Currently, the market for organic sugar in the EU represents around 275,000 tonnes. Most of this is imported (from Colombia and Brazil). Germany, France, Belgium and Netherlands are the main importers. Domestic organic production is currently limited to 14,000 hectares, with Germany, Italy and Austria accounting for 70% of the beet acreage. In the foreseeable future, beet acreage in the EU is likely to expand as regulatory oversight for exporting countries is likely to mean increased organic sugar production costs for complying to strictures. This should level the playing field for local EU organic sugar producers.
ARTB has been monitoring the development of the organic sugar market since 2019. This study offers an overview of the recent trends and evolutions on this fast-moving segment.
Imports of organic sugar into the EU: a cyclical decline and contrasting trends
Organic sugar imports decreased in 2020 to some 190,000 tonnes (Figure 1). However, this reduction is circumspect: the Covid pandemic and confinement measures triggered a significant slowdown in trade activities. In that sense, it looks as if the 2020 decrease may only be conjuncture of the pandemic (more data are therefore needed to determine mid-term trends).
Figure 1: Volume of European imports of organic sugar (t)
From a geographic point of view, most of the 2020 organic sugar imported in the EU came from Latin America (Figure 2). The picture is, however, mixed with:
- An increase of volumes coming from Colombia (19,000 t) and Laos (9000 t),
- A significant decrease in imports from Brazil (16,000 t), India (15,000 t) and to a lesser extent Paraguay (8000 t) and Argentina (4000 t).
Figure 2: Main exporting countries of organic sugar to the EU-27 (t)
Looking at destinations (Figure 3), statistics reveal:
- A significant decline in 2020 imports shipped to Belgium (and to a lesser extent Netherlands and Sweden),
- A steady increase in organic sugar shipments to Germany, France, Italy and Spain since 2018.
Figure 3: Main European importing countries (EU-27) of organic sugar (t)
European domestic production in full expansion
Once an exclusive import market, the European organic sugar market is changing and domestic production of organic beet sugar is expanding with a growing number of European operators positioning themselves in this new segment although organic beet production acreage remains marginal – accounting for less than 1% of total European beet acreage.
From a geographical point of view (Figure 4) and at this point, organic beet is produced in 8 European countries – namely Germany, Austria, Denmark, France, Italy, Lithuania, Sweden and Switzerland – and processed in 9 sugar factories.
Figure 4: Organic beet sugar production in Europe
Although most of organic beets are processed in the country where it is grown, there are a couple of notable exceptions, where factories source organic beet from neighboring countries. Namely:
- the Swiss plant in Frauenfeld (Swiss Sugar) which imports large quantities of organic beet from “Rebio” producers located in Southern Germany,
- the Danish plant in Nykøbing (Nordic Sugar – Nordzucker) which processes organic beet sourced from Sweden.
Organic beet acreages
According to ARTB estimates, the European organic beet acreage stood at 14,000 ha in 2020: an increase of 51% compared to the previous season (Figure5).
Figure 5: Evolution of organic beet areas in Europe
Geographically, Germany followed by Italy and Austria are the main European organic beet producers accounting for nearly 70% of the total EU planted acreage (Figure 6).
Figure 6: Geographical distribution of organic beet areas in Europe
However, the harvested acreage is at times significantly lower. This is mainly due to field losses from pest and diseases infestations. For example, as a result of weevil attacks – currently impossible to control – nearly 71%, 16% and 59% of the Austrian organic beet crop was lost in 2018/19, 2019-20 and 2020/21,2 respectively.
Therefore, it is imperative to:
- distinguish between “planted” and “harvested” acreage,
- integrate those potential losses in relative agricultural productivity calculations performed.
Yields and prices
Productivity and organic beet price for selected countries in 2019 and 2020 are displayed in Table 1.
Looking at CIF organic sugar imports shipped in the EU, prices – which are monitored on a semi-annual basis by the ARTB – do not reveal any3 major variations between origins (Table 2).
This “stability” therefore suggests the existence of a relative “autonomy” of the price level of European organic sugar vis-à-vis world sugar prices and/or the standard contractual market for European sugar.
Finally, when it comes to retail (Table 3), prices are once again very stable compared to previous years4 supporting the idea of an autonomous niche market (hardly influenced by regional or international fundamentals).
The evaluation of organic beet production costs is extremely complex and varies considerably:
- from one farm to another (even if they are located nearby),
- from one campaign to another due to climatic conditions and pest disease infestations5.
Therefore, finding a consensus to determine an “average” cost of production is problematic.
Overall, as one organic beet grower explains, organic farming boils down to a single factor, namely the time spent to manually remove weeds from the fields.
