We see it on the receipt with every purchase: groceries are becoming more and more expensive. Above all, sugar prices are going through the roof: they have recently risen by 80 percent. The reason for this is not only the decline in the sugar beet harvest.
For baking cakes, for coffee and for cooking: we need sugar everywhere. But it is increasingly becoming a luxury item. In June, people in Germany had to nearly 80 percent more pay for sugar, almost twice as much as a year ago. The curve has been pointing steadily upwards since last October.
For a long time, sugar was actually far too cheap on the European and world markets, he says Sandra Furderer, spokeswoman for the Sugar Economic Association in the ntv podcast “Learned again” to the point. The EU reference price, from which it is worthwhile to produce sugar economically for companies, was below the 400 euro limit per ton from 2017 to 2021. “That means sugar was very, very cheap. It was almost not economical for companies to actually produce sugar.” The price then rose again at the end of 2021.
There are several reasons why sugar has become more expensive: Firstly, energy costs have risen dramatically, mainly due to the war in Ukraine. Both the farmers and the producers notice this. Sugar beets are processed immediately after harvest, from September to January. Especially in the cold months gas and Co. were very expensive.
Farmers are also paying more for fuel and fertilizer. All of this makes their beets significantly more expensive for the sugar manufacturers. “Companies have to pay farmers a higher price for their beets, otherwise they will decide not to grow beets but something else,” says Fürderer. In addition, there are other cost centers for the sugar producers, there are ever higher climate targets, environmental and social requirements that have to be implemented.
Bad harvest in Germany and France
The sugar that we can buy in the supermarket is mostly made from local beet sugar. The main sugar producers in Europe are France and Germany. In Germany, sugar beets are grown on around 360,700 hectares. Around 25 million tons of sugar beets became around in the last production period 3.8 million tons of sugar manufactured. In the period before that, 2021/2022, the yield was higher: around 4.5 million tons of sugar were produced from around 29 million tons of beet.
Last year the harvest was poor due to several heat waves, especially in France. The sugar beet is actually ideal for hotter and drier climates because it can draw water from deeper layers with its long roots, the expert explains in the podcast. “But the way we saw it last year, it was too much.” In addition, climate change would also lead to more pests and plant diseases.
Two-thirds of the world’s sugar is made from sugar cane. The largest producers in the sugar business are Brazil, India and Thailand. These countries are also struggling with extreme weather, harvested less last year and therefore exported less sugar. Now in the spring there have already been declines in harvest.
Biofuel instead of sugar
Because they earn more money with it, some sugar cane manufacturers, including in Brazil, no longer produce sugar, but instead turn their sugar cane into biofuel, i.e. ethanol. “The war in Ukraine has also made fuel significantly more expensive,” explains Fürderer. As a result, less sugar ends up on the world market – sugar is becoming more expensive, “also here”.
The high sugar prices are good for beet growers and the sugar industry. You can make money again with sugar. Europe’s second largest producer Nordzucker and Südzucker were able to significantly increase their profits in the 2022/2023 financial year.
Sandra Fürderer expects sugar to remain expensive for a while. The extreme weather plays a key role, making it difficult for analysts to forecast earnings in Europe and worldwide. “Especially when there is uncertainty, the price will remain rather high. It will probably not go back to the level four or five years ago any time soon.”
Confectionery manufacturers expect a shortage of sugar
For candy manufacturers, on the other hand, the high sugar prices are a big problem. The Chocolate Producer Knight sports sees the high cost of raw materials, energy and packaging as a serious burden. Some confectionery manufacturers are afraid that there will soon not be enough sugar left. Storck expects according to the business week Supply bottlenecks in August and September before new sugar from this year’s harvest is available. And according to the report, Katjes also expects the sugar quota to be sold out by September.
Buying cane sugar is expensive for producers: if they want to import it into the EU, they have to do it punitive tariffs of more than 400 euros per ton.
It is foreseeable that chocolate bars or gummy bears will soon become even more expensive for us. We had to pay around a third more for biscuits in March than the year before. Cakes and other sweet pastries are also badly affected by inflation.
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