Ricardo Migueláñez. Agricultural engineer
The beet sector situation in Spain is worrying. Many producers are voicing their concerns and the numbers support their claims: the area used for beet growing has declined in recent years, mainly in the two primary zones (north and south), a trend which looks set to continue this year. Moreover, farmers may lose the bulk of their coupled support for the next harvest.
According to Miguel Blanco, General Secretary of COAG (Coordinator of Organizations of Farmers and Stockbreeders): "Beet farmers expect another slump in planting this season if the industry doesn't increase the price per ton for 2014/2015. The current price is 38 or 39 euros on average with subsidies; however, those are coming to an end and the price continues to slide, with the result that planting next year is expected to decline".
For 2013/14, approximately 26,600 hectares have been planted, of which 3,600 are outside Castile-León (Álava and La Rioja) and around 23,000 are in that region. Acor has 8,600 hectares and the remainder belong to Azucarera.
To avoid a further decline in beet cultivation, Blanco trusts that "the industry will react and pay more"; moreover, he says that COAG will not accept less than 42/43 euros per ton in the next harvest, because "a lower price disincentivizes farmers". To that end, he considers that "the industry must decide if it's still interested in making sugar from beets, which seems to be the case, instead of refining imported products. With that in mind, the price must be raised to allow farmers to stay afloat since, without farmers and beets there will be no mills, no sugar, no social fabric and no jobs associated with the sector."
According to Blanco, prices in Spain are lower than the European average. "Throughout the European Union, the industry is paying higher prices than in Spain. In England, British Sugar, which owns Azucarera, has reached an agreed price of 38 euros with a progressive increase to 42 in March, and prices are also higher in France, Germany and the Baltic countries."
With regard to interprofessional relations, Asaja (Young Farmers' Agricultural Association) considers it very important that management at British Sugar "puts all the cards on the table and sheds light on why British beet farmers will be paid between 4.8 and 9 euros more per ton, and up to 42 euros per ton, while appreciation is not permitted in Spain." According to Donaciano Dujo, president of Asaja in Castile-León: "As Spain and the UK are part of the same single market, i.e. the European Union, it's incomprehensible how the Spanish subsidiary would allow lower prices to be paid. The industry must increase farmer compensation because it is its duty, because it can and because the sector