If sugar costs $1.70/kg, but takes 100kgs of sugarcane and over 2000L of water to produce that 1 kg, how is the end product profitable?

Question

If sugar costs $1.70/kg, but takes 100kgs of sugarcane and over 2000L of water to produce that 1 kg, how is the end product profitable?

In: 300

Answer 1

Water is not that expensive when it is used for agricultural irrigation. In Spain, in 2010, in a region with intensive agriculture –which received water from another basin–, it costed less than 0,3 eur/m3. That is, less than 1 euro for those 2000 L.

I guess that is similar in other countries.

(Spain also produces sugar, but it comes from the beetroot).

Edit: In 2022, the water price in this region is circa 0,2 eur/m3. Source: https://www.boe.es/boe/dias/2021/08/07/pdfs/BOE-A-2021-13594.pdf