fixed and a variable element, the former amounting to T1.10.0 per long ton; the other component varies in- versely with world market prices, from L2.10.0 at a world price level of less than O31.0.0 to nil when the latter reaches 1,39.C.O./ 24. A second se-t of quctas (Overall Agreeraeiit Quota, presently 2,780,000 long tons) which encompasses the Negotiated P1rice Quota, has the function of limiting total oxpcrts of participating Cominonlealth ex- porters to preferential markets - the U.K., Canada and >'7w Zealand. It does not entitle exporters to any benefits other thin those arising Ercn tariff preferences accorded to Cornonwealth countries. Sale3 to Canada, eow Zealand and to the U.Kf. beyond the Aegotiated Price luota move at the world price. 25. The Agreement, originally concluded for a period ending Deceriber 31, 1959, has been extended, in accordance with its prcrisions, in cach, subsequent year by another year - in 1952 to the end of 1960, etc. It wzas last extended in 1966 to December 1974; further extension in 1967 was omitted in view of the pending application for admission to the Co;mmon Market. Agrcemont between Cuba and Centrall,y Plaoned Couinti'ies 26. The Agreement betwreen Cuba and the USSR of 1964 regulates sugar trade between the two countries for the period 1965 to 1970. i.xports will be made at an agreed constant pricc equivalent to six cents per pound £.a.s. Cuba. It has been reported that 20 percent of exports -ill be paid in corvertible currcncy; the rest on a strictly bilateral basis. >'Jhether this would cover import3 from other centrally planned countries is not knorn. 1/ Equivalent to 5.L4 U.S. cents ner pound prior to, and 4.66 cents per pound after devaluation of the pcund. The price in terms of the pound sterling has remained unchanged. 2/ Including special payments the equivalent in U.S. cents per pound amounts to 5.94 before and to 5.09 after devaluation of the pound. - 15- 27. The quantities negotiated for each year, i.e., the quantities ieihich the USSR has agreed to buy, and actual exports by Cuba are shown below (million tons): 1965 1966 1967 1968 1969 1970 Negotiated 2.1 3.0 4.o 5.0 5.0 5.0 Exported 1.9 2.5 1.8 Actual exports have remaineca well below the negotiated le-7el; a similar development is expected in 1968, since production in the 1967/68 season, affected by drought, will hardly exceed 5.5 million tons.y/ In addition to the contract with the USS.I, Cuba also has bilateral agreements with other centrally planned countries, at pr:ices reportedly between five and six. cents per pound f.a.s. Cuba. "lo further details on these contracts are available. Western Europe and Depcndent Overseas Territories 28. Imports by France from its Overseas Depart:rents (Guadeloupe, Martinique and Rcunio.) ai-e considered as internal sunplies and move at the French inte2znal price; the sama applies for imports of the ;Ietherlands from Surinam. Special prices previously granted by France to former overseas territories (other than the three Departments rentioned) have beerh discontinued. Portu. .. .....--.p 5.0 5 0 -- 5.0 4.0O - 4.0 WORLD EXPORT \s S} \ ~~~~UNIT VALUE 3.0 - 3.0 "WORLD" PRiCE 2.0 -_ 2.0 1.5 1.5 SEMI-LOGARITHMIC SCALE I.O I i I I I I I I _ I 1.0 '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 '64 '65 '66 '67 (R IRD - 3 7-O - 17 - A. -ffects o:t Price Fluctuations on Production 33. In examining the effec-bs of fluctuations in the 'wrorld' price we may distinguish between their direct impact on exporters' earnings and their influence on production developments. The former, as just pointed outj are greatly modified by the large proportion of sugar movizg under special arrangements. Prodactioin, however, responds to price variations, seemingly more strongly to sharp increases than to declines. rcperience has shown that price advances, shortlived as they have been, have tended to accelerate the upward movement of production, and have been followed by periods of protracted surpluses and subsequent price declines (see Chart I). 34. It is not possible to isolate the effect of price changes on production developments; other factors, notably export controls under the International Agreement, have been at wiork. It seems reasonable to ass-ume that production in the centrally planned countries, wholly determined by Goverument decisions, would be hardly affected by movements in world prices. The follotwing considerations, intended to identify as far as possible price and non-price influences, refer to production developments outside the cenitrally planned economies. In order to reduce the impact of crop varia- tion.s three year averages have been used. 35. The data in Table 8 indicate that the overall grouth rate bettween 1952-54 and the following three years wtas wqell below the average of the twelve year period shown; this scczaed to coincide with a decline in prices. Yet, as discussed in the previous section, restriction under the Inter- national Agreement which caine into force at the start of 1954 was probably the most decisive factor in thie movenent. The strong increasa in the next, period (1955-57 to 1958-60) was probably price induced; the sharp rise of the world price in 1957 has no doubt encouraged expansion in most areas. Expectation of a continued steep rise in consumption (which failed to mater4±alize) may have given further impetus. Tho subsequent decline of prices to less than the lowaer limit adopted under the Agreement could have been a factor in inducing reduction of the rate of production growthi, but other develonments, inotably a sequence of poor crops in Cuba as well as in Western Europe, have been primarily responsible for the slowdowm. As can be seen frao the more detailed data in Annex Table 6, net importing developed countries actually stepped up the rate of output. 36. The strong reaction to the steep increase in world prices in 1963, uninhibited by controls,has already been mentioned. Except for Cuba, where for internal reasons recovery wzas not impressive, production expand- ed at a greatly accelerated rate, both in developed and developing areas. The fact that at the same time the rise in consumption slowed down did not put a brake on production developrents. Response to the subsequent steep price decline to an unprecedently low level has yet to be seen. There have been signs of a slowdon, but more time will have to pass before we can gauge strengUt and speed of any reaction. - 18 - Table 8: SUGAR: PRICE AID PRODUCTIV.1 D['l1OPFi1ES3, 1952-54 TO 1964-66 (EXCLUDIiIG CZE!.f:ALLY FL[JWED COUTPJ.ES) Price-L/ Production Cents/pound Ilillion Tons DeveloPintz Developed Cuba Otlher Total 1952-54 4.26 12.7 5.8 11.9 30.4 1955-57 3.32 13.7 5.0 14.4 33.1 1958-60 3,88 15.8 5.9 17.3 38e9 1961-63 2.87 17.0 5.1 18.8 h0.9 1964-66 5.35 20.2 5.2 22.2 47.6 Change2_ Average annual growfth rate Cents/pound percent 1952-54 to 1964-66 4.3 -.8 5.4 3.8 1952-54 to 1955-57 -.94 2.5 -4,8 6.7 2.9 1955-57 to 1958-60 +.56 4.9 5.6 6.1 5.5 1958-60 to 1961-63 -1.00 2.5 -4.4 2.9 1.7 1961-63 to 1964-66 +2.40 5.9 .3 5.7 5.2 ) Lagged by one year; the price data refer to 19_5l-53, 19V54-56 etc. Source: Annex Table 6. Aftermath of the Price and Production floom 37. The upsurge in world prices and the subsequent boost in produc- tion have adversely affected receipts for sugar exports. Saariinkage of markets, notably in developed importing coimtriec, has been particularly harmful; the protracted very low level of world prices in recent years has further redu2ed expor' receipts. 38. It is difficult to criantify these effects; mo.cover, any attempt to do so wrill necessarily involve a certain degree of arbitrariness. In measuring the loss of r.arkets caused by increased oelf-sufficicncy in net importing developed countries w-e are faced iwith the question of hot; much of the increase can be attributed to the price boom. Allotance has to be made for the effect of other factors which may lave contri.buted to the increase, but we cannot clcarly detenrine the extent of their effect. Some indication may be derived, houever, on the basis of developments prior to the price boexi. As pointed out earlier, self-sufficiency in net importing developed countries as a group did not increase during the tfifties (see para. 5 and Annex Table 1). Subsequently the structural changes on the markot did iilduce expansion of output beyond the growth of consumption, particularly in the United States. Between 1956-60 and - 19 - 1961-63, i.e., prior to the pi-ce increase,l/ the rate of self-sufficiency in the group of countries under consideration?! increased by some 4.3 per- cent, the resulting (annual average) lobs of markets to exporters amounting to some 350,COO tons. In attempting to estimate the price induced portion of the much stronger rise in self-sufficienlcy betueen 1961-63 and 1964-66 - some 11 percent, correspondiing to a volume lozs of 955,000 tons per yrear - we have assumed that the ef£cct of non-price factors has been of the same magnitude as in the preceding three year period. Valued at 1964-66 prices tile total loss of markets to exporters care to $101 million (annual average) as against .T47 million in the first period. The difference, i.e., $54 million per year,may be taken as the loss attributable to the price induced exDansion of output. Allowing for the share in e.ports originating in developed countries the annual loss to developing exporters comes to roi;gh- ly $40 million per year, or $120 million over the three years 1964-66.3/ B. Direct Effects of Price iiovem.ents on Export Peceipts 39. Fluctuations in world prices affect exports to the free market; the impact on the value of total sugar exports is greatly modified by the large share of trade moving under special arrangements. Though it is obvious that receipts for free market exports in recent years have been severely depressed by the very lo.w level of wJorld prices, there is no single unambiguous method of measuring the extent of the 'loss'. The result will depend on the price used for comparison; if account is taken (as it should be) of the correspording 'gain' in the preceding high price period the net loss, if any, iTll obviously be very much smaller; moreo-ver the result will vary with the number of years included. 40. Tne purely illustrative calculation shot*m in Table 9 covers net exports to developed countries over the years 1963 to 1966; conparisons have been based on the minimum and madximun prices (3.25 cents and 5.25 cents per pound) tentatively adopted during recent negotiations for re- newtal of the International Agreemaent. Gains and losses have been measured as the difference between values at t'world' prices and those at the iaiaxi- mum (1963/64) or minimum (1965/66). 1/ The price increase during 1963 could not affect production prior to 1964. 2/ The countries covered are those listed in Annex Tab';e 1, excluding, however, the E'C group which at the time of the price increase lhad become a net exporting area. For a detailed calculation see Aunnex Table 3b. - 20 - Table 9: CALUUTAIO.1 OF 'GAINSI AdD 'LOSES' O;l 1ET FREE NAP.KLT EXORTS TO DVEMGPED COU-IITMIES Jet :x-^rte,'s o Total nBveloping Total DeveloDini _ 1963-64 190b--66 1963-66 (Annual averages) Volumes million metric tons 4.7 2.8 4.3 2.5 Value, million $ at 'world'priced/ 724 429 180 104 452 266 at 5.25 cents/lb 544 322 426 250 at 3.25 cents/lb _ - 179 5 - 'Gain' or 'Loss' +180 +107 -128 -75 +26 +16 1/ 1963-64: 7.00 cents/lb; 1965-66: 1.89 cents/lb. This is obviously only one of various possible calculations: if gains had been measured against the maximum Drice under the 1953 and 1958 Agreements (4.35 cents per pound) gains would appear considerably larger than those shotn. If, on the other hand, the period covered had included the year 19C7, there would have been three years of loss against only two years of gain and the net balance would have been negative. Detailed volume data for 1967 are not yet available; assuming free market exports to developed countries of roughly the same magnitude as those on the l965-66 average, the net (annual average) loss over the years 1963-67 would come to some $5 million and '2 million for all (net) exporters and for developing countries respectively. Effect on Individual. Countries' E)mort Receints 41. The impact of fluctuations in the world price on individual coun- tries' export receipts depends maiAly on two factors: the proportion of sugar exported at special prices and the share of sugar in their total export re- ceipts. The share of sugar sold under special arrangements varies widely from country to countrj and, in many instances, has also considerably varied over time. In recent years (i.e., after re-allocation of the U.S. sugar quota) well over twio-thirds of total sugar exports by develoing countries have moved under special arrangcments (see Table 10 and Annex Table 7).!/ The share is greatest - over three-Tourths - for Wlcstern Hiemisthere countries (other than Cuba). Sone 70 percent of these exports are directed to the United Stateq but, as mentioned above, this is a recent development wJhich started only after the cessation of U.S. imports from Cuba. The Commonwealth. countries in the 1/ The data in the table and the discussion of the data refer to exports on the 1965/66 averac. - 21 - area (the West Indies and Guyana) sell the greaser na:-t of their sugar to the United Kingdom under the Comomnwealth Agreeinent; .Zartinique and Guadeloupe ship nearly all of their exportable supplies to Metropolitan France. Table 10: SUGAR: EXPORTS BY ILiIIJ -aREIO.,IS AT SPECIAL A'ID 1a1i.nD PRICE, g965-66 AVERAGE (1Million metric tons) To -alPrices Special Cent. Free *Iarket Price as From - Develoned LDC's Planned Developed LYrls- Total of tota-l/ Developing: Cuba - - 3-35 1.00 *55 4.90 68.6 Other West. Hemisphere 3.05 - .75 .45 4.25 71.8 Africa .85 .05 - .30 .10 1.30 70.8 A3ia-Oceania 1.45 - - .60 .60 2.65 54.7 Total 5.35 .05 3.35 2.65 1.70 13.10 67.0 Australia and South Africa .60 - - 1.15 .05 1.80 32.4 Centrally Planned - - - .60 .40 1.00 - 1/ Percentage calculated before rotnding. Source: Based on Annex Table 7. 42. More than two-thirds of Cuban trade is absorbed by the centrally planned countries under bilateral agreements, but only a small fraction of these exports (20 percent under the agreem.ent tith the USS:') are paid for in convertible cuxrencies. Trade with a number of other countries also moves under bilateral arrangements, presumably at price, above the 'world' level; in the absence of information on such deals all uf Cuba's exports to countries other than the centrally planned group have been showM as Iworld market' transactions. 43. Some 70 percent of exports by .frican developinG countries, including some of the area's intra-trade, moves at special prices, mostly directed to affiliated countries in restern .urope. 440. With the notable exception of the Plilippines, whose exportable supplies are entirely absorbed by the United States, the few net export- ing countries of Asia are largely dependent on the fiee itarket. Thus China (Taiw7an), the second largest exporter of the conti:.ent, has only a - 22 - rather modest quota on the U.S. market; over 90 percent. of the country;S sugar exports are sold at the world price. "%hile India. and Thailand have exported roughly one-third of their shipments under special arra.ne- ments, the (still quite small) exports of Indonesia are entirely directed to the free marlcet. 45J Australia, the largest net exporter among the develoned countries, has a quota under the Commonwealth Agreemernt as well as on the U. S. mar-- ket; roughly 40 percent of the country's exports move at special prices. The corresponding proportion of South African exports is much smaller since the country has lost its quota under the CommonMealth Agreement. 