The EC’s publication in December of its EC’s ‘Prospects for agricultural markets and incomes in the EU 2013-2023’ notes that “the importance of ethanol as an outlet for sugar beet increased considerably following the 2006 reform”, but that it is “likely to decline with the disappearance of the sugar quota in 2017”.
In 2012 and 2013, the EU sugar beet harvest was lower than in previous years (which is attributed to reduced sowing and lower yields), but remained “considerably above quota level” (the quota is 13.5 million tonnes). However, “EU sugar beet production is projected to expand in the coming decade”, with increased volumes of the available beet crop being used in sugar production
Having reached a low of 110.2 million tonnes in 2013, beet production is projected to grow at an increasing rate from 2017 onwards, to reach 119.3 million tonnes in 2023 (+8.26% compared to 2013). This will still be 6.4% below the post-reform peak in beet production of 127.4 million tonnes attained in 2011.
Sugar production from beet is projected to increase from 15.4 million tonnes in 2016, the final year of production quotas, to 17.1 million tonnes by 2023, an increase of 11%, arising from both an increase in the percentage of beet going into sugar (from 84.8 to 87.8%) and an overall increase in beet production (+7.2%).
EU sugar and isoglucose sector 2010–2023: Projections for production, consumption and trade (sugar: million tonnes white sugar equivalent; isoglucose: million tonnes)
|Sugar beet production||114.7||110.2||113.5||115.0||115.7||116.7||117.6||118.5||119.3|
|EU sugar price (€/tonne)||726||627||408||416||420||416||413||409||405|
|World sugar price (€/tonne)||413||376||356||377||380||377||375||371||367|
|EU price as a percentage of the world market price||175.8||166.8||114.6||110.3||110.5||110.3||110.1||110.2||110.3|
|Isoglucose as a percentage of the sweetener market||3.5||3.5||5.2||6.2||7.3||8.3||9.4||10.5||11.5|
Source: EC, ‘Prospects for agricultural markets’, statistical tables, extracted from Tables 6.15 and 6.16.
In contrast, isoglucose production is projected to more than triple, from quota-restricted production of 700,000 tonnes to 2.4 million tonnes by 2023. EU isoglucose consumption is similarly projected to more than triple, from 600,000 tonnes to 2,2 million tonnes. This is projected to result in isoglucose increasing its share of the sweetener market post quota abolition from 3.5% in 2012 and 2013 to 11.5% in 2023.
EU sugar consumption is projected to contract from 17.4 million tonnes in 2016 to 17.1 million tonnes by 2023. This continues the trend in reduced sugar consumption apparent since 2010. By 2023, EU sugar consumption is projected to be 10.5% below consumption levels in 2010, the year when EU imports reached 3.9 million tonnes.
EU sugar imports are projected to fall from 3.6 million tonnes in 2016 (around the level of the 3.7 million tonnes imported in 2013) to 1.9 million tonnes in 2023. EU sugar exports are projected first to fall from 1.8 million tonnes in 2016 to 1.2 million tonnes in 2018, before increasing to 1.9 million tonnes by 2023. The EU is thus seen as moving closer to self-sufficiency, with the EU sugar trade being balanced by 2023. Nevertheless, the EC argues that “the most competitive origins that have free access to the EU market will… continue exporting to the EU”.
From 2016 to 2017, EU sugar prices are projected to fall by 28.7%, with only a marginal, unstable price recovery in subsequent years, before ending the projection period 29.2% below the 2016 projected price and only 0.25% higher than the EU support price of €404/tonne.
This will see the EU market price premium fall from over 60% to 14.6% in 2017, and to a fairly steady premium around 10.3% from 2018 to 2023. During this period, EU price movements will mirror world market price movements.
Given the beet production level attained in 2011, when sugar production quotas were still in force, EC projections put EU sugar beet production in 2013 well below the attainable potential. This can be attributed to a recognition of the demand challenges which will be faced in the EU market, with contracting consumption and increased availability of alternative sweeteners. Put simply, EU beet producers will only want to produce sugar if there are profitable market outlets available.
This provides the context in which current EU beet co-refiners will need to decide on whether to continue to co-refine imported raw cane sugar. This will no doubt be influenced by the extent to which individual co-refiners can make a profit on raw cane sugar product sales, which do not compete with their own beet sugar sales.
This needs to be seen in the context of the projected fall in EU sugar prices in 2017 and a major reduction in the price premium on the EU market compared to world market sugar sales. With EU sugar imports projected to fall by 48.6% between 2015 and 2023, this is likely to pose serious challenges for ACP sugar exporters.
In the light of the experience of the Mauritian sugar sector, which has formed a medium-term corporate alliance to assist in repositioning its sugar products on the EU market, this suggests that if profitable exports to the EU market are to be maintained post 2017, ACP sugar exporters will need to pay increased attention to the development of market repositioning strategies between 2014 and 2017.