Changes for EU beet growers as from 2017/18

Transcription

1 INTERNATIONAL CONFEDERATION OF EUROPEAN BEET GROWERS Changes for EU beet growers as from 2017/18 Bernhard Conzen President CIBE European Economic and Social Committee CCMI Hearing - Industrial change in the EU beet sugar industry - 16 May

2 Sugar beet in Europe Source: CIBE CIBE = International Confederation of European Beet growers Sugar beet production 16 EU-Countries + Switzerland + Turkey 23 CIBE members Number of growers : around Beet sugar production : average 17.5 Mt Beet area : average 1.5 Mha Beet area 2017/18: +17% compared to 2016/17 2

3 Why growing sugar beet? Because: thanks to the EU sugar regime it has allowed a good planning security for farmers it was so far almost always economically profitable (economic advantages over alternative crops) sugar beet is an excellent rotational crop beet farms are organisationally and technically well equipped... regular investments have le to constant progress in productivity there is a sugar factory/company nearby which needs beet and pays for it there was so far a balance in the relationships between growers and manufacturers which has allowed a fair sharing of duties and obligations as well as of sugar value 3

4 Why growing sugar beet? Because: thanks to the EU sugar regime it has allowed a good planning security for farmers it was so far almost always economically profitable (economic advantages over alternative crops) sugar beet is an excellent rotational crop beet farms are organisationally and technically well equipped... regular investments have le to constant progress in productivity there is a sugar factory/company nearby which needs beet and pays for it there was so far a balance in the relationships between growers and manufacturers which has allowed a fair sharing of duties and obligations as well as of sugar value 4

5 EU sugar beet post-2017: a new picture Abolition of key regulatory management measures: - Sugar and isoglucose Quota - Difference between Quota und Out-of-Quota - Minimum Beet Price (no safety available for beet in the scmo) - WTO export limit A specific contractual framework has been maintained (EU Reg 1308/2013) with the obligation to conclude written contracts and interprofessional agreements before sowing between growers organisations and sugar undertakings but within certain limits Position in the chain has been weakened for growers and double competition for sugar beet: in the field and in the sweeteners market 5

6 Position of beet growers as from 2017/18 Outside cooperatives, interprofessional agreements and contracts concluded and after long/difficult discussions in some regions Value sharing clauses are no longer mandatory (mainly applied but with variable results) Growers bargaining power has been strained with risks of increased transfer of value to the undertakings, risks for growers to be the adjustment variable of the sugar supply chain and consequently risks for undertakings to face opportunistic behavior of some growers on the medium term Indispensable regulatory contractual framework is a necessary condition but not a sufficient one to ensure a constructive dialog between growers organisations and sugar undertakings and a fair balance of risks and obligations between the two parties Response of sugar undertakings should adapt and respond accordingly with appropriate contracts 6

7 Competition on the EU market According to the Commission EU market share of sugar will decrease and EU sugar will face structural surplus Source: Commission s Prospects for Agricultural Markets

8 Competition on the Eu and world markets: According to the Commission EU sugar price will fluctuate around the reference threshold and close to the world price /t EU sugar Reference threshold Volatility of world sugar prices White London #5 Raw New York #11 Attractiveness for preferential sugar as from 450/t

9 Competition in the field: where are the strong points of beet? High and stable agricultural yield Performance of beet vis-à-vis alternative crops Good logistic conditions up to the factory Professional management of beet growing (Agricultural good practices, logistic) Sugar factory: - good technical conditions - high daily capacity - high exploitation rate (long campaign) - low transport cost up to customers Cooperation and constructive dialogue between growers / growers associations / undertakings 9

10 Competition between EU regions: Sugar yields and coupled payments Beet yield in t/ha Sugar content in % EU Member States with beet coupled support => generally regions with lower yields 0 BE CZ DK DE GR FR HR IT LT HU NL AT PL RO SK FI SE UK 0 Beet yield in t/ha Sugar content in % 10

11 Competition in the field : possible alternative crops Wheat Raps Maize Potatoe/vegetable 11

12 Beet regular improvment of productivity and professional management On average 2 % of yield increase per ha and per year during the last decade ,29 9,61 9,28 10,02 10,88 11,63 10,34 12,22 11,23 11,46 12,80 11,21 11,54 Photos: RRV Bonn Sugar in t/ha Photo: ROPA 12

13 But increasing beet variable costs Source: AK 1, LWK NRW 2015 Photo: RRV Bonn Photo: Photo: RRV Bonn 13

14 Challenge: cost-recovery Kostendeckung unverzichtbar Photos: RRV Bonn 14

15 Enhancing competitiveness post-2017 and managing risks visà-vis alternative crops Development of new beet seed varieties Improving agricultural good practices Improving harvest technique and avoiding losses during harvest Minimizing losses and maximizing performance during loading and cleaning Minimizing losses during beet storage and adapting longer beet processing campaign Reducing fix costs Improving Beet/sugar yield needed to surpass increasing variable costs Managing higher risks (see also changes in PPPs) 15

16 A new challenging context as from 2017 Competition and risks will increase Beet growing will be maintained only where it allows a sufficient margin: where it is worthwhile and has a significant margin over other crops (maize, raps, wheat, potatoes/vegetables) where there is a well-functioning beet supply chain, a fair sharing of risks and value and transparency in the market where there is well-functioning risk management tools 16

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