See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/257780629

The Mexican Industry: Overview, Constraints, Current Status and Long-Term Trends

Article in Tech · September 2012 DOI: 10.1007/s12355-012-0151-3

CITATIONS READS 36 7,037

5 authors, including:

N. Aguilar-Rivera Universidad Veracruzana

75 PUBLICATIONS 175 CITATIONS

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Futur foods, new processes View project

Marcos algara siller View project

All content following this page was uploaded by N. Aguilar-Rivera on 03 February 2017.

The user has requested enhancement of the downloaded file. Sugar Tech (July-September 2012) 14(3):207–222 DOI 10.1007/s12355-012-0151-3

REVIEW ARTICLE

The Mexican Sugarcane Industry: Overview, Constraints, Current Status and Long-Term Trends

N. Aguilar-Rivera • D. A. Rodrı´guez L. • V. Enrı´quez R. • A. Castillo M. • A. Herrera S.

Received: 26 January 2012 / Accepted: 28 April 2012 / Published online: 3 July 2012 Ó Society for Sugar Research & Promotion 2012

Abstract Sugarcane (Saccharum species hybrid) as a impact, high demand from domestic market but low sugar- source and epicenter of the renewable energy, bio-fuels and cane productivity and capacity to supply sugar cane from bio-materials, as well as a food crop, is becoming more fields. The diversification without strategies of sugarcane widely recognized as a source of rural livelihoods. Sugar- growers and sugar factories for improving profitability and cane production in Mexico has more than 490 years of competitiveness for creating the grounds for a green and history; however, Mexican is recognized as sustainable biorefinery industry and to develop a modern uncompetitive in nature, mainly due to stagnating low sug- agro-industry to fill a national need in food and biofuels also arcane and yield and highly fiber in stalks per needs immediate attention. In this review, performance, hectare and variability in the production process. Average present and future relevant aspects of the sugar industry are yields of sugarcane (TCH) range from 60 to 70 metric tons/ presented and discussed. ha and sucrose yields (TSH) 8,000 kg/ha last decade. The sugarcane agriculture yield decline has been defined as ‘‘the Keywords Sugar industry development Á loss of productive capacity of sugarcane growing soils under Sugarcane productivity Á Constraints Á long term monoculture’’ and takes place in a highly dis- Competitiveness improvement Á Mexico tinctive landscape on both the Pacific and Gulf of Mexico coasts and in high mountain river valleys in central Mexico. The sugar mills are characterized by a dichotomy because The Mexican Sugar Industry: Structure vary greatly in size, age and technology with a preponder- and Background ance of medium and small mills, old, obsolete and inefficient technologies, which increases the cost of sugar production in Sugar (sucrose) is produced on an industrial scale in over Mexico compared to countries with advanced technology 133 countries worldwide with a tropical climate. In most and supporting system. Therefore, Mexico is considered as a years, over 70 % of world sugar production is consumed medium-to-low cost producer of sugar. These factors have domestically which allowed the development of a large adversely affected sugarcane growers and sugar industry, export market. Sugarcane and sugarbeet are two main and constantly eroding their sustainability and profitability. sources of white crystal sugar in the world. Out of world’s The sugar has assumed the status of ‘‘political goods’’ like total white crystal sugar production, about 79.8 % comes petroleum. The Mexican sugar industry is facing numerous from sugarcane and 20.2 % from sugarbeet. More than 100 challenges, like high crushing capacities and environmental countries in the world cultivate sugarcane (Saccharum species hybrids). It production is predicted to increase 13.4 % in 2020 worldwide. Mexico is the world’s seventh N. Aguilar-Rivera (&) Á D. A. Rodrı´guez L. Á V. Enrı´quez R. Á largest producer of sugar (3 % worldwide) and is fifth A. Castillo M. Á A. Herrera S. amongst sugar cane producing nations with a long tradition Facultad de Ciencias Biolo´gicas y Agropecuarias, of high per capita sugar consumption and the inherent Universidad Veracruzana, km 1 carretera Pen˜uela-Amatlan, 94945 Co´rdoba, Veracruz, Mexico weaknesses of a developing economy. The sugar industry e-mail: [email protected] forms an integral part of the rural economy and provides 123 208 Sugar Tech (July-September 2012) 14(3):207–222

Fig. 1 Mexican sugar exportation (INEGI 2011) high incomes for its farmers or canegrowers (can˜eros). world average per capita consumption (21 kg) with the Most of the sugar produced in Mexico is consumed largest demand coming from the beverages domestically which indicate the economic importance of industry (consumption in Mexico has grown to 150 L per sugar in the national diet. capita since 1980’s on the basis of the current trends and is However, Mexico’s production is predicted to increase expected to increase), food processing industry, chemical by 5.8 million metric tons in 2020 (10.6 %) to export 586 industry, cosmetic and pharmaceutical industry. The sugar thousand metric tons mainly to the United States under supply and utilization data from 2006 to 2010 were 5,462 NAFTA (the North American Free Trade Agreement), production, 394 net exports and 1,253 ending stocks (in Canada, Puerto Rico and others (Fig. 1). The sugar con- million metric tons). Under the North American Free Trade sumption is predicted to increase to 5.2 million metric tons Agreement (NAFTA), Mexico currently is allowed to in 2020 (4.7 %) as more sugar is used in processed prod- export excess sugar to the United States and Canada. Thus ucts under the assumption that Mexico does not convert to the viability of the industry don’t depends largely on the HFCS in their soft drink (carbonated drinks) industry. conditions and prices prevailing in the world market for Ending stocks are predicted to increase by 19.1 %. If sugar. Mexico replaces the sugar that is used in soft drinks with The Mexican sugar industry is largest agricultural HFCS, the excess sugar will likely be exported to the industry after corn (0.5 % of national GDP and 2.5 % of United States under NAFTA (Koo and Taylor 2011). manufacturing gross). Despite sugar’s importance and the At 2012, Mexico’s population of about 110 million uses support provided to the industry each year (8 % of the about 5.0 million (metric) tons of sugar per year (47 kg/per country’s agricultural subsidies), the Mexican sugar industry capita consumption in raw form), and this indicates the has stagnated, and sugarcane producers facing low incomes. medium standard of living and income, which was above Some analysts have identified market liberalization

