Market reform puts pressure on sugar beets - agri benchmark Germany Network meets in Braunschweig

The agri benchmark Germany Network met in January to discuss the future competitiveness of sugar beet production.

The end of the sugar and isoglucose quotas, as well as future market liberalization, will put pressure on sugar prices in Europe. Therefore the agri benchmark Germany Network discussed the future competitiveness of sugar beet production during a workshop in Braunschweig.

The experts stated that preceding crop effects have to be considered when talking about the competitiveness of sugar beets. Depending on the location, the preceding crop effect of rapeseed is 100 to 150 EUR per hectare higher than that of sugar beets. The main driver for this difference is that rapeseed causes higher yields in following wheat. Differences in tillage and direct cost have just a marginal impact on the preceding crop effect. 

Raphael Albrecht considered the identified preceding crop effect to calculate minimum sugar beet prices for typical agri benchmark farms in Germany. At the minimum price, the gross margin of sugar beet equals the competing crop. The preceding crop effect has a significant impact on the minimum sugar beet price:

• If sugar beets are competing with rapeseed, the preceding crop effect increases the minimum sugar beet price by 10-20 percent.
• If they compete with wheat or corn, the preceding crop effect decreases the minimum sugar price by 3-6 percent.
• At rapeseed prices of 360 EUR per ton, the minimum sugar beet prices of most typical farms are above the EU reference price of 26 EUR per ton. Sugar beets are only competitive on typical farms in the Hildesheimer Börde and Uelzen.

Yelto Zimmer pointed out that the end of the isoglucose quota in 2015 will put additional pressure on the sugar industry. Isoglucose can substitute up to 30 percent of the European sugar market, mainly as a sweetener in the soft drink, bakery and dairy industries. In his presentation, he showed that high value by-products accrue during the processing of isoglucose. As these byproducts are linked to corn prices, the production of isoglucose stays profitable even with increasing commodity prices. To be able to compete in this market segment, the sugar industry has to decrease profits by about 40 percent, Zimmer concluded. 

Contact:

thomas.dewitte@ti.bund.de

raphael.albrecht@ti.bund.de

yelto.zimmer@ti.bund.de