Brazil is the largest sugar producer (29.6 million tons) and exporter in the world, with 18.94 million tons exported in the 2019/2020 cycle. This amounts to an equivalent of 18.5% of global production and 32% of exports worldwide.



Sugar TradeApproximately 2/3 of all sugar produced in Brazil is exported, heading to more than 100 countries around the world. Sugar is traded in the free market, with the exclusion of most developed countries who protect their sugar markets by imposing tariff-rate quotas. Brazil is a member of the Global Alliance for Sugar Trade Reform and Liberalization, which seeks to improve the world’s sugar trading environment.

Sugar Trade China

As part of its WTO obligations, since 2001 China has enforced a sugar tariff-rate quota (TRQ) with a 15% basic-duty rate on imports up to 1.94 million MTs, and a rate of 50% over this volume. For a period from 2017-2020, additional Sugar Safeguard Policy tariffs were applied to out-of-quota imports.

Since 2016 China has implemented the Automatic Import License (AIL) system that requires sugar importers to pre-register above basic-duty sugar imports with the regulator, and since 2020 China also requires importers to file information with the China Sugar Association (CSA) or the China Chamber of Commerce of Foodstuffs and Native Produce (CFNA).

China also implements a National Reserve System for sugar, with the last major auction taking place in October 2016. The smuggling of sugar along porous land borders from Southeast Asia is another persistent challenge.

14th Five Year Plan for Economic and Social Development

14th Five Year Plan for Economic and Social Development

It is likely that the new 14th Five Year Plan (2021-2025) that is about to be issued will focus on increasing the quality of soil, mechanization, and controlling sugar smuggling.

In April 2020, the Guangxi provincial government announced a three-year (2020- 2022) action plan to modernize the region’s local sugar industry, which accounts for 70% of China’s total cane sugar production. The plan aims to raise yields to an average of 5 MT per mu (1mu=0.067ha) by mechanizing at least two-thirds of cane planting and harvesting. In order to incentivize greater mechanization, the plan will provide varying levels of support payments to cane farmers. Support will be given to encourage new and existing production levels, while separately providing insurance-type payments to offset farmers’ losses if weather or market conditions deteriorate. State-owned mills will also receive continued support.

China’s 2020 full year sugar production is estimated in 10.3 million tons, while the estimated sugar consumption is 14.8 million tons, also a reduction from previous estimates. From January to October 2020, China’s sugar imports reached 3.65 MTs, up 28.4% year on year following the expiration of the Sugar Safeguard Policy.

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The European Union (EU) is the third largest sugar producer and the second largest consumer in the world. EU sugar policy was first established in 1968 and regulates all aspects of the industry, ranging from production quotas and guaranteed prices, to exports subsidies and import restrictions.


2006 Sugar Reform


Import tariffs and quotas

Most EU sugar imports are controlled by Tariff-Rate Quotas (TRQs), which set the amount of sugar that can enter the region from abroad at a reduced or zero duty. The EU applies Most-Favored Nation (MFN) tariffs to additional sugar imports. These high import duties – €339 per ton on raw cane sugar for refining and €419 per ton on white sugar – prevent imports beyond the TRQ limits from most competitive, sugar-producing countries such as Brazil, Thailand and Australia.

Today, 412,054 tons of Brazilian sugar can be imported at a preferential rate of €98 per ton (78,000 tons can be imported at an even lower rate for seven years) and an erga omnes TRQ (meaning a quota open for any country to meet) of 289,977 tons is also available at the same duty rate. In addition, a temporary duty-free quota of 400,000 tons annually is open for industrial sugar imports.

The EU grants duty-free, quota-free access for sugar imported from the world’s Least Developed Countries (LDC) and ACP countries that were members of the former Sugar Protocol and are signatories of Economic Partnership agreements. However, transitional safeguards have been in place to prevent a surge of imports from these countries since 2015.

More and more sugar is also imported through free-trade agreements where the countries partnering with the EU don’t get full access to the EU market, but are granted a zero-duty TRQ. This is the case of Ukraine, Peru, Colombia, Central America, Panama and Moldova.

