INVENTORIES IN THE SUGAR MARKET IN MEXICO

Abstract

Objective: The objective was determining the minimum inventory that guarantees the supply of domestic consumption and sugar exports in México. The hypothesis establishes that an optimal inventory would mean lower storage costs and will increase the income of the sugar producer.

Methodology. To achieve the objective a spatial and temporal equilibrium model was formulated and applied to the sugar market in the consumption cycle 2015.

Results. With an average monthly inventory of 831 thousand t of sugar the sugar’s industry maintains high inventories of sweetener for most months of the year. The previous inventory level could decrease to 416 thousand tons, as this level guarantee the supply of domestic demand and exports in the analysis year

Implications: A policy that keeps sugar inventories to lowest level allows diminish the storage costs by 594 million pesos and to increase the producer income by 635 million pesos.

Conclusions: Because of the positive effects on the income producer, it is recommended that the sugar industry promotes a policy to establish a minimum inventory.