Organic Sugar – Paraguay

Small countries tend to get overlooked in discussions about trade, yet they can be important supply sources for specific products. Paraguay is a good example. It’s a very poor, landlocked country, sandwiched between Brazil and Argentina, with a population of just 6.5 million.

The country is the world’s fourth largest exporter of soybeans, according to the US Agency for International Development, with sales of $2.9 billion. It is also the world’s largest exporter of organic sugar, as well as the largest supplier to the United States. Last year’s sales to the US amounted to $65 million, accounting for 43% of its $152 million in total exports to the US, according to Datamyne figures. Organic sugar exports to the US accounted for 70% of its total worldwide sugar exports of $91 million.
The biggest importer of Paraguay’s organic sugar is Wholesome Sweeteners, based in appropriately named Sugar Land, Texas. “Farmers utilize sustainable, organic agriculture practices meaning no chemical fertilizers or pesticides are used to grow organic sugar,” Sarah Miller, a spokeswoman for the company, wrote me in an e-mail message. Nor is it genetically modified.
Wholesome Sweeteners has a “Fair Trade, Not Aid” certification program, aimed at supporting farm cooperatives in developing countries. “In Paraguay, Fair Trade dollars buy tractors and trucks, improve bridges and roads, and convert thousands of acres from conventional cane cultivation to organic cane cultivation, a three-year process,” the company states on its website.
Besides Paraguay, the company’s other top sources include Costa Rica, Malawi, Argentina, Brazil and India, Miller said.
Another big US importer is Florida Crystals, which claims to be the first and only producer of certified organic sugar, grown and harvested in the United States.
The vast majority of sugar imports from Paraguay enter the US through Houston, followed by Jacksonville.
The US protects its domestic sugar industry through subsidies and strict import quotas, but the quotas do not apply to specialty sugar. Paraguay does not export any raw sugar to the US, even though USDA quotas allow it to ship up to 7,258 tons.
Its organic sugar exports to the US last year totaled 35,000 tons, out of worldwide sales of 50,000 tons, according to Peter Tase, a fellow with the Council on Hemispheric Affairs.
Paraguay was the first country to engage in industrial-scale organic sugar production, according to the Organic Food Directory, but Tase said a greater degree of industrialization would allow it to increase exports by at least 50%.
Sugar accounted for 69% of the US’s 2,863 containerized import shipments from Paraguay last year, according to Datamyne’s bill of lading data. Wood, the second biggest, containerized commodity, was a distant second, with 15%. Georgia-based Shao Industries, a forest products company, was the single largest consignee, with 238 shipments.
A company called Azucarera Paraguaya (AZPA) dominates Paraguay’s sugar trade, with $60 million in exports to the US last year.
Altogether, the US was only the seventh largest foreign market for Paraguay. The top destinations were Argentina, Uruguay and Brazil, its partners in the Mercosur trade bloc. Buenos Aires is the principal gateway for Paraguay’s oceanborne trade.
The US is the fourth largest exporter to Paraguay, trailing far behind China, Brazil, and Uruguay. [For a “Quick Look @ Mercosur Trade in 2011,” download Datamyne’s new FREE report here.]
Although Paraguay is suffering a severe drought, it has had little effect on sugar cane production, according to both Miller of Wholesome Sweeteners and Tase. That’s because sugar cane is a very hardy crop, compared with more sensitive crop like soybeans, Miller said.
The drought has rendered commercial shipping on its rivers impossible, according to an account dated Jan. 18, but sugar cane exports are not affected because they travel over land to Argentina, Tase said.
That’s sweet relief to aficionados of organic sugar.

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