On June 28, 2019 the EU and Mercosur countries closed an agreement of principle for the conclusion of a free trade agreement. This FTA will enhance the Brazilian access to the EU sugar market by reducing the WTO intra-quota tariff to zero for 180,000 tons of sugar. This is by no mean additional quantities granted to Brazil, but just a reduction of the intra-quota tariff of an existing WTO quota.

2006 Sugar Reform

The European sugar reform was mainly motivated by the negative ruling of a WTO panel in a case brought by Australia, Thailand and Brazil against the EU, but the market access granted to LDCs and EU enlargement also played a role. As the EU increased its membership, the government had to offer additional import opportunities as compensation for new member states adopting the EU sugar policy and its protectionist measures.

The latest reform of the European sugar regime

In December 2013, the EU modified its common organisation of the markets in agricultural products, and as part of it, the EU reformed once again its sugar policy. With the intention to let producers respond to market signals, production quotas were abolished on 30 September, 2017 and export subsidies are set at zero. This reform, coupled with historically low international sugar prices, had a significant impact on the EU sugar market and prices. As a consequence, imports were also affected.

India Sugar Policy

India is the second largest producer of sugar in the world after Brazil and is also the largest consumer. Sugar industry is an important agro-based industry that impacts rural livelihood of about 50 million sugarcane farmers and around 5 lakh workers directly employed in sugar mills.

Employment is also generated in various ancillary activities relating to transport, trade servicing of machinery and supply of agriculture inputs. Today Indian sugar industry’s annual output is worth approximately Rs.80, 000 crores. There are 735 installed sugar factories in the country as on 31.01.2018, with sufficient crushing capacity to produce around 340 lakh MT of sugar

Far and Remunerative Price

Minimum Selling Price

Far and Remunerative Price

The Sugarcane (Control) Order, 1966 was replaced with the ‘Fair and Remunerative Price (FRP)’ of sugarcane for 2009-10 and subsequent sugar seasons. The cane price announced by the Central Government is decided on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) in consultation with the State Governments and after taking feedback from associations of sugar industry. The Sugarcane Control order was amended basis cost of production of sugarcane, return to the growers from alternative crops and the general trend of prices of agricultural commodities, availability of sugar to consumers at a fair price, recovery of sugar from sugarcane etc.

The FRP system does not condition farmers to wait till the end of the season or for any announcement of the profits by sugar mills or the Government. It in-fact assures margins on account of profit and risk to farmers, irrespective of the fact whether sugar mills generate profit or not and is not dependent on the performance of any individual sugar mill.
Accordingly, FRP for 2018-19 sugar season has been fixed at Rs. 275 per qtl. linked to a basic recovery of 10% subject to a premium of Rs. 2.75/qtl for each 0.1% increase of recovery over and above 10% and reduction in FRP at the same rate for each 0.1% decrease in the recovery rate till 9.5%. With a view to protect interest of farmers the Government has decided that there shall not be any deduction in case where recovery is below 9.5%; such farmers will get Rs. 261.25 per quintal for sugarcane in the current season. The FRP of sugarcane payable by sugar factories for each sugar season from 2009-10 to 2018-19.

Minimum Selling Price

Price of sugar is market driven & depends on demand & supply of sugar. However, with a view to protect the interests of farmers, concept of Minimum Selling Price (MSP) of sugar has been introduced w.e.f. June, 2018, so that industry may get at-least the minimum cost of production of sugar, so as to enable them to clear cane price dues of farmers.
The Government imposed a basic customs duty of 5% and a countervailing duty of Rs.850.00 per tonne on imported sugar w.e.f. 28.04.1998. Following several amendments in the availability, production and costs due to surplus stocks of sugar in the country the GoI increased the import duty from 15% to 25% on 21.08.2014, which was subsequently increased to 40% w.e.f. 30.04.2015 and further increased to 50% w.e.f. 10.07.2017. In order to prevent any unnecessary import of sugar and to stabilize the domestic price at a reasonable level, the Central Government has increased custom duty on import of sugar from 50% to 100% in the interest of farmers w.e.f. 06.02.2018.

