Sugarcane production in Mexico: In what geographical areas should its use be diversified to avoid a sugar glut?

Abstract

The constant trade conflicts between Mexico and the U.S. that have hindered sugar exports and led to the accumulation of inventories justify conducting studies that analyze the diversification of sugarcane uses to avoid a sugar glut. In order to determine, from an economic and logistical point of view, the sugar mills in which the diversification of sugarcane use would be most advisable, a spatial equilibrium model was applied to the sugar market in the 2014/15 harvest. The results indicate that by decreasing total sugar production by 10 % (from 5.98 to 5.38 million t), the national area devoted to sugarcane production would be 687.6 thousand ha (12.2 % reduction) and the San Cristóbal, San Nicolás and Plan de Ayala sugar mills located in the states of Veracruz and San Luis Potosí would decrease their sugar production by 276.0, 97.5 and 85.2 thousand t, respectively. The sugarcane area used for sugar production would be reduced by 49.2, 13.0 and 14.5 thousand ha, respectively, at the three aforementioned sugar mills. Considering that the excess supply of sugar lowers prices and the income of producers, it is recommended that the Government promote projects that industrialize the production of sugarcane to obtain products other than sugar; the production of biofuels could be an alternative.