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THE HONEY AND SUGARS MARKET IN THE EU

Posted by: Sudiro | Latest News | Monday Feb, 16 2009 10:45:00 AM

Consumption

Honey

The EU accounts for approximately 24% of the world’s honey consumption. Because of the maturity of the market, consumption will not show enormous growth, although between 2002 and 2006, EU consumption of honey increased by approximately 2% annually on average. An important factor contributing to this growth is the strongly increased interest in a healthy life style and, consequently, in the consumption of health food. Honey is a completely natural product with several health promoting properties and therefore fits well in this trend. A threat to the reputation of honey as a natural health product and, subsequently, to the consumption of honey are the bans on honey imports. In recent years bans have been imposed on honey imports from countries which exported honey contaminated with prohibited substances, or which did not have an appropriate testing programme in place.

Increased concerns about the effects of intensive farming on the countryside and on the environment in general have also intensified interest in organic foods. Although environmental concerns are shared by a much smaller group of consumers, organic food products also profit from the general interest in natural products as they are perceived to be purely natural.

Sugars

The EU consumes roughly 12% of the world’s sugar. Between 2002 and 2006, the EU consumption increased by 6% annually on average in terms of volume. Momentarily, most of the sugar consumed in the EU is still beet sugar. However, the EU sugar regime reforms will most likely change this situation dramatically in the coming years, in favour of the consumption of cane sugar.

The only notable threat to the sugar market in general is the trend towards more sugar-free products. However, even though sugar-free products are in higher demand, sugar substitutes themselves are also under pressure from the natural health trend, as most of these sweeteners are artificial as opposed to natural. Consumers perceive artificial products to be less safe for their health than natural products and are therefore turning away fro artificial sweeteners as well.

Production

Honey

The EU is an important producer of honey, accounting for around 14% of the global honey production. A large part of this growth was realized in Eastern Europe, notably Hungary and Poland. The new member states Romania and Bulgaria also significantly increased their honey production. Due to the accession of these countries to the EU, the self-sufficiency rate of the eu increased by almost 10% to approximately 60%.

Sugars

The EU sugar market was a highly protected market until recently. Nearly all demand for sugar was met by domestic production, which was protected from low-priced imports. Currently, the EU sugar sector is experiencing major changes, due to the EU sugar regime reform. The key elements in the reform are the price cuts for sugar produced in the EU. This will lead to considerable decreases in production of sugar in the EU, as any producers are not able to remain competitive with the lower prices. The change from beet sugar to cane sugar will not have further consequences for total sugar consumption. However, it will have a large impact on the origin of the sugar. At first sight, the EU sugar regime reform and the subsequent decline in EU sugar production seem to open up new opportunities for all developing country producers. However, in the reformed EU sugar market, the major competitors to developing country exporters will not be EU producers. Instead, they will be the large-scale exporters in the world’s most competitive producer countries.

Trade channels

Honey

Bulk imports of reach consumers after packing by packers or processing by industrial users. Pre-packed honey is also sometimes imported, but seldom from developing countries. Importers usually combine the functions of importing honey into the EU with processing, blending and packing the honey.

Sugar

Traditionally, most raw cane sugar was imported by a small number of sugar trading companies. However, with decreasing sugar beet production in the EU, European refineries will increasingly focus on processing cane sugar. It is expected that an increasing number of refineries will obtain import licences and import the cane sugar themselves. This is also expected to affect imports of raw cane sugars, which are not for refining. Currently, the most important (conventional) traders of cane sugar are located in The United Kingdom. This is probably due to the historical ties between the UK and most developing-country sugar exporters. After the complete implementation of the EU sugar regime reform, it is expected that only a limited number of very large refineries will come to dominate the conventional sugar market. This market the conventional market less accessible and less attractive for developing country producers of raw cane sugar, as quantities traded will become increasingly large. However, it can be expected that refined cane sugar will also be increasingly imported, as it can be produced at a lower price than the refined beet sugar in the EU.

Imports

Honey

The EU27 imported honey worth €348 million in 2006. Developing countries together supply almost half of the EU’s total honey imports. Imports fluctuated significantly between 2002 and 2006. This was due to large price increases as a result of import bans on honey from several countries such as China and Brazil. These bans have been lifted again, because the worldwide supply of honey is decreasing and is resulting in high price increases.

Sugars

Imports of sugars, except those of molasses, are increasing. They are expected to increase particularly fast from 2008 onwards, when prices of imported sugar go down as a result of the EU sugar regime reform. Brazil is expected to become the principal supplier after reforms are fully implemented, as it is the world’s major producer of low-priced cane sugar.

The EU sugar regime reform is a major threat to some developing countries, as it will significantly lower the price of sugar from the ACP countries (African, Caribbean and Pacific). These countries were formerly able to profit from the high sugar prices in the EU and the Sugar Protocol. The Sugar Protocol is an agreement between the EU and the ACP countries on the supply of sugar from the ACP countries to the EU at guaranteed prices. These prices are, in practice, equal to the prices which EU producers received, and will also decrease because of the sugar regime reform. However, some countries will still have preferential access through the Everything but Arms Treaty.

Source: CBI-PPIE(sdr)