46. Centrally planned net exporters (Czechoslovakia, Poland, Hungary and Rumania) sell more than half of their total sugar exports to Wles' rn European markets and the rest to developing countries. iome of these ex- ports may move under bilateral agreements, but the greater part is probably traded at world prices. Average Prices (Unit Values) Received by Selected Countries 47. The behavior of average prices received by individual exporting countries has varied u-idely with the proportion (and the change in the proportiorn) of sugar sold at special prices. This is illustrated in Charts III-VII, for four major sugar exporters: the Philippines, iianiritius, Taiwan and the Dominican Republic. The unit value of Philippine sugar exports has closely followed the moderate upward trend and 'nhe minor short run variations of the U.S. price;-/ variations in the country's re- ceipts for sugar, particularly the decline in 19$7, have been alnost entirely the result of volume changes. Develorments have been fairly similar in the case of ilauritius; far the greater part of its exports, varying frcn some twlo-thirds to four-fifths, are directed to the U.N. at the negotiated price (plus special bonuses) under the te:;ns of the Common- wealth Agreement. llost of the remainder is exported to Canada at &1e world pri-e, the only benefit being preferential tariff treatncrt.- Except for the temporary rise in 1963, reflccting the very high price obtained in that year on the Canadian and on other mar::ets oiitsiie the U.N., the unit value of 'auritiust sugar e:ports has been remarkably stable. Export receipts for sugar have by and large follc;;ed tihe gradual upward trend of sugar shipments, interrupted in 19)60 by a sharp decline, as a short crop severely reduced exportable supplies. 1/ The U.S. has traditionally been the market for Philippines sugar ex- ports; prior to 1960 some 95 percent of shipments went to the U.S., thereafter the U.S. absorbed the country's total sugar exports. 2/ It is believed that roughly two-thirds of the tariff differential accrue to exporters. Hence prices received on the Canadian marlket, though moving with the world price, have been slightly higher than thoso received by non-Commonwealth exporters. CHART I PHILIPPINES: VALUE, VOLUME AND UNIT VALUE OF SUGAR EXPORTS; TOTAL EXPORT VALUE, 1951 TO I9GG 8, 0 0 - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Boo. _ TOTAL EXPORT VALUE 600 _ t LEFT SCALE) , 400 300 0 200 o . 0 z1 150 _r o SUGAR EXPORT VALUE e (4-LEFT SCALE) 100 80 /--_ _ _ _ _ Q _ _ _ _. 60 0 -_ _ ___ .__ __ _ 40 150 SUGAR EXPORT VOLUME (RIGHT SCALE -RI 10 _--__ 2 so 60 S0. °, 80 0 ._ _ SUGAR EXPORT UNIT VALUE t --LEFT SCALE) 40 I-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ w 3 SEMI-LOGARITHMIC SCALES '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 '64 '65 '66 I1RD-3771 j CHART X MAURITIUS: VALUE, VOLUME AND UNIT VALUE OF SUGAR EXPORTS; TOTAL EXPORT VALUEP 1951 TO 1966 1,000 I I 800 600 400 . 300 0 0 , 200 oX 0 ________ _______ OTAL EXPORT VALUE __ 30CAS E AL 60 % s 40 SUGAR EXPORfT VALUEX -LEFT SCALE 30 150 SUGAR EXPORT VOLUME (RIGHT SCALE --..O) 10 0 x Z ~~~~~~~~~~~~~~~~0 2~~~~~~~~~~~~~~~ 6 60 0 _ _ _ ~~~~~0 w SGAR EXPORT UNIT VALUE __ _____ _______ (-4--LEFT SCALE) 4 w3 SEMI-LOGARITHMIC SCALES '51 '52 '53 '54 '55 '56 '57 '58 '59 '60 '61 '62 '63 '64 '65 '66 IORD-3772 - 23 - 48. In contrast to the smooth course of average prices received by the two countries just discussed, those received by China (Taiwan) shared the sharp gyrations of the world price.2/ As mentiJoned above, only a minor fraction of the countryf-s-sugar exports move at special prices. Export earnings for sugar, though in some years modified by volume changes, mainly reflect the wide fluctuations of average prices received. 49. Prior to 1960 most of the Dominican Pepublic's sugar exports were sold on the world market and both average prices and earnings from sugar moved with world prices. Thereafter a substantial share, varying with the U.S. quota (including occasional large deficit allocations) and with the '.olume of domestic production, has been directed to the United States. Unit values have been increasingly dominated by the U.S. price; since after the sharp downturns of the world price only small quantities have been shipped to other destinations, prices received have been hardly affected by the downturn. 50. The brief review of developments in the four countries discussed indicates the widely varying impact of flustuations in the 'world' price on average unit values of individual countries and consequently on their receipts for sugar exports. However, as mentioned above (sea also Annex Table 7) few of the developing countrios sell more than one-third of their sugar exports on the free market and for the great majority the sharp variations in the world price have only a limited effect on average unit values received. The Share of Sugar in Total Eports 51. The ultimate effect of fluctuations in the prices received by individual countries, to the extent to which they occur, depends on the importance Of sugar in relation to their total trade. For a number of countries sugar provides a considerable proportion of foreign exchange earnings; as shown in Table 11, referring to exports on the 1965/66 average, seven countries including, apart frcm Cuba, the French Overseas Departments of Guadeloupe and Reunion, as wrell as I4auritius and Fiji, are deriving some 50 to over 90 percent of their export earnings from sugar. For another seven countries the share of sugar in total exports ranges from 11 to 36 percent; for still another seven countries sugar accounted for about 5 to 8 percent of export receipts. For none of the net sugar exporters not listed in the table, including the developed and centrally planned countries, did the share of sugar exceed l.5 percent.i/ 1/ The slightly higher level of prices received by China throughout the period covered (1953--67)is explained by the fact that most of the sugar exported has undergone some refining process; the 'world' price refers to raw sugar. Since the world price of sugar wras very low in the 1965/66 average, the share of sugar in total exports might have been exceptionally small in these two years; however, comparison with earlier periods (1958-60 and 1961-64) indicated that it was not much greater in these periods and did not exceed 4.5 percent for any of the countries not included in Table 1.. C4ART X CHINA (TAIWAN): VALUE, VOLUM E AND UNIT VALUE OF SUGAR EXPORTS; TOTAL EXPORT VALUE, 1953 TO 1966 1,000 800 600 _ Ur 400 TOTAL EXPORT VALUE 1 (,*--LEFT SCALE)> J -J 300 0 0 '200_ 0 2 0 I00 so t*rt 60 -w'. --SUGAR EXPORT VbUE - 'tLEfT SCALE) 40 ,, ( RtGHT SCALE ---oz ~~~~~~~~10 St,°°# % rn° o x 8 80< B E 6 __0_ __ = R. 4 0 ffi 4 _ _; 40 z 3 ______________ SUGAR EXPORT UNIT VALUE w 3-t-LEFT SCALE )_ 2. SEMI-LOGARITHMIC SCALES I I I ., I .f_ '53 '54 '55 '56 '57 '59 '59 60 '61 S2 '63 '64 '65 '66 I8RD- 3773 CHART : DOMINICAN REPUBLIC: VALUE, VOLUME AND UNIT VALUE OF SUGAR EXPORTS; TOTAL EXPORT VALUE, 1951 TO 1966 I,00O ' I __ , . I I , I 8,000 600 400 - 300 0 0 Qi 200 TOTAL EXPORT VALUE - _ O (4 LEFT SCALE) 0 j 100 80 __ _ _ _______ V If NRr VP\z .^e 60 <, f ^ tb%*, dp INSUGAR EXPORT VALUE 40 I LEFT SCALE) 30 SUGAR EXPORT VOLUME 200 8 >b_ {(RIGHlT SCALE D 150 a~~~~~~ so 10 -_ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ 10 X ~0 8 . | . _ 80 0 6 .____ 60 0 Cu a- 4 40 tV 3 SUGAR EXPORT UNIT VALUE (-*-LEFT SCALE) 2. SEMI-LOGARITHMIC SCALES '5I '52 '53 '54 '55 '56 '57 '58 'S9 '60 '61 '62 '63 '64 '65 '66 IBRD-3774 - 24 - Table U1: PrROPORFTIO!i OeF SJGZC1 E0WTED AT SPECIAL 2IC,3 BY COU8IrIi WITH SHARE 0 SUGAR I.I TOTAL EXPORTS OF 55f ALD Mr0RR, :1965-66 AVERAGE Percent Share of Sugar in Total Exports _ 50 and over 10 to under 50 5 to under 10 ~at % at ~at special special special prices prices .prices Mauritius (92) 70 Br.Honduras (32) 77 Haiti (7) 82 Cuba (84) 69 Guywia (27) 67 Peru (6) 78 Reunion (81) 91 Jamaica (21) 75 I-lalagasy Rep. (6) 52 Barbados (72) 87 Ilartinique (18) 100 Trinidad & Guadeloupe (59) 94 Philippines (16) 100 Tobago (6) 79 Fiji (58) 66 Nlozambique (12) 100 Costa Rica (5) 93 Dominican Chizia Mexico (5) 81 Republic (53) 89 (Taiwan) (11) 8 Ecuador (5) 98 Note: Figures in brackets indicate the share of sugar in total cxports. Source: Annex Table 8. 52. The data in Table 11 indicate that, with the notable exception of China (Taiwan) all countries for which the share of sugar exceeded 10 percent have cxported two-thirds or more of their sugar shipments under special arrangements well above the world price; the same applies for six of the countries in the last group. The seventh country in th1-.t croup, the iHalagasy Republic, exports roughly half of *her sugar at special prices. Thus for the great maiority of countries where the share of sugar accounts for five percent or nore, the impact of fluctuations in the wJorld price on receipts for sugar is greatly modified or prattically nil; the impact on total export proceeds, where it exists, is still smaller. 53. In a number of countries listed in Table 11 the share of sugar in total export3 has gradually declined. This applies partLcularly to China (Taiwan), the country most dependent on the free mrirket. The share of sugar has rapidly declined from some 45 percent in the late 'fifties, to less than 30 percent in the early 'sixties and only 11 percent in re- cent years. Although this latter figure reflects, in part, the low sugar prico in 1965/66, it is mainly accounted f - the rapid growth of other exports, largely manufactured goods. But. i.iare of sugar has also de- clined in countries selling mainly under sp_ al arrangements, notably Guyana, Jamaica, Peru and the Philippines ;-,I; ; other exports have gained ground. - 25 - III. THE PRO,2i A.!D SUGIIT-ED 3SOXTIOI A. The Basic Problem Restated 54. The main problems facing exporters of sugar can be briefly sun- marized as: (1) sharp fluctuLations and a declining trend of the 'world' price, reflecting recurrent surpluses on the sugar market, and (2) shrinking of markets (actual and potential) through increasing production and self-sufficiency in net importing countries, usually referred to as the problem of 'access to rmarkets'. 55. As argued in the previous section the effect of price fluctua- tions on production incentives has been more serious than their direct impact on expo.-t receipts. The problem of access to narkets has been greatly aggravated by temporary price bocms which have intensified the drive toward self-sufficiency in importing countries 50. lie have tried earlier to give an indication of potential losses in export earnings caused by rising self-sufficiency in importing devel- oped countries and to provide a rough estimate of the extent to which this movement has been strengthened by the price advance in 1963. lilore- over, a computation of gross and net losses on free market exports to developed countries has been presented, drawing attention to the arbitrary element involved. The results are suwmarized below (million dollars): E3timated aninual averaje loss on markets of developed net importers, attributable to: Increased self-sufficiency: Price Fluctuations: 1964-66 compared to: 1958-6o 1961-63 1965-67 1963-67 Total Total Price induced three years five years All e-porters 169 101 54 130 5 Developing Countries 143 85 40 75 2 The data indicato that direct losses on account of price movements, even if no account is taken of earlier gains, have tended to be less severe than those incurred as a result of rising self-suficiency in importing countries. Taking furthermore into account that shrinkage of the market caused by increased self-sufficiency tends to be penrmanent wlile prices, even in the absence of stabilization measures, wiould hardly persist at their current low level, we may conclude that the 'access problem', es- pecial'ly on special price markets, deserves particular attention. - 2G _ 57. There can be little doubt that action cn the sugar market is imperative; events during the six years followang suspension of the opera- tive clauses of the Agreement have provided ample evidencc - if such evidence was required. This, as well as the need for dealing uith both problems, has been tfidely recognized. The choice of technique to be applied will depend, in part, oil the emphasis placed on either the 'price' or the 'access' problem; other factors, primarily of expediency under cur*- rent conditions, and the chance of general acceptance will have a consid- - erable bearing. B. Scope of International !-arket Ree.ulations 58. Fragmentation of the raarket into a number of segregated sectors has limited the scope of international regulations. Although alloance has been made for sugar trade under speciaal arrangeinents, such trade wJas not subject to quota restrictions: export control under international agreements has been (and presumably wJill be in the future) confined to the free or residual sector of the market. 59. As shown in Table 12 total gross exports to the 'free marklet'l/ amounted in recent years to scme 9.2 million tons, of which nearly half originated in developing areas; the rest was supplied in almost equal parts by developed and centrally planned countries. iRoughly one-third of the 9.2 million consisted of re-exports, partly by lWestern Europe, importing raw and exporting refined sugar. But the greater part was supplied by the USSR and other centrally planned countries, which inport Cuban raws under special b i ateral arrangements and re-export refined sugar to the free market.2* These large re-exports wihich Licveloped when Cuban tirade was re-routed, and currently cover a sizeable share offDee market requiremcnt., have created serious problems in the way of re- negotiating an international agreement._' Wle shall revert to these problems in Lhe next section. 1/ axcluding transit movements via Hong Kong, Singapore and the Senegal. 2/ M4ost of these shipmentp are directed to developing cowntries, the main importers of refined sugar. 3/ The point has been made that exports by the USSZ1 consist of domes- tically produced and not of imported Cubain sugar. iHowever, the physical identity of exports by a net inporter (commonly referred to and treated as re-expor6s) is obviously irrelevant for the prob- lcm in question. - 27 - Table 12: SUGAR: EXPORTS ON THE 'FREE MARKET,' 1965-66 AVERAGE To Free market Of which as porcent From Developed LDC's Total re-exports of total (Thmo-.sand metric tons) (Percent) Developed Countries _ W. Europe 'Jnited Kingdom 160 175 335 335 100 lEC Group.7/ 190 450 610 6W0 100 Other W. Europe 110 40 150 50 100 Australia, S. Africa 1,160 50 1,210 65 68 Total 1,620 715 2,335 1,090 80 Dsveloping Countries Luba 990 1,535 - 31 5t;;er W. Hemirphere 760 hho 1,200 - 28 Other.g/ 900 780 1,680 90 42 Total 2,650 1,765 4,115 90 34 CAnf ally Planned Ij.S.S.R. 270 660 930 930 98 Other Eastern Europe 615 510 1,125 385 100 China (Mainland) 5 440 WJ5 U15 96 Total 890 1,610 2,500 1,760 99 A'.l areas total 5,160 h,090 9,250 2,,940 h9 Ex=luding re-exports . . (6,310) 10 N.4t freo market (4,070) (1,000) (8,070) ,.nportr3/ l. The data refer to EEC exports to the outside world, not including EEC intra- Irade, hence re-exports differ from tho3e in Annex Tablo 5. 2/ Excluding re-exports from Hong Kong, Singapore and Senegal (mainly to develop- ing countries) of 105,000, 10,000 and 30,000 tons respectively. 3;. 'Tlo difference betwseen net frce marlket exports and irports is explained by re-exports to the froe market of Cuban sugar, imported by the Contrally Planned countries at special prices. Sor ce: Based on Annex Tables 5 and 7. - 28 - C. Choice of Techniques in the Light of Conditions Prevailinr on the Sugar aiarhet 60. The basic mechaaimn of previous Sugar Agrecments - pre- and postvar - has bcen restriction of supply by way of e;mort guotas0./ The possibility of alternative devices was repeatedly explored during the last decade and consideration was given to various techniques, including long tam, contracts, compensatoly financing (transfer from importing to exporting members or vice versa if transaction prices are belowz the agreed louer - or unper - limit) and buf'er stocks as an auxiliary (though not the principal) nethod. Howaver, the conclusion was reached that export quotas provided the most suitable, if not the only workable, solution and the newt Agreement currently under negotiation again envisages export quotas as the main techrnique to be applied. 