At the beginning of August this year, when the tariffs imposed by the president of the United States, Donald Trump, came into force in Brazil, Jalles Machado (), a producer of sugar and sugarcane ethanol, released a Relevant Fact to the market signaling what the possible impacts of the North American government’s measure could be on the business model, especially in the area of organic sugar production.
And the projection was not at all encouraging: a loss of up to R$25 million. And this size is even easy to justify, as he explained, during an episode of Business Rootits road between the countryside and Faria Lima, a partnership between InfoMoney e The AgriBizthe company’s CFO, Rodrigo Penna de Siqueira.
“In the last five years, our brand has been the largest exporter of organic sugar in the world four times – global leader in this market. Of everything we do in this regard, 85% is for export and, of this quantity, 70% is for the American market”, he said, showing the relevance of the US market for the commodity.
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‘Less worse’
Over the last few months, however, according to the executive, the effects have been reduced. This is because the North American market itself has paid more for the product. Organic sugar, he said, cannot appear overnight. To start producing, the brand has to leave the field without the use of chemicals, in quarantine, for around four years.
“There is nowhere to get this product from, unless you prefer to be out of supply”, he contextualized. Ultimately, the American end consumer is paying the higher price, which should have an effect on local inflation.
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The sugar market in the world
Siqueira also commented on the sugar situation in the world, in a situation where, in recent years, there has been a production deficit. Currently, the sector is heading towards a moment of recovery, with even a projected surplus for the next harvest.
But he points out: “inventories are still low, especially if we compare them to the last 13 years”, he said. The international market has also seen recoveries in India and Thailand, but any impact still needs to be analyzed with caution.
