Subsidies and preferential market access made sugar one of the most distorted food sectors. Now these regulations are changing. The new push for ethanol production and changing consumption habits will continue to ensure a high demand for sugar in the future. The potential negative environmental and social impacts of sugar production will remain a contentious issue.

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Sugar is produced from sugar cane and sugar beets with about 70 per cent of the world's production of sugar derived from sugar cane, a tall perennial grass.  While sugar beets are predominantly produced in the European Union, the United States and Central Asia, sugar cane production is located in tropical and sub-tropical regions with Brazil and India as the largest sugar cane producers. Most of the sugar made from sugar beets is consumed domestically with only 310,000 tons having been exported in 2009. On the other side, global sugar cane exports were as high as 27 million tons in the same year. Global sugar trade is dominated by Brazil, which accounted for over 60 per cent of global sugar cane exports in 2009. Other major exporters are Thailand, Guatemala, Cuba and South Africa.

Sugar has been one of the most distorted commodities in world trade due to different forms of interventions by developed and developing countries alike such as preference schemes or controlled market access. For instance, the EU Sugar Protocol, which was supplemented by special preferential sugar arrangement and the Everything but Arms Initiative, provided duty-free access for the African, Caribbean and Pacific Group of States ( ACP ) countries to the EU market including a guaranteed price and country-specific export quotas.  These measures, however, have been subject to change in recent years. In 2007, the EU declared the renunciation of the sugar protocol with its formal termination coming into effect in 2009. The EU sugar sector reform includes a phased implementation of reductions in the guaranteed prices for ACP producers and the progressive introduction of full duty-free, quota-free access for ACP sugar exporters to the EU until 2015/16. The United States are the largest single sugar importing country using a variety of tariff-rate quotas which are allocated each year to different sugar exporting countries based on their historic shipments to the United States. Tariff-rate quotas are a two-tiered tariff system, whereby sugar imports within a set quota are charged a lower in-quota tariff, while imports exceeding the set quota amount are charged a higher over-quota tariff rate. These are just a few examples of various interventions in the global sugar market which influence the market position and competitiveness of many developing countries.

On the demand side, several factors influence the long-term outlook for the sugar market. The increasing use of sugar cane for ethanol production has created a large new market for sugar producers. The changing dietary pattern in many countries towards increased consumption of energy-dense foods is also expected to lead to an expansion in the demand for sugar. In 2010/11, adverse weather conditions coupled with above-mentioned trends lead to global demand exceeding sugar supply resulting in an expected surge of world market prices for sugar.

Sugar cane production is associated with certain environmental challenges. According to the World Wildlife Fund ( WWF ) sugar cane has caused a greater loss of biodiversity than any other single crop. While the greatest amount of land clearance for sugarcane production occurred decades or even centuries ago, the area under cultivation has continued to grow in some areas, especially as a result of the use of sugarcane in biofuel production.  Moreover potential environmental damages are caused by overuse of irrigation water, fertilizers and pesticides as well as discharge of mill effluents and pre-harvest cane burning. Better management practices such as efficient irrigation systems, biological control and integrated pest management and minimum tillage are promoted by organizations such as the WWF , the South African Sugar Association and the Australian Canegrowers Council. On the social side, there has been reported use of child labor on sugar plantations, e.g. in Latin America.