61. 14hile fragmentation of the narlcet limits tha scope of internation- al regulations, other conditions, natural and man-made, including shifts in the narkcet structure, lirLit the choice of techriques .~i, as vividly brought out during recent negotiations, complicate re-e.-ablis:;ent Sf a quota agreement. Auaong these conditions three stand out as particularly Signifi- cant: (1) the almost unlimnited physical potential of producisng sugar in most parts of the world; (2) the structural changes on the market caused by cessation o. U.S. imports frca Cuba; (3) the anticipated growith of procuction and of exporbable sur- pluses in the ELC groupl. 62. Sugar can be producecl froa either canie or bcet in most areas and countries; ccns queati-, if prices are profitablc, wheth,er on account of mar- ket forces or of deliberate regulatory action, thoy invariably will invitc ex- pansion of output not only in imjorting countries (ritlt the result of further shLrinkage of markets) but also by actual or potential exporters. A buffer stock wcould provide an assured market at an agrecd (mdinu,un) price and thus would offer a strong temptation for many countries to 'prodeuce for the buffer stoclk. If, however, in order to avoid excess accun.ulation, purchases wsere to be limited or th2 buying price wocre to be reduced, the objective of main- taining prices at not less than the agreed minimum level would obviously not be achieved. For this reason buffer stockcs as the principal mechani.I 1/ Miss has been the most commonly used technique; in additioin to being applied to rcGulatc the sugar market it has been the sole device under the Coffee Agreement and the rmain basis (supple),iented by buffer stock operations) for controlling the tin marl;et. The mechanics are well knoin: stabilization of prices is attempted through reducing global (and individual member countries') quotas if prices approaclh, or de- cline to less than, the agreed low.er li.it; restrictions are graduaally relaxed iiitli rising prices and may be entirely suspended if prices exceed the agreed ceiling. - 29 - for stabilizing sugar prices are precluded. Problems will also arise if other devices are applied, but they may be met, to a certain extent, by appropriate measures. 63. Structural changes on the sugar market after cessation of U.S. imports from Cuba have frustrated repeated efforts to review the Inter- national Agreement. Crucial problems, not yet solved, arose fram Cuba's claim for a share in the market based on planred production of about 10 million tons to be reached by 1970. This compares with average production of 5.2 million tons and a ma-dimunm level of 6.8 million tons ia the course _ of the years 1961 to 1966. Average exports during these six years amoun- ted to some 4.8 million tons of which some two-thirds were directed to centrally planned countries and the rest to tihe free market. In previous negotiations, including those held during April-June 1960, Ouba has in- sisted that exports to the centrally planned countries should remain outside the free market quota and that the latter should considerably exceed actual exports in recent years. Informal discussions subsequent to the negotiations just mentioned seem to have produwed a ssttlement concerning the free market quota of Cuba (at- a level of 2.15 million tons).I This, however, would still leave the problem of ' eakages2, through uncontrolled re-exports by the centrally planr.ed countries.- It has been suggested that free market ezports by this group should be limited to some 1.65 million tons, but it is as yet uncertain vAether the countries concerned, particularly the U-SSR, would agree.3/ However, in the absence of a definite liritation re-exports of the centrally planned countries right be further raised, which would reduce mrarets for other exporters. zpansion of output at a greatly accelerated rate - pres=nably in response to the temporary decline in supplies from Cuba - has restored self-sufficiency in the centrally planned countries as a group;. thus, unless stoclc accumulation was desired, re-exports could be stepped up to the level of im.ports from Cuba.L/ 1;oreovcr, if Cuba were to succeed in 1 *5be C. Czarnikotr Ltd.: Sugar Review -Io. 876, July 25, 1968. 2/ The problem of controlling 'lecakaCes1 as such is not new; it had arisen, on a rither small scale, under previous Agreements with respect to USSR free market sal s of sugar purchased xLder special arrangements from Eastern European countries. It was met by excluding, for the pur- pose of the Agreement, these purchases from Uo3R imports. Under this rule, which established symmetry in the treatment of exports and imports of non-quota sugar, the USSl appeared in some years as a net exporter on the free market and, accordingly, had been given a small e:port quota (200,000 tons). 3/ It is difficult to figure, in this connection, how, cooperation of non- participating centrally planned countries, e.g., Eastern Germany, could be secured. Unless Cuba would undertake to linit exports to these countries, uncontrolled leakages could continue and increase, even if participants would agree to accept thi limits suggested. 4/ :liile annual average imports of Cuban sugar by the centrally planned countries amounted in recent years to well over 3 million tons, their re-exports to the free marlket renained below 2 million tons. - 30 - expanding production while exports to the free market would be subject to quota restrictions, cxports to the centrally plarLed countries, and hence re-exports frorn the latter, migit be greatly increased. Unless such developments were forestalled it can hardly be expected that other exporters would accept quota rest.rictions on a market likely to shrink. 64. Policies adopted and -spirations of the ETC group have created further complications in the wnay of establishing a quota agree- ment. The group, which includes the French Overseas Departments of Guadeloupe, Mlartinique and Reunion (treated in this oaper as separate territories) has opposed export quotas and has offered instead to limit production to 117 percent of internal requirements. At current consunp- tion of about 6.5 million tons (raw value) such excess would lea-ve roughly 1.2 million tons which would be largely, although not entirely, disposed of on export markets. These figures compare with excess production in recent years of some five percent and net exports of about 0.2 million tons, including some 50,000 tons exported by the French Overseas Departments at special prices to the United States. The free market quota of 300,000 tons suggested by ,)r. Prebiscli would thus be roughly twice the volume exported in recent years. However, under the regulations which came into force July 1, 1968, prices to manufacturers and beet growers have been set at levels sufficient to cover the cost of the highL-est cost producing countries in the Coms.un- ity. Although the complex system of production quotas adopted should have a restraining effect, it will not prevent a considerable expansioil.l/ I/ Total basic qlotas for the Community as a whole over the ne.xt five years will amount to 6.40 million tonis (whaite szigar) per year, same thiree to five perccnt above current consun;ption. (Journal Officiel Decenber 16, 1967; !ewsletter on A,gricultural Policy March 1968). iHiember countries will allocate to producers in their territori#s basic ouotas for whichi they will receive the full support price and mnxiirium quotas which, for the nex- thlree years, will exceed basic quotas by 35 ?ercent per year. For production in cxcess of the latter but wiithin t.ie maximium quota a (variable) levy uill be imposed whqich will reduce net returns to less than thle Lull support level. Yet, even if the levy reached its upper lirit, net returns wsould still be highl enough to induce production to be expanded beyond the basic (full price) quota. There is no way of predicting by lhotw much production will actually rise; nor is it possible to establish a clear link between quota regulations and the limitation of production to 117 percent of requircments as proposed by the group. - 31 - Even if excess production were not to reach the full 17 percent, export- able surpluses (and exports, would no doubt increase far beyond those in recent years and the suggested quota. I;oreover, production in the Com- mUnity is subject to wide year to year fluctuations, mainly on account of vagaries of tha weather, and net trade has varied widely.1/ Hence, unless exports, rather than production, were limited and the group, through appropriate stock operations, would maintain exports around the agreed quota, sharp variations would complicate the working of a quota mechanism. It therefore would appear that a limit on production, even if a compramise on the degree of its excess over consumption could be reached, could hardly- satisfy other exporters. 65. To sum up briefly, conditions prevailing on the sugar market narrow dotn the choice of possible techniques of mn.rket regulation; buffer stock operations as the main mechanism would not be wiorkable. Re-establishment of an agreement based on export quotas faces serious difficulties; however, if acceptable compromises wtere reached, a quota mechanism, supplemented by additional measures (as foreseen in the draft under negotiation) could provide a wrorkable solution. The Aarcement under .Ic.otiation lHain Features 66. The ncw Agreement under negotiation2- would again nrimar1 lv be based on cxnort (uot.as as thc principal techniquie for maintainiinj piccs within a range to be determined. Quotas would apply to (net) exports to the 'free market'; moreover, as indicated above, limitations on re-exports of Cuban sugar by the centrally planned countries are being considered. The mcchanics wculd be similar to those under previous ;ngrccments: basic export tonrages, established during rnegotiations, would ornm an integral part of the Agreement. They Zould subsequcntly seive as a guide for annual quota allocations, based on estimated net free market import requiremients. The allocation procedurel/ would be such as to give deve- lopinz countries a larger share in total annual quotas thaii the one implied by basic export tonnages. This is a novel feature; no such. provisions had v AveraLge net exports of the ESC group (including exports of French Ohverseas Departments to the U..) over the eight years 1960-67 amounted to roughly 220,000 tons. -.:nnual figures rangc from a high of 850,OO0 tons in 1961 to minus 130,000 tons (i.e., net imports) in 1963. 2/ ilegotiations are based on a draft, prepared by the Secretariats of U'ICTIAD and the Intcrnational Sugar Council, dated January 1963. 3/ An initial percentage (the precise figure to be determined) would be allocated to developing exporting members only; the remainder would be apportioned among all exporting members. - 32 - been applied before. Iloreover, basic export tonnages of developed ex- porting countries would be gradually reduced in liL-e ,rith increases in these countries' domestic consumption, which would automatically raise the share of developing countries in free market exports. 67. As under previous Agreements, exports under special arrange- ments - those to the USTL, to the U.K. (under the negotiated price quota), those by Cuba to Socialist countries and those under the Afro-Malagasy Agreement - would not form part of or be charged against the quotas to be established. They wIould, however, be considered as part of exporters' total entitlements and presunably be taken into account in establishing 'free market' quotas. 68. Under this type of agreement the main emphasis would again be placed on price stabilization. iHowever, various additional measures are envisaged which would strengthen the Agreement and deal with the crucial problem of access to markets, for which export quotas per se provide no solution. 69. Provisions to reduce loss of markets to non-participating e.xorters contained in previ=us Agreements have been foi-tified. The obligation of irmporting members to limit purchases from non-participaits to specified fixed quantities has been maintained; but it would be sup- plemented by the much more stringent obligation to omit purchases alto- gether fran non-members if and as long as the tworld' price wias below the agreed rinimnum of the range. 'Tnis additional provision if accepted and carried out by importing members would, no doubt, greatly facilitate the defense of pi-ices at the minimum without requiring overly drastic reduc- tions in members' quotas. The prospect for this additional obligation being adopted will, however, greatly depend on thc proportion of e:qxorts covered by the Agreement; it wyould be practicable only if coverage were fairly ccmprehensive. 70. The obligation of importers to refrain from purchases frcm non-members when prices are below the floor would have a counterpart in an obligation to be undertaken by exportinDg members, to give participating importers the opportunity of buyinyg specified quantities!/ at the ceiling price in case market prices exceed the ceiliing. 71. Ileasures to dcal writh the question of ensuring e.oortcrs of access to markets envisage commitments to that elfect by developed importing countries. The actual nature of such ccm,mitments had not been spelled out in the draft but it was suggested -that they might take the form of a specific percent Share of the total consumption or of grarth of consumption, or of a specific quantity waich presumably would gradually rise with increasing consumption. The first alternative would correspond to the proposal made by ir. Prcbisch, Director-General of UICTAD, at the IUCTAD Conference in Delhi February 1968; the second would be similar in 1/ These quantities would be determined on the basis of actual purchases from member countries in previous years. - 33 - some respects to the alternative device of long term contracts as the basic mechanism of a Sugar Agreement. It would not, however, combine quantity with pric3 guarautee; thM floor would be maintained throu&d quota adjustments, and the ceiling (for specified quantities) by the ob; a- tion undertaken by exporters mentioned in the preceding paragraph. 72. As under previous Agreements, stocks held by exorting countries would be subject-to regulations with respect to maximum and minimum levels. Carryover stocks in excess of those maintained for domestic requirements would have to be limited to a certain percentage of their export entitle- ments (i.e basic export tonnages plus the tonnage to be exported under special arrangements). I'Iinimum stocks to be held would be determined annually by the Council (the main executive body) and would have to be immediately available for export at the Council's call. The minimum stock level to be set by the Council could not exceed a certain percentage of basic export tonnages. The stock provisions seem to lean toward avoiding excess stocks rather than to ensuring reserves sufficient to prevent prices fram rising much beyond the ceiling. The adverse effects of such price increases suggest that strong safeguards against such contingencies are needed. 