BDSI reports reduced cocoa grindings, and major spike in sugar prices

Germany’s BDSI national confectionery association has reported that the ten bean-based companies operating within the country have delivered cocoa grinding figures down 2.1%, at a total of  97,421.6 t of cocoa in the fourth quarter of 2023, amid continued global pressure on supplies, writes Neill Barston.

According to the trade body, grindings within the country were also down for the year by 1.2% to 392,792.4 tonnes, which mirrored a challenging picture for the sector as prices hit near-record highs on both the New York and London commodity markets.

As the BDSI noted, European figures also show a downward trend, with the European Cocoa Organization (ECA) reports at for the 4th quarter of 2023 that 350,739 t of raw cocoa were ground. This corresponds to a decrease of 2.5% compared to the same quarter of the previous year.

Moreover, as Confectionery Production has reported over the past year, the heightened price of beans, and reduced cocoa grindings within Europe, along with a significant upturn in inflation for many locations around the world has placed pressure across the value chain of the confectionery industry.

While cocoa farmers in key markets including Ghana and Ivory Coast have welcomed deals in recent months to enhance their levels of pay from below poverty-line wages of around $1 a day in many instances, this has not seemingly matched the sustained high price achieved for cocoa – with no direct correlation between the commodity values and payment for agricultural workers presently in place. This has led to a study from the International Cocoa Organisation to examine the creation of an African cocoa Exchange, in the hope that this would stimulate further growth for the sector in the region, including indirectly helping raise industry pay.

German sugar challenges

As for Germany, beyond its present challenges within cocoa, another core confectionery ingredient of sugar has proved challenging to source, with the average price level on the European sugar market is currently over 90% higher than the average of the past three years and 20% above the world market price.

“Sugar is scarce in the EU and the protectionist policy of the European Union does not allow fair competition from outside,” explains Dr. Carsten Bernoth, General Manager at BDSI. “The disastrous combination of a deficit in EU sugar production on the one hand, which is far from covering the European needs of consumers and processors, and market isolation on the other, is entirely to the detriment of domestic processing companies.”

In the last five years, the area under sugar beet cultivation has decreased significantly. Sugar beet production is at a much lower level and is subject to major risks due to weather conditions. Nevertheless, companies in the European sugar industry are increasingly taking advantage of the opportunity to supply their sugar to the world market. Despite lower production, there is a steady export of sugar outside the EU.

“On the other hand, we see an imbalance in the EU’s continued high import tariff. The exaggerated protective tariff of €419/t on sugar imports from the world market still dates back to the time of the old sugar market regime before 2006. An adjustment to the new one Market conditions and the chronic shortage situation are urgently needed,” said Dr. Bernoth continues. The EU is now a net importer of sugar and will therefore be dependent on reliable import options in the long term.

Furthermore, for this reason, the BDSI noted that it opposes a policy of sealing off the world market when it comes to sugar. From the BDSI’s perspective, given the high competitiveness of the European sugar industry, there is no longer any justification for maintaining the WTO “sensitive product” status for European beet sugar.

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