OUTLOOK FOR SUGAR CONSUMPTION IN ASIA. Y i-ting, W ong Taiwan Sugar Corporation. Chairman, Ladies and Gentlemen:

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1 OUTLOOK FOR SUGAR CONSUMPTON N ASA Chairman, Ladies and Gentlemen: Y i-ting, W ong Taiwan Sugar Corporation am grateful to have this opportunity to discuss with you a topic that is of major importance to Taisugar and the sugar industry in general - the current trends of sugar production and consumption. will discuss the topic from several perspectives: World sugar consumption The growth in world sugar consumption has been declining steadily since the early 1970s. The global growth rate was 5.2% in the 1950s, in the 1960s, 2.2% in the 1970s and 2.0% in the first half of the 1980s. t is estimated that world consumption will reach metric tons (m.t.) (raw value). That is roughly mat. more than the global production of m.t., a 1.12% growth. This is the slowest growth in sugar consumption since the 1950s. Per capita sugar consumption, interestingly, reflects geographical and cultural differences. While the world average is 20 kg per year, Oceanians consume 43 kg, Europeans and South Americans consume 41 kg, North Americans 35 kg, Africans 15 kg and Asians only 10 kg. Sugar consumption in Asia n recent decades, the Asian nations have recorded a higher growth in sugar consumption than the world average (See Table ). The growth began to show signs of slowing down in During this period, total consumption came to a near standstill. The average growth rate for the first half of the 1980s was 5.9%. Taisugar estimates that sugar consumption in Asia will reach m.t. in , accounting for 31% of world sugar consumption. There are seven Asian nations which have consumed more than one million metric tons of sugar a year since : ndia, Mainland China, Japan, ndonesia, Pakistan, ran and the Philippines. t is estimated that ndia will consume m.t. of sugar in , making it the largest sugar consuming nation in Asia. ts share of Asia's total sugar consumption is 29%. n the last few years,\lndia has shown an average 10.59% annual increase in sugar consumption. Asia's second largest sugar consuming area is Mainland China. t consumed m.t. last year, of Asia's sugar consumption. Consumption in Mainland China has risen by 2 M m.t. in the last five years, a 7.93% annual growth rate. 1080

2 Mainland China 2,500 3,340 4,300 5,100 5,600 5,660 6,060 6, Japan 1,554 3,010 2,783 2,837 2,890 2,694 2,886 2, ndonesia ,911 1,890 1,973 2,051 2,018 2, Pakistan ,006 1,110 1,270 1,410 1, ran ,343 1,237 1,358 1,426 1,324 1, Japan is also a large sugar consuming nation. n the early 1980s, however, sugar consumption decreased with the introduction of high fructose corn syrup on the Japanese market. But the sugar market has shown signs of stabilizing in recent years due to a drop in raw sugar prices and the saturation of the high fructose corn syrup. Japanese agricultural authorities say domestic sugar consumption will be m.t. They also estimate that the consumption of high fructose corn syrup will be m.t. or 20% of the total sweetener market. High fructose corn syrup is not widely used in Asian nations other than Japan. t therefore has no significant effect on sugar consumption in Asia in general. Taking a look at Asia's per capita sugar consumption, we can see that every Asian on the average consumes 10 kg of sugar a year, (See Table 11). This is only half the world average, but the rate of growth in Asian per capita sugar consumption is double the world average; per capita sugar consumption in Asia has grown 4.51 % so far this decade. On a nation by nation basis, per capita consumption is lowest in Mainland China, at 5.8 kg a year and ndia is second lowest at 11.5 kg. The Asian nation

3 with the highest per capita sugar consumption is ran, at 29.4 kg a year followed by Taiwan at 25 kg and Japan at 23.9 kg. Asians as a whole are expected to continue consuming more and more sugar. The area, thus, represents a major growth market for the sugar industry. The size of the future sugar market will be affected by a number of factors: for example, the population growth, world oil price and levels of foreign exchange reserves. t is reasonable to estimate that toward the end of the decade growth will slow down to a little under 5070, still 3% higher than the world average. TABLE. Per capita annual sugar consumption in Asia, k popuiaaverage tion Year growth(millions) rate per capita annual consumption annual growth rate (%) ndia i2.2 Marnland China Japan ndonesia Pakistan the Philippines Sugar consumption in Taiwan Sugar consumption grew steadily in Taiwan in the 1960s and 1970s (See Table 111). The growth rate averaged 4.34% in the 1960s and 4.74% in the 1970s. Consumption began to decrease dramatically in the early 1980s. As in Japan, the introduction of high fructose corn syrup here in 1984 had a major impact on the sugar market. Growth in consumption continues to inch toward zero. n 1985, the average Taiwan citizen consumed 25 kg of sugar.