123 Sugar Tech (July-September 2012) 14(3):207–222 209

Fig. 2 Productivity of sugarcane countries producers (FAOSTAT 2011) ua il (TSH) yield Sugar Sugarcaneyield (TCH)

Factoryyield(%) strategies in Mexico pursued as a cause of the crisis in the controlled by foreign business concerns, but the develop- sugar industry (Scaife 2010). ment of sugar, as an organized and modernized industry in However, the industry as a whole provide significant full the country, was started at the beginning of the twentieth and part time employment for more than 400,000 jobs, century with the land reform at the end of the Mexican including cane cutters, seasonal field workers, cane trans- Revolution created communal tracts of land called Ejidos port, factory workers and administrative, technical and for Mexico’s peasantry, as a strategic for the Mexican management personnel. Consequently, over 2.2 million government for sugar as commodity, and resulted in people depend on the Mexican sugar industry for a direct increased productivity in sugarcane crop fields, so it was job and indirectly employing more than 12 million people necessary to bring more expansion and growing land under in 227 municipalities most of them are the rural sugarcane cultivation, thus the sugar legislation started in communities. the beginning of 1940’s with Decretos can˜eros; this In this context, the first sugarcane plants (Castilla’s decrees governing the conditions of production and the variety) were brought to Mexico from Cuba Island in the establishment of the price of cane, and revised periodically early 16th century (1521) by Spanish settlers (Hernan because its contribution to the Mexican economy in terms Cortes). The first sugar mill was established in 1536 in San of labor and local consumption and significantly to the Andres Tuxtla Veracruz. Many major were set socioeconomic development of rural population due the out as they were in the Caribbean and Brazil. Mexico’s main occupation of the majority of the labour force is indigenous population provided a resident labor force, sugarcane farming. They were modified in 1944, 1971, augmented by the introduction of some slaves from Africa. 1974, 1980 and 1991. In 1949, an Agricultural Research The cultivation of sugarcane was encouraged and devel- Institute named Instituto para el Mejoramiento de la Pro- oped on a significant scale to making sugar and export to duccio´n de Azu´car (IMPA) was established with Research Europe because it proved to be the only crop suitable to Stations to address sugarcane agriculture and related local climatic, soil and topographic conditions, and it could problems as agronomy, entomology, and agricultural therefore be grown on a commercial basis as a sugar engineering but mainly focused on the improved breeding manufacturing factory and also providing much-needed for sugarcane Mex varieties. It was closed at 1990 and the calories to its population. activities of sugarcane research were transferred to the Mexican sugar industry has always been considered of Universities and Sugar groups without economic support public interest (socio-economic-political imperatives). and investments. Thus, the early sugar industry in Mexico was closely linked The post-World War II political economy was charac- to its colonial history and the regime changes mostly terized by oligopoly capitalism and heavy state support for

123 210 Sugar Tech (July-September 2012) 14(3):207–222

Fig. 3 Mexican sugarcane states producers

San Luis Potosí Tamaulipas

Sinaloa

Nayarit Veracruz Campeche Jalisco Tabasco

Colima Morelos Quintana Roo Michoacán Puebla

Chiapas Oaxaca

Fig. 4 Sugar mills and regional geographical distribution (Aguilar-Rivera et al. 2011) 123 SucroseYield(t/ha) 211 123 National Average SugarFEESA Mills Private Sugar Mills Tala Benito Juárez Benito San Pedro San Rafael Rafael Pucte San Sugar Mill Yield (%) Higth Productivity Low

Productivity uacnYed(t/ha) SugarcaneYield Supply capacities from sugarcane growing areas Region 1 The Mexican sugarcane ) Fig. 6 industry productivity by sugar mills (Aguilar-Rivera et al. 2011 Sugar Tech (July-September 2012) 14(3):207–222 Fig. 5 212 Sugar Tech (July-September 2012) 14(3):207–222

