global F&A conference i Conference summary Day 1 - the global %r, market place and growth in emerg ing markets Poor Standard What'sNewS Issue 7 November 2000 SB:That's not so much due to the growth of niche markets, hut rather there is in- ereasing transparency in the market itself. The market is opening up, and people are seeing the different ways of purchasing sugar and other commodities. WNS: Is this Internet related, or do you agree with Jonathan Kingsman's percep- tion of the net as a tooi? ST: I don't think the Internet is really rele vant at this time for sugar. Although, the system Ejnar Knudsen talks about - whereby vTraction partners can check products sold via the Internet - can work efficiently in many sectors. Jonathan Kingsman points out that for sugar it's a tooi that can help you do business. Even James Proudlock of Sugaronline stresses the roie of e-media in gathering and ana- lyzing information, rather than using them to buy and sell. I don't think anyone be- lieves it will become a different, or rather alternative, trading medium in the near fu ture. People still have to check the quality, they want to see the goods. ADY: I think there's an- other factor here. To day, sugar is often just one of 20 or so ingre- dients used by a man- ufacturer of other products, as Cees Menkhorst of Cosun and Mats Andersson of Danisco Sugar ex- plain. Sugar is not as important as it used to be. Fair? RB: Yes. Price levels have been maintained by efficiency in pro duction, which has in- creased dramatically, not least through both seed quality and re- sulting yields per acre - which the speakers in the final section of the conference touch on, especially Philippe Chatin of Novartis and Martin Jager from Nutrinova. But if we go back to the fact that consumers are interested in other types of products, such as organic sugar, then you're talking a very different issue. In Australia, they've Chairman Charles Groenhuijsen discussing the politics ofGM become very keen on traceability, an issue covered by Frank Karsbergen of the Anty- lum Group. ST: If consumers want organic or brown sugar, perhaps because they perceive these products as 'healthy', and therefore more desirable, then that's what the industry will give them. RB: It isn't just a consumer concern - the industry will have to handle the repercus- sions if consumers reject products - you see that, for example, in the EU where consumers are very nervous about addi- tives and so on. ADY: The organic food business is growing 25-30% a year. So growers who make the investment - it takes 12 years to develop organic production - can reap returns. RB: This actually goes back to what Luis Fernandez is saying. Everyone in this in dustry has a raison d'être, they can justify why they are there. This is one of the fac tors which makes sugar very political. Everyone has a very good reason to con tinue. I think they will all pursue the path that is most suited to their own social and economie development. ADY: Don't forget, sugar is the oldest commodity to be traded internation- ally. We've been do- ing it for centuries. RB: I suppose the real- ity is that even though it would not normally be considered a 'sta- ple', like rice and grains, but in emerging markets, sugar is still an important source of energy for many poor people. Some- thing they desire, a luxury even, so it is important from a political perspective to ensure that sugar is available. In that re spect, it acts like a staple with far-reaching influence. Add to that its potential role in power supply and co-generation, then you'11 see just how important this com modity is and why it will remain a politi cal issue. Our industry cannot afford to forget that. 4? Although rather rhetorically entitled 'Did Brazilian sugar production peak in 1999?', CEO of Copersucar Clésio Balbo's presentation set the pace for the rest of the conference. This was no PR exercise. Balbo offered a deep analysis of the evolu- tion in production over the past 20 years, with long-term forecasts based on com- pleted deregulation and increased focus on the whole risk spectrum. Answering a re- sounding 'yes' to the initial question, he then went on to argue the case for the use of ethanol/alcohol as a viable alternative to oil, especially when the fossil fuel tops the USD 25/barreI level. Already, the sugar industry in Brazil generates enough 'green' fuel to power 5% of the country's total motor vehicles. 'What is exciting now,' he commented, 'is the fact that other coun- tries are looking at a blend of ethanol and diesel. I'm talking Gasohol in the US, the so-called FlexFuel vehicle being developed in Sweden. Mexico is also looking at this option, while major sugar producers like Thailand, Australia, China and India are all carrying out their own studies. The use of this kind of "green" fuel is a response to both Kyoto and volatile oil prices.' Russia has no shortage of fossil fuels, but that seems to offer little comfort to the sugar industry there. Igor Khoudokormov, CEO of Prodimex, had a somber story to teil, although it's potentially good news for exporters. In the past five years and in- spite of a devastating crisis which has re- duced even further an already poor Stan dard of living, raw sugar imports have increased three-fold. It is an increase Rus sia can hardly sustain. The Russian sugar lobby has been at pains to reduce volatil- ity in the market. As a result, the »-

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