Calls for relief in the Swiss sugar market have been amplified by European association CAOBISCO joining them, as it warns that sugar users of the European food and drink industry are suffering from the current situation and losing their competitiveness.
The association explained that the current situation oversaw tightening EU sugar supplies so that supplies during the agricultural period, from October to September are so low that vulnerable sugar users, SMEs, face critical shortages which may lead to factory closures and job losses.
The existing forecast for the agricultural year 2022/23 shows sugar levels currently available are weighing at 552 tonnes, which CAOBISCO said represented less than two weeks of EU sugar users’ overall consumption, meaning that existing levels are dire.
The problem lays in the reduced number of EU sugar beet planting areas, CAOBISCO said in its detailed explanation, which had a knock-on effect on sugar supply. This also threatened the EU’s ability to be self sufficient and poses a significant threat to all European industries that rely on sugar, notably, the confectionery, food and drink sectors.
The reduced number of beet planting areas and yields, poor weather conditions and European farmers struggle to source fertilisers at an affordable price have contributed to a perfect storm; where sugar supply is short and demand is high. Prices have already been driven up by the war in Ukraine, disruption from the pandemic and consequent energy crisis and inflation.
In addition to this, prices for white sugar have increased by “record highs” of more than 80% in the last 12 months according to data published by the EU Commission and only continue to rise, bumped up by scarce supplies. As a result, manufacturers have had to pass the price inflation onto consumers in the food and retail sector, which contribute as a major driver of food inflation which puts strain on consumers’ budget.
The market is also import-reliant, CAOBISCO noted, as manufacturers of sugar-containing products have difficulties complying with weight-based origin rules when exporting to certain third market and lose out on concessions granted in Free Trade Agreements.
The situation is not so dire that it cannot be resolved, the association said, and was dependent on “political willingness to act”. Suspension of import tariffs on white sugar would help alleviate strain on supplies and avoid “irreversible economic consequences” to the food and drink industry.
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