Sugar comes from two types of crops: cane sugar and beet sugar. Some countries such as the U.S. and China growth both types of sugars. Many countries that produce sugar offer subsidies to their sugar farmers and protect their sugar industry from foreign competition. Some of the laws include the US Farm Act, the European Union Sugar Regime and strict control on imports by the Chinese government.

The chart below shows the major sugar producing countries:

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Source: Sugar – Consumption at a crossroads, Credit Suisse

Brazil is the world’s largest sugar producer followed by India and China. With excess sugar production Brazil converts some of them into ethanol which is used as a fuel replacing gasoline. The country is also the world’s largest exporter to the world market. China and India consume all the sugar produced. Hence the supply of sugar to the global market is dominated by Brazil and Thailand.