73. The most essential features of the new Agreement under discuss- ion may be summarized as follows: (1) export restrictions would continue as the main price support- ing device; they would be reinforced, to a greater extent than before, by limitations on imports from non-participating countries; (2) additional measures, not provided for in earlier Agreements, would ensu-e access to developed importers' markets through special obligations to that effect undertaken by the import- ing countries concerned; (3) preferential treatment of developing exporters has been in- troduced through provisions with respect to quota allocation, as well as through gradual reduction of developed countries' basic export tonnages in line with consumption growth in these countries. Appraisal 74. The prospects for this type of Agreement to operate effectively will largely depend on its coverage. Assuming wide participation (includ- ing Cuba and the EDC group) and acceptance of the main provisions outlined above, the Agreement would have a good chance of aclhieving its main objec- tives, i.e., to deal successfully wsith both the 'price' and the 'access' problem. The strengthened provisions concerning imports from non-members (whose supplies in this case would be comparatively small) would help to maintain prices above the minimum; cammitments by developed importers would secure access to their markets. There might, however, be an accelera- tion in the movement toward self-sufficiency of developing importers; - 34 - demand from these countries, currently arnounting to scme four million tons, may not grow or may even shrin1. Such a developrrent might appear unavoidable under any circumstances; but it might gain momentium if prices were supported at levels which developing importers may find too high. WJe intend to come back to this question again in the next section. 75. If a significant proportion of trade would remain outside the Agreement the chances for success would be dimmed. Importing developed countries might still be prepared to commit themselves to linit purchases from member exporters; however, it cannot be expected that even these - countries, let alone other inporters, would be willing to accept the provision of altogether discontinuing purchases from non-memabers if prices iiere below the floor. In tho absence of such provision, or in case mem- bership on the import side wiould also be limited, there is little chance that prices could be held. Under such circumstances an Agreement based primarily on long term contracts could offer a more satisfactory solution. Long Term Contracts as an Alternative 76. This technique has the merit of being workable even ief 2ne or more than one nmjor exporter or importer would not, participate.1 It consists of mutual obligations undcrtaken by participating importing and exporting countries to purchlase, or sell, specified quantities at prices not beloiw the min.mum (or not excec-ding the maximum) of a mutually agreed price range. A Sugar Atgrcement based on this techlioue would primarily aim for such contracts betw:een developcd irporting countries2/ on one side and their sources of 'free market' supply on the other.-V It rLght enccmpass existing special arrangements of developed imnporting countries, which currently apply to scme 60 percent of their total imports, and could indeed be regarlcd as an c:ztcnsion of such arrangements to additional countries and quantities. 77. Existing arrangements - including those of the U.S. and the U.K. with specified trading partners - would be maintained in their present ( The device of multilateral long term contracts was actually developed in the course of negotiating an Internationzl '.Laeat Agicenent, and was intended to provide a solution for the impassc which had arisen because of Argentina's decision not to participate. hle original draft was based on export quotas, considered unworkable with one major exporter remainina outside the Algreement. 2/ There is no a priori reason for excluding altogether the possibility of developing importing countries entering into contractual obliga- tions; but they would (iffer, in various respects,from those envisaged for developed importing countries and will be discussed furtlher below. Imports of centrally planned countries are already subject to special arrangements. 3/ These sources include developed, developing as well as centrally planned ccuntries (see Table 12 above). bilateral form. Additional contracts, as here envisaged, could be on a multilateral basis, not attempting to pair off individual buying and selling countries, though the swit total of the quantities guaranteed by importers would of course have to be equal to those guaranteed by cx- porters. Moreover, under a multilateral scheme the agreed price range would have to be the same for all transactions covered. 78. Since the Agreemer.t wiould have the main purpose of securing access to the markets of developed importing countries at remunerative prices, it would be imperative that the contracted quantities cover total import requirements of these countries, rising over time with increasing consumption. Ideally the total of such increase should be met by purchases frcm participating exporters; domestic production in developed countries should not be expanded. The extent to which tlis c,an be achieved would vary trom country to country,sone might be wii'l5ng to liuiit but not to forego expansion of domestic output; in any evenit there is no need for Uniformity in individual importing countries' cc mitments. 79. Imports from non-participatting exporters would be subject to limitations similar to those under quota agreements: they should not exceed a specified volume, determined on the basis of previous years' iMrorts from these sources. That iwould automatically channel any addi- tional import requirementsl/ beyond the contracted quantities and those purchased fron non-members to participating exporters. As to price, such additional quantities should be subject to similar provisions as those covered by contracts: importing countries wJould purchase at not less than the minimum and exTorters would sell at not more than the md:nun under the agreed range,2/ 80. The broad network of trade under a contract type Agreemer.t, hopefully including all developed importing countries on one side and their trading partners on the other, is illustrated in Table 13 and in greater detail in unnex Table 10. The data used are average exports in the years 1965/66; they are not intended to suggest the actual quan- tities to be negotiated but to give a rough approximation of the magni- tudes involved and of the additional volume of sugar trade exporting coimtries could count on sellinc at remunerative and reasonably stable prices. The table lists in column 1 e:xports by net exporting countries under special arrangements to all destinations and, in coltmns 2-7, exports to developed countrics whiich are currently buying on the free 1/ Even though importing countries may be prepared to enter coiaditments covering total annual import requirements,it is not possible to make precise forecasts of such requirements; it therefore is to be expec- ted that conriitments will tcrd to be on the conservative side. / Some modification regarding these price comitments may be necessary; they might apply to some predetenrined percentage of the contracted quantities or, particularly in the case of shortage, may have to be waived in certain cases. Table 13: SUOARs EXPORTS UNDER EXISIIIG ARRANGDM4TS (AT SPECEAL PRICES) AID UMDM PROPOSED LOM TERM CONTRACTS (1965/66 AVERAGE) (Thousand metric tons) Under proposed long term contracts with developed \ ~~To importinr, countries At special or con- Total At special W. Europe Total tract prices as % cols. Jrom ~~~~prices, all New excluding cols. Of total exports 8 & 9 destinationZL/ Canada- Japan Zealand UK & EEC Israel 2 - 6 Actura7lPotential % - - t~~~() (2) (3 ~(40 ( 0 (6) (7) )- ( 10 eveloping: Cuba 3,342 69 387 - 361 5 822 68.6 16.9 85.5 Other W. Hemisphere 3,048 283 12 14 16 - 325 71.8 7.7 79.5 Africa 915 131 - 11 9 _ 151 70.8 UL.7 82.5 Asia & Oceania 1j462 118 389 41 -- 548 54.7 20.5 75.2 Total 8,767 601 788 66 386 5 1,846 67.0 14.1 81.1 [Developed: Australia & S. Africa 580 248 693 65 6 _ 1,012 32.4 56.6 89.0 Denm.ark - - - - 47 - 47 - 86.4 86.4. Turkey 1 - 27 27 0.9 40.8 4i.7 Total 581 248 693 65 53 27 1,086 30.4 56.9 87.3 Eastern Europe / - _ _ 187 42 229 - 23.9 23.9 Total all areas 9,348 849 1,481 131 626 69 3,161 58.6 19.8 78.4 or which to developed countries 5,957 1/ Including exports of cuba to the centrally planned countries (3,342o000 tons) and of some African exporters to developing countries (48,000 tons). 2/ Czechoslovakia, Hungary and Poland. .,nnrcr: Annex Table 10. - 37 - market but under the proposed scheme would import under long term contracts, 81. Under the assumption that total exports to the developed markets in columns 2-6 would be covered by-contracts, the share of net exporting areas moving at special-tincluding contract) prices would be brought from about 59 to over 78 percent. Although gains would not be evenly distributed the exporting countries of Asia, which currently have the smallest share of exports at sp.!cial prices, would greatly improve their position: the proportion of their trade moving at special prices would increase trom. 55 to 75 percent. 82. The largest single market where guaranteed access as well as a remunerative and reasonrvbly stable price could make a great contribution is Japan; Cuba, China (Taiwan) and IndoncT a, ta :rentio;i only developing exporter3, could greatly profit frrn comnitments by t1iat market both with respect to price and increasing voluia of irports. Canada as well as New Zealand wculd contrib-ate mainly or wholly by comaitments to pur- chase at agreed prices; Canadian productioa has been fairly stable for many years ani Ile-w Zealand meets all requirements by imports. Price would also be the main factor in the case of the ScanrUnavian countries and Switzerland, where production has not tended to increase. 83. As indicated in Table 13, the greatest gain would accrue to developed countries: the proportion of sales at special prices in their total exports wo:uld rise fron 30 to 87 percent. This compares with in- creases frcm 67 to 81 percent for duveloring countries and frcm ncar zero to 24 percent for Eastern Europe. It should be recalled that the figures in the table have been derived on the basis of actual 1965/66 exports to developing countries, w.ich implies that distribution among exporting countries would remain unch3rg-n,d. It is ouite conceivable, however, that preferential treitment would -De accorded to developing exporters an1i that their share in e:',djrts under contracts with developed countries would exceed their present share. The Special Case of the U.K. 84. U.K. imports at free narket prices in 1965/66 amounted to nearly 600,000 tons of which 330,000 tons were exported in refined form, aDproxi- mately 150,000 tons to developed countries (mainly iNorw;ay, Switzerland, Sweden and Greece), the rest to developing countries. Assum:ing that these latter exports would move at world prices, only about 400,OCO tons of U.K. free market imports might be covered by contracts - those exported to developed markets and those retained for domestic consumption. Developed importers of U.K. sugar would include the respective quantities in their global import commitments. Assuming that U.K. additional contracts would be confined to developing exporters, which in 1965/66 supplied roughly 350,000 tons at free market prices, the proportion of developing countries, special price sales in their total exports could be raised by another three percent to roughly 84 percent (see Annex Table 10).. - 38 - Markets in Developing Countries 85. These countries have in recent years imported some four million tons of sugar annually. Although less than half of these imports are directly supplied by developing exporters (see Table 12 above), the latter have been the original sources of most of the sugar received in refined form fran centrally planLed and developed areas. Thus the importing developing countries, with their great potential for increasing consump- tion, right offer widening msarkets - directly or indirectly - to LDC exporters. 86. One cannot expect, howJever, that developing countries would be prepared to undertake commitments similar to those envisagcd for developed markets. Yet developing imnorters were particularly sensitive to the sharp price rise in 1963 (their imports were drastIcally reduced in that year); although they have benefited from the low prices which have pre- vailed in the last few years they might consider it worthwhile in the longer rLun to enter contracts covering pait ox their anticipated require- ments so as to secure part of their supplies at reasonable prices, Both minimum and maxinum prices under such contracts might be lowier and the range might be narrower than under commitments by developed countries. This would imply a double or multiple price systen; but we do not believe that such a system, which actually already exists under current special arrangements, would create serious problems. 37. Developing (but not developed) importing countries may bc Civen the option of participating in thc Agreement as 'non-contracting' inembers, undertaking the obligation of limiting purchases frcm non-participating exporters to a specificd volume, determined on the basis of purchases from these sources in previous years0 The quid pro quo might taSic the form of an obligation by exporting countries to supply specified ouanti- ties of sugar, determined on the basis of custcm:iry purchascs froia menber countries, at a price not higher tihan the maximum under the price range (wliich for that purpose might be the maxinum agreed tuder contracts with developed countries). 88. Whether or not contracts could be ectended to cover part of developing coulitries' imports, an effort should be made to keep prices on the remaining free market on a moderate level anld to avoid sharp price increases. Iot only wzould this be in the interest of developing importers, w-hich utnder either a quota or a contract type agreement twould be the main buyers at 'world' prices, but it might also reduce their incentive to meet an increasing slhare of consumption by cxpanding domes- tic production and thus would wsiden the scope for exports to these markets. Participation of Cuba and the 17C Group 89. Both Cuba and the EEC group anticipate a sizeable expansion of output and exports, which makes it difficult to accept quota limita- tions on the latter. Cuba nevertheless seemed eaCer to particinate in the Agreement under negotiation and wrilling to compromnise on her initial - 39 - quota G_ . It therefore might be expected that Cuba would also be prepared t. join a contract type Agreement, should currcnt negotiations not succeed. Cuba's e:ports to developed countries after 1960 have been fairly stable around .9 to 1.0 rrillion tons; assurming wride participation on the side of developed importers, Cuba probably could count on contrac- ting a quantity close to that figure, slowly rising with increasing import requirements. 90. The SEC group has altogether opposed quota limitations on its exports and the limit on production offered instead suggests that future - exports would increase far beyond past levels. Free market exports of the group to developed countries (excluding intra-trade but including t'hose of French Orerseas Departments to Canada and tlewJ Zealand) amounted in recent years to somce 200,0C0 tons. Guaranteed qu.xitities under a contract Agreement would har-dly exceed this figure and would not increase if, as one night expect, preference twould be given to developing expor- ters. 91. Guaranteed quantities of both Cuba and the EM group, since they would presumxab.y bc con:ir.ed to trade with develoned countries, wiould obviously be much smaller than free market quotas offered during recent discussions. Howlever, an Agreement based on conbracts Vrould be less restrictive; there wrould be no limit placed on export's beyond the contracted quantities, thourh prices fetched for those exports might be very loIwO Yet the absence of export restrictions niay make a contract typo Agreement more palatable for Cuba and, particularly, for the 3C group. Appraisal 92. Under an Agreement based on long term contracts the main em- phasis would be placed on maintaining and widening export markets, par- ticularly in importing develoncd cowut-ics, at prices w-iithin an agreed range. The potential benefits which could be derived from that type of agreement may be gauged by reverting to the data nresented earlior indicating the nagnitude of the loss incurred in recent years as a result of rising production and greater self-sufiiciency in developed markets. As far as these marlkets are concerned, the contract technique combining volume and price coiniitments would be preferable to tha mcasurCs nlow under consideration which provide for commiitmcnts with respect to volume only; prices would have to be suppozted through quota restrictions. 