Fig. 7 Supply capacities from sugarcane growing areas Region 2

Mexico’s sugar industry. State control of the industry cli- researching which promoted a competitive transition in the maxed in the 1970s when the government nationalized, global market. builds and closed sugar mills1 and unionized mill workers However, there has always been a close relationship and can˜eros gained social benefits such as higher wages between its overall development and the land policies, and cane which maintained stringent production and mar- mostly through government support and control of payment keting controls. These benefits discontinued since 1975 by mill owner for cane, without the creation of a ‘home- onwards with reductions in levels of credits available for grown’ technology or technological advances to increase cane production, the removal of subsidized inputs, higher sustainable productivity and the efficient utilization of rates, and perennially low prices meant deteriorating con- sugarcane (lack the technical capacity), to ensure a fair ditions of production throughout the 1990s and 2000s. The living standard for the agricultural society. This way, the 1982 and 1994 debt crisis and the subsequent structural support failed and unsuccessful economic and social chan- adjustment, facilitated the dissolution of traditional insti- ges took place in Mexico for sugar industry, in the transition tutions for managing the agricultural economy and from a developing country to a developed country (1970–2000) and it led to disinterest of private sugar mills as 1 In 1950, there were 96 sugar mills in Me´xico in 16 states sugar cane was discussed earlier (Aguilar-Rivera et al. 2011; Enrı´quez producers (Sinaloa, Nayarit, Colima, Jalisco, Michoaca´n, Guerrero, 2009; Scaife 2010; Chollett 2009; Powell 2007; Singelmann Morelos, Puebla, Oaxaca, Chiapas, Campeche, Yucata´n, Tabasco, San 2003, 1996, 1995, 1981; Castillo Giro´n and Aguirre 2005; Luis Potosı´, Tamaulipas and Veracruz) located in 14 regions (Sinaloa, Nayarit, Jalisco, Colima, Michoaca´n, Balsas, Tehuaca´n, Papaloapan- Rappo 2002; Mestries 2000; Borell 1991). Istmo, Soconusco, Yucata´n, Tabasco, Veracruz-Central, Veracruz- Sugarcane is grown under a wide array of agro-climatic Costa and Huastecas) with a production of 1,122,943.6 t. sugar. In conditions extending from the tropics to sub tropics because 1960 there were only 75 sugar mills. 64 in 1970, 67 in 1980, 64 in of Mexican geographical location; sugarcane production is 1990, 61 in 2000 and 57 in 2012 located since 2005 in 6 new regions (Northwest, Pacific, Center, Northeast, Gulf of Mexico and affordable in comparison to USA and European . Southeast). However, sugarcane crop production in Mexico is a complex 123 Sugar Tech (July-September 2012) 14(3):207–222 213

Fig. 8 Supply capacities from sugarcane growing areas Region 3 process consisting of inter-dependent sub-processes like sustainable energy production but Mexico’s productivity in planting, varieties selection, irrigation, fertilization, cultural sugarcane fields is consistently low, with yields falling operation, crop protection, harvesting, etc., and requires (cane tonnage) in recent years with regions that are decision support at various stages for maximum production. unsuitable for sugarcane. This is because of underdevel- Actually, the crop experiences various types of biotic oped agricultural methods and rely on rain-fed agriculture and abiotic stress, and it’s highly vulnerable to diseases, which is extremely unpredictable and there are insufficient pest, weeds, water loss, storms and other unpredictable available cane for supply as per the mills’ capacities; this natural events as ENSO. Sugarcane has traditionally been also resulted in immature cane being crushed in some cultivated over a average 7-year cycle on 13 % plantilla mills, which is reflected in the poor mixed juice purities (year-old cane), 15 % soca (2 year old), and 72 % resoca and cane RVs (FIRA 2009). Thus, the sugarcane produc- (more than 2-year-old cane) or higher number of rations in tion in Mexico is linked to factors like climatic conditions, the fields of total acreage, which affect the profitably and soil conditions, water resources, human factors, economic determine the impact of cane growing practices on the conditions etc. which impacts on natural factors, the solu- environment, consequently the productivity in the pro- tion depends on many factors as different farming practices ducers regions is relatively low compared to others coun- (Aguilar-Rivera et al. 2010). tries (Fig. 2). Sugarcane fields cover up 770,000 hectares supplying raw material to 57 sugar mills, located in 15 states and 6 regions (Figs. 3, 4). Sugarcane represents 3 % of total Sugar Industry Structure Mexican crop area (3.3 %). The principal states of sugar cane production are: Veracruz (1.6 million metric tons) The national interest in sugarcane has increased signifi- with 270,000 hectares, Jalisco (0.5 million) in 63,000 ha cantly in recent years due to its economic impact on and San Luis Potosı´ (0.45 million) in 74,300 ha. Veracruz

123 214 Sugar Tech (July-September 2012) 14(3):207–222

Fig. 9 Supply capacities from sugarcane growing areas Region 4 is the leading state by far in terms of area of sugarcane sugar mills are: Pujiltic (La Fe), Atencingo, Melchor fields (36.7 %) followed by Jalisco (11.4 %), San Luis Ocampo, A. Lo´pez M. and Tamazula. San Cristobal, Potosı´ (10.3 %) others producers are: Oaxaca (5.6 %); Atencingo, Tres Valles, El Potrero and Tala are the largest Chiapas (5.5 %); Tamaulipas (4.6 %); Nayarit (4.3 %); sugar mills, which are having raw sugar industry and Puebla (3.7 %); Morelos (3.6 %); Quintana Roo (3.4 %); refinery. The rest are raw sugar or refined producers with Tabasco (3.1 %); Sinaloa (2.7 %); Colima (2.3 %); Mich- low level of product diversification using byproducts as oaca´n (2.1 %) and Campeche (0.9 %). filter mud, and and productive flexibility, Some Mexican sugar mills have increased efficiency without enhancing infrastructure facilities to further reduce since the 1990 s; however sugarcane crop fields are not costs. There is a debate about the future of at least five of sufficient to maintain mills capacities (Figs. 5, 6, 7, 8, 9, these units due their relatively low scale economy and high 10, 11). production costs (Enrı´quez 2009). It is interesting to note that sugar mills belonged to private sector in 13 private business groups with 76 % of national production, and the government (FEESA) or Sugarcane Crop Fields public administration accounts for the remaining 24 % (Tables 1, 2), being the largest individual group, thus with At sugarcane crop fields, the most important sugarcane economic power over national sugar prices (Acosta 2011). varieties are CP 72 2086, Mex 69 290, Mex 79 431, Mex According to Aguilar-Rivera et al. (2010) the last sugar 68P23, RD 7511, SP 70 1284 and Z Mex 5532 (Table 3); mill (Plan de San Luis) was built in 1984 and several mills insect pests in Mexico are the sugarcane borers Diatraea have an average age of 77 years and facing financial crisis saccharalis (Barrenador) (4.8 %), rata can˜era (Sigmodon which reduce strategy amplitudes. The most competitive hispidus) (2.9 %), Gusano cogollero (Spodoptera 123 Sugar Tech (July-September 2012) 14(3):207–222 215

