The Venezuelan sugar industry foresees domestic production only slightly increasing in 2012, constrained by low profitability and the absence of government incentives.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: VE1204
Sugar Annual Report
David W. Cottrell
The Venezuelan sugar industry foresees domestic production only slightly increasing in 2012,
constrained by low profitability and the absence of government incentives to support cane output.
Total imports are expected to be about 800,000 metric tons. The government recently increased
the regulated consumer price to Bs. 6.11 per kilogram, an amount that may cover production
costs but not large enough to stimulate further investment or expansion.
A combination of price controls, decreasing cane planted area, fear of expropriation, and large
amounts of imports continue to negatively impact the domestic sugar industry. Refined sugar
production is estimated at 503,007 metric tons. The Bolivarian Government of Venezuela (BGV)
regulates the price of sugar for the domestic market, which is currently Bs. 6.11 per kilogram.
Imports will be needed to cover the needs of the soft drink and confectionary industries.
Production and Milling:
VENAZUCAR, Venezuela’s sugar milling industry association, has reported that millers are not
increasing investment because price controls on refined sugar limit profitability. Estimates for
refined sugar production stand at 503,007 metric tons for 2012.
There are 16 operating sugar mills in the country, 10 of those are managed by the BGV. Most of
them were either occupied or expropriated by the BGV since 2005. However, some reports from
the Corporacion Venezolana de Alimentos indicate that despite the BGV owns most of the mills,
they only produce 20% of the sugar that is consumed in the country and the private sector
continues supplying the 80% of the consumers demand.
Even with extensive land and suitable weather, cane producers cannot meet domestic demand.
Historically, between 70 to 75 percent of the country’s sugar demand is met by domestic
production, while imports account for the rest. Now, between 40 to 45 percent of sugar demand is
met by domestic production and imports covers around 55 to 60 percent of total demand.
The first sugar cane harvest takes place from November through April, and the second from June
through November. The first harvest is responsible for about 70 percent of the cane cut in
Venezuela, and the second harvest for the remainder. Two Venezuelan mills, Central La Pastora
and Central Carora, located in Lara State in the northwest, have plantations on which cane can be
harvested all year long.
According to Venazucar, the majority of cane growers are considered to have small or medium size
plantings. Total area planted to sugar cane is estimated at 105,000 hectares for 2012. Sugar cane
growers are reluctant to increase area planted because there are no price incentives due to
controlled prices and there is a fear of being expropriated.
The sugar industry forecasts that consumption will not increase significantly in the short term.
Demand for 2012 is estimated at 1.3 million tons of refined sugar. Annual per capita consumption
fluctuates between 39 and 41 kilograms. Recently, the soft drink processing industry has been
receiving less sugar because the BGV directed a greater share of product to domestic/home
consumption. The BGV then increased sugar imports to avoid a national sugar shortage. The
industrial food sector is composed of soft drinks and snacks such as cookies, crackers, and
confectionary. The Venezuelan soft drink industry uses 100 percent sugar without any fructose or
other sweetener for its non-diet beverages.
In early 2011, there were severe sugar shortages and the BGV attributed them to some sugar
producers illegally exporting unrefined sugar to Colombian producers of chocolate products and
other sweets to. These exports kept large amounts of stocks off the domestic market. The BGV
believes that by creating an artificial shortage, an informal market was created that was used by
some producers to increase profits. Sugar on the informal market can sell at more than double the
VENAZUCAR estimates imports of raw sugar at 700,000 metric tons and 100,000 metric tons of
refined sugar nearly all from Brazil and some from Central America.
The present base tariff on sugar is 20 percent ad valorem calculated on a CIF price basis. Sugar is
included in the Andean Community price-band variable-levy system. This tariff system was
implemented by Venezuela for sugar and several other agricultural products in September 1995.
Raw and refined sugar coming from the Andean Community enters Venezuela duty free. Bilateral
agreements signed between Venezuela and Guatemala, Nicaragua and El Salvador also give sugar
from these countries duty free entry.
Several issues have a negative impact on the production; price controls, land expropriations, lack
of transportation, security concerns, lack of inputs, fertilizers and even labor force problems. In
March 2012 the BGV announced that they approved 725 million of Bolivars (US$ 168 million) to
reactive the production in those mills managed by them. However, the private sector does not
foresee a significant increase of the production with this announcement, according to them the
BGV has promised to reactivate the production in the past but nothing happened.
VENAZUCAR representatives put sugar cane processing levels back in 2005 at almost 9 million
metric tons per year. At that time, most mills were owned and run by the private sector. Today,
the BGV owns most of the mills and processing levels have dropped significantly.
Refined sugar continues to be under the retail price control policy established by the government in
2003. In January 2012 the BGV increased the regulated consumer price to 6.11 Bolivars* per
kilogram. Representatives of the National Federation of Associations of Venezuelan Cane Producers
(FESOCA) consider this price sufficient to cover production costs in the short term. They met with
officials from the Ministry of Agriculture and Lands to discuss the price. However, FESOCA agrees
with Venazucar regarding the limitation that price controls have over the investment to increase
The list of regulated consumer prices published on the Official Gazette No 39,835 shows:
A kilogram of refined sugar Bs. 6.11
900 grams of refined sugar Bs. 5.59
A kilogram of brown sugar Bs. 5.88
900 grams of brown sugar Bs. 5.29
The BGV’s retail network MERCAL (Mercado de Alimentos C.A.), markets food products at low
prices. The price of a kilogram of refined sugar is Bs. 1.72.
*1 US$ = 4.3 Bolivars.
As mentioned above, both the government and the private sector currently sell refined sugar.
Sugar millers continue to offer refined sugar under their brands through Venezuela’s traditional
retail sector (supermarkets, “mom and pop” stores, convenience stores, etc). On the other hand,
the BGV directly imports raw and refined sugar through its food purchasing entity, CASA,
(Corporación de Abastecimiento y Servicios Agricolas) and then sells it through its MERCAL food
distribution stores at lower retail prices. The stores sell government-subsided products to the lower
The Venezuelan consumer prefers refined sugar but shortages in early 2011 opened the market for
different sugar products. Brown sugar and fruit lactose products are now options taken into
consideration by consumers and their markets have expanded. Fruit lactose products are currently
not under the controlled price regime.
Production, Supply and Demand Data Statistics:
Venezuela 2010/2011 2011/2012 2012/2013
Market Year Begin: Sep Market Year Begin: Sep Market Year Begin: Sep
2010 2011 2012
USDA Official New Post USDA Official New Post USDA Official New Post
Beginning Stocks 316 316 351 351 351
Beet Sugar Production 0 0 0 0 0
Cane Sugar Production 490 490 490 503 523
Total Sugar Production 490 490 490 503 523
Raw Imports 750 750 700 700 680
Refined Imp.(Raw Val) 100 100 100 100 100
Total Imports 850 850 800 800 780
Total Supply 1,656 1,656 1,641 1,654 1,654
Raw Exports 0 0 0 0 0
Refined Exp.(Raw Val) 0 0 0 0 0
Total Exports 0 0 0 0 0
Human Dom. Consumption 1,300 1,300 1,300 1,300 1,300
Other Disappearance 5 5 5 3 5
Total Use 1,305 1,305 1,305 1,303 1,305
Ending Stocks 351 351 336 351 349
Total Distribution 1,656 1,656 1,641 1,654 1,654