* See, for example, C.Fan, Determination of Sugar Supply Functions in Taiwan, unpublished Ph.D. Thesis, University of Hawaii, 1967. ** Saburi Ebi, 'Sugar Industry in Java and Formosa - A Comparative
Study', (Econ. Coop. Admin., Mission to China, Tokyo, 1947, mimeo). J.E.Metcalf, The Agricultural Economy of Indonesia , U.S. Dept. Agric., Agricultural Monograph 15, 1952.
" O.H,Grist, R.ic£, London, 1953.
"" F.O.Licht's Sugar Information Service, Ratzeburg, 1962. """ For example, the Second World War saw cotton and local food
crops almost completely replace sugar cane production in the Philippines, Indonesia, and Formosa, the cultivation of local foodstuffs, manioc and sweet potatoes in Mauritius, peanuts and rice in Cuba, corn, wheat, and rice in India, all at the expense of cane.
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Supply Conditions
The share of sugar beat in the total output of sugar has varied between 38% and 44% in the postwar period, while actual output of beet
sugar has increased from 13.37 million metric tons per annum in the $ early 1950s to 29*92 million metric tons in 1974 (compared with a
world output of 33*57 million metric tons in 1951 and 78,70 million metric tons in 1974)' \ The importance of sugar beet increased signif icantly in the nineteenth century, Britain operated a policy of duty free import of sugar from 1874 to 1901, which led to the complete
disintegration of the Jamaican sugar cane plantations,' * but simul- ’4 taneously opened the key British market to sugar beet from European
producers. Largely with the help of subsidization from various govern ments, the share of beet in world sugar production reached 15% in 1850 and 65% by 1900, ^ Although boat sugar was grown with a view to satisfying domestic demand, by 1914 beet supplied nearly 25% of total
(’* )
world exports of sugar « Since Britain had no domestic production of beet before the First World War, she had to rely on th&? Continent for a major part of her imports®
The dominant role of beet was soon challenged, however, even before the European beet sugar economy was ravaged by the First World War.
# Sugar statistics are reported in a number of different .units, such
as English short tons of 2,000 pounds, metric tons of 2,204.6 pounds, t English long tons of 2,240 pounds, and Spanish long tons of 2,271.6
pounds. Conventionally, international data are converted into metric tons.
P.O.Curtin, 'The British Sugar Duties and West Indian Prosperity', Journal of Economic History, Spring 1954*
H.C.Prinsen Geerligs, The World's Sugar Cane Industry, Past and Present, Manchester, 1912.
Lois B.Bacon and F.C.Schloemer, World Trade in Agricultural products; Its Growth., _ Its Crisis., _and_the New Trade Policies^. Internat M Inst, of
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Subsidization of beet sugar exports turned out to bo very expensive to the public treasuries in Germany, Austria-Hungary, and Russia. By imposing an embargo on imports of subsidized sugar, Britain opened the way for the Brussels Sugar Convention of 1902, which largely removed the artificial competition faced by tropical sources of supply More over, many cane-producing regions began to use improved factory equipment before 1900, especially Louisiana, Hawaii, Java and Cuba. Indeed, Cuban production of cane exceeded one million tons by the early 1890s, while heavy export of American capital to ex-Spanish territories (Cuba, Puerto Rico, and the Philippines) led to significant improvements in cane
processing. The result was that by 1913 the world was again producing more sugar from cane than from beets.
The Interwar Period
While the First World War severely disrupted the European beet economy, the years of economic disorganisation that followed the war saw an even more dramatic fall in production. Total European production of sugar was only 2.6 million tons in 1919/20 compared with total pro duction of 8.3 million metric tons in 1913/14. Not until 1928/29 did European production exceed its prewar level. During this period, two factors combined to enable such cane areas as Cuba, Java, and the Dominican Republic to make use of modernised milling facilities in pro duction for exports the rising levels of consumption in the United States and Japan, and the deficiency in European production.
Cane producers' exports to Europe, however, were soon threatened. Great Britain joined the ranks of beet producers by imposing a direct subsidy on home-grown beets effective October 1, 1924. The Great Depression gave rise to intensified protection of beet sugar, which implied further marketing problems for exporting countries. However, production of cane sugar expanded rapidly also under the umbrella of protection, in other parts of the world. In some cases, higher output was directed almost exclusively at the domestic market and had little impact on international trade in sugar (for example, Argentina, Brazil and Mexico). But the effect of the increase in Indian production of white sugar (under various protectionist policies introduced in 1930 and 1931) was a direct displacement of imports from Java. Production of cane sugar in Java was again adversely affected when Japan success fully established Formosa as a base of sugar self-sufficiency by the early 1930s. The implications for Java's industry were very serious: market losses in India and Japan coincided with significant improvements in agricultural productivity, involving new varieties of cane capable of very high yields.
