The EU sugar sector

16-03-2020

The sugar sector in the European Union provides a source of income for many farmers and sugar manufacturers. The EU is the world's top producer of sugar beet and one of the main sugar manufacturers' and consumer markets. The EU sugar market had been one of the most heavily regulated markets in the agri-food sector for 50 years, until the quota regime ended on 30 September 2017, thereby introducing a new scenario for this segment of the economy. The sector faces challenges on a number of fronts. The changed policy environment which resulted from quota elimination, as well as trading conditions due to higher production levels, and the ongoing debate on the agreement with Mercosur have all contributed to a period of uncertainty for commodity prices. Maintaining a viable sugar sector is inextricably linked with the development of agriculture and rural areas. This means the parallel development of economic, social and environmental policy objectives. At an economic level, the fate of sugar farming will help to ensure farmers’ incomes as well as those in the wider processing sector. From a social perspective, keeping jobs in agriculture, manufacturing and services sectors will benefit rural communities. Sugar beet cultivation also allows farmers to diversify their income sources while improving soil quality and encouraging environmentally friendly agricultural practices. Future policy for the sector should focus on risk mitigation. It will also be mindful of the stabilisation of farm incomes; instruments to limit farm income volatility; linking sugar beet production with environmental and climate change objectives, and encouraging the development of a long-term risk management system. This briefing updates and expands an earlier publication, published in April 2018 (PE 620.224).

The sugar sector in the European Union provides a source of income for many farmers and sugar manufacturers. The EU is the world's top producer of sugar beet and one of the main sugar manufacturers' and consumer markets. The EU sugar market had been one of the most heavily regulated markets in the agri-food sector for 50 years, until the quota regime ended on 30 September 2017, thereby introducing a new scenario for this segment of the economy. The sector faces challenges on a number of fronts. The changed policy environment which resulted from quota elimination, as well as trading conditions due to higher production levels, and the ongoing debate on the agreement with Mercosur have all contributed to a period of uncertainty for commodity prices. Maintaining a viable sugar sector is inextricably linked with the development of agriculture and rural areas. This means the parallel development of economic, social and environmental policy objectives. At an economic level, the fate of sugar farming will help to ensure farmers’ incomes as well as those in the wider processing sector. From a social perspective, keeping jobs in agriculture, manufacturing and services sectors will benefit rural communities. Sugar beet cultivation also allows farmers to diversify their income sources while improving soil quality and encouraging environmentally friendly agricultural practices. Future policy for the sector should focus on risk mitigation. It will also be mindful of the stabilisation of farm incomes; instruments to limit farm income volatility; linking sugar beet production with environmental and climate change objectives, and encouraging the development of a long-term risk management system. This briefing updates and expands an earlier publication, published in April 2018 (PE 620.224).