Crisis in Colombia's sugar market
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Crisis in Colombia's sugar market

After a slump in oil prices rocked Colombia’s commodities market, sugar, is the next product suffering. The country’s Superintendence of trade and industry has slapped a 320 million peso fine  ($112,000) on sugar workers association Asocaña and 14 other companies within the industry, which could see around 190,000 workers lose their jobs.

President of Colombian senate Luis Fernando Velasco questioned the sanction, “during this period (of the year) when we reached a supposed agreement not to allow sugar to be imported into Colombia there were some very important imports from Central America. So the question here is, what happened?” Caracol Radio reports.

In what has been termed a “death penalty” for the sugar industry, the fine slapped on Asocaña is equivalent to around 50 percent of its total assets.

Sugarcoated statistics

As the fine continues to spark debate and concern across Colombian parliament, the principal concern has been expressed for the workers themselves. If those sanctioned will have to pay up, this could result in hundreds of workers having to sell up, leaving them not only homeless but also without a livelihood.

Colombia produces about one percent of sugar globally, with the sector contributing 4.7 percent to the country’s agricultural GDP and 56 percent of GDP in the sugar-growing Valle de Cauca department.

“The sector has already been hit by international prices and imports. This multmillion fine will impact family incomes, and unemployment will result in collateral problems. In Florida, Candelaria, Palmira, La Paila, Miranda, Corinto, we depend on this industry.” Mayor of Pradera, Adolfo Escobar told daily El Tiempo.

Sugar prices have increased in Colombia during the past few years. According to Colombia’s Pricing Information System (Sipsa) the average price of a kilo of sugar has increased from 1.585 pesos to 2.018 pesos between December 2014 and September 2015, an increase of 31 percent.

As foreign sugar brands reach Colombia, the price of sugar should drop the superintendence argues. But what will this mean for Colombia’s sugar sector workers?

Sickly sweet truths

For now, it looks like sugar producing giant Brazil will determine what will happen to prices in the sector, despite analysts from the World Sugar Organization predicting deman will drop below the estimated 2.5 million tons in 2015 and 6.2 million tons predicted for 2016, the global price of sugar soared 27 percent during the past month alone.

If the sanction does go through, this could see the end of Colombia’s sugar industry.

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