4 TABLE ll. Sugar consumption in Year , average TAWAN Annual per cap. consumption (kg) Annual growth rate % Total sugar consumption 112, , , , , , , ,313 m.t. Annual growth rate (YO) ASA Annual per cap consumption kg WORLD Annual Per cap consumption kg n the 1960s and 1970s, although per capita sugar consumption in Taiwan was double the Asian rate, it was still lower than the world average. But, in the first half of the 1980s, Taiwan's per capita sugar~consumption exceeded the world average, growing to 2.5 times the Asian average. n 1985, Taiwan's total sugar consumption was m.t.. There are several factors which affect the size of Taiwan's sugar market: (A) Population growth The population of Taiwan in 1985 was The growth rate was 1.4% (See Fig. 1); but the birth rate has begun to decline and is expected to continue declining. At the same time, however, the population as a whole is becoming older, while the death rate is not likely to decline dramatically. t is estimated that by the year 2000, population growth will have decreased to 0.9% per year and the size of the population will be about (B) Purchasing power Purchasing power, which is determined by per capita income, has risen considerably in Taiwan since the 1960s (See Table V). The growth has slowed

5 somewhat since the beginning of the 1980s but in the long run. it will continue to grow at the rate of 7% annually. - l~lillion FGURE 1. Population trends in Taiwan QGQ - mnn\ \ VVV - GVVV, year TABLE V. Per capita income in Taiwan, US $ Year (esti- average mate) growth rate Per capita income Annual growth rate (%) , (C) The competition from other sweeteners The final factor is an impact on domestic sugar consumption. Sugar has three main competitors here: high fructose corn syrup, maltose and artificial sweeteners. High fructose corn syrup was introduced on the Taiwan market early in 1984 and immediately captured a portion of the market. Currently, the annual production

6 1085 of corn syrup is m.t.. t is estimated that high fructose corn syrup will gradually 10% of the sugar market within the next 10 years. Taiwan has the capacity to produce m.t. of maltose annually but facilities are under-utilized, demand is relatively low and only m.t. of maltose are produced. This satisfies domestic demand. The Taiwan Sugar Company produces m.t. every year, taking up 10% of the maltose market. As for artificial sweeteners, Taiwan imports aspartame, saccharine and other sweeteners. The market for artificial sweeteners has grown tremendously in the past decade. Since the beginning of the 1980s, the use of sweeteners has grown at a steady pace of 20% a year. Taiwan will import an estimated m.t. of artificial sweeteners in The demand is expected to rise to m.t. a year within the next 10 years. Changes in dietary habit Table V shows that the average Taiwan citizen consumes calories a day, made up as follows: protein - Per capita protein intake has increased remarkably in Taiwan since the 1950s. As expected growth in the rate of consumption has slowed down in recent This can be attributed to a decrease in consumption of rice and other grains. TABLE V. Analysis of food intake of Taiwan vegetable, g , Carbonhydrate,g

7 1085 of corn syrup is m.t.. t is estimated that high fructose corn syrup will gradual- 1 ly replace 10% of the sugar market within the next 10 years. Taiwan has the capacity to produce m.t. of maltose annually but facilities are under-utilized, demand is relatively low and only m.t. of maltose are produced. This satisfies domestic demand. The Taiwan Sugar Company produces m.t. every year, taking up logo of the maltose market. As for artificial sweeteners, Taiwan imports aspartame, saccharine and other sweeteners. The market for artificial sweeteners has grown tremendously in the past decade. Since the beginning of the 1980s, the use of sweeteners has grown at a steady pace of 20% a year. Taiwan will import an estimated m.t. of artificial sweeteners in The demand is expected to rise to m.t. a year within the next 10 years. Changes in dietary habit Table V shows that the average Taiwan citizen consumes calories a day, made up as follows: Protein - Per capita protein intake has increased remarkably in Taiwan since the 1950s. As expected growth in the rate of consumption has slowed down in recent years. Per capita vegetable protein intake has been steadily on a decline since the 1970s. This can be attributed to a decrease in consumption of rice and other grains. TABLE V. Analysis of food intake of Taiwan Calories Annual growth J rate % PROTENE vegetable,g , animal, g total, g Annual growth 1 rate % Annual growth rate % Annual growth rate %

8 Meanwhile, per capita animal protein intake has grown steadily since n 1985, per capita protein intake per day in Taiwan was 80 grams. Fat - Per capita fat intake in Taiwan has been on the rise since the 1950s. Per person fat intake per day in 1984 was 107 grams. Because of the continuing increase in the intake of meat and milk products, per capita fat intake should continue to grow. Carbohydrates - The increase in carbohydrate intqke, which includes sugar, was slight in the 1950s and 1960s. And since the 1970s, growth has decreased. Per capita carbohydrate intake in 1984 was 368 grams. The figure is expected to continue declining.' Long;term sugar consumption trend in Taiwan As we have seen, sugar consumption is determined by many factors: population size, sugar prices, purchasing power, dietary habits, tastes, climate and competition from other sweeteners. The most significant of these factors are population, price and purchasing power. Of the last 15 years, we think that sugar consumption in Taiwan will reach metric tons ( m.t. of raw sugar) by Approximately 10% of this amount, however, is likely to be replaced by high fructose corn syrup and artificial sweeteners. Translated to per capita terms, within 10 years, the average Taiwan resident will be consuming 26 kg of sugar annually and 3 kg of high fructose corn syrup and artificial sweeteners. CONCLUSON n conclusion, whereas per capita consumption of sugar in many industrialized nation has decreased in the last decade, it is still on the rise in all the nations of Asia except Japan. And, Taiwan, whose market is fashioned closely after Japan's, is also likely to see a saturated sugar market in not too many years to come. Unless sugar price rises abruptly and starch price continues to be pressed, the consumption of sugar replacements, including high fructose corn syrup, will remain at present level in both quantity and variety. Thank you.

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