The German sugar industry is suffering: unequal subsidies, drought and bans make life difficult for farmers. There are not a few who therefore decide against the turnip.
According to its own statements, the sugar industry in Germany is still under pressure due to regulations that distort competition on the European market. According to the beet farmers' association in the Rhineland, 20 percent of farmers with beet fields gave up cultivation this year. "That shows the drama of the situation," said managing director Peter Kasten. The sugar market has changed a lot in the last few years: for years, fixed EU-wide sugar quotas regulated the market, now the sugar factories and farmers have to assert themselves in open competition on the international market.
"What we are suffering from is that we have to contend with considerable distortions of competition in Europe," said Kasten. In a number of countries, beet farmers receive subsidies in the form of premiums per hectare. According to the farmers' campaign #WirsindZucker, 30 percent of the sugar beet acreage in the European Union is subsidized in this way, but not in Germany.
"We cannot compensate for these distortions," says Hermann Schmitz, managing director of the Cologne sugar company Pfeifer und Langen. "In countries where no premiums are paid, the acreage is declining."
Drought harms, so does crop protection
The decline is also noticeable in sugar factories: Pfeifer und Langen cut jobs around 2016 and closed a location in Romania, and the packaging location in Elsdorf in the Rhineland was downsized. The situation is also difficult with the listed rivals Nordzucker and Südzucker: Hundreds of jobs have been added and capacities reduced at Südzucker in recent years, Nordzucker posted a loss of millions in the past financial year despite entering the sugar cane business.
The subsidies are not the only challenge that the industry has had to face in recent years: In 2018, the drought summer put a considerable strain on the harvest, even though the sugar beet is actually considered to be very resistant. In addition, farmers in Germany are allowed to use fewer pesticides than many of their colleagues in other countries. The neonicotinoids, which are actually banned throughout the EU, are permitted in numerous countries by means of an emergency license, which makes life easier for farmers – but Germany is also taking the tougher course here.
Yeast suffers too
Markus Weck, representative of the yeast industry, describes the upheavals on the sugar market as "quite a rollercoaster ride". Yeast producers rely on a by-product of sugar production, namely molasses. They are also affected when things go badly in the sugar industry. "It will not mean that we will wake up one day and there will be no more molasses available. But it can be a hassle to get enough quantities," says Weck. The world market price for cane molasses has doubled over the past few years.
Since last year, beet farmers have at least seen a slight easing in harvest and prices. "We are not yet at a level where it is really economical. But we are heading in the right direction," says farmers' representative Kasten. The fact that many of his colleagues decided against the beet is due to the entrepreneurial orientation of many farmers in the Rhineland: For example, the cultivation of potatoes or carrots is sometimes more lucrative, the areas are in great demand and the competition is fierce.
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