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?

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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

I’m not aware of the ins and outs, but I think the simple answer would be someone is being exploited

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

Water falls from the sky and much of the weight in the sugar cane is water plus the carbon content which came from the air fixed by the sun.

Those are both virtually free.

The water comes mostly from tropical rains, of which there are plenty. And the labor is done largely by poor laborers in similarly poor countries who do not make very much money (the wealthiest country with significant sugarcane production is Brazil, a middle income country, and many others are poorer).

It’s really difficult for a lot of people to really conceptualize just how cheap bulk agricultural goods are.

That’s because a lot of the cost that we consumers end up dealing with is largely transportation, storage, and a retail mark-up.

For example, a *tonne* of corn is worth about $30. A tonne of raw sugar cane is worth about $50. A big part of the reason agricultural products are so cheap is two fold. In richer countries it’s a combination of high levels of automation and low paid migrant workers depending on the product, not all of them rely on that but a lot do and in poorer countries it’s just low wages (so…exploration)

Also your numbers are way off. It takes about 10 kg of sugar cane to make 1 kg of table sugar. That means the raw sugar cane cost for a kg of processed sugar is about 50 cents.

As for water well that’s a whole other…thing. Right now that’s virtually free, but only because most places are using water at an unsustainable rate.