Agricultural policy in the major importing countries, i.e. the United States and the United Kingdom, was designed to reconcile a number of conflicting interests: domestic beet producers, metropolitan cane refiners, offshore cano producers and overseas suppliers, as well as the consumer and the public treasury. A brief analysis of these two key markets would be useful at this stage.
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Britain operated a policy of free trade in sugar from 1874 to 1901j and imposed a light revenue tariff after that date; however, the substantial tariff imposed during tho first World War was continued after 1918 for both revenue and protectionist reasons* In 1919, a system of imperial preferences was introduced, and a domestic beet subsidy was started in 1924, The result was that domestic production of beet sugar exceeded half a million tons by 1934/35, The pattern of Britain's sugar trade was also undergoing changes Before the First World War, 80% of total sugar imports was beet, but by 1930, 92% of total imports was from sugar cano sources. The effect on domestic consumption was that by 1937, 60% of total consumption was Empire-grown (compared with only 4% in 1913 and 24% in the middle 1920s), The main beneficiaries from this change in the pattern of supplies were (apart from subsidised beet producers in Britain) Australia and South Africa, and tho colonial cane-producing territories (mainly the British West Indies, and Mauritius)» The
total sugar output of the Empire in 1937 (excluding India) was four to five times larger than the output in 1913, Another important change related to the nature of the imported sugar; imports of boot sugar had typically been in refined form, but the tariff schedule in 1928 ’ was designed so as to promote imports of raw sugar and dis courage refined imports. While this revised tariff system boosted the re-export business of British cane-sugar refiners, it also meant an end to Czech sugar-beet exports to Britain.
The main principle underlying American sugar policy was an emphasis on protecting domestic supply and maintaining the American
.20.
domestic market as a preferential market for certain off-shore and overseas cane exporters. The interwar period witnessed a rapid growth of insular cane sugar production (in Hawaii, Puerto Rico, and the Philippines), the rise of a domestic beet sugar industry
(to a level exceeded only by prewar Germany and the USSR), the
expansion of cane production in Florida, and the recovery (from the effects of cane disease) of production in Louisiana, The main instrument of American sugar policy had remained the tariff until 1934; this provided the basis for slow growth in Hawaii and domestic beet production. But it was Puerto Rico and the Philippines which benefited most as a result of tariff increases in the United States in 1921 and 1922. The offshore producers gained again from the high Smoot-Hawley tariff introduced in 1930, by displacing about one million tons of Cuban sugar and threatening mainland sugar producers at the same time*
The present instabilities on the world sugar market can be traced back directly to the policies adopted by these two main importers in the interwar period. The immediate combined effect of the sugar policies of the United States and the United Kingdom (which together accounted for about 50% of total sugar imports during this period) was
to "place exporters to nonpreferential markets in an increasingly precarious# position", ^ Cuba and Java were the main exporters to be adversely
affected. Total Cuban exports reached nearly 5 million tons in 1925, compared with approximately 2.5 million tons in 1913, but progressive displacement from the key American market reduced exports to below 2 million tons by the early 1930s. Since Java lacked both a preferential market abroad and a significant domestic outlet, it was even more
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adversely affected by the 'imperialization' of world sugar trade. She was compelled to reduce production from 3 million tons in 1830/31
to just over half a million tons in 1935/36, During this period of :J the setting up of preferential bilateral agreements regarding trade
in sugar, only the less important exporters, such as Peru and the Dominican Republic, were able to maintain reasonably stable levels of exports.
Post-war developments in the world sugar economy
The sugar policies embarked upon by the major importing countries in the interwar period set the tone for the post-war developments in world sugar trade* Preferential markets absorbed on average about 50% of total sugar exports, with the remaining exports disposed of on the 'residual' world free market. Tho main bilateral arrangements have been the United States Import Quota System (1934 to 1974), the Commonwealth Sugar Agreement (195# to 1974), the Cuban-Russian-Chinese agreement (1962 onwards), and minor arrangements covering supplies of sugar from French overseas territories to Francs, ex-Dutch territories to the Netherlands, and ex-Portuguese territories to Portugal* The significant factor to emerge in the post-war period is that while production and consumption increased by nearly 150% between 1950 and 1975, the share of world trade has been steadily falling. While the basic structure of trad© still remains unchanged (cane surplus areas
in developing countries exporting to deficit countries in North