93. What iwould be the incentive for importing cou;itries to enter contracts of the type envisaged? In the first place it should be their often assk.rted desire to assist in promoting trade of pri^ax-r producing countries at fair and stable prices; in turn this wrould sustain the purelasing pow;r of these countries and hence their de2iar.d for imports. Ilorcover, long term. contracts wsould also serve the self interest of importin, developed countiies nore directly: they would be assured of adequate supplies at agreed maximum prices in years of relative shortage. Obviously the extent of guarantees under contracts would be primarily - 40 - determined by the willingness of importing countries to make ccmmitments; but failing their active cooperation, the 'acces prob.em', which w-e con- sider as the most vital one, camnot be solved. 94. Assuming that developed importing countries wiould purchase under contracts and, as envisaged, commit themselves to purchase sugar required beyond the contracted quancities at a price not below tne mininun of the range, the residual market would be quite narrowJ and would serve develon- ing importers almrost exclusively. As mentioned above, a number of these countries may find it to their advantage to enter contracts for part of - their anticipated reouirements; othe:s may join as 'non-contractingt mem- bers, merely undertaking the obligation not to increase their purchases from non-participating exnorters beyond a specified maxmun. 95. In any event, the residual mar3:et ;.ould be consieerably nlarrower than it is now and prices oni that market could decline to very lmw levels. Sincc, however, participating exporters wiould be assured of remunerative prices for by far the larvest share of their trade, temporary vcry lor prices on a - hopefully expanding - residual market may be taken in stride. The beneficiaries iwould be dcveloning importers._ 96. Should one or more than one major exnorter not participat:, an Agreement based on contracts would seen to offer the only worl:able solution. The sector of the market to be covered by contracts would obviously be smaller since scm.e imuorters, if they derive a large pa 't of their sugar imports fro;n non-nember countries, night no' care to participatc Undcr such circumstar.ces the fee market sector w-ould be lar,er and the chance of maintaining prices at a desirable mininu-.1 rather re:note; but ;.here would still be strong reasons in favor o' preventing a sharp rise in prices on that market. In order to achieve this end it is suggec:tod that adequate reserves be built up and maintained; these would be ava.ila'l1, in case of need, to supplement supplies fr.m current proeuctien. Cdmpensatory Transfers - an Awuxi.iarr 3esuare 97. A compensatory transfer scheme on a multilateral basis has been suggested by Lord Kahn as a possible alternative device which va±ght be applied on the sugar market.-2/ Under such a scheme trade iwou).d move without restriction and all transactions (other than thoce under special arrangemcnts) i;ould take place at marlket prices. 1lnenever thc average price for individual transactions over a certain period (say one calendar month) remained belowr the agreed minimua level, importing countries would l/ Obviously, as long as the USSR is pr'ipared to contiruc the current practice of purchasing Cuban rawz sugar at six cents per pound and re-exporting it in refined form at a much low;er price, both develop- ing exporters and importers are getting the better of twjo worlds. 2/ "Tlhe principle of compensation as an alternative", briefly outlined in i ultilatcral Cntions for Sl.iar, fippendix C to an unpublisiied docu- ment of the International %gar Council, ilovenher 1959. make and exporting countries would receive compensatory payments covering the difference betueen the average transaction price and the minimum price for the volune traded. Cunversely, whenever the transaction price would exceed the agreed maximum, compensatory transfers wzould move from exporting to importing countries. All such transfers would be nade among governments, and it would be left to each individual govcrmment to deter- mine tha use of the compensation received, or the way in which transfer payments would be financed. 98. Obviously, a scheme based solely on compensatorj transfers would not as such provide a solution to the 'access problem'. iloreover, it is difficult to visualize how such a scheme could successfully operate under the present complex ccnditions on the international sugar market. Sugar traded on the 'free market' is moving from developed to developing countries and vice versa, as well as among countries in each group. Developing countries, whether exporting or importing, could hardly be expected to join a scheme involving compensatory payments; dif4iculties would also arise w-itlh respect to transactions with the centrally plaLned countries. We would not, thereforc, consider compenssatory transfers as an independent alternative device. 99. How-ever, such transfers might play a useful role tiithin the frome-iork of an Agreement based on long term contracts as outlined above. Some of the importing countries may find it difficult for institutional, a&dinistrative or other reasonIs, to accept and impltnent contractual obligations to i.mport sugar at prices above the cuzrrer.t rarket Zeve>. They miglht prefer intergovernuiental transfer payie;nts to cover thc dif- ference bettween agreed ninirnuni and actual transaction prices wheenever the latter are belowr the minimnri. ilo such preference can be e:cpccted on the side of cxporting (large3y dovelopirig) countries wnh( market prices exceed the ceiling. They would find it easier, no doubt, to en- force exports at the ceiling price rather than to compensate importing countries for any differencc which raight arise. 100. There wrould be no need for 'syImctry' in the form of exportcrs' and importers' obligations. ior would the system have to be wuiform for all contracting importing countries, provided thlit export i rig countries would not object to receiving mini;mun prices for exports to soome imnport- ing countries and compensatory payments for their exports to othler countries.l/ 1/ Since sugar exports in most exnorting countries are subject to governrent control, no dificulties are likely to arise in that respect. Compens,:tory receipts could be passed on to private exporters and producers in the form of subsidies. - 42 Reserve Stock 101. It is expected that participating exporting countries would carry reserves sufficient to ensure that the quantities to be supplied under special arrangements and negotiated under contracts will be avail- able even in years of short crops. 102. The purpose of the additional reserve stock here proposed is to make sure that (a) additional requirements of participating importers can be met at prices not exceeding the agreed maximum; (b) the 'free market - price' can be maintained around that level; and (c) a last resort is pro- vided in case individual countries' reserves would not suffice, in any particular year, to fulfill their obligations. How Large a R?eserve? 103. In considering the size of such a reserve two main aspects have to be examined, the first relating to its effect on the market, the second concerning the cost involved. Firstly, the reserve should be large enough to p -ovide the desired safety margin, but should not exert pressure on prices by its size; nor should it induce undue reliance on the reserve and thus lead to reduction of comnercial stocks, as this wsould obviously defeat its ourpose. Secondly, the cost involved would hiave to be reason- able in relation to the benefits to be derived. iAeither of these ques- tions can be answered to full satisfaction and the decision will have to be largely based on judgnent. 104. Concerning the size of a reserve required to meet its purpose, guidance may be sought by attempting to measure the shortfall which trig- gered the 1263/64 price bocn. This mrght be done on the basis either of the cumulative deficit between production an(d consumption or, alternative- ly.of the behavior of stocks (in relation to consumption) during the critical years (1962 and 1963). According to data publislhed by the International Sugar Council, the cumulative deficit in the two years came close to 2.8 riillion tons..1 Howtever, in preceding years production had considerably exceeded consumption and part of the deficit mentioned re- flected deliberate retrenchment in various areas. A number of Western EBropean countries w-ith large surpluses on hand had reduced beet acreage 1/ It should be pointed out, however, that the figure obtained depends largely on the choice of production data anong those publisthed in various sources. We have used those of the International Sugar Counr cil, which state both production and consumption oni a (conparable) calendar year basis. Crop data given in other sources (FA0; the U.S. Department of Agriculture; .v. 0. Licht) combine production in indivi- dual countries' crop harvesting seasons which vary from area to area. Thus the world totals derived depend on the way in wdich country data have been combined and differ considerably from those given by the International Sugar Council and also fron each other. Using any of these data wtould furthermore have raised the problem of choosing an appropriate consumption period for comparison. - 43 - and this reduction, even if the high yield of the 1960/G6 season had been maintained, would have brouight do'.m output in that area by about ten per- cent, or rougily one million tons. Thus the ttrue' shortfall does not seem to have exceeded tl7o million tons!/ and a reserve of that magnitude would have sufficed to keep prices in check. 105. Under the second alternative the shortfall wJould be indicated by the (maydmum) difference bettween actual and 'normal' stocks in relation to consumptioin. An attempt along these lines has been made, using a series of data on wiorld stocka as of August 31 of eachyear, computed and reg-larly- published by F. 0. Licht.2/ 'llonual' in this connection wiould refer to a stock/conswuption ratio which wjould not per se cause prices to rise beyond or to remain belotu the limits of a certain range .3/ 106. Data comparing the stock/consumption ratio with wzorld price- over the years 1950 to 1967 indicate that at a ratio of less than 22 percent prices exceeded the ceilinng; at a ratio of over 24 percent, uwhich prevailed much rore frequently, prices mostly tended to move below the floor (see Chart VII and Annex Table 12). Awhere were e::ceptions to be sure, notably in the early 'fifties and again in 1957 ihen prices v:ere strongly affccted by the Korean 'har and the Suez crisis. lloreover, through the period 195h to 19062 prices were influenced by tae operation of the International Agrcoments. On the basis of these observations wie have taken a stoc'k/consumption ratio (as o,; August 31) of 22 percent and 1/ I.e., less than four percent of world consumption but ncarly one- third of net exports to the free market in the-e years, which explains to a large extent the sharp reaction of' world prices. 2/ Ideally, season end stocks -should have been used, but no ccmprehen- sive series ccmbining suclh stoc!.s is available. In the majority of producing countries stocks at the end of August aare at or not far above tllcir seasonal lo;;, but this does not apply for scnie areas, including the Caribbean. Thus, AuSust 31 world stoc':s exceed tho total of stocl.s at the lorwest lcvcl; the serics nzevertiec1css provides a sufficiently close approxim.mation to be used for our purposc. The figures are far low-er than those published in recent years by the Internatioaal Sugar Council referring to December 31 levels (includ- ing, as do those co.mpitted by Licht, estimates for countrics not pro.iding data); th-e 1966 figure shotw 13.4 million tons for August 31 (Licht) as comipared to 22.5 million tons for December 31 (Inter- national Sugar Council). 3/ Wle lhave soam!what arbitrarily taken the range between 3,25 cents per pound and 4.35 cents per pound, adopt'd under the 1953 and 1953 Sugar Agreenents. CHART z SUGAR. STOCK/CONSUMPTION RATIO AND "'WORLD" PRICE, 1950 TO 1968 AGREED RANGE 3.25 TO 4.35 CENTS PER POUND 1 96 KOREAN OR SUEZ CRISIS 7 6 _ 1964 1951 a~~~~~ l z 5 LAJ .~~~~~~~~~~~~~950 o4 3 _ -l~~~~~~~~~~~162 - 959,v191 1|965 -- 19-67- _o_ _ 1969 19660 l -_ __ _ _ _ _ _ __ __ ._ - _._. - - - . -~ - - - . - _____._____ __.____. 15% 20% 25% 30% 35% STOCK/CONSUMPTION RATIO | 24 percent as rough indications for the approximate limits of a tnonaalI ratio. . 107. On the basis of a minimum stock/consumption ratio of 22 percent, 'nonmall stocks on August 31, 1963 wiould have amounted to 12.0 million tons, as compared to their actual level of some 10.1 million tons at that time (see Annex Table 12). The shortfall of roughly 1.9 million indicated by this comparison appears to be very close to the 'true' deficit ol about 2 million tons derived by our first approach. In spite of the large mar- gin of error in the underlying figures and of the arbitrary choices invol-_ ved in both approaches,.Z/ t.he results give a rough indication of the size of the reserve which might have prevented the sharp price boc-m Ho!sever, a moderate price increase, signalling the nead for some expansion of out- put at that time, would have been called for and a reserve of less than 2 milli3n tons would have been sufficient. 108. Considering the desirab'le magnitude of a reserve as suggested for the future, we furthermore have to keep in mind that it should not threaten to depress prices or to induce the scaling down of cormiercial stocks. We therefore would want to keep total stocks - commercial plus the segregated reserve - at a level not higher than that indicated by the upper limit of a 'normal' stock/consumption ratio, i.e., 24 percent. Using estimated consumption for 1S68/69 of some 69.7 million tons3/ as a basis, total stocks should not exceed 16.7 million tons; thus, if coa-* flercial stocks were held at not more than 22 percent of consunption or some 15 rillip tons, the reserve should not be higher than about 1.5 million tons.,/ A reserve of that size could be expected to keep a price increase within bounds without, howrever, exerting undue pressure on the market. 1/ Concerning the lower limit of 22 percent, camne support may be derived from a recent statement by Dr. A-hlfeldt, Chairman of F.O. Licht (In- ternational Sugar Report, January 19, 1963). The author considered it desirable that, by August 31, 1969, stocks should be brought down to 15 million tons, or some 21.5 percent of expected consumpoion (69.7 million tons in 1963/69). There wqas no suggestion, ho-..ever, that a stock/consumption ratio of that size would be desirable at other times. 2/ See footnote 1 to page b2;in our second approach the result depended on the choice of the 'norm' for a stock/consimption ratio. 