Sugar beet industry 'explosion' warning by Fairtrade Foundation

Fairtrade sugar, and the farmers who produce it, are under threat from Europe. UK volumes have fallen 5% over the past year and prices across the globe are plummeting. In Europe, prices of white sugar have fallen from over €700/t in 2012/13 to €440 [European Commission]. And according to a new Fairtrade report, things are likely to get a whole lot worse. 

In fact, the ‘Sugar Crash’ report claims a disaster is looming for sugar growers in developing countries (Fairtrade or otherwise) due to an EU reform that could see them squeezed out of the market. It predicts the ending in 2017 of a quota on EU sugar could force hundreds of thousands of people in African, Caribbean and Pacific (ACP) countries into poverty. 

So what has caused the crisis, and what can be done to stop it?

Under existing quota rules, EU sugar beet growers are allowed to produce no more than 13.5 million tonnes of sugar beet a year: any excess has to be exported, used for non-human consumption or carried forward to the next year. EU member states currently consume about 17 million tonnes per year and the deficit is mostly filled by cane sugar, which is imported duty free.

But come 1 October 2017, the cap will be removed, meaning all sugar beet can be used for human consumption. This could make it nigh-on impossible for farmers in ACP and so-called ‘least developed countries’ (LDC), such as Jamaica, Fiji and Belize, to compete.

“Sugar cane farmers face ruin,” warns Fairtrade Foundation CEO Michael Gidney. “In Malawi, for example, without market access farmers and their families will go back to being hungry. I think this is the EU being asleep at the wheel, and the decision they’ve taken to remove the cap on beet production is effectively going to flood the market with beet.” Beet is much cheaper than cane in many cases, Gidney adds, “so at a stroke policymakers in Brussels have taken away a competitive opportunity for millions of farmers across developing countries and the ACP group where sugar is grown. Most of these communities have relied on sugar for generations.”

Sugar Crash highlights figures from the Department for International Development (DFID), which claims the end of the quota could push 200,000 people in ACP countries into poverty by 2020.

Although the EU has provided funding to support cane farmers through the transition, Fairtrade believes this has not always been directed effectively, and in many cases its impact will not be felt in time. It is calling on the EU to lead a new initiative that brings together government and businesses to jointly fund and deliver programmes to support cane farming communities to avert the crisis. With the UK accounting for more than a quarter of the EU’s sugar imports from ACP and LDC countries, it believes DFID in particular should take a lead.

Exaggerating the problem?

The UK government, however, is so far proving reluctant. “We have been working very closely with the European Commission and the private sector to ensure support is available for sugar farmers in developing countries affected by these changes,” is as far as a government spokesman would go this week.

Indeed, some critics believe Fairtrade is overstating the situation, as farmers in ACP and LDC will still have duty-free access to the EU. The EC is particularly critical of Sugar Crash and claims it “gives an inaccurate report of the EU sugar regime”. An EC source says: “Production quotas and the managed markets are no longer viable. They build in rigidities and create vested interests. It is not the case to claim distorted markets are required by the Sustainable Development Goals.”

Sugar cane growers may well switch their focus to new markets to offset some of the lost business in the EU. Indeed, emerging economies such as India, China and Japan present an opportunity thanks to their growing sugar consumption, as does North America. “But gaining access to them can’t happen overnight,” warns Gidney. “It’s going to take generations for small scale farmers in ACP countries to develop an alternative livelihood.”

As for the EC’s criticism, Fairtrade believes duty-free access isn’t enough to protect the livelihoods of its farmers, claiming the reform makes such access financially unviable.

Ruth Digby, chief sugar adviser of the NFU, agrees “there is no question that it will have knock-on effects for ACP and LDC countries”.

And the impact isn’t just limited to developing countries. Dramatic changes are also on the cards for UK sugar players. “It will mean greater competition and price volatility as we are seeing with milk pricing,” says Digby.

Consumer support

In the end, much will come down to consumers and retailers. Retailers such as Waitrose, Sainsbury’s and The Co-op offer own-label Fairtrade sugar, and a number of brands source their sugar on Fairtrade terms - Kit Kat, Cadbury Dairy Milk, Ben & Jerry’s, Tate & Lyle to name a few. The Foundation hopes this will continue to be the case.

“We share the concerns of Fairtrade about the future of the small cane sugar growers when EU beet quotas end in 2017,” says Ian Bacon, president of Tate & Lyle Sugars. “It will be critical that Fairtrade continues the good work of helping consumers understand the impact of the choice they make when they purchase Fairtrade sugar.”

If the warnings in Sugar Crash are to be believed, the livelihoods of thousands of people could well depend on it.