1. Brussels, June 9, 2005 /1 THE FUNCTIONING OF THE INTERNATIONAL SUGAR MARKET Jean-François Sneessens Conference “What reform for a mutually supportive sugar regime?”

2. Brussels, June 9, 2005 /2 I. Production, Consumption,… II. International market: imperfect and insufficient mechanism of co-ordination III. Possibilities of action IV. Other observations

3. Brussels, June 9, 2005 /3 World Sugar Production

4. Brussels, June 9, 2005 /4 World Sugar Consumption

5. Brussels, June 9, 2005 /5 Most important producers and consumers

6. Brussels, June 9, 2005 /6 World market 21% Preferential markets 7% Self- sufficiency 72% Sugar Production and Trade

7. Brussels, June 9, 2005 /7

8. Brussels, June 9, 2005 /8 Most important export and world prices

9. Brussels, June 9, 2005 /9 PRODUCTION / CONSUMPTION: CO-ORDINATION THROUGH M A R K E T S (supply/demand, prices) b u t...

10. Brussels, June 9, 2005 /10 World markets are imperfect  VOLATILITY  LOW LEVEL, on average  DOWNWARD TREND <== Measurable <==. Theory (Ricardo). The average world cost: 400 EUR/t sugar?. 80 % producers, cost > world price <== Measurable PS : is so for sugar and other agricultural products World prices :

11. Brussels, June 9, 2005 /11 World markets particularly imperfect: WHY ? 1. Particularities agricultural Supply & Demand (non-elasticity,…) 2. Mercantilist national policies (non-co-operative => anti-co-operative) 2bis Priority given to Exports 3. Intrinsic factors to world markets a) Residual markets b) Income inequalities 4. Currency,...

12. Brussels, June 9, 2005 /12 EXPECTATIONS OF THE SOCIETY AND AGRICULTURAL MARKETS Expectations (towards agric.) :Food security, Social balance, Environment… Particularities : Equity and Externalities ==> outside of the market! Market : IMPERFECT mechanism of co-ordination Complementary role of the government (where?… national)

13. Brussels, June 9, 2005 /13 Conclusion for the world markets: important mechanism of co-ordination but IMPERFECT AND INCOMPLETE (to respect, to improve, to complete)

14. Brussels, June 9, 2005 /14 Possibilities for action ? : NON –mutually supportive policies (dumping) National regulation* National regulation + preferential import (condition: coherence with regulation) International and co-operated policies (co-operated actions, international agreement,…) * Prices, supply regulation

15. Brussels, June 9, 2005 /15 Other observations: other sweeteners

16. Brussels, June 9, 2005 /16 Other market possibilities: bioethanol Brazil: > 40 % of the cane sugar area !  + Investments

17. Brussels, June 9, 2005 /17 Bioethanol and Biodiesel Production (in million tonnes) UE-25 USABrésil USA Brésil UE-25 Bioéthanol Biodiesel