FMCG giants clash with European farmers calling for import cap on Ukraine food produce amid sugar dearth

18 Jan 2024 --- European big food faces a structural sugar deficit, compelling a coalition of industry giants — including The Coca-Cola Company, Pepsico, Mars, Ferrero, Lactalis and Mondelēz International — to publicly call for more imports of the commodity, while pushing back at demands from local farmers to block trade with conflict-stricken Ukraine.

A joint statement published this week by the CPG giants, banded under the Committee of European Sugar Users (CIUS), draws attention to Europe’s diminished sugar volumes having been a sticky issue for the sector for some years now.

However, offsetting this deficit primarily through imports remains a serious point of contention between manufacturers and farmers. Local EU sugar beet growers have spoken out about this particular strategy, fearing that a spike in volumes may drive down prices and hurt local farmers in the long term.

CIUS responded to farmers’ demands for a cap on imports from Ukraine by singling out agri-food producers as a root cause for the problem.

“The EU has had a structural sugar deficit — for several years now. This is due to a combination of insufficient planting of sugar beet in the EU and excessive restrictions on imports that make it impossible to fill the gap in an economically viable manner,” it argues.

“Shortages have undermined the growth of the EU’s high value agri-food exports, and thus the European economy. Even with the dramatic increase of imports of sugar from Ukraine since the EU lifted restrictions, there is still a shortage of supply in the EU of this vital raw material for strong export industries such as confectionery and fine bakery wares.”

Food businesses blame a combination of insufficient planting of sugar beets in the EU and excessive restrictions on imports for the sugar dearth.Ballooning sugar prices
At a presentation given in November, the French sugar beet growers association (CGB) demanded a “clear answer from the European Commission on the future management of this inflow of sugar.”

Toward the end of the month, the EC’s Deputy Director for Agriculture, Pierre Bascou, warned MEPs that sugar prices remain high, at “more than €800 (US$870) per metric ton.” 

In May 2023, Eurostat data revealed that sugar prices were, on average, 61% higher than the previous year across the EU. This came a few months after European sugar producers warned of a “devastating” blow to the beet sector as the Court of Justice of the EU stopped emergency exemptions for seeds treated with neonic insecticides.

EU agriculture commissioner Janusz Wojciechowski affirmed the EU average sugar price peaked at “record high levels” in 2023. “Due to a severe summer drought, the sugar production for 2022/2023 is estimated to be almost 12% lower compared to the previous year,” he highlighted in a December statement.

Agriculture against raised imports
During of the sugar shortfall, five European food producers appealed to the EU’s Agriculture Commissioner Janusz Wojciechowski last week, urging that the bloc adopt a cap mechanism for sensitive commodities that the EU had opened to import from Kyiv.

Representing sugar, maize, poultry and egg farmers — sectors weathering the most market volatility — the organizations emphasized in a joint statement their support for Ukraine, while warning that the efforts to help Kyiv are “currently inequitably shared, with the agricultural sector bearing a disproportionate and unsustainable burden.”

“CIUS is shocked to see calls for blocking imports of sugar from Ukraine. Such calls are unjustified on so many levels — but here we just focus on European economic interest,” CIUS responds.

“In addition to helping the Ukrainian economy, the freeing up of sugar imports from Ukraine has been vital for the European food industry.”

With the same sentiment, Bascou urged MEPs not to forget the EU’s “dependence” on Ukrainian imports before the war, which “[will remain so] after the war.” He continued to stress that Hungary and Romania are “net importers” of sugar.

“We need more sugar from Ukraine (and Europe and other sustainable sources) — not less,” underscores CIUS. “The food industry needs certainty that Ukraine will remain open as a source of supply long term, as alternative sources are so limited.”

“This will help to reduce the EU sugar deficit and to provide the EU food industry with capacity and confidence to increase high value add exports, thus contributing to EU economic growth in addition to providing vital economic help to a country that deserves all the support Europe can provide.”

By Benjamin Ferrer