Europe’s beet sugar output, after September 2017, will depend on the number of countries that continue in production and which ones decide to contract or expand.
With no ceiling on production and beet yields steadily increasing, output is expected to rise. According to European Commission forecasts, sugar production between 2017 and 2025 could increase by 5% to 17.7mt a year.
The commission suggests isoglucose production will see a three-fold increase, rising from the current capped 700,000t annual yield, to 2.3mt. And it has predicted that EU sugar prices will be more closely aligned to world market prices.
As production grows inside the EU, under the protection of the €350/t trade tariff, imports are expected to halve from about 3.5mt to 1.8mt/year. At the same time the EU has suggested annual exports will go up from 1.3mt to 2.5mt.
One fear for the future is that competition for market share is likely to become intensive between countries both inside and outside Europe.
Countries could even undermine each other’s market positions by increasing production and offloading surpluses cheaply to undercut prices.
Ultimately the supplier that wins will be the one that can sell for the lowest price.
Currently, there is still preferential access from former Commonwealth countries like Fiji and Mauritius but as relatively inefficient producers, these nations will find it increasingly difficult to compete.
Conversely the French sector is in a relatively strong position because quotas in France were set well above production capabilities. This sustained a higher number of growers which means it can now scale-up production rapidly. French processing capacity is also high. When beet markets were depressed - unlike the UK which sold off factories - French processors mothballed facilities in case the market once again changed. That foresight may pay off as France can boast 20 factories compared to the UK’s four. With this production scenario the producer-owned co-ops in France are bullish and have stated that they intend to increase production by 15%.
Transport costs could also be a major issue that will reduce the competitiveness of some countries. These costs are extremely high because of the tonnages involved. Again, France, with its 20 factories, may have an advantage because growers will be more able to find a nearby outlet, helping them to keep transport costs to a minimum.
Outside the core sugar beet growing and processing areas in the north-west European region transport costs may play an even bigger role.
Away from factories and away from the key outlets for sugar products in the more northern EU countries, member states in the south may find it increasingly hard to compete.
But other factors come into play such as climate and efficiency.
Frost is the big enemy for the sugar beet grower as it destroys the water-laden root so countries with milder climates may have an advantage over colder member states. For example, Germany and Poland, two of the largest sugar beet producers, suffer harder frosts that come early in the season and it is common for factories in these countries to end the processing season at Christmas as temperatures fall. To extend their processing season and make more efficient use out of their assets, crops will have to be lifted and stored in greater quantities on-farm or at the factory. This will require significant investment and puts frost-prone countries at a disadvantage. By contrast the UK’s maritime climate allows growing and harvesting to continue through to March, making efficient and cost-effective use of the processing facilities over a longer period without incurring the additional cost of extra storage.