Sugar strengthens its dominance in agriculture in El Salvador

Sales of sugar to new Asian markets have enabled the sector to weather the uneven impacts of Covid-19 but the outlook is less positive

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sugar El Salvador

A worker at a sugar cane field in Tonacatepeque township, northwest of El Salvador's capital San Salvador (image: Alamy)

El Salvador implemented some of the strictest measures to contain the coronavirus in Latin America: a mandatory quarantine with scant permissions to leave the house and stringent police surveillance. Yet the sugarcane sector was able to overcome the hurdles posed by the pandemic.   

“With all the protocols and protection measures it has been more complex because supply chains are cut and transport is more difficult,” said Julio Arroyo, executive director of El Salvador’s Sugar Cane Association. “Now that the rainy season begins we’ll start the sowing. This is how we are living with the virus,” he added.

In early May, Salvadoran workers continued to harvest sugarcane under lockdown, taking precautionary measures that included social distancing, temperature checks, and wearing face masks. Buses transporting workers were only half full, Arroyo said. 

Despite these obstacles, El Salvador has harvested over 7 million tonnes of sugarcane this year, according to the Salvadoran Council of the Sugar Agro-Industry (CONSAA). The figure is up from 6.7 million tonnes last year. 

Mario Salaverría, president of the Sugar Association, said exports have not stopped to major Asian markets. A ship carrying 35,000 metric tonnes left for Taiwan over a month ago and another with 45,000 tonnes destined for China departed soon after.

18%

of El Salvador's sugar exports go to China

Sugar is El Salvador’s largest and most profitable agricultural product, grossing over US$200 million annually and employing 200,000 people. The country sends 18% of sugar exports to China and 15% to the US. 

Free trade agreements with South Korea, Taiwan, the US and Europe facilitate the trade. Last year, China became the largest buyer, displacing Taiwan in what some observers saw as a strategic move to strengthen political ties with the Central American nation.

Bittersweet success

Sugar’s success has come at a price for the rest of agriculture in Salvador. Over decades, sugar’s rise has fuelled inequality in rural areas as monopolies acquire land and other resources, according to Meraris López, an environmental researcher from the Universidad Centroamericana José Simón Cañas.

Karen Molina, an economic researcher for El Diario De Hoy, said the pandemic has only exacerbated existing differences. 

“The sugar industry is much more organised and united than others,” Molina said.  “This has allowed them to push for their sector and against obstacles in a much stronger way.” 

According to José Edilberto Guevara del Cid, who has grown coffee in western El Salvador for 28 years, the lockdown has slowed activity in the sector - once as competitive as sugar - by around 40 to 50%.

Although the government issued passes that permit coffee workers to travel freely, many small producers were never informed about them or lacked the internet access necessary to obtain them. 

“That has restricted us a lot,” Edilberto said.

Demand for coffee is also down. In late March, global exports around the world fell by 3.7% compared to the same time last year. Prices have turned extremely volatile and a recent report from the International Food Policy Research Institute warns that this could drive small producers into poverty. 

El Salvador farmers primarily grow specialty coffee, gourmet beans sold for a premium at high-end roasteries and cafes in the US. But due to the pandemic, many businesses have been forced to close or limit their services. 

Jose Setté from the International Coffee Organization (ICO) said demand has also been curtailed by the onset of the global recession. “If people are unemployed or have wages reduced the tendency is to cut back on discretionary spending,” he said. 

Workers in smaller agricultural sectors are also suffering the impacts of the pandemic disproportionally. 

William Rivera, a farmer from Chalatenango, a department in northwest El Salvador, told national outlet El Economista that he lost his entire cabbage crop because there were no buyers. 

Cabbage is used in the popular Salvadoran dish pupusas, but many restaurants are now closed. Over 10,000 agricultural workers from surrounding areas reported losing entire fields of lettuce, onion, green chilli and celery. 

The future of sugar in el Salvador

Despite its current success, sugarcane could suffer too. In April, global sugar prices dropped 14.6% compared to March, the second consecutive monthly decrease. Global demand for fuel has plummeted due to Covid-19 travel restrictions and sugar mills around the world have dedicated more cane to making sugar instead of ethanol, leading to oversupply.

Julio Ángel Castro Luna, executive director of CONSAA, said the outlook is challenging:

“Low global sugar prices could affect the sector's income, translating into a decrease for both cane producers and mills.”