The Government of India has reviewed the Sugar Subsidy Scheme and has decided to give access to consumption of sugar as a source of energy in diet, for the poorest of the poor section of the society under it’s Antayodara Anna Yojana.

USA Sugar Policy

The United States is the sixth largest sugar producer and fifth largest consumer of sugar in the world. The U.S. sugar industry has enjoyed trade protection since 1789 when Congress enacted the first tariff against foreign-produced sugar. Government protection continues to this day.

The framework for the current U.S. sugar program has its roots in the 1990 Farm Bill. This law established price support through preferential loan agreements, domestic market controls and tariff-rate quotas.

Price Support

Domestic Market Controls

Tariff-Rate Quotas

Other Initiatives

Price Support

The U.S. Department of Agriculture (USDA) provides loans to sugarcane and sugar beet producers and processors guaranteeing a minimum price regardless of the true market conditions.

At the end of the loan term (usually nine months), sugar producers and processors make one of two choices:

  • Give the government their sugar as payment for the loan; or
  • Sell their sugar on the market if the going price is higher than the USDA loan amount.

Currently, the average loan rate is US$19.75 cents per pound for raw cane sugar and US$ 25.38 cents per pound for refined beet sugar (FY2020).

Domestic Market Controls

The USDA dictates the amount of sugar an individual company may sell during a given year, but these allotments can and often are adjusted based on harvest conditions.

If companies produce more sugar than their allotments permit, they are forbidden to sell it. Instead, they must store the excess sugar at their own expense until they have permission to sell it. The Farm Bill requires these allotments be at least 85% of domestic sugar demand.

Note that marketing loans and marketing allotment programs are contingent on the use of feedstock produced in the U.S.

Tariff-Rate Quotas

U.S. sugar imports are strictly controlled by Tariff-rate quotas (TRQs) and established annually by the USDA and the U.S. Trade Representative. The TRQ sets the amount of sugar that can enter the country from abroad at a low or zero duty.

The amount set aside for import under TRQs must meet US obligations to the World Trade Organization (WTO) – currently a minimum of 1,117,195 tons of raw sugar and 22,000 tons of refined sugar. The 2008 Farm Bill also allows USDA to increase sugar TRQs on April 1 of each year if a shortage is expected.

Even though sugar production and markets have changed substantially during the past 30 years, TRQs are based on U.S. sugar trade levels from 1975 to 1981.

For FY 2020, the U.S. allocated a quota of 152,691 tons of raw cane sugar to Brazil which will pay an import duty not to exceed US$ 1.375 cents per kilogram.

Additional sugar imports above TRQ levels are not practical or economical under normal market conditions due to stiff over-quota tariffs.

Other Initiatives

Sugar-to-Ethanol Program

Under another provision of the Farm Bill, the U.S. government can sell excess sugar (for instance, unneeded supplies generated by generous price supports) to ethanol producers at a significant loss. With this program, ethanol producers can pay for sugar the equivalent of what they pay for less-expensive corn. This provision provides additional, less obvious protection to the U.S. sugar market.

Suspension Agreements for Sugar Imported from Mexico

Since January 2015, sugar imported from Mexico have been subject to the terms of two agreements suspending an anti-dumping (AD) and countervailing duty (CVD) investigation started in 2014 by U.S. International Trade Commission and the Department of Commerce.

Since the preliminary investigations found that imported Mexican sugar hurt the U.S. domestic industry, duties would have to be charged against the imported product. In December 2014 both governments agreed to export limits and reference prices for Mexican sugar.

The agreement was amended in June 2017 and the Reference Prices in the amended agreement were set at:


  • Twenty-eight cents per pound by dry weight commercial value for refined sugar (polarity greater than or equal to 99.2); and,
  • Twenty-three cents per pound by dry weight commercial value for raw sugar (polarity less than 99.3) loaded in a bulk vessel and freely flowing (not in a container, tote, bag, or otherwise packaged).