Fig. 10 Supply capacities from sugarcane growing areas Region 5

frugiperda) (1.0 %) and Aeneolamia contigua Walker due to stagnating sugarcane yields and low sucrose content (Mosca Pinta) (10.1 % total sugar field) that had showed a in stalks (Scaife 2010). continued increase throughout the industry, with a known There are 165,000 cane growers averaging nearly 4 ha impact on yield an quality (Fig. 12). or less in area per canegrower (small-scale farmers) con- Mexico and the sugar sector offer a great potential for tributed 61 % of total sugarcane production in about employment and income generation; however, at harvests 133,763 farms with barriers in sugarcane planting, culti- season from late November to June () 2010/2011 yields vation, and harvest in a Land Tenure structure Ejidal or were forecast to average 65.570 (metric) tons per hectare and communal (74.5 %) and private (24.5 %) who supply cane 7,702 kg sucrose/ha, yields that low haven’t been seen since to the sugar mills and trapiches for or , only 1970s, despite the steady increase in area harvested (Fig. 13) a small percentage are larger than 10 ha. Sugarcane pro- that would be about 15 % lower than the prior years, due to duction value at 2010/2011 harvest season (zafra) was vulnerability to climate change, ENSO, unusually cool and $2,152 million USD and cane prices have shown a con- damp harvest conditions especially in Veracruz (largest siderable increase since the beginning of the past decade sugarcane producer state). This way, 62 % of the cane from $32.325 to $53.874 USD/t. cane; thereby in terms of growers produce under rainfed conditions; only 38 % are averages was nearly 66.7 % higher than in 2001, as a result irrigating their sugar cane fields as well as intensive culti- of a continuation of government policies that intervene in vation, thus, small farms produced sugarcane more slowly, sugar chain fuelled by growth in sugar consumption, rising and with poor quality which impact on the efficiency on incomes and populations trying to motivate productivity sugar mills. Despite high overall output, Mexico’s sugar despite the adverse effects of cost of transportation fuel, industry suffers low productivity and crop diversification fertilizer, agricultural labor and seed cane.

123 216 Sugar Tech (July-September 2012) 14(3):207–222

Fig. 11 Supply capacities from sugarcane growing areas Region 6

The educational level of farmers and workforce is low Nacional de Can˜eros (CNPR) (National Union of Sugar- and not adequate (71 % have only basic education 6 years). cane Growers). Sugarcane workers are belonged to two The 98.9 % of canegrowers are men with an average age of unions: Sindicato de Trabajadores de la Industria Azuca- 40 years. The seasonality of sugarcane production has a big rera y Similares de la Republica Mexicana (STIASRM) impact on its ability to create high quality jobs, because the (Association of Industry Sugar Workers of Mexico) and the work associated with sugarcane production and harvesting Confederacion Regional Obrero Mexicana (CROM) (the manually is highly seasonal, jobs tend to be temporary; Regional Confederation of Mexican Workers). The salaried this, in turn leads to high turnover, difficulty in training and employees in the milling industry are represented by the consequently low wages, besides the new climatic condi- Camara Nacional de las Industrias Azucarera (National tions and agronomic characteristics of the crop (old vari- Chamber of the Sugar and Alcohol Industry) (Buzanell eties) limit the harvesting season (zafra) to 6 months out of 2011). the year. As a result, while at the beginning of the 2000s The regulatory framework for the Mexican sugar the sugar producers received, on average, 4 % more sugar industry (public policies), in terms of rigidities and ineffi- from one harvested hectare than 2011 therefore, currently ciencies, without a enhanced capability for identification of this advantage has been reduced. developments, trends, risks and opportunities in the inter- Sugarcane growers are well organized, with the largest national market through better integration for the entire number of private land owners affiliated with the Union Research, Development, & Extension (RD&E) effort, Nacional de Productores de Can˜a (CNC), i.e., the National leadership and creativity/innovation for the sugar industry Union of Cane Producers. The ejidatarios or communal is established primarily by the Ley de Desarrollo Sustent- land cane growers are largely represented by the Union able de la Can˜a de Azu´car (2005) and El Programa

123 Sugar Tech (July-September 2012) 14(3):207–222 217

Table 1 Mexican sugar mills Table 2 State sugar mills (CNPR 2011) Sugar group Sugar mills Sugar group Sugar mills States Sugar mill

