Sugar built Mauritius. Not metaphorically — literally. The island was uninhabited when the Portuguese arrived in 1507. The Dutch introduced sugarcane in 1638, primarily to produce arak, using enslaved labour. The French expanded the plantation system. The British inherited it, abolished slavery in 1835, imported 450,000 indentured labourers from India to replace the enslaved workforce, and continued exporting sugar to European markets at preferential prices secured through colonial-era trade agreements. By independence in 1968, sugar contributed approximately 30 per cent of GDP and 90 per cent of export earnings. In 2003, sugarcane was cultivated on 85 per cent of Mauritius's arable land by 28,000 planters, with most planters being smallholders. One in three rural families was directly or indirectly involved in the sugar industry. The island's entire agricultural geography — its land use, its labour market, its rural community structure — had been organised around a single crop whose price was set by a European preference that the island's planters had no part in negotiating and no power to sustain when the Europeans decided to end it.

The observable contradiction is this. Brazil stands as the unequivocal production and export leader in the global sugar market, with an output of 44 million tons in 2024, underpinning its role as the price setter for the global market. The five biggest exporters of sugar by dollar value — Brazil, Thailand, India, France and Germany — were responsible for over two-thirds of globally exported sugar during 2024. France and Germany — both European nations — are among the world's five largest sugar exporters. They export refined beet sugar, produced with European Common Agricultural Policy subsidies, into the same global market where African and Caribbean cane producers compete. The ACP countries grew the sugar that built the European confectionery, beverage, and food processing industries for three centuries. The price they received for that sugar was a political decision made in Brussels. When that decision changed, the African and Caribbean producers bore the entire cost of adjustment.

The Mauritius case is the most precisely documented instance of this structure, but it is not unique. Barbados, Jamaica, Guyana, Fiji, Malawi, Swaziland, Trinidad, and Côte d'Ivoire all held ACP Sugar Protocol allocations. High-cost ACP countries such as Barbados saw both total exports and exports to the EU falling dramatically. The elimination of the Special Preferential Sugar Agreement affected ACP low-cost producing countries including Trinidad, Swaziland, Mauritius, Jamaica, Guyana, Fiji, and Côte d'Ivoire. Each of these economies had organised a significant portion of their agricultural sector around the Protocol price. Each faced the same adjustment when the Protocol ended: a world market price set by Brazilian efficiency, competing against European subsidised beet, with no preferential cushion and no transition mechanism adequate to the structural transformation required.

The first constraint is structural and concerns the global price mechanism. Brazil dominates the global sugar market with costs approximately 30 to 40 per cent lower than many competitors, providing structural advantages in price-competitive markets. The OECD-FAO Agricultural Outlook 2025-2034 expects Brazil to reinforce its leading exporter position, followed by Thailand and India, with nearly 52 per cent, 14 per cent, and 8 per cent of global exports respectively in 2034. The price of sugar on the world market is effectively set by the cost of production of the most efficient producer — Brazil — adjusted for the Brazilian real exchange rate, the relative profitability of sugar versus ethanol, and the vagaries of weather in the Brazilian Centre-South growing region. No African or Caribbean cane producer has any influence over any of these variables. The world price is not a negotiation. It is a Brazilian agricultural decision, expressed through the No.11 raw sugar futures contract traded in New York.

The second constraint is the European subsidy architecture. France and Germany export sugar. They are among the five largest sugar exporters by dollar value globally. They export beet sugar produced under the Common Agricultural Policy, which for decades included production quotas, price supports, and export subsidies that enabled European beet sugar to compete in world markets at prices below European production costs. The WTO ruled against the EU's sugar subsidy regime in 2005 — the DS265 case, initiated by Brazil, Australia, and Thailand — finding that EU sugar exports were subsidised in violation of WTO commitments. The ruling forced the EU to reform its sugar regime. The reform simultaneously ended the ACP Sugar Protocol's preferential prices. The WTO ruling that corrected European subsidy distortions landed its entire adjustment cost on the ACP countries that had organised their agricultural sectors around the preferential price those subsidies had cross-subsidised.

The third constraint is land lock-in. Land abandonment accelerated, especially among the less efficient producers, with the abolition of the ACP-EU Sugar Protocol in 2009. The ex-Syndicate price paid to sugar producers which had reached Rs 17,891 per ton prior to the price reduction in 2006 decreased to Rs 13,535 for the 2010 crop. The greater-than-expected land abandonment was largely a result of continuous increases in operational costs — labour, transport, and fertilisers — which planters were not in a position to cover from their declining revenues. An economy that has placed 85 per cent of its arable land under a single crop for two centuries cannot diversify its agricultural base in response to a price shock in a single decade. The infrastructure, the knowledge base, the capital investment, and the entire rural social organisation of the sugar economy are built around cane. Abandoning cane is not switching crops. It is dismantling a civilisation.

The 2006-2015 Multi-Annual Adaptation Strategic Plan was Mauritius's correction to the Protocol's end. It planned for a managed reduction in cane area, diversification into food crops, and transition of the sugar industry toward value-added products — specialty sugars, rum, and electricity generation from bagasse. The correction was a genuine attempt at structural adaptation. Six milling companies currently produce sugar in Mauritius, down from the eleven factories operating in 2006. The industry now concentrates on supplying refined sugar for direct consumption to the EU market, where virtually all of its sugar is sold. The number of mills halved. Production fell from a peak of over 600,000 tonnes to 235,000 tonnes forecast for 2024. The industry survived — smaller, more concentrated, more focused on value-added specialty products — but the smallholder planter community that the Protocol had sustained was devastated.

The correction addressed the industry's survival without addressing the smallholder's livelihood. The six surviving mills are concentrated among the large sugar estate companies — the same conglomerates that have dominated Mauritian economic life since the plantation era. The smallholder planters whose land was not large enough to sustain production at post-Protocol prices abandoned their fields. The land they abandoned did not return to food production as the diversification strategy intended. Much of it was converted to other uses — real estate development, golf courses, and the villa and resort schemes whose foreign ownership dynamics this edition has examined in the IRS article. The sugar land that built Mauritius for three centuries has been progressively transferred out of agricultural use and into the luxury real estate market. The extraction of value from that land did not end when the sugar economy declined. It continued through a different mechanism.

The evidence suggests that the ACP Sugar Protocol was simultaneously the most significant development finance instrument ever extended to small island economies and the most effective mechanism for preventing the agricultural diversification that would have made those economies resilient to the Protocol's end. €4 billion to Mauritius alone over thirty years is a transfer of resources that no aid programme or development bank has matched for a country of Mauritius's size. It funded the economic diversification into manufacturing and services that made Mauritius the "African development miracle" of the 1980s and 1990s. The miracle was real. Its foundation was a European preference that European producers eventually found too expensive to maintain.

The WTO ruling that ended the preference was legally correct. The EU's sugar export subsidies were trade-distorting in violation of WTO commitments. The ruling's legal correctness does not alter its distributional consequence: the adjustment cost of correcting European subsidy policy was borne by the African and Caribbean economies that had organised their agricultural sectors around the price that European subsidy policy had made possible. Brazil, Australia, and Thailand — the complainants in DS265 — were large, diversified agricultural exporters for whom the ruling represented a competitive gain. The ACP sugar producers were small economies with monoculture agricultural sectors for whom the ruling represented an existential disruption. The WTO's trade rules do not distinguish between these two groups. The same legal framework that protected Brazil's right to compete on unsubsidised terms in the EU market also ended the preferential arrangement that protected Barbadian and Mauritian sugar planters from Brazilian cost efficiency.