Table 4 provides a low/medium/high estimate of various crop management parameters relating to organic beet cultivation. The findings are, however, purely indicative at this stage.
In 2007, the Council of the European Union approved Regulation 834/2007 which defines the general rules and labelling procedures for organic production. This regulation was additionally complemented by :
- Regulation 889/2008 on organic production, labelling and control of organic products,
- Regulation 1235/2008 on arrangements for imports of organic products from third countries.
However, this historic regulatory framework is to change to “ensure conditions of fair competition and to guarantee the proper functioning of the [European] internal market for organic products”.
New Regulation and Repeal of the Equivalence Rule
To begin with, it is worth recalling that certified organic products that are currently imported in the EU under Regulation 834/2007 – can benefit from the so-called “equivalence” rule.
This rule allows a third country to export products, to be recognized as “organic” by the EU, as long as national rules of the exporting third country on organic production are considered “equivalent“ to those applicable within the EU. Consequently, some organic products may eventually be labelled “organic” although they do not necessarily strictly comply with intra-European rules.6
In view of the differences that sometimes exist between the rules of certain third countries and the rules in force within the EU, the European Union has, however, decided to repeal this equivalence rule which appears in Regulation 834/2007 and to replace the latter with Regulation 2018/848.
What this means is that organic products imported into the EU – unless there is a renewed reciprocal trade agreement – need to be certified as compliant (and not equivalent) to the rules in force within the European Union.
Initially scheduled for7 January 2021 when this new regulatory framework for organic production would have come into force, it was postponed (Covid crisis) to 1 January 2022 under the amending Regulation 2020/1693.
Adjustment period for certifying bodies
The disappearance of this equivalence rule is accompanied by significant adjustments for regulatory bodies/authorities and operators established in countries which have been recognised as ‘equivalent’ within the meaning of Article 33 of Regulation 834/2007.7
In order for these entities to have sufficient time to comply with the new regulations (through the conclusion of a renewed reciprocal trade agreement recognising equivalence with the EU or through full compliance with European regulations), the expiry date of their equivalence recognition is maintained until 31 December 2026. Therefore, and based on our understanding of the regulatory texts, the date of application of the equivalence rule may not be fully effective from 1 January 2022 but four years later.
A market structure that is set to change?
This regulatory change for third countries is of size and likely to impact the balances on the European organic sugar market, which has so far been an import market (see points 1 and 2).
Some third countries – currently benefiting from the equivalence rule – could indeed be denied future access to the European market without strict compliance with European rules. Import volumes could, therefore, decrease. However, a quantitative assessment of this possible decrease remains very complex at this stage.
This new regulation could also trigger some processing and administrative adjustments, therefore affecting organic sugar production costs in third countries (European rules being generally stricter than rules from third countries, compliance to the new rules could generate additional costs) and supporting prices on the European market. This situation could eventually promote a further development of the European domestic production of organic sugar.
In the medium to long term, the structure of the European organic sugar market could be profoundly changed.
According to our estimates, the European organic sugar market – which has its own independent dynamics and is hardly influenced by variations in international/European conventional sugar markets – accounted for nearly 275,000 t in 2020/21: an increase of 3% compared to the previous campaign. Certainly, affected by the pandemic and an overall declining sugar consumption trend, we believe that the increase in domestic organic beet acreage and production is likely to continue in coming years.
Especially since the Community rules on the import of organic products will be modified.
Meanwhile and on a medium-term perspective, the development of economically viable robotic alternatives to manual weeding could seriously affect the development magnitude of the domestic production as weeding represents, by far, the main cost item for organic beet farming.
In view of the many climatic and pest/diseases incidents that have marked recent beet campaigns, the risk of “zero return – zero income” is also a key point which, despite an a priori remunerative price level, could affect the growth potential for this production. Consequently, the ability to find viable solutions to stop weevil attacks and more generally to control climate-induced sanitary risks is certainly a major challenge which will pave the way for a further development of organic beet cultivation in the EU.
1 As a reminder and to date, there is no European production of organic cane sugar. However, some French overseas departments have expressed interests in developing this type of production in coming years.
2 Source: CIBE (2021).
3 As an example, Filipino sugar imported under nomenclature 17011390 corresponds almost exclusively to organic / Fairtrade Muscovado sugar.
5 For example, rainfall preventing the passage of hoeing machines at an optimal date to avoid the proliferation of weeds can lead to very significant variations in weeding costs.
6 From this point of view, Regulation 834/2007 offers a form of flexibility vis-à-vis the rules governing the organic production method in the EU.
7 In the case of control bodies/authorities and operators established in countries which are not recognised as “equivalent” within the meaning of Article 33 of Regulation 834/2007, the expiry date of the European recognition is postponed to 31 December 2024.