Sugar prices are rising worldwide after bad weather tied to El Nino damaged crops in Asia

Skyrocketing sugar prices left Ishaq Abdulraheem with few choices. Increasing the cost of bread would mean declining sales, so the Nigerian baker decided to cut his production by half.

For scores of other bakers struggling to stay afloat while enduring higher costs for fuel and flour, the stratospheric sugar prices proved to be the last straw, and they closed for good.

Sugar is needed to make bread, which is a staple for Nigeria’s 210 million people, and for many who are struggling to put food on the table, it offers a cheap source of calories. Surging sugar prices – an increase of 55 per cent in two months – means fewer bakers and less bread.

“It is a very serious situation,” Abdulraheem said.

Sugar worldwide is trading at the highest prices since 2011, mainly due to lower global supplies after unusually dry weather damaged harvests in India and Thailand, the world’s second- and third-largest exporters.

This is just the latest hit for developing nations already coping with shortages in staples like rice and bans on food trade that have added to food inflation. All of it contributes to food insecurity because of the combined effects of the naturally occurring climate phenomenon El Nino, the war in Ukraine and weaker currencies. Wealthier Western nations can absorb the higher costs, but poorer nations are struggling.

The United Nations Food and Agriculture Organization is predicting a 2 per cent decline in global sugar production in the 2023-24 season, compared with the previous year, translating to a loss of about 3.5 million metric tonnes said Fabio Palmeri, an FAO global commodities market researcher. Increasingly, sugar is being used for biofuels like ethanol, so global reserves of sugar are at their lowest since 2009.

Brazil is the biggest sugar exporter, but its harvest will only help plug gaps later in 2024. Until then, import-dependent countries – like most of those in sub-Saharan Africa – remain vulnerable.

Nigeria, for instance, buys 98 per cent of its raw sugar from other countries. In 2021, it banned imports of refined sugar that ran counter to a plan to build up domestic sugar processing and announced a US$73-million project to expand sugar infrastructure. But those are longer-term strategies. Abuja traders like Abba Usman are facing problems now.