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China's Sugar Production Down, Price UP
China's over surplus sugar industry began to walk out of the red this season with 280 million yuan (US$ 33.7 million) worth of net profits.
The industry had made losses for four years in a row. In southwest China's Guangxi Zhuang Autonomous Region, the sugar production amounted to 3 million tons, or 40 percent of the country's total.
Severe frosts that hit some sugar growing area in south China last winter caused a loss of 2 million tons of sugar output.
However, production loss has helped boost sugar prices in major sugar trading markets around the country, which soared from 2,000 yuan (US$ 240) per ton last year to over 3,000 yuan (US$ 361).
Feng Zuhua, director of the Guangxi Economic and Trade Commission, said that losses caused by frosts has had a positive influence on the industry. Profits were gained from the restructure of inefficient sugar plants with measures taken to reduce production cost. The production cost was 100 yuan per ton more than usual.
China will start to drastically reduce sugar production this year. Most reductions will be done by eliminating outdated production facilities.
Analysts from the China Sugar Association suggested that some areas that are unsuitable for sugar production should be forced to leave the market, while the remaining ones ought to speed up technical upgrading and improve efficiency.
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