3/ Estim.1 te by Dr. AhlEeldt; see footnote 1 above. / A figure of that magnitude lhas also been suggested by ihr. R. E. Liddiard, Chairman of C. Czarnilcour Ltd., London, who, in addition, has given valuable advice concerning location of stoclc, storage facilities and cost of storage construction. The Cost of a Reserve 109. lhat would be the cost of acquiring and maintaining a reserve of the m3gnitude suggested? The cost of acquisition would of course largely depend on market conditions and prices prevailing at the time of purchase. Currently the market is still depressed by the existence of surplus stocks, mostly in the hands of exporting countries, and prices have continued to weaken -~ the Januai'y-August 1968 average was roughly 1.8 cents per pound and recent quotations have declined to 1.4 cents. The follcwing estimates.are based on the assumption that purchases for the reserve *rould start in the near future, taking burdensome surpluses off the market, and thus bringing cormercial stocks closer to 'norr.al levels'. It could not be expected, however, that the reserJe could be acquired at or close to current prices; demand for such a large volume would no doubt lead to an upturm, even if purchases were made cautiouslr and spread over some time. It would be more realistic to assume our- chase prices to vary from, say, 2 cents per pound to perhaps 3.5 cents. Our calculations have been based on an average price of 2.75 cents per pound, roughly equal to $60 per metric ton. 110. It has been suggested that stocks, in order to be available without delay uhen and wlhere nceded, should be distributed over a nuinber of areas, importinig as well as exporti.n. Wle therefore have to add freight- for, say, lhalf of the reserve to be hcld. The cost of acquisition and distribution would then be calculated as follotis: (IIillion Y") 1,500,000 metric tons at 2.75 cents per pound 90.00 ($60 per metric ton) Freight on 750,000 tons at 1 cenit per pound 16.50 ($22 per metric ton) 106.5o 'o this we have to add the cost of constructing additional storage facili- ties. In view of the recent large expansioni of such facilities in many countries, the need for construction co ould be limited; existir. space could be leased. Ile have here assumed that warehouses would have to be constructed for one-third of the recserve, or 500,OO tons.l/ The cost of construction varies iwith location and particularly with the type of warehouse built. 11e have beenl advised that sugar can be safely stored in relatively inexpensive shelters and that the average cost of construction I/ It should be noted that an under- or over-estimate in this respect, though affecting the necd for capital outlay, would not appreciably alter subsequent annual payments; the cost of leasing storage space would probably not much dificr from interest on capital invested in constructing or perhaps purchasing storage facilities. may be put at approximately ''24 per ton. On that basis capital outlay for constructing storage facilities for 500,000 tons would co;e to,.$12 rillion. Thus total capital cost for acquisition (incluctng freight for half the reserve) and warehouse construction for one-third, would amount to ........ e ............. eono006e $118.50 million, or, to take a round figure, $120 million. 1 l. At a rate of interest of seven percent and amortization over a period of, say, 15 years, annual debt service (equally spread over the period) would amount to some oo o*X. @$13.2 nillion. Allowing for the cost of insurance, leasing of storage space and operating and administrative expenses, a round figure of..$ 3.0 million has been added,Y which would bring annual payments to .......$16.2 million.!/ 112. It is not intended here to suggest a way of distributing the burden of such payments, and the following computation is presented solely for illustrative purpose3. Suppose that payments were to be covered by a charge an exports under special arrangeiments which move at prices ranging from some 5 cents per Dound to over o cents per pound. ThetDnnage sold at speciil prices amounted, on the 1965/66 average, to some 9 millioni tons (see Table 11); on that basis the char-e per ton would be roughly $1.8, or (at a p;ice per ton of 5.5 cents, eoual to rotighly P120 per ton) ouie and one-half percent of the expor-t price. 113. The foregoing compntations have not taken account of profits to be expected fron stock operations. If stocks acquired at 2.75 cents per pound were to be sold at 5 cents per pound (in order to prevent a price increase beyond that level) the gross profit (2.25 cents per pound or V49.5 per ton) on 1.5 Tillion tons would am,ount to $74.25 million. Part of the profit would have to be retained for coverinc the difference betureen the original purchase price (2.75 cents per poun~d) and the presumably higher price to be paid for stock replenishment (perhaps close to 4 cents per pound). If $40 million were set aside for that purpcso, the remaining $34 million could be used for partial coverage of current expenses. Divided ove: 15 years this could cover annual cost of roughly *"2.2 million and thus would reduce payments to be levied to iah Million per year. 1/ Insurance cost, according to inform,ation received, about 24 cents per ton on 1.5 million tons . .............................0... *0 $ .4 million Lease of storage space for 1 million tons (assumed roughly equal to interest cost for new construction).... $1.7 million To this a highly conjectural estimate O. 3 .9 million has been added for other expenses. $3.0 million 2/ Total paynents over the period of 15 years wlould thus amount to ...*..........6 66*666** $242,6 million of which amortization would account for ........... $-120.0 million Expenses for insurance, lease etc. would come to v ` 45.0 rmllion and interest to ............ 0............. $ 77.6 miullion L14. Turning to the crucial question of comparing cost with expected benefits, it should be recalled that the latter would primarily accrue in the form of avoiding potential losses wihich could arise as a consequence of a sharp price boom. Tnere is no way of forecasting the possible size of such losses in the future; however, some notion may be derived on the basis of our tentative estimates referring to loss of markets through expansion of output in developed importing areas in response to the 1963/64 price boom. The anr.ual loss to exporters over the three years 1964--C was estimated at $54 million. If we were to add the net annual loss in earnings of j5 million on free market exports to developed coun-- tries over the period 1963-67, we would come to a figure of some s60 million.2/ 115. Concerning the cost,, we obviously have to exclude amortization of capital, since this part of annual payments will be offset by gradual reacquisition of t:.e reserve stock4ihich after 15 years would be aomed by the (contributing) exporting countries. Deducting average annual amnorti- zation of $8 million from total payments of $14 million leaves us with a 'premium' of $6 million per year as compared to a potential annual loss of perhaps $7O million. Whether this would be considered as a worthwhile proposition may be left open; we actually do not have to face this question. Purchasing the reserve in the near future, as we have assumed, would have the incidental though very desirable effect of lifting prices from their current depressed level. Even if prices wtere to increase by not more than 1 cent per pound ($22 per ton), annual earnings on net free market exports, taking aoain the 1965/66 level of some 6 million tons as a basis, wiould be raised by some $132 million. This would exceed the whole capital outlay for purchasing the reserve and constructing storage space, and there can be no doubt that from the point of view of social cost the investment would be justified. Reserve Stock Onerations 116. Under our assumption purchases for the reserve would start in the near futurc; some part might be acquired en bloc in special deals with. exporters holding surplus stocks which they would like to reduce. Buying might also proceed on the free market; alternatively, the s'ock namagement could announce its intention to purchase, witlhin a certain period of time, a specified quantity (say 100,000 tons) at a fixed price. The management would obviously aim at setting the price at a level at which p.ocurement of the whole or of a large proportion of the specified volume could be reasonably expected. The price offered might be lower, equal to or higher than the currcnt world price; it should not be changed during the period for wlhich the offer had been announced. 117. Selling operations would consist of releases of sugar intended to supplement supplies available in exTorting countries whenever prices would tend to exceed the agreed upper limit of the range. aeleases may / See summary table on page 25 and for detail on the 6cmputations pages 19 and 20 as iwell as Annex Table 3b. also be made to participating exporters so as to enable them to meet additional demand from participating kimporters or, in case of emergency,2/ to fulfill cormitmrents under contracts. Under such condiitions the release might be considered as a loan to the particular exporting country to be 'repaid' in kind within a reasonable period; repayments would be the par- ticular country's responsibility and might be made out of its oxn production or through purchases on the free market. Sufficient time would have to be allowed so as to prevent a renewed upward pressure on market prices. 118. Alternatively, the stock management might directly enter the market, either to meet demand beyond contracted quantities when exporting members are not able to do so, or by offering sugar on the residual market in order to prevent prices from exceeding the agreed maximum. In this case the tiring and spacing of purchases for replenishment would have to be left to the discretion of the stock management. Obviously, if reserves were still considered adequate, purchases could be delayed until prices were close to or below the mininmu. Under no circumstances should pur- chases continue after the original (or desired) level of reserves has been restored. Why Reserve but not Buffer Stock 319. Before turning to a brief discussion of buffer stoc'is it might be useful to point to the essential differences betwseen the latter and reserve stocks as suggested above. Buffer stock operations are intended to prevent prices (a) fron declining to less than the agreed floor and (b) from rising beyond the agreed ceiling. The purpose of a reserve stock is limited to the second objective. Initial operations wlould be similar; both schemes would have to start with purchases, preferably in a low price period, though those for a reserve could be made at prices above the floor. However, the criteria for ending (and for resuming) purchases would differ. Buffer stock buying wiould continue as long as prices remained below the floor; purchases for the reserve would stop as soon as the desired volime had been acquired, irrespective of the level of prices. Operations at the ceiling would be similar for both types of stocks: selling ,would continue as long as prices oxceeded the ceiling. Thereafter replenishment of the reserve stock wou'ld start as soon as the boom had abated; buffer stock buying would not be resumed until prices approached or reached the floor. 120. The sharp fluctuations in the price of sugar on the residual free market seen to suggest that buffer stocks might provide at least a partial solution to existing problems. For the reasons already mentioned - the great potential of expanding production in practically every coun- try and thu encouragement which would be provided by a guaranteed 'market' - reliance on buffer stocks as the main device for price stabilization is precluded. But this still lcaves us writlh the question whlether buffer stocks might not have a useful function as a supplementary measure under a quota (or contract) Agreement. 1/ Such as severe crop failure beyond the extent which could be met from the country's own reserve stock. - 49 - 121. This question wras conside.;d some time ago by the International Sugar Council. In discussing the functions of a buffer stock, supplemcn- ting production or export co,itrols, tw-io main alternatives were centempla- ted: buffcr stock purchases could be designed to take up either the whole difference between actual exports and production in individual member countries (allowing for domestic consumption) or the (presumably smaller) difference between actual exports and the country's basic quota. The implications of such operations were not analyzed, but it is obvious that neither alternative could work under an Agreenent which did not cover vir- tually the whole market, both on the export and import side. Although - non-participating exporters would have no direct access to the buffer stock, their production and exports would increase under the shelter of a guarantced minimum price. This in turn would narrow the market for par.- ticipating exporters; the difference between production (or basic quotas) and actual exports would steadily grow, and the buffer stock would degene- rate into a surplus stock. 122. Moroover, even in the unlikely case of a very ccmprehensive Agreement, stocks wzould tend to grow unless the probsm of access to mar- kets were solved. On a slhrinking market ',rice3 cculd only be maintained by gradually reducing basic quotas and tt;e gap be'.ea the latter and actual exports would widen. 123. The draft Agreement discussed aboive attermpts .o cope with thle access problem and would also strcn_then pzroisions for reducing loss of markets to outsiders. Tn appraising the clhances of success for an Agree- ment of the type suggestedj, we concluded that tlhcy zould be good - provided coverage would be comnrehensive. The draft does not provide for buffcr stocks, and we do not believe that buffer stock operations vrould make a significant contribution. 124. l4arkets in daveloped importing countries *rould be secured; sene gradual shrinkage of others appears likely but would presumably be taken into accounit in setting basic quotas. It therefore wJould appear that quota restrictions occasionally needed to support the price would be quite mnall and there would be litt'e scope for buffer stocks to take up an occasional gap bctween basic quotas and actual e:-ports. There could, howxever, still be instances of large crops in individual ccuntries requirin- temporary stockholding, since exports would be linit3d under the quota. Such stock- holding night be performed by a buffer stock. Houever, on a market effec- tively controlled, with guaranteed outlets in developed countries, there would be no difficulty in finzacing a temporary surplus and no need for the much more costly and cumberscme mecihanism of a buffer stock. 