AGAZUCAR Los Mochis Grupo Central Campeche La Joya Puga Motzorongo Motzorongo Chiapas Pujiltic El Refugio Huixtla SAGARPA-FEESA Atencingo Grupo Porres Santa Clara Colima Queserı´a Jalisco Bellavista El Modelo Huixtla Jose´ Marı´a Morelos, Melchor Ocampo, Emiliano Grupo PIASA Adolfo Lo´pez San Francisco Ameca, Jose´ Marı´a Zapata Mateos Martı´nez Tala, Tamazula Plan de San Tres Valles Michoaca´n Pedernales Luis Grupo Sa´enz Aaro´nSa´enz La´zaro Ca´rdenas San Garza Santa Clara Miguelito El Mante Morelos Casasano La Abeja Jose´ Marı´a Tamazula Emiliano Zapata Morelos Nayarit El Molino Ingenios Alianza La Joya Santos Popular Puga Oaxaca Adolfo Lo´pez Mateos Casasano Plan de Ayala El Refugio El Potrero Bellavista La Margarita La Pedernales Providencia Puebla Atencingo Cuatotolapam Calı´pam San Cristo´bal San Gabriel San Luis Potosı´ Alianza Popular San Pedro Plan de Ayala Grupo Azucarero Tala Zucarmex Pujiltic Plan de San Luis Me´xico Benito Jua´rez Mahuixtla´n San Miguel del Naranjo La´zaro El Higo Quintana Roo San Rafael de Pucte´ Ca´rdenas Melchor Sinaloa El Dorado, Los Mochis, Eldorado Ocampo La Primavera Grupo Garcı´a Calı´pam Independientes Ingenio El Tabasco Azsuremex Tenosique Santa Rosalı´a Gonza´lez El Carmen Molino Benito Jua´rez Nuevo San Azsuremex Tamaulipas Aaro´nSa´enz Garza Francisco Ingenio La El Mante Xico Grupo La Margarita Central Concepcio´n Veracruz Independencia Progreso Ingenio La Cuatotolapam Zapoapita Primavera El Modelo La Margarita Ingenio San Jose´ de Abajo El Potrero La Providencia Independencia San Cristo´bal Servicios La Gloria Domino Foods San Nicola´s San Gabriel Azucareros del Me´xico Tro´pico San Miguelito San Pedro Beta San Miguel Constancia Zapoapita San Francisco Ameca Central Motzorongo San Miguel Naranjo Central Progreso San Rafael Pucte Constancia Queseria El Carmen Santa Rosalı´a de la Chontalpa El Higo La Concepcio´n La Gloria Nacional de la Agroindustria de la Can˜a de Azu´car Mahuixtla´n (PRONAC 2007/2012). The legislation seeks to provide a Nuevo San Francisco framework for the supply of sugarcane by farmers, in terms San Jose´ de Abajo of the quantity and price, to a mill and the vesting and San Nicola´s marketing of raw sugar on behalf of all farmers and millers Tres Valles Total 57 Sugar mills without a competitive environment. The legal issues linked

123 218 Sugar Tech (July-September 2012) 14(3):207–222

Table 3 Sugarcane varieties in Mexico (Flores 2008) pesticides herbicides and irrigation, fertiliser management, Varieties Area (ha) Varieties Area (ha) impact of sugar mills on air pollution and the impact of cane burning on air pollution are not considered. Coupled Mex 69-290 183,154.35 CP 72-2086 218,782.52 to this, is the fact that there is not a formal institute for Mex 79-431 59,044.84 RD 75-11 23,896.55 RD&E in sugarcane since 1990; the research is carried out Mex 68-P-23 35,015.36 SP 70-1284 12,946.16 marginally by some universities and sugar groups. Mex 57-473 26,988.02 Co 997 11,672.62 ZMex 55-32 10,659.41 My 5514 10,166.84 Mex 69-749 8,753.29 NCo 310 6,107.51 Challenges and Directions Mex 68-1345 8,341.74 L 6014 5,227.96 Mex 73-1240 6,256.57 CP 74-2005 4,793.50 Mexican sugar industry as an economically, environmen- ITV 92-1424 4,928.44 CP 44101 4,841.26 tally, and socially sustainable industry, with considerable Mex 80-1410 3,527.53 Q 96 3,103.17 capacity to expand sugar cane area on a large scale, along ITV 92-373 3,142.54 CP 70-1527 2,582.08 with the projected growth in ethanol production, it has the Mex 9662 1,195.28 CP 72-1210 2,349.88 potential to produce high-quality sugarcane (cane to sugar Mex 80-1407 1,127.38 SP 74-5203 1,215.40 ratios) in at least some regions (Jalisco, Morelos, Puebla Mex 80-1415 1,055.46 Q 68 602.5 and Chiapas) using appropriate technology and handling as Mex 80-1428 1,096.49 RB 73-9735 602.5 irrigation and high mechanization application (Brunini Mixtures 3,717.53 Mixtures 2,200.96 et al. 2010). It is concerning, though, that not all regions Others 19,317.02 Others 4,820.94 produce at internationally competitive levels (low level of Total 378,529.27 Total 315,913.16 productivity and profitability) while other regions continue Domestic 55.00 % Foreign 45.00 % to produce sugarcane when the quality of the cane is so poor (Campeche, Tabasco, San Luis Potosi). to the sugarcane cultivation as a monoculture, transport At present, variations in sugarcane production are the processes and sugar process (extremely harmful to the function of two factors, sugarcane crop area and produc- environment) as soil quality, water contamination by tivity. The growth in area and productivity (quantity and

Fig. 12 Impact on sugarcane productivity by producer state (SIAP 2010) 123 Sugar Tech (July-September 2012) 14(3):207–222 219

Fig. 13 Historical sugarcane area growth and yield (1937–2011)

Table 4 Productivity of Mexican sugar industry last decade (2000–2011) Zafra Total harvest Average cane Sucrose yield Total sugarcane Total sugar Total ethanol area (ha) yield (ton/ha) (t/ha) production (t) production (t) production (L)

