Sugar: Small increase in production despite record prices

EU sugar market more than in need of reform to keep medium-sized processing companies competitive

05-Sep-2023 - Germany

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Confectionery manufacturers do not expect any real relief in sugar prices for the new sugar marketing year starting in September. The European Commission does expect a slight increase in production volume of 6% to 15.5 million tons. However, this is still far from sufficient to meet the European consumer and food industry demand of 17.5 million tons. This is putting pressure on the smaller and medium-sized companies in particular. Around half of the more than 220 companies in Germany have fewer than 100 employees. The extreme cost pressure since 2020 is therefore continuing unabated. At the same time, the export-oriented industry is being significantly weakened in international competition. Sugar is the last agricultural sector in the EU protected by the market regime with its high external tariffs.

Growing cost burden due to sharp rise in sugar prices

In the current difficult economic situation, skyrocketing raw material costs are the biggest problem, on top of the already high energy costs in Germany. The European sugar price, for example, rose dramatically last year and is currently at an all-time high. In June 2023, it was more than 80% above the level of the previous year. This is according to the EU Commission's figures on European industrial sugar prices.

Protective tariffs on the EU sugar market ultimately hit consumers

At the same time, the inflationary developments in certain areas are "homemade". For years, the Federal Association of the German Confectionery Industry (BDSI), together with other sugar-processing industries, has criticized the political structure of the European sugar market. The sugar market is still largely shielded from the world market by high protective tariffs. The few import quotas that the EU allows other producers are too inflexible and, moreover, are only available to the European suppliers of sugar themselves. This is because the imported unfinished raw sugar must first be refined into white sugar by the European sugar industry. However, this so-called "co-refining" is not done to relieve the market, but primarily to prolong the sugar campaign.

Short-term market openings could provide relief, but do not change the need for reform

The BDSI is therefore calling for more market orientation, consideration of climate change in European sugarbeet cultivation and a suspension of the high protective tariffs so that sugar can also be imported from other regions of the world. Countermeasures by policymakers would be necessary to curb the shortage on the market as well as price inflation for sugar. "In this extremely tense situation for the confectionery industry in Germany and the European Union, the EU Commission must finally act and open up the European market for white sugar imports in the short term," says Bastian Fassin, Chairman of BDSI. "Despite high sugar prices, EU sugar production is still far too low and the supply situation is at risk. This clearly shows that without further import quotas or the suspension of the protectionist EU safeguard tariff, it won't work." In addition to these short-term measures, however, a long-term realignment of the EU sugar market is imperative in BDSI's view.

Note: This article has been translated using a computer system without human intervention. LUMITOS offers these automatic translations to present a wider range of current news. Since this article has been translated with automatic translation, it is possible that it contains errors in vocabulary, syntax or grammar. The original article in German can be found here.

https://www.yumda.com/en/news/1181466/sugar-small-increase-in-production-despite-record-prices.html