125. The foregoing considerations refer to a quota Agreement iTth ride coverage; ilowever, the chances for reaching such an Agrcement are very rcmote and, as pointed out above, buffer stock operations under an Agreenent with only partial coverage would be frustrated. - So - 126. Supplementing an .lgreement based on long term contracts by buffer stocks (rather than a reserve atock as suggested) is precluded by the nature of the device; contracts iuould leave part of the market free and, for the reasons stated earlier, buffer stock operations uould result in unlimited surplus accumulation. LIST OF STATISTICAL TABLES Annex Table 1: Sugar: Production, Consumption and Degree of Self- Sufficiency in Developed Importing Areas, 1952-54 to 1964-66, Annual Averages Annex Table 2: Production, Consumption and Balances in Nct Importing Developing Countries Annex Table 3a: Computation of 'Losses' to Exporters through Increased Production in Net Importirng Developed Countries, 1958- 60 to 1964-66 Annex Table 3b: Estimated 'Loss' to Exporters through Increased Produc- tion in Net Importing Developed Countries, Induced by the 1963-64 Price Increase, 1961-63 to 1964-66 Annex Table 4: Sugar: Trade Among kajor Countries and Areas, 1953-55 Average Annex Table 5: Sugar: Trade Among Wajor Countries and Areas, 1965-66 Average Annex Table 6: Sugar: Production, Consumption and Average 1nnual Grcwth Rates 1952-54 to 1964-66 Annex Table 7: Sugar: Exports by Net Exporting Countries at Special and at 'World' Prices, 1965-66 Averago Annex Table 8:. Exports of Sugar: Share in Total Export Value, Percent of Volume Sold under Special Arrange:nents, 1965-66 Average Annex Table 9: Sugar E-cports, Share in Country's Total Exports, in Sugar Productior. and in World Net Sugar Exports Annex Table 10: Sugar: Exports by Net Exporting Countries under E>dsting Arrangemzents (at Special Prices) and Propcsed Long-Term Contracts, 1965-66 Average Annex Table 11: Stocks, December 31 of Year Shlovwn, and Stock Changes by Main Arcas Annex Table 12: Sugar Stocks in Relation to Consumption, Actual and 'Normal' Data for Chart I: Sugar - World Production, Con u;p-Aon and Prices 1949 to 1966 Data for Chart II: Sugar: Export Prices, W.orld) U.S., Commonwcalth and Averago Export Unit Value Data for Chart III: Philippines - Value, Vol.ume and Unit Value of Sugar Exoorts; Total Export Value, 1951 to 1966 Data for Chart IV: M-3auritius - Value, Volume and Unit Value of Sugar Exports; Total Export Value, 1951 to lo66 Data for Chart V: Clina (Taiwan) - Value, Volu..e and Unrit Value of Sugar Exports; Total !xport Value, 1953 to 1966 Data for Chart VI: Dominican Republic - Value, Voluw.o and Unit Value of Sugar Exports; Total Export Value, 1951 to 1966 Data for Chart VII: Sugar: Stock/Consumption Ratio and 'World' Price, 1250 to 1966 Basic Table A: Sugar Production by Main Regions and Countries, 1951 to 1966 Basic Table B: Sugar: Consumption by ihin Regions and Countries, 1951 to 1966 Basic Tab'Le C: Sugar; Gross Exports by -ain Regions and Countries, 1951 to 1966 Basic Table D: Su,gar: Gross Imports by Iai.n Regions and Countries, 1951 to 1966 ANNEX TAkL'E h )GOAA: T!ADE AM(YG X-A.JA COUT.S ' A;.?j65 A f fAS, 1953-55 AVM1AG7 (Thousand mezric tons) Developed Couatries to ;Jestern Japan and 1 .)eveloping Centrally Ce- if rial USA Canada aurope Uew ZealandV ;otal Countries Planned '.Iorld Dxports De',eloped Countries - 88 993 113 1,194 19344 74 -2,612 1,350 of which: !Western Europe - 1 395 1 397 1,222 74l 1,693 1,300 Australia, South Africa - 87 570 112 769 100 - 869 - OtheZs2/ - - 23 - 23 22 - 50 50 Developing Countries 3,533 476 3,259 1,095 3,363 1,618 201 10,182 215 -uba 25h42 75 1,151 302 4,130 544 159 4,833 _ Other '.*stern Haeisphere 105 275 1,395 194 1,969 563 31 2,563 _ Others 686 126 713 539 2,2614 511 11 2,786 215 Centrally Planned_2/ - - 3147 - 347 317 595 1,259 335 ;lorlid Total 3,533 564 4,599 1,203 95,904 3,279 870 114,053 1,900 1/ >ostl'r Japan: total imports of New Zealand 109,000 tons. 2/ U."j.A., Canada and Japan. 3/ q:fl: nld `:>steni k:urope. iour-cc: '.':0 'cvriodity * new 1964, Special Supplemaent "Trade in Agricultural Conmodities in the United Jatlons i)crelo?nc!it Jecadu", sVol. 2, Table 4.3. ANNEX TABLE , XJG:tA: T-'WD D O.jG W-iJKOs COU:12::- " .;2 u-., :.965-66 AV&!AG: (Thouisand met .c to-is) - COD; Dereveloned Countries to Qtiner / eveloilig Centrally fLon U-3A'L Canada U.it. 2i 3L W.Europe Othrs;' Total Countries P lanned .r1d2W / cp Develo?ed '.ountriesV 260 249 501 420 393 762 2,585 728 5 3,407 5 -estern 7urope: U.i. 5 1 - 21 131 - 158 173 5 336 3 :DC countries 5 - 17 333 171 - 576 4"a - 1,024 5 Others 4 - 11 11 85 - ill 39 - 150 ALustralia_?. 169 112 414 - - 539) 1,234 50 - 1,373 South AIfrica 77 136 59 5 6 219 502 2 - 504 OthersY/ - - - - - It 4 i6 - 20 JeveloninG outries 3,545 6O9 1,736 584 33 911 8,023 1,990 3,342 13,355 2 Cuba - 69 87 79 366 363 939 544 3,342 4,375 Otlher 'cstern leraisohere 2,314 29]. 873 258 .16 52 3,804 4422 _ 4,246 Others 1,331 249 776 247 156 471 3,230 1,004 - 4,234 2: Centrally Planned - - 161 219 505 5 890 1,610 33 2,538 1,7' U33, - - 1 18 250 - 269 660 18 947 91 i;asLern t rose - - 160 201 255 - 616 510 2 1,128 3 .hina (Mainland) - 5 440 la 463 1 ..or1J Tot.a22/ 3,905 853 2,398 1,223 1,436 1,673 U,498 4,328 3,385 19,300 3,0( 1/ Jann.n, :eZi bealand and Jouth A.frica. / *otal cxnorts (world and develoDed countries) include non-specified expo;ts of 89,000 tonsiby Austi-i'Ja aad ..inada. o.1r"c: lnternat;.:nal Jugar Council, Statistical Bulletin, AXugust/Scrtember 1967. ANNEX TABLE 6 SUGARt PROTW CT1OY, CONSUHPTION AND AVERAOE AMINUAL GROWTHRACTES 1952-54 to 1964-66 Thousand Metric Tons (AnnUa1 Average) - Annl.al AverAg Grotth Rates 195254 1952-51 1955-57 1958-60 1961-4 to to to to to 1952-51 195-57 1958-60 1961-63 1964-66 1964-66 1955-57 1958-60 1261-63 1964-c Production World Total 37,365 41s,085 49,743 52,903 62,980 4.4 3.2 606 2.1 6.o Centrally Planned 7,000 79975 10,822 11,964 15,360 6.8 4.5 10.7 304 8.7 Developed Net importers 6,297 6v430 7,049 7,940 9,232 3.2 0.7 301 400 5.2 EEC 914,1 4s570 5,501 591h63 69358 3.6 3.3 6.4 - .2 5.2 Net exporters 2,282 2,683 3,230 3,570 4,>587 6.0 5.5 604 3.4 8.7 Developing Cuba 5,758 4.,980 5,870 5,134 5,183 _ .8 - 4.8 506 _-.4.4 .3 Others 11,887 11,4A7 17,271 18,832 22,263 5.4 6.7 6.1 2.9 5.7 Consuimption World Total 35,907 41,03 4740148 53D332 59,9401 4.3 14.5 4.7 4.3 3.7 Centrally Planned 6,718 75713 10,1400 12,1866 15,1421 7.2 4.7 10o5 7.4 6.2 Developed Net importers 13,689 15,156 169129 17slt05 18,221 2.4 3.5 2.1 2.6 1.6 EEC 49207 4,9677 5,211 5,707 6,272 304 3.6 3-7 3.1 3.2 Net exporters 1,9542 1,706 19802 1,975 2,254 3.2 3.4 1.8 3.1 4.5 Deve'oping 9,751 11,751 13,506 15,379 17,236 4.8 6.4 14.8 4.4 3.9 Source: Based on data in International Sugar Council: The World Sugar Econo2My 1963, Vol. II and Sugar Yearbooks 1962 to 1966. I ANNU TASIR 7 SUXGAR: EUPU8S BT NET E(PORTING CWUiTRIES AT SPECIAL AND A? bWVRLDl* FRICE, 1Y65-66 AVUUA0S (Thousand metric tons) Centrally At Developed Countries Dleveloping Planned Special1 To At At At. Pricet. At Special Prices World Special World Special World As % af From ~~~~~~~U.S.A.11 U.K. Othere Total Prices Totail Prices Prices Prices Total Tot-al2' Q __(2) (3) Ct. () (6) (7) -(8) (.2) (10) (i Ltevelo,inp. Couintries W~esternl Hemuspht,re Argentina 57.1 - - 57.1 - 57.1 - - - 57.1 100.0 Martinique - - 55.1 55.1 55.1 - 0.2 -55.3 99.6 Ou&tC,emala L8.7 - - L.8.7 L1(8.7 - 0.3 4 (9.0 99.1. Ecuador 57.7 - - 57.7 1.2 58.9 - - 58.9 98.0 Su.rina . - - 8.0 8.0 -.8.0 - 0.3 - 3.3 96.4. Venezuela 12.0 - - 12.0 0.5 12.5 - - -12.5 96.0 Guadeloupe 1.9.8 - 117.6 167.4. 6.9 171..3 - 1..)3 178.6 93y7r Coat.a Rica 52.9 - - 52.9 - 52.9 - 3.83 56.7 93.3 El Salvador 30.8 - - 30.8 1.0 31.8 - 1.8 -33.6 91.7 Panama 13.8 - - 13.8 - 13.8 - 1.6 - 15.1 89.6 Dominican Rep. 3.89.3 - - 4.89.3 52.4. 54.1.7 - 5.. - 54.7.1 89.1. Leeward & Windcward - 39.3 - 39.3 5.2 C.b.5 - - - 1.1.5 83.3 Barbados 1..6 10..2 - 152.8 22.1. 175.2 - - - 175.2 137.2 HaLiti 22.1 - - 22.1 1..8 26.9 - - - 26.9 82.2 Neaxco 3.2l.5 - - 4.21.5 52.3 4.73.8 - 4.6.8 - 520.6 61.0 Trinidad & Tobago 10.6 138.1 - 1I.8.7 39.5 188.2 - - - 188.? 79.0 Perj 318.3 - - 318.3 23.8 31.2.1 -68.2 - 4.10.3 77.b British Honduras 8.0 20.8 - 28.8 8.1. 37.2 - - 32.2 77.1. Jamaica 9L.5 220.7 - 315.2 106.8 1.22.0 - 4 (22.0 7L..7 Nicaragua 31.1 - - 31.1 - 31.1 -10.6 - Lii.? 71.tb Ouyana 37.? I1.133 - 185.5 91.7 277.2 - - - 277.2 cA.9 Bolivla2Y b.1 L1 (.1 - t.1 -3.7 - - 8 52.6 Brazil 319.3 - 34.9.3 270.1. 619.7 - 29h.7? - 9tib.L. 36.2 Colombia 38.- 38.7 68. 107.6 --. 107.6 36.3 Total attove 2,152.1 .715.1. 180.7 3,00..2 7>,6.2 3.,80L.41 - 411.7 - 1.41.6. 71.d Cuba 988.9 988.9 50-.39 3,4.3 L 61:..&15 6-i.6 Total Western Hamiephere 2,152.1 715.4. 18(0.7 3,01.8.2 I,71.5.1 L,793.3 - 985.6 3,31.2.3 9.137l.; 73.0 Africa Tanzania - - - - . - 1.5 - - 1.5 10C3.0 Mozambique - - 122.3 122.3 - 122.3 - 0.5 - 122.8 9. Uganda -- - . - 12.5 0.5 - 13.0 56.2 Reunion 2.2 - 210.0 212.? 16.5 228.7 - 3.5 - 232.2 91.), Angola - - 25.0 25.0 - 25.0 5.5 - 30.5 52.0 Swaziland 7.3 86.1 - 93.7 20.6 11l..3 - 0.9 - 115.2 b1.3 Mauritius 11..3 386.1 - (.00.1. 151.2? 554..6 - 19.9 - 574.5S by.7 Malagasy Rep. 7.1. - 5.0- 12.1. 21.6 34..0 21.0 8.8 - 63.8 5Ž.3, Coneo(Brazzaville) - - 1.0 1.0 - 1.0 13.0" 1t..1 - 2d.4. 19.3' Southern Rhodesia- Z- 57.6 5Z. 52.0 - 09 Total Africa 31.2 V.2.5 363.3 867.0 27C.5 1,137.5 (.8.0 106.0 - 1,291.5 7J.8 Asia and Oceania Philippines 1,092.9 - - 1,092.9 - 1,092.9 - - - 1,092.9 100.0 Fiji lslarjda 38.6 142.?. - 180.8 81..2 265.0 - 10.9 - 275.9 u5.5 Thailana.11 18.0 - - 18.0 1.0 19.0 - 32.1. - 51.1. 35.u India 78.9 25.4. - lOt..) 12(.1l 228.1. - 125.6 .35i,.. 29.5 ChinaL (Tait.an) 65.8 - - 65.8 385.1 1.50.9 - 380.8 6 531.7 7.9 lndonesla - - .i 36.0 -30.2 -66.92 Total Asia & Oceania 1,291..? 167.6 - 1,1.61.8 6.001. 2,092.2 - 579.9 - 2,672.1 54..? Cou.ntries11 3,1,77.5 1,355.5 5L41.0 5,377.0 2,L1.6.0 8,023.0 L.8.0 1,671.5 3,31.2.3 13,05L.8 67.3 Excluding; Cuba 3,1.775 1,355.5 5441s0 5,377.0 1,657.1 7,03.1.. 0,.0 1,127.6 - 8,72.0.7 6.1- Developed Countries,L/ Australia 167.0 31.0.1 - 507.1. 726.1. 1,233.8 - 1.9.8 - 1,283.6 39.5 South Africa 72.3 - - 72.3 h79-9 502.2 - 2.2 - 50t..1 l1..3 Turkcey 0.6 - . 0.6 20.9 27.5 - 38.5 - 66.o 0.9 Denmar - L 7otal ?3'.9 31.0.. 1, 5833 1,238.2 R18185 - 90.5 . . 9 )9. 33).1. a Partly eatin.ated. I/ ixport data have been corrected t.o cx'clu.,e U.s;. non-.q;nta imports of~ some 175,UOO tons (for1 rt.-.pror, aninal fecu or alcohol) wanich move at world prices. Y/ Colu.sn (Qi11j7j..j9j. ~'19(6 On,ly; U.Li. quot.- cstabliihed in 1966.-T1 rI he L-..; ;i.oup (not includin' tuver:..eas oepartr,cnt-) has bet.,, a net importer it, tho years covered. ;,ot..: PriCe diLfferenti-als arisint- irom. Lariff p".fert.nc-r- l-ave tint I ~n c',nisi,icred as "special t,rire:;` e.g., oi:- w,alth exports t-o :an:..,. art- inclult. in Col. 5. 4or,vr,i.e ntl the exports 31mwn in that. calu.an and] in Col. ii naky hnive noved un.i~-r -.1a'.eral o rui-, sp2r.ial prite .rt,'et, but cotuid not 1.e ident.ified. ij..c : ae,j ton iata pua,lin-- by in'.ern.%ti,-:ol -',.:ir~ I*sat.;,.3hu ,t, AINEX TABLE 8 EXPORTS OF SUGAR: SHARE IN TOTAL EXPORT VALUE, PERCENT OF VOLUME SOLD UNDER SPECIAL ARRANGEMENTS, 1965-66 AVERAGE 1965-66 Value of Countries' Exports: % of Volume Sugar Total Sugar as X under Special (million US $) of Total Arrangement Developing Countries (1) (2) (3) Western Hemisphere Cuba 537.8 639 84.2 68.6 Barbados 20.4 28 71.7 87.2 Guadeloupe 21.4 37 58.6 93.7 Dominican Republic 69.3 132 52.7 89.4 British Honduras 1/ 3.4 11 31.7 77.4 Guyana 27.5 103 26.7 66.9 Jamaica 47.0 220 21.4 7147 Martinique 7.8 44 17.6 99.6 Haiti 1/ 2.6 36 7.2 82.2 Peru 41.9 715 5.9 77.6 ?rinidau and Tobago 21.8 h115 5.2 79.0 Costa Rica 6.4 126 5-1 93.3 Mexico 58.0 1,187 4.9 81.0 Ecuador 6.9 141 4.9 98.0 Brazil 68.6 1,672 4.1 38.2 N4icaragua 3.8 141 2.7 74.6 Guatemala 5.1 208 2.4 99.4 Panama 1.8 84 2.2 89.6 Surinam 1.0 72 1.3 96.4 Colombia 7.9 52z 1.5 36.0 El Salvador 1.6 191 0.8 91.7 ArgBetina 6.5 1,543 O.4 100.0 Africa Mauritius 63.2 69 92.2 69.7 Reunion 29.6 37 81.0 91.4 tMozambique 13.3 110 12.0 99.6 Malagasy Republic 5.4 95 5.7 52.3 Southern Rhodesia 2/ 11.3 142 2.6 _ Angola 3.5 211 1.7 82.0 Asia and Oceania Fiji 29.5 51 57.5 65.5 Philippines 132.7 813 16.3 100.0 China (Taiwan) 55.9 493 11.3 7.9 India 22.9 1,646 1.4 29.5 Thailand 4.4 658 0.7 3 . Indonesia 1,7 708 0.2 - Deve1oDed Countries Australia _/ 112.5 3,215 3.5 39.5 South Africa 43.9 1,612 2.7 14.3 Turkey 8.2 _477 1.7 0.9 Note: Percentages calculated from unrounded data. * Partly estimated. 1/ Figures in columns 1 to 3 refer to 1965 only. 2/ Average of fiscal years July/June 1965/6 and 1966/7. Sources: Ii'UF, International Financial Statistics, FAO Trade Yearbook 1966, Uli Monthly Bulletin and International Trade Statistics 16o, National Traae Statistics. ANNEX TAELE 9 SUGAR EXPORTS, SHARE IN CWhTRYI'S TOTAL EXPORTS, IN SUGAR PRODUCTIONI AND IN WORLD NET SUGAR EXPORTS Sugar Exports as of Country's: country's Sht-.re in Total Exporto Sugar Production World Net Sugar Receipts (Volume) Exports (Volume) 195_-60 1965-66 195r6 1965-66 Developing Countries Western Hemisphere Cuba 77 84.2 92.1 89.0 38.3 29.3r Barbados 68 71.7 91.6 93.6 1.1 1.1 Guadeloupe 50 58.6 96.5 94.7 1.0 1.1 Dominican Republic 46 52.7 90.0 85.9 5.9 3.4 British Honduras 24 31.7 85.7 92.5 0.1 0.2 Ouyana 48 26.7 94.9 91.1 2.1 1.7 Jamaica 23 21.4 83.1 84.1 2.3 2.6 Martinique 30 17.6 89.7 85.9 0.5 0.3 Haiti 6 7.2 2 27.5 40.3 0.1 0.2 Peru 11 5.9 64.8 51.7 3.4 2.5 Trinidad & Tobago 7 5.2 84.4 80.3 1.2 1.2 Costa Rica 1 5.1 17.6 47.5 0.1 0.3 Mexico 4 4.9 18.8 23.9 1.8 3.2 Ecuador 1 4.9 24.o 31.1 0.2 0.4 Brazil 4 4.1 23.7 21.6 5.3 5.6 Colombia - 1.5 - 21.1 0.7 Africa Mauritius 91 92.2 100.0 93.8 3.2 3.5 Reunion 79 81.0 94.6 93.5 1.4 1.4 Mozambique 15 12.0 73.9 72.8 0.8 o.8 Malagasy Republic 6 5.7 52.7 57.1 0.3 0.4 Asia and Oceania Fiji 60 57.5 94.2 88.7 1.4 1.7 Philippines 23 16.3 75.2 70.5 7.4 6.7 China (Taiwan) 45 11.3 88.4 85.4 5.6 5.1 India - 1.4 1.2 9.9 0.2 2.2 Thailand - 0.7 - 21.0 - 0.3 Developed Countries Australia 3 3.5 50.3 56.8 5.0 7.9 South Africa 2 2.7 26.4 35.8 1.8 3.1 1/ 1965 only. 2/ Includes Swaziland. Sources: DIF International Financial itatistics, FAO Trade Yearbook 1966, UN Monthly Bulletin of Statistics and International Trade Statistics, National Trade Statistics, international Sugar Council .3gar Yearbook 1964 and 1966. Ann lABEL 10 StfAX, SPO Br Y W o9rTm3 aiwwTBrcs U3Dm EUIs?YK ARRAY0D(w (A? SMIAI PRICKI) AND PRDPOSKI ULi9-YTi OIATIACTS, 1965.66 AVE9A0 At peCi1:9 r=,. At special prices. Actu.al pric*,a Pae-0- all dc,tlnatic,,e lAnia M.vo.od lon. t.- contracto atth decanPod nol. lapnctinn ccmcin ____________ To flew Scanti- Sailter- SoolIh To tal ftc. ~~~~~~U.S.A. U.K. Others Total Canada JIapan, Zealuand ar-a land Euopa lraml U. E. To tal OzCLU8 LI.E. :~ (1to(3) (5)ta(12) ¶1 (2 (1 4 5) 6) (7) (8) (9) (10) (II) (12) (1)) (11.) (15i f!6' . ............. thaineand a.uic t e ae....) . C.. ... . . .. .. . .. .. ri-ontns,57.1 57.1 - - - ..0 llartiniq...- 55.1 55.1 - - 99.6 - Om tc.ass 4.8.7 - ,8.7 - -- 99.1. Kcoador 57.7 5 7. - - - - - - - - - S,nio . .0" - - - - 61. 0 Vyeav7sla 12.0 -12.0 - - 96.0 Oaadalou9a 1.. - 17.6 167.1. 1.9 - .9 1.9 93.7 12.I - Oauta Rica 52.9 - - 52.9 - -- - 9)3) - 92 S.,ader 30.8 - 30.8 9 - - - - Pansee 13. -.8 - 8 9.6 Dosin1euA Rep. 1,89.3 - - 189.) 6.8 - .9 - - 53 21.0 15.7 872. 3.9 - 1a.ward A dindaad 39.3 - 39.3 5.2 - - - 5.2 5.2 p8. ) ; -. Ba,bads 1..6 11.8.2 - 132.8 22.1 - -- 22.2. 22.1. e7.2 12.1 - NO Li 22.1 -22.1 - - .8 1.8 - 8. - hSeoc 1.21.5 - 121.5 1..7 - - - - - 8.0 12.7 1.? eI.C 2.- Trinidad & Thba 10.6 138.1 - 10.8. 39.1 -4- 39.1. 39.1. 79.0 2:.11 Pwr. ~~318. - - 318.3 I 51 - - - - 10 6.1. 5.4. 27.6 1.~ Efri tlulh ondtwa.a 80 208 - 2. .. - - - - 7. JoanetCa 91..5 22.7 - 315.2 1066.8 - 206.8 106.8 7-.7 7C.1 ~ Bcaragus, 31.1 - - 31.1 - - - - - - -6- aw ~~~37.2 11'.8.3 - 185.5 91.7 - --- 91.7 91.7 66.9 1. floliola 1/ 1.2.1 1.. - 5.6 Brazil 31.9.) 31.9.) 1. 1.1.6 - 5.1. - 1.6 - 1.10.7 112.6 31.9 3!.62 -~.A Co12i - - 3.7 -- - - 27. 27.2 - L ___ Total above 2.152.1 715.1. 180.7 3,01.8.2 283.2 11.6 11..) 5.1. 10.6 - 57.0 1.82.1 3 25. 1 71.8 Cuba - 3.31.2.) 2,3L?. 69.0 387.6 - 58 -_ 273.9 .6 87.4. 909.9 822.5 6 Total de,iacc.~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~612 336I.62h4 ,47. . !Ie1iapher.. 2.152.) 715.1. 3,523.0 6,390.5 352.2 399.2 11..) 6. 3.6282.5 1.2... 1.392.0 1.1.7. ' Afric- Taw,i mIa - 1.5 1.5 - - - - -C Mosmabique- 122.3 122.3 - - - - Ildends 12.5 12.5 - - 9 - - Reuni-e 2.2 - 210.0 212.2 I; 1.2 -- 27.8 39.0 11.2 In A.nanla 25.0 25.0 - - - - Soa-Iland 7.3 86.1. 93.7 5.2 - - - 6.3 11.5 5.2 iio Knu.rl tiu 11..J 386.1 1001.1 105.5 - - - - 105.5 '.05.5 67.7.- NagasAy Rap. 7a. - 26.00 33.1. - - .2 - .4. 11.6 5.2 ,2. 9 Cor4o lBra,vacil).l) .- - 14.0 IL.0 O - - - - -1 Southe,, Rhodani -- 20.5 - - - 82 3P.2 7.0. 0 Aofal Aric JI.2 1.72.5 1u.1. 915.0 131.? 3.1. 5.2 - 3.5 - 18.7 199.8 151.1 78. - - - Asi ad XceaL,ia fldlippl.aos 1,09.9 - - 1,097.9 - - - - - -. Fiji rlolad. 38.6 11.2.2 - 180.8 65.8 - 17.1. - 8'. 2 83.2 65 1. .'hailand 1/ ~~18.0 - - 8.0 - .1.0 - - - 1.0 I.0 310 India 78.9 25.1. - 01..3 51.9 - - 61.8 113.3 51.9 29. Chl-(hian 65.8 - . 