Implications of WHO Recommendation on Sugar

ProducersDonald MitchellDonald Mitchell

Lead EconomistLead Economist

The World BankThe World Bank

WHO Dietary Recommendation on Sugar Reduce added sugar of all types to 10 Reduce added sugar of all types to 10

percent of total energy consumptionpercent of total energy consumption Sugar is defined as all mono- and Sugar is defined as all mono- and

disaccharides added to foods plus sugar disaccharides added to foods plus sugar naturally occurring in honey, syrups and naturally occurring in honey, syrups and fruit juicesfruit juices

Based on Irz and LMC studies

Global sugar consumption would decline Global sugar consumption would decline about 20 million tons (16%), with largest about 20 million tons (16%), with largest adjustment in US and some developing adjustment in US and some developing countriescountries

Trade would decline by about 6-10 millionTrade would decline by about 6-10 million

Major Uncertainties

Extent and timing of adjustment in Extent and timing of adjustment in consumptionconsumption

Substitution possibilitiesSubstitution possibilities Interaction of policy commitments and Interaction of policy commitments and

consumption adjustmentsconsumption adjustments Policy responses Policy responses

Impact of WHO Recommendation Will consumers adjust to WHO Will consumers adjust to WHO

recommendations?recommendations? Relevant comparison may be tobaccoRelevant comparison may be tobacco Which has had health warnings for about 40 Which has had health warnings for about 40

years and is starting to see changesyears and is starting to see changes

Substitution Possibilities-larger than studies suggest? Non-caloric sweeteners in soft drinks Non-caloric sweeteners in soft drinks

could replace sugar and HFCScould replace sugar and HFCS

Saccharin – still used in 100 Saccharin – still used in 100 countriescountries

Aspartame – used in USAspartame – used in US HFCS may be big loser if consumers HFCS may be big loser if consumers

adjust total sugar intakeadjust total sugar intake

…other substitution possibilities

Sucralose made from sugar could replace Sucralose made from sugar could replace sugar in baking and pastriessugar in baking and pastries

Approved for use US in 1998Approved for use US in 1998

Most of properties of sugar but chemically Most of properties of sugar but chemically altered to prevent absorptionaltered to prevent absorption

No change in sugar consumptionNo change in sugar consumption

Policy Constraints

US cannot reduce imports because of US cannot reduce imports because of agreement with quota holders made in 1990agreement with quota holders made in 1990

All adjustment to consumption would come All adjustment to consumption would come from US producersfrom US producers

EU has ACP quotas which cannot be EU has ACP quotas which cannot be reduced and EBA commitments which reduced and EBA commitments which could not easily be reducedcould not easily be reduced

Policy Response

Adds to other pressures for reform during Adds to other pressures for reform during Doha Round trade negotiationsDoha Round trade negotiations

Weakens support for sugar production in Weakens support for sugar production in EU and US as happened with tobaccoEU and US as happened with tobacco

Possible Outcome

Reduced production in EU and US and Reduced production in EU and US and hasten reforms of current sugar programshasten reforms of current sugar programs

Substitution of non-caloric sweetenersSubstitution of non-caloric sweeteners Slower growth of consumption in Slower growth of consumption in

Developed Countries and possibly some Developed Countries and possibly some Developing CountriesDeveloping Countries

Sugar Producers Diversify

Importance of increased export market Importance of increased export market opportunities through agricultural opportunities through agricultural liberalization in Doha Roundliberalization in Doha Round

Sugar is among the most distorted Sugar is among the most distorted commodity markets with high protection in commodity markets with high protection in EU, Japan and US which limit imports.EU, Japan and US which limit imports.

Trade reform would increase exports of Trade reform would increase exports of developing countries including sugardeveloping countries including sugar