2001/02 609,157 70.431 7,999 42,903,622 4,872,388 46,744,002 2002/03 600,792 73.150 8,202 43,948,244 4,927,574 39,244,028 2003/04 608,715 74.676 8,254 45,456,250 5,024,078 34,558,142 2004/05 657,145 77.445 8,821 50,892,642 5,796,439 59,326,646 2005/06 658,776 71.785 8,018 47,290,412 5,282,088 50,068,096 2006/07 675,416 72.586 7,868 49,025,604 5,314,081 38,865,959 2007/08 683,008 70.725 8,083 48,305,474 5,520,687 19,427,526 2008/09 663,057 64.122 7,484 42,516,838 4,962,495 14,504,473 2009/10 647,937 66.936 7,448 43,370,288 4,825,539 11,826,693 2010/11 673,050 65.570 7,702 44,131,570 5,183,500 19,342,517

Table 5 Sugarcane production cost (FIRA 2009) quality) during the last five decades has not been uniform or steady. It has been observed that there is considerable Activity/production regime Rainfed Irrigation year to year fluctuation because varied substantially $USD/ha % Cost $USD/ha % Cost declining yields and supplies during the last 10 years, Crop management 133.56 10.6 141.41 7.66 depending upon their agro-climatic conditions, nature of Fertilization 324.30 25.8 466.67 25.28 crop (plant or ratoon), variety grown, fertilizers, input use Irrigation 0 0 113.63 6.16 as diesel fuel, days of sunlight, rainfall received and extent Pest and weeds control 208.30 16.6 200.00 10.83 of irrigation available and production cost (Tables 4, 5). Harvest 425.93 33.9 718.74 38.93 This phenomenon has been highlighted by Aguilar-Rivera Others 164.81 13.1 205.78 11.15 et al. (2011, 2010) when focusing on the fact that industry Total 1256.89 100 1846.22 100 structure characteristics are partially endogenously. The forecast production is made up of over 3.4 million Sugarcane yield 57 t/ha 85.5 t/ha tons of standard or raw sugar (43 sugar mills), over 1.7 Sugarcane production cost $22.3 USD/t. $21.6 USD/t. sugarcane sugarcane million tons of refined sugar produced at integrated mills (14 sugar mills), and a smaller volume of traditional

123 220 Sugar Tech (July-September 2012) 14(3):207–222

Table 6 Productivity indicators from Mexican sugar industry (CNPR Table 6 continued 2011) Indicator/zafra 1999/2000 2010/2011 Diference Indicator/zafra 1999/2000 2010/2011 Diference Electricity consumption per 17.138 17.944 ?4.70 Area under sugarcane 611,297 673,050 ?10.10 ton of cane cultivation (ha) Number of sugar mills 59 54 -8.47 installed (2 sugar mills). The soft-drink industry absorbs Average duration of crushing 167 145 -13.17 one-third of the 55 % of sugar destined for industrial use in (Days) Mexico and 45 % is destined to domestic consumption. Average cane yield (t/ha) 68.872 65.570 -4.79 The industry uses bagasse, the fibrous waste material Sugar yield (t/ha) 7,682 7,702 ?0.26 remaining after the juice has been extracted from the sugar Sucrose % cane 13.531 14.100 ?4.21 cane, to provide process heat for the boilers and energy. In Fiber % cane 13.410 13.350 -0.45 addition, 1.6 Mt of molasses were produced, of which 0.05 Brix % clarified juice 16.220 16.803 ?3.59 Mt (3.6 %) were used to produce ethanol (currently there Bagasse % cane 29.640 29.093 -1.85 are only four integrated distilleries to sugar mills) with an Sugarcane production (t) 42,101,037 42,903,622 ?1.91 output of 19.3 ML. The establishment of additional dis- Sucrose loss (%) 2.41 2.32 -3.73 tilleries has increased competition in this segment of the Lost in bagasse (%) 0.727 0.687 -5.50 sugarcane and molasses market over recent years. While Lost in filter cake (%) 0.138 0.135 -2.17 most of the remaining molasses was exported, mainly to Lost in final molasses (%) 1.173 1.237 ?5.46 the USA, it could alternatively be used as an ethanol Undetermined losses (%) 0.249 0.329 ?32.13 feedstock that might yield up to 400 ML of biofuel (Garcı´a Extraction (sucrose based) 96.266 96.654 ?0.40 et al. 2011). The Mexican sugar industry had low pro- Sucrose recovery rate (%) 82.180 83.067 ?1.08 ductivity during the last decade (Table 6), and a large Imbibition % cane 25.55 25.75 ?0.78 number of sugar mills have diversified poverty into Sugar mill Yield (%) 11.36 11.75 ?3.43 byproduct based industries and did not invest and set up Total time loss (%) 26.32 15.05 -42.82 distilleries, organic chemical plants, pulp and paper and Cane mechanically harvested 8.601 17.464 ?103.05 cogeneration plants resulted in loss of revenue. (%) Mexico’s geographical location permits theoretically a Cane mechanically loaded 81.838 80.875 -1.18 good production of sugarcane, there is also the potential for (%) opportunity. However, Mexico’s sugarcane industry is a Sugarcane price ($/t) 22 56 ?154.55 contradiction and faces numerous serious challenges, Production of coproducts and by-products including: vulnerable plants, poor drainage of soils in some Sugar (t) 4,696,032 5,183,500 ?10.38 areas, winter frosts in some mountain areas, especially in Raw sugar (t) 2,861,781 3,429,727 ?19.85 the more north growing regions, limited and unreliable Refined Sugar (t) 1,822,892 1,708,422 -6.28 rainfall especially in periods of drought, are a major Muscovado Sugar (t) 11,359 45,351 ?299.25 problem, mainly in Veracruz and San Luis Potosi where Ethanol (L) 67,050,234 19,342,517 -71.15 irrigation systems are inadequate; level of production Ethanol per ton of molases 262.762 231.255 -11.99 inputs (fertilizers, pesticides, etc.), burning the cane fields Molasses (858 Brix Total) 1,630,087 1,664,417 ?2.11 prior to harvest as a common practice (90 % of the har- Filter Mud (Filter Cake) (t) 1,844,114 2,001,655 ?8.54 vested sugarcane); transport costs which contribute to the Bagasse (t) 12,478,668 12,839,017 ?2.89 high price of sugarcane in Mexico, small size of production Bagasse for derivatives (t) 479,846 39,328 -91.80 units which limits investment and improvements and low Cogeneration (KWH) 682,786,359 7 ?9.16 efficiency of older sugar mills. 45,307,133 At present when Mexican Government is emphasizing Steam generation (energy) (t) 27,552,833 24,146,457 -12.36 to stabilize the sugarcane productivity by improving its Steam (consumption per ton 0.654 0.547 -16.36 environmental performance; it is essential to raise the sugar of cane) yield per hectare for enhancing total production of cane and Petroleum (consumption per 14.830 2.320 -84.36 sugar and to respond effectively to the current global ton of cane) environment, developing a range of skills in the areas of Petroleum consumed in sugar 710,221,953 116,999,807 -83.53 technology, marketing, management, human resources, and mill (L) finance in order to raise productivity. It should must be External electricity (KWH) 38,758,930 46,573,441 ?20.16 known that how far productivity varies from state to state,

123 Sugar Tech (July-September 2012) 14(3):207–222 221 and factors responsible for such variations because of the It is necessary for sugar industry and business estab- natural conditions exploring the precision farming and lishments to mobilize more specific resources to explore satellite-based remote sensing and GIS in sugarcane pro- new approaches to use cane and sugar as raw material to duction on planning; implementation; and management to produce sugar based value-added products to improve refine farming system operations through the gathering of industry profitability in cleaner production. Diversification data on variable field characteristics and sugarcane yield in of products (transition from to sugarcane a multidisciplinary approach from the conceptual paradigm biorefinery agro-industrial value) which utilizes the entire of international competitiveness. crop for a variety of environmentally favorable outcomes chemicals from bagasse and molasses, and intercropping with high value plants for sugar mills and biorefineries; Conclusions diversity is the key factor in today’s highly integrated sugar milling operations and the mills produce a range of other Mexico’s sugarcane yields are beginning a long-term products such as energy, food, animal feed, manures, bio- decline threatening Mexico’s position as a top producer of fuels, ethyl alcohol and its derivatives. cane sugar in an economy dominated by market forces, the Process of consolidation, diversification, transition, critical features, variability and vulnerability that charac- expansion, economic challenges, greater competitiveness terizes the Mexican sugarcane production needs to increase and deregulation in Mexican sugar industry and the food the share of the contribution of industry in the GDP. Sugar industry, based in sugar, require new forms of proactive co- industry is one of the key industries which can contribute to ordination between canegrowers, farmer representations it and help in provide jobs for the growing unemployed (CNC and CNPR), government, industry, stakeholders and people as well as it can be an important step toward the their clients through the interaction of various determinants rural development transiting from manual to mechanical through combinations of competencies and resources with harvesting. Farms range in size from \4 ha to hundreds or the principle of ‘‘co-responsibility, most efficient, quality even thousands of ha by agroecological zoning. This will conscious, good knowledge of international business, greatly curtail the high rates of migration from rural to highly mechanized, economies of scale and diversification urban areas and USA and their associated problems. in the food-energy sector, degree of integration (vertical, Mexico’s land tenure system has a profound effect on its lateral, and horizontal). R&D innovation and specialized sugarcane production sector. The industry has production human resources, to increase the efficiency and profitability units that average about four hectares in size. This struc- of the supply chain adopting agricultural practices that tural condition inhibits the investment of modern technol- minimize off-farm impacts and ensure the sustainable and ogies and hinders improvements in efficiency and cost efficient use of soil and water resources; formulating pol- savings through economies of scale. icies and capabilities that will attract foreign direct Technology management process in sugarcane produc- investments, while simultaneously attacking the exporta- tion and sugar processing, as the most important ways to tion to USA, for a more fair competition in the world reach a high quality level in Industry, and production cost market of sugar also needs immediate attention. Mexican controlling is the key of technological processes adminis- sugarcane industry will take a new turn towards increasing tration, in resolving many problems related to production the ability and desire to compete, self sustainable and be and productivity. more successful in coming years. In view of the geographic position of the industry and the climatic conditions, development of productive sugarcane varieties is a key focus. A Sugarcane Research Institute and a References Sugarcane breeding and varietal improvement program with new advances in Biotechnology are necessary to improve Acosta, C.C. 2011. Valuation of a Mexican sugar mill and driving sugar crops varieties reducing cost of sugar production, value factors. Business Intelligence Journal 4(1): 91–106. improvement in biological nitrogen fixation, efficient and Aguilar-Rivera, N., G. Galindo M, C. Contreras S, and J. Fortanelli specialized cane husbandry practices for growing in less M. 2010. Competitiveness and productivity of Mexico’s sugar mills. Theoria 19(1): 7–30. favorable soils under drought conditions, healthy seed-cane Aguilar-Rivera, N., G. Galindo M, C. Contreras S, and J. Fortanelli production, green manuring, efficient planting and green M. 2011. Factores de competitividad de la agroindustria de la harvesting methods. The transfer of advanced agricultural can˜a de azu´car en Me´xico Revista Regio´ny.Sociedad technologies to the farmer through extension programs and a XXIII(52): 261–298. Borell, B. 1991. The Mexican sugar industry problems and prospects. national bio-energy strategy that will increase leading to http://www-wds.worldbank.org/external/default/WDSContent better living conditions, but also to become a bigger pro- Server/IW3P/IB/1991/02/01/000009265_3960930173743/ ducer of ethanol and sugar is also required. Rendered/PDF/multi_page.pdf. 123 222 Sugar Tech (July-September 2012) 14(3):207–222

Buzanell, P. 2011. Outline of size and structure of Mexico sugar sector. Ley de Desarrollo Sustentable de la Can˜a de Azu´car DOF 22-08- http://www.sugarpub.com/5/post/2010/5/sugar-in-mexico-an- 2005. http://www.diputados.gob.mx/LeyesBiblio/pdf/LDSCA. industry-overview-by-peter-buzzanell.html. pdf. Brunini, O.J.P. Carvalho, A.P.C. Brunini, A.L. Padua Junior, S.F. Mestries, B.F. 2000. Globalizacio´n, crisis azucarera y luchas can˜eras Adami, and P.L.G. Abramides. 2010. Agroclimatic zoning and en los an˜os noventa. Sociologı´a 15(4): 41–68. climatic risks for sugarcane in mexico: A preliminary study Powell, K. 2007. San Sebastia´n, the social and political effects on considering climate change scenarios. Proceedings of Interna- sugar mill closure in Mexico. Journal of Environmental and tional Society for Sugar Cane Technology 27:302–314. Occupational Health Policy 17(1–2): 41–52. Castillo Giro´n, V.M., and A.A. Aguirre J. 2005. La agenda del azu´car Programa Nacional de la Agroindustria de la Can˜a de Azu´car. mexicano 1990–2003: origen y causas de la crisis financiera. 2007/2012. Secretarı´a de Agricultura, Ganaderı´a, Desarrollo Carta Econo´mica Regional. 17(92): 25–40. Rural, Pesca y Alimentacio´n, 2007. Chollett, D.L. 2009. From sugar to blackberries: Restructuring agro- Rappo, S. 2002. ‘La expropiacio´n azucarera resuelve la crisis’ Nuevos export production in Michoaca´n, Mexico. Latin American y viejos conflictos Revista Aportes de la facultad de economı´a Perspectives 36: 79–92. BUAP 7(19): 107–132. CNPR Unio´n Nacional de Can˜eros, A.C-CNPR. 2011. Estadı´sticas Scaife, K. 2010. Inadequate institutions and inefficient outcomes in azucareras zafras 2000/2011 En: http://www.caneros.org.mx. Mexico’s sugar industry. Master of Arts in Law and Diplomacy Enrı´quez, P.M. 2009. Sugar cane in Mexico: The ancient alternative Thesis. The Fletcher School Tufs University 89 p. of the future http://www.sugarjournal.com/articles/active_subs/ Sistema de Informacio´n Agropecuaria. 2010. Padro´n De Productores 2009/May2009/SJ%20Sugar%20Cane%20in%20Mexico.pdf. De Can˜a De Azu´car (Zafra 2006–2007). Secretaria de Agricul- FAOSTAT. 2011. Estadı´sticas de produccio´n de azu´car. http://faostat. tura Pesca y Alimentacio´n SAGARPA. fao.org/site/567/DesktopDefault.aspx?PageID=567#ancor. Singelmann, P. 2003. La transformacio´n polı´tica de Me´xico y los FIRA. 2009. Competitividad de la Industria del Azu´car en Me´xico. gremios can˜eros del PRI. Revista Mexicana de Sociologı´a 65(1): FIRA Boletı´n Informativo 126 p. www.fira.gob.mx. 117–152. Flores, S.C. 2008. Planeacio´nestrate´gica para la agroindustria de la can˜a Singelmann, P.G. Otero. 1996. Peasants, Sugar and the Mexican de azu´car http://atamexico.com.mx/ponencias_atam2008/Miercoles State: From Social Guarantees to Neoliberalism. Mexican Sugar %2010%20en%20el%20Ulua%203/2.-%20Agricultura%20Ca(n) Cane Growers: Economic Restructuring and Political Options. era.pdf. Compilado por Peter Singelmann. Transformation of Rural Garcı´a, C.A., A. Fuentes, A. Hennecke, E. Riegelhaupt, F. Manzini, Mexico, nu´m. 7. San Diego: University of California-Center for and O. Masera. 2011. Life-cycle greenhouse gas emissions and US-Mexican Studies, pp. 7–22. energy balances of sugarcane ethanol production in Mexico. Singelmann, P. 1995. Mexican Sugarcane Growers: Economic Restruc- Applied Energy 88(6): 2088–2097. turing and Political Options 88 p. http://www.escholarship. INEGI, 2011. Anuario estadı´stico de comercio exterior de los Estados org/uc/item/9w66h4fk. Unidos Mexicanos http://www.inegi.org.mx/prod_serv/ Singelmann, P. 1981. The sugar industry in post-revolutionary contenidos/espanol/bvinegi/productos/continuas/economicas/ Mexico: State intervention and private capital. Latin American exterior/2010/EXP_DOL_2010/ANU_XD_1.pdf. Research Review 27(1): 61–88. Koo, W.W., and R.D. Taylor. 2011. Outlook of the US and World Sugar Markets, 2010–2020. Agribusiness and Applied Econom- ics 679: 35.

123

View publication stats