65.8 - 3;4.0o 23.5 - 77.5 377.5 7. Indonesia - - - - 31.. - Total Auia& - , - -*** * *****- Ooaanl.. 1.291..? 167.6 - 1.161.8 1.17.7 389.1 40.9 - - - 61.8 609.5 51..7 5:1..' .2. .1.477.5 1,355.5 3,931..) 8,767.3 601.1 788.3 66.1, 66.1. 33.6 286.0 4..6 751.9 2.201.3 1.e1.6.'. 61.0 it., .,c*adlnz Cuba 3,1.77.5 1,355.5 592.0 5.1.25.0 532.1 1.00.7 86.1. 10.6 - 11.1 - 2167.5 12n.29. 1,023.9 66.1 V9.- as;cI 1607 31.NA14 - 507.1. 112.? 13.9 MA.. 651.1. 651.1 3?.5 bouth Africa 72.3- 72.3 135.5 219.0 5.5 - - - - 6o.o 361 -32. Turkey 0.6 - 0.6 - . 26.9 26.9 26.9 .0.9 7 Deneark - - 96 7.9 ___ - - 17.5 L7.5 Total ~~~~239.9 31.01.4 583.3 21.8.2 69l.9 61.. 1.5. 7.9 - 26.9 - 1,085.8 1.085.8 ._1. C'entrally ?ata ~~~3T1. - - - - ~~~~~~~~~~~~~~~~~~~~~21.8 31..) 25.8 - 19 81.9 Ilnc.r'I - - - - - 1..~~~~~~~~~~~~~~~~~~ ~~~) 5.9 14..) 1-6.5 - 1.1. 1..0 - polan -Z- -.7 - Z - 67.0 ___ 13.5 25.6 . 30.1 Vyle. - ?ot-2 C.nt-lif plOAt-d - - - 93.1 10.2 53.6 1.2.1 - 229.0 ?229.0 2. 3. 71 T. 1, 1,695.9 3.?I1.) 9,31-7.6 8.9.1 111912.2 IlL 3 316x.6 !1.7 337.6 73.6 351..9 3,516.1 3.161.? ct.6 2.2 0Partly .s.im.tad. 1/1966 only; 'J.-. q-.oa *et.ta.h.sd in I96. '~ ha LIZ uap tn.t nIut. NJer,,an flrpsrfl-t,l ha, towm. a ..r. .e)vrt.r in ti. ye.r. covered. 3,turc., macn 0a,1, Lcd Inen oa cr uclia'.ad i.~ua t3.~ Annex Tab'.e 11 STOCKS, DECEIBER 31 OF YTi:AR zrHO-ri, A.'D srMi' MHAGES BY MmD A5WS (Th'ousand netri.: tonsj Stockcs at *3tock changes during period shoi*m Stock change end of year Exporters Imoorters during period a 1962 1963 1962-;73. 1762 19b3 1962-63 Exporters Impor 196.1 1962 1963 (2)-(1) (3)-(2) (O1-(1) (2)-(1 (3 -(2) (4)-(5) 1966 1964-66 (10) Develoned *.xportinr *Z>lropelf 3,153 2,616 2,515 -537 -101 -638 3,230 715 Australia & S.Africa 1 192 1,121 976 - 71 -145 -216 1 460 484 3,737 3,491 76U --246 1,199 Innorting ". Europe 5,781 5,015 5,257 -766 +242 -524 6,!492 1,2 lorth A4merica 2,421 2,506 2,744 + 85 +238 +323 2,880 ] Other 215 276 293 +61 + 17 + 78 513 2 Develoniazv 5,417 7,797 7 -123 993 lXooroing C.uba 1,030 341 186 -689 -155 -844 363 177 Others L 393 3 936 3 218 -457 -713 -1,175 6 334 3 16 5ss3 4S27~7 3STZ -1,146 _Tj -2,019 --97 3,293 Inporting 515 556 564 + 41 + 8 + 49 1,006o Centrally P1anned2/ Exportin J/ 215 232 183 + 17 - 49 - 32 225 42 inPorting/ 2,820 3,130 2,522 +360 -658 -298 3,430 S Total -xPOrting 9,983 3,246 7,078 -1,737 -1,i68 -2,905 21,612 4,534 TnporLing 11,752 Uj533 11,330 -219 -153 -372 14S321 2,5 Percen' ;ie]ld by: ExportLin 46 42 38 45 Trrnorting 54 58 62 55 ]./ D'eirl, Dennark, -rance and Turkey. 2/ Stocks in countries for which data are available. 3/ Huingary. 7/ U&;.1 and Ilbania. o:ro.m-: In crnationa1 -iLar Council, Sugar YeLrboo!: 1966. Annex Table 12 SUAR SrOCKS IN RELATIONI TO CONSUMPrION, ACTUAL AND 'NORMAL' End Stocks -iomia Stmk 'World' Fi Ending as % of min. 22%, max. 24% Surplus D3ficit Calend4r Consumption Stocks Consumption of Consumption (2)-(5) (4)-(2) yearY (1) ~ (2) (3) M4 (5) (6) (7) (8) Thousand metric tons Percent -------Thousand metric tons-------- Cents/pam September 1- August 31 1949/50 29,812 6,755 22.7 6,559 7,155 4.98 2/ 1950/51 32,290 8,239 25,5 7,104 7,750 (489) 5.70 2/ 1951/52 33,140 10,940 33.0 7,291 7,954 2,986 4.17 f 1952/53 35,20cx 10,226 29.1 7,744 8,2448 1,778 3.41 1953/54 36,892 11,911 32.3 8,116 8,854 3,057 3.26 1954/55 38,254 11,415 29.8 8,416 9,181 2,234 3.24 1955/56 40,443 10,087 24.9 8,898 9,706 (381) 3.47 1956/57 42,227 10,234 24.2 9,290 10,134 5.16 i 1957/58 44,704 9,934 22.3 9,835 10,729 3.50 1958/59 47,561 13,767 28.9 10,463 U, 415 2,352 2.97 1959/60 48,858 14.790 30.3 10,749 11,726 3,064 3.14 1960/61 52,744 17,079 32.4 11,604 12,659 4,420 2.70 1961/62 55,602 13,463 24.2 12,232 13,344 2.78 1962/63 54,550 10,115 18.5 12,001 13,092 1886 8.29 1963/64 54,262 1L,321 20.9 11,938 13,023 617 5.72 1964/65 60,155 18,339 30,5 13,234 14,437 3,902 2.03 1965/66 63,017 180,356 29.1 13,864 15,124 3,232 1.76 1966/67 65,230 18,281 28.0 14,351 15,655 2,626 1.99 1967/68 est. 67,464 17,642 26.2 14,842 16,191 1,451 1.75 * '7ote: From 1953/54 to 1960/61 I.S.A. in operation. 1/ 'alendar year of the second year shown. 2/ Korean War. 3/ Suez crisis. ource: F.0. Licht - Die Weltzuckerwirtschaft 1936-1961, World Sugar Statistics, 1961/62 to 1966/67 issues, Sup.ar reporTs, JanTur19 and March le, ±1O5. Lata for Chart I: SUGAR - WORLD PRODUCTIO0I, CONSUMTOTI0N AD PRICE, 1949 TO 1966 "World" Production Consumption Price ----Million metric tons…------ US cents/lb 1949 28.1 27.4 4.16 1950 29.2 29.4 4.98 1951 33.4 32.0 5.67 1952 36.2 33.5 4.17 1953 38.4 36.4 3.4' 1954 37.5 37.8 3.26 1955 39.0 38.7 3.24 1956 40.3 41.8 3.47 1957 44.o 42.5 5.16 1958 47.1 .45.0 3.50 1959 49.8 46.9 2.97 1960 52,3 49.2 3.14 1961 54.7 53.2 2.70 1962 51.5 53.5 2.78 1963 52.5 53.3 8.29 1964 .60.1 55.8 5.72 1965 64.8 60.1 2.03 1966 64.1 62.3 1.76 Sourccs: FAO: The World Sugar Economy in ?iMures, 1962; International Sugar Council: £he 'iorld Sugar -,cononm 1963, Vol. II and Sugar Yearbooks 1964, 1965 and 19J6. Data for Chart II: SUGARt EXP0 PRICEST1/ WORLD, U.S. CGM9ONWEALTH AND AVEFOE F.UORT UNIT VALUE (U.S. Cents per pound) Unit Values $Wbrld' 2/ U.S. CowonwealthYV World Developing 1951 5.70 5.07 3.99 5.27 1952 4.17 5.35 4.70 429 1953 3.41 5.43 5.18 4.42 1954 3.26 5.21 5.01 4.49 1955 3.24 4.99 4.98 4.31 1956 3.47 5.10 4.98 4.33 1957 5.16 5.30 5.16 5.28 1958 3.50 5.41 5.36 4.53 1959 2.97 5.35 5.52 4.29 1960 3.14 5.35 5.44 -4.06 1961 2.70 5.35 5.52 4.20 4.75 1962 2.78 5.56 5.61 4.26 4.83 1963 8.29 7.28 5.64 6.16 6.50 1964 5.72 5.98 5.64 6.12 6.48 1965 2.03 5.80 5.82 4.64 4.61 1966 1.76 6.04 5.94 4.43 * 4.72 1967 1.87 6.32 5.94 n.a. n.a. 1/ F.a.s. or f.o.b. Caribbean Ports. 2/ 1951-60: New York No. 4 (World) contract- therearter ISC price, (average of New York and London quotationZs. 2/ Starting in 1965 the figures include the special payments to developing countries introduced in that year. Sources: International Sugar Council The World Sugar Economy 1963, Vol.II and Sugar Yearbook 1966. FAO State of F'ood and Agriculture 1967 and Trade Yearbook 1968 (advance release). USDA Sugar Report, January 1968. Dati for 'vnart .111: PHILTPPI;IES - VALIJE, VOLLTME AJD t.T V.EL' 0SJGA, DMXPO.S; TOrAL EXPORT VAUJE, 1951 TO 1966 xcoort )ckeipts Sugar Ex=orts Total Sugar Volime Index Unit Value (Million dollars) 1958=100 US Cents/lb 1951 427.41 64.2 53 5.14 1952 345.7 89.9 81 5.14 1953 396.3 95.8 Bo 5.55 1954 400,5 105.6 89 5.51 19i5 0oo.6 106.3 94 5.20 1956 453.2 100.6 91 5.12 1?57 ,431.1 82.8 72 5.30 1958 492.8 116.4 100 5.41 1959 529.5 i12.6 95 5.47 1960 560.4 133.5 1in 5.56 1961 499.5 135.1 109 5.72 1962 556.o 122.0 98 5.76 1963 727.,1 146.5 105 6.47 1964 742.0 148.3 112 6.15 1965 768.4 132.4 104 5.90 1966 .857.4 133.0 87 6.15 Source: fl? - International winancial Statistics 11ppleneuit to 1957/68 IssuesT and r'ebruary 1963 issue. Data for Chart IV: MAURITIUS - VALUE, VOLUME AND UNIT VADUE OF SUGAR EXPORTS; TOTAL EXJPOIT VALUEs 1951 TO 1966 Export Receipts Sugar- Rcorts Total Sugar volumeTndex Unit Value (Hillion dollars) 1958-1O0 US Cents/lb 1951 50 47.5 97 4.26 1952 53 50.2 90 4.85 1953 58 55.6 92 5.24 1954 56 54.4 96 4.91 1955 53 51.3 91 4.89 1956 63 60.8 103 5.13 1957 69 66.1 112 5.12 1958 61 58.2 100 5.05 1959 61 58.2 98 5.15 1960 39 36.5 57 5.54 1961 62 57.2 97 5.13 1962 64 59.2 99 5.22 1963 90 84.0 110 6.64 1964 77 72.3 110 5.70 1965 66 60.8 109 4.85 1966 71 64.4 111 5.03 Sources: IMF, International Financial Statistics "Supplement to 1966/67 and 1961/oS Issues"; Customs Exccise Department Mauritius, Annual Report, various issues. Data for Chart V: CHINA (TAIWAN) - VAIUJE, VOLU10 AND UgIT VALUE 0? SUGAR EIPORTS8 TOTAL EXPORT VAIUE, 1953 TO 1966 Export Receipts _ Sugar Exports Total Sugar Volume Index Unit Value (Million dollars) 1958-1O0 US Cents/lb 1953 127.6 85.8 106 4.45 1954 93.3 4-1 64 I4.70 1955 123.4 62.5 71 4.76 1956 118.3 62.0 73 4.68 1957 148.3 92.5 91 5.60 1958 155.8 80.8 100 4L.9 1959 157.0 64.3 90 3.97 1960 164.1 72.8 106 3.83 1961 195.5 57.6 86 4.70 1962 218.3 45.6 77 3.27 1963 331.7 101.9 78 7.16 1964 433.0 128.0 103 6.95 1965 449.7 58.8 95 3.41 1966 536.3 52.9 103 2.84 Source: I F International Financial Statistics "Supplement to 1967/68 Issues" and February 1968 issue. Data for Chart VI: DOM1I.ICA1 REPUELIC - VALUE, VOLUME A'ID UJIT VAB-3 07O SUGAR EOPMTS; TOTAL EXPO.U VALUE, 1951 TO 1966 t^z.oz-t :IeceiTts Sugar rcports Total &ugar Volume Index Unit Value (MEllion dollars) 1958=100 US Cents/lb 1951 118.7 66.6 82 5.72 1952 115.4 57.1 94 4.36 1953 105.3 45.1 96 3-55 1954 119.7 40.1 86 3.28 ±955 114.8 44.8 98 3.25 1956 121.5 53.2 109 3.41 1957 147.4 80.7 104 5;26 1958 128.3 52.2 100 3.80 1959 130.1 55.8 111 3.33 1960 174.4 89.1 177 3.65 1961 143.1 67.1 132 3.65 1962 172.4 96.9 139 5-03 1963 174.3 100.4 126 6.21 1964 179.4 92.8 116 6.03 1965 125.5 61.8 94 5.28 1966 137.4 76.7 98 5.82 Source: I F International Financial Statistics "Supplement to 1967/68 Issues" and Webruary 19o6 issue. Datpt for Clhart VII: SUGAR: STOCW/CONSTJTTIOl RATIO AflD 'WORLD' PR..Ct, 1950 TO 1968 Stock/Consumption 'World' Ratio Price August 31 Annual Average percent US Cents/lb 1950 22.7 4.98 l/ 1951 25.5 5.70 1/ 1952 33.0 4.17 I/ 1953 29.1 3.41 1954 32.3 3.26 1955 29.8 3.24 1956 24.9 3.h7 1957 24.2 5.16 2/ 1958 22.3 3.50 1959 28.9 2.97 1960 30.3 3.1t 1961 32.4 2.?O 1962 24.2 2.78 1963 18.5 8.29 1964 20.9 5.72 1965 30.5 2.03 1966 29.1 1.76 1967 28.0 1.99 1968 26.2 1.75 * 1/ Korean War. d/ Suez crisis. * Partly estimated. Source: Annex T31ile 12. Pasic Table A: SUGAR PRODUCTION BY MAIN REGIONS AND COUNTRIES, 1951 TO 1966 (Thousand metric tons) 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 2 Developed Countries Western Europe 5,975 5,563 7,139 6,758 7,171 6,711 7,442 8,113 8,128 9,929 9,o44 7,865 8,962 10,741 9,688 10, Israel - - - - - 7 12 17 24 32 29 34 36 40 usSA'/ 3,887 4,090 4,233 4,L45 4,265 4,332 4,218 4,109 4,434 4,576 4,887 4,913 5,340 5,965 5,662 5, Canada 120 150 120 114 135 121 13U 168 134 152 124 138 151 157 137 Jaran 26 32 41 44 14 65 17 119 145 149 200 284 375 379 569 Australia 749 919 1,237 1,283 1,156 1,194 1,295 .1,378 1,359 1,441 1,446 1,930 1,799 2,002 2,073 2, So.th Africa-2/ 533 614 679 703 815 833 953 1,046 952 1.069 1.031 1,267 1,378 1,133 l Total 11,290 11,368 13,449 13,347 13,627 13,238 14, 002 14,852 15,263 17,223 16,802 16,190 17,928 20,658 19,302 20, Centrally Planned Eastern Europe & USSR 6,325 6,176 7,048 5,988 6,512 7,144 7,980 9,285 9,873 9,889 11,222 10,481 9,889 12,307 13,693 13, China (Mainland) 300 hl51 638 693 717 807 864 900 1,260 1,260 1,200 1,300 1,800 2,000 2,200 2, Total 6,625 6,627 7,686 6,681 7,229 7,951 8,844 10,185 11,133 11,149 12,422 11,781 11,689 14,307 15,093 15, Developing Countries Cuba 5,759 7,225 5,159 4,890 4,528 4,740 5,672 5,784 5,964 5,862 6,767 4,815 3,821 4,590 6,082 4, Others 9,753 10,981 12,131 12,552 13,589 lJ,343 15,493 16,318 17,431 18j,65 18,723 18,694 19,077 20,573 23E482 22, Total 15,512 18,206 17,290 17,442 18,117 19,083 21,165 22,102 23,395 23,927 25,490 23,509 22,898 25,163 29,564 27, !World Total 33,429 36,201 38,425 37,470 38,973 40,272 44,011 47,139 49,791 52,299 54,714 51,480 52,515 60,128 64,759 64, 1/ Including Hawaii, Puerto Rico and Virgin Islands 2/ Including Swaziland. iSource: Based on data in International Sugar Council: The World Sugtar Economy Vol. II, 1963, and Suear Yearbook 1964, 1965 and 19J6. Basic Table B: SJGAR: CONSUMPTION BY MAINI ROEGONS AND COUNTRIES, 1951 TO 1966 (Thousand metric tons) 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 Developed Countries X'estern Europe 8,44 8,241 8,972 9,562 9,729 10,536 10,579 10,890 10,939 fl,290 11,657 11,968 12,404 12,376 12,985 13 Israel 35 38 45 49 55 60 63 67 80 80 87 100 110 109 12 Js.--.!/ 7,149 7,h79 7,777 7,585 7,796 8,251 8,082 8,LOO 8,542 8,600 8,936 9,076 9,235 8,951 9,353 5 Canada 640 681 668 708 730 751 740 802 816 773 807 848 859 907 915 Japan 563 796 1,089 1,075 1,060 1,167 1,141 1,268 1,325 1,414 1,S55 1,602 1,687 1,667 1,969 2 Now Zealand 95 94 98 100 99 107 109 113 117 123 122 129 129 116 132 Australia 610 496 542 563 565 551. 572 579 589 592 606 616 672 645 659 South Africa 564 506 588 563 598 626 651 667 682 679 688 661 707 776 853 Total 18,10' 18,331 19,779 20,205 20,632 22,049 21,937 22,786 23,090 23,551 24,457 25,000 25,803 25,547 26,978 21 Centrally Flanned E.stern Europe & USSR 5,126 5,726 6,145 6,336 6,136 6,919 7,374 8,139 9,oo6 10,054 11,963 10,791 9,955 12,152 13,341 1: C:-ina (Mainland) 300 500 650 750 800 900 950 1,000 1,300 1,625 1,980 1,876 1,904 2,140 2,300 North Korea & North Vietnam 14 15 15 16 19 20 21 23 26 27 28 35 37 37 4 Total 5,440 6,241 6,810 7,102 6,955 7,839 8,345 9,162 10,332 11,7C6 13,971 12,702 11,926 14,329 15,688 lf Developing Countries 8,462 6,915 9,846 10,492 11,155 11,905 12,193 13,047 13,508 13,961 14,d19 15,731 15,541 15,973 17,396 1l .World Total 32,002 33,487 36,435 37,799 38,742 41,793 42,475 44,995 46,930 49,218 53,247 53,483 53,270 55,849 60,062 6: V/ Including Hawaii, Puerto Rico ard Virgin Islands 2/ Including Swaziland. Source: Based on data in International Sugar Council: The World Sugar Econorty, Vol. IL 1963, a-d Irzar Year2k lo64, 1965 and 1966. Rasic '2iable Cs SUGAR: GROSS EXIlTS BY MAIN REGIONS AND COUNTRIES, 1951 TO 1966 (Thousand metric tons) 1951 1952 1953 1954 19 5 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 Develop'ed Countries Weste:-n Europe i,609 1,423 1,647 1,705 1,840 1,598 1,916 1,L26 1,385 1,799 1,803 1,418 1,662 1,620 1,688 Australia 285 262 752 651 626 685 781 662 691 842 895 1,253 1,228 1,316 1,221 South Africa-1 60 10 86 204 239 18LL 166 250 245 284 297 494 603 582 526 Other 106 126 78 34 41 122 17 21 28 35 15 15 22 21 Total 2,060 1,821 2,563 2,594 2,746 2,589 2,880 2,359 2,349 2,960 3,010 3,180 3,548 3,540 3,456 Developing Countries Cuba 5,472 5,049 5,516 4,226 4,644 5,394 5,307 5,632 4,952 5,635 6,414 5,131 3,521 4,176 5,316 Other Western Hcrisphere 1,760 1,909 2,349 2,356 3,060 2,511 3,270 3,275 3,230 4,505 4,485 3,833 4,108 3,504 '4,139 Africa 752 766 792 774 854 916 1,037 994 889 81 1,103 1,110 1,192 1,162 1,192 Asia and Oceania :,20-1 1.5:'8 2,320 1.973 2,053 2,227 2,389 2,273 2,116 2, L63 2,537 2,700 2,998 2,861 2.936 Total 9,188 9,292 10,977 9,329 10,611 11,048 12,003 12,174 11,187 13,W44 14,539 12,774 11,819 11,703 13,583 Centrally Planned 979 1,111 1,054 1,468 1,182 520 592 1,233 1,376 1,336 2,954 3,211 2,303 2,296 2,453 ,.orld Total&' 12,227 12,224 14,594 13,391 14,539 14,157 15,475 15,766 14,912 17,740 20,503 19,165 17,670 17,539 19,492 1/ Including Swaziland 2/ Excluding trade of Puerto Rico, Virgin Islands and Hawaii. Sou-ce: Based on data in International Sugar Council: The World Sugar Econour-. Vol. II, 1963, arxi 2.gar Yearbook 1964, 1965 and 1966. Basic Table D: SUGAR: GROSS IMRTS BY MAIN RfIONS AND COUNTRIS, 1951 M 1966 (Thousand metric tons) 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 19( De-eloped Countries W.estern Europe 4,546 4,212 5,372 3,971 4,218 4,485 5,594 5,033 4,796 4,787 4,282 4,384 5,434 5,062 4,731 5,1: Canrada 497 555 528 596 617 652 628 667 691 617 689 755 753 749 838 7 1 USA 3,302. 3,487 3,525 3,510 3,669 3,902 3,9J.4 4,374 4,187 4,637 3,993 4,248 4,168 3,295 3,654 4,0 Japan 55k 793 1,094 942 1,025 1,175 1,141 1,197 1,198 1,278 1,306 1,375 1,301 1,394 1,421 1,5 Israel & South Africa 27 LL3 66 1:3 75 h9 54 57 77 70 48 71 80 142 201 New Zealand 96 102 90 104 109 105 111 119 117 123 122 133 122 124 132 1i } Total 9,022 9,192 10,676 9,166 9,713 10,368 iiA?2 11,447 11,066 11,512 10,44o 10,966 11,858 10,766 10,977 11,7 tDeveloping Countries 2,368 2,469 2,676 3,612 3,422 3,153 3,196 3,389 3,201 3,541 4,013 3,757 3,154 3,702 4,457 4z,0 Centrally Planned 514 479 501 699 1,361 550 820 701 441 2,483 5,679 4,385 2,263 2,618 3,338 3,1 I.orld Total 11,904 12,1140 13,853 13,477 14,496 14,071 15,458 15,537 14,708 17,536 20,132 19,108 17,275 17,086 18,772 18,9 Source: Based on data in International Sugar Council: The World Supar Econonc, Vol. II, 1963, and Sugar Yearbook 1964, 1965 and 1966.