BDSI calls for easing of tariffs on sugar imports to EU, amid major market inflation

Germany’s BDSI confectionery trade body has called for the EU to ease tariffs on sugar imports, amid all-time high prices that it believes are damaging smaller and medium-sized enterprises as the sector struggles to meet consumer demand, reports Neill Barston.

As the organisation noted, sweets and snacks manufacturers in the country ‘do not expect any relief’ from the huge spike in costs for the key ingredient – which increased a staggering 80% year-on-year against market values in 2022.

According to the BDSI, the EU Commission is expecting a slight increase in production volume of 6% to 15.5 million. However, this is still far from being enough to adequately cover the European demand of consumers and the food industry of 17.5 million tonnes.

This puts pressure on small and medium-sized companies in particular. Around half of the over 220 companies in Germany have fewer than 100 employees. The extreme cost pressure since 2020 continues unabated. At the same time, the export-oriented industry is being significantly weakened in international competition. Sugar is the last EU agricultural sector protected by the market organisation with its high external tariffs

In the current difficult economic situation, the biggest problem is the exploding raw material costs, which are added to the already high energy costs in Germany. The European sugar price rose dramatically last year and is currently at an all-time high. In June 2023 it was over 80% higher than the previous year. This emerges from the EU Commission’s figures on European industrial selling prices for sugar.

As the BDSI noted, the inflation developments in certain areas are “homemade”. For years, the Federal Association of the German Confectionery Industry (BDSI), together with other sugar processing sectors, has criticised the political structure of the European sugar market. The sugar market is still largely shielded from the world market with high protective tariffs. The few import quotas that the EU allows other producers are too inflexible and are only available to European sugar suppliers themselves. The imported unfinished raw sugar must first be refined into white sugar by the European sugar industry. However, this so-called “additional refining” is not done to relieve the market, but rather to extend the sugar campaign.

In response, the BDSI is now calling on prices to be realistically aligned, including consideration of climatic change in European sugar beet cultivation and a suspension of high protective tariffs so that sugar can also be imported from other regions of the world. It noted that price inflation would need to be curbed.

Bastian Fassin, Chairman of the BDSI, said: ““n this extremely tense situation for the confectionery industry in Germany and the European Union, the EU Commission must finally act and open the European market for white sugar imports in the short term.

“Despite the high sugar prices, the EU’s sugar production is still far too low and the supply situation is at risk. This clearly shows that this is not possible without further import quotas or the suspension of the protectionist EU protective tariff.” In addition to these short-term measures, the BDSI believes that a long-term realignment of the EU sugar market is required.