News and views

As I browse the web researching various topics concerning the EU and UK sugar markets, I've been bookmarking interesting weblinks. Some of these are news clippings, some are links to official documents, and some are interesting data sources.

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Associated British Foods

Adjusted operating profit for AB Sugar is expected to be well ahead of the same period last year.

AB Sugar traded strongly in the first half with revenues expected to be some 26% higher than the same period last year due to higher sugar prices in Africa and Europe and an increase in bioethanol sales following the recommissioning of Vivergo. The adjusted operating profit margin at AB Sugar is expected to reduce as the contribution from higher sugar and coproduct prices was more than offset by the impact of higher energy costs and, for Vivergo, also higher wheat costs which led to a loss in the half year. Adjusted operating profit for AB Sugar is expected to be well ahead of the same period last year. European sugar prices continued to improve over last year as a result of lower European sugar production. Estimates for EU sugar production in the 2022/23 campaign are now some 10% lower than last year due to lower yields caused by adverse weather and a smaller growing area. Both European and world sugar prices remain high. Our UK and Spanish businesses have largely contracted sales for the year at these improved prices. UK sugar production for the 2022/23 campaign is still expected to be 0.74 million tonnes, down from 1.03 million tonnes from the last campaign. This fall in production reflects lower beet sugar yields following unusually adverse weather conditions. British Sugar has moved swiftly to secure alternative sources of supply and is working with customers to ensure continuity of supply. Energy cost inflation has been significant even though mitigated by government support. The shortfall in UK sugar beet production will result in much lower profitability at British Sugar in the second half.

European Parliament

Exceptional measures to alleviate tension in the EU sugar market are not appropriate - Agriculture Commissioner Wojciechowski

In response to a European Parliamentary question concerning the “tense sugar market in 2022/2023”, the Agriculture Commissioner Mr Janusz Wojciechowski said on 27 January 2023 that it “is currently not considered appropriate to introduce an exceptional measure like the opening of additional tariff quotas”. Members of the European Parliament Peter Jahr (PPE) and Marlene Mortler (PPE) said that food producers are reporting existential challenges as markets face a critical situation, with extreme price hikes for sugar, glucose, dextrose and starch being a particular source of concern. In addition, high energy prices are driving an increased demand for bioenergy, they said. The MEPs noted the Commission outlook for 2022/2023 forecasts a reduction in sugar production of more than one million tonnes. The decline in production is offset by a reduced demand for sugar for food and reduced exports of sugar-containing foods. “What action does the Commission intend to take in order to curb supply-driven inflation, especially for white sugar, glucose, dextrose and starch?”, and “to what extent does energy recovery affect the sugar market and sugar market prices?”, the MEPs asked. Commissioner Wojciechowski replied that measures to reduce energy demand, ensure alternative supplies and accelerate the rollout of renewables will have a direct or indirect positive impact on the sugar market, as well as other factors such as domestic supply/demand, imports, world prices, etc. He also said that any potential tightness on the domestic market can be addressed by existing preferential access, including from Ukraine, and hence it is currently not considered appropriate to introduce an exceptional measure like the opening of additional tariff quotas. Commissioner Wojchiechowski assured the MEPs that the Commission is, “very closely monitoring the evolution of all key parameters linked to the evolution of the EU sugar market in view of a timely detection of any risk of disturbance in the market”.


EU’s carbon border tax reignites debate on fertilisers’ decarbonisation

The inclusion of fertilisers in the landmark EU’s carbon border levy turned up agri-food stakeholders’ noses as they fear more costs for farmers and undermining the potential of the sector in the green transition. Following weeks of intense negotiations under the Czech Presidency of the EU, legislators have reached breakthrough agreements on a number of key files within the Fit for 55 package, including the final elements of the Carbon Border Adjustment Mechanism (CBAM) agreement. The agreement, which was struck on 13 December, will pave the way for Europe to set up the world’s first levy on carbon-intensive goods entering its market. The EU’s carbon border adjustment mechanism will apply to foreign competitors unless they enforce comparable measures to lower emissions on the industries covered by the levy. However, the final deal has been lambasted by EU agrifood stakeholders, who reserved criticism for the decision to include fertilisers. “This inclusion will make the price skyrocket further, increasing the cost of agricultural production in Europe, whilst making the use of imported food more competitive and attractive,” a statement from the EU farmers’ association COPA-COGECA reads. For the association, this ‘double penalty’ for farmers would be ‘unbearable’, considering the current and foreseeably increasing price of fertilisers, already at a historic high thanks to Russia’s invasion of Ukraine.