Insight Focus
- A second straight year of the la Niña Phenomenon has caused rain to increase in the region.
- First consecutive La Niña years in over 10 years.
- Sugar production and exports have decreased in Colombia, raising domestic prices by 50%
Colombia is the 4th largest sugar producer in Latin America. Colombia produced around 2.09 m tonnes of sugar in 2022.
Of this total amount, 1.4 m tonnes of sugar goes for domestic consumption, while approximately 640 k tonnes of sugar are exported. Colombia also imported around 200 k tonnes of sugar in 2022.
However last year’s Colombian sugar production and export figures were lower than expected due to the second consecutive La Niña phenomenon.
La Niña Phenomenon
In 2022, Colombia went through a second straight La Niña year. La Niña occurs when the ocean temperature cools down in the eastern and central parts of the Pacific Ocean. La Niña affects each geographic region differently. It may bring extreme rain or drought to certain countries. In Colombia’s case, La Niña brings excessive rain. In 2021 and 2022 (both La Niña years), Colombia’s precipitation was higher than in previous years.
The excessive rain that La Niña brings to Colombia has been disastrous to its sugar industry. As mentioned, Colombia’s sugar production and exports have decreased due to La Niña’s rainfall.
To make matters worse, the Colombian sugar industry has a year-round harvest. The excessive rain that La Niña brings doesn’t allow farmers to harvest the cane. The La Niña rain has also caused extreme flooding in the region damaging crop. According to the Colombian National Disaster Risk Management United (UNGRD), crop damage was reported in over 864 municipalities and 32 departments.
Cane fields flooded in the Colombian sugar producing region of Valle del Cauca.
Economic Consequences
The shortage of sugar production in 2021 and 2022 have caused domestic prices to skyrocket in Colombia. Between 2018 and 2020, domestic Colombian sugar prices hovered between 500 to 600 USD/mt. Then in October 2020, the prices started to rise. Prices reached a ten-year high at 1100 USD/mt in August of 2022. The current sugar price in Colombia is around 990 USD/mt, a 50% jump from 2020. The high domestic sugar prices have contributed to the high inflation in Colombia. Colombia 12-month inflation in December was at 13.12% while food inflation reached 27%.
What Could Happen Next?
Many meteorologists predicted that La Niña reached its peak in 2022 and that ocean temperatures should rise. Before La Niña officially dwindles down and we transition into an El Niño season, La Niña will most likely continue in the first few months of 2023. When the El Niño season come, it will most likely bring a reduction of rain to Colombia and could increase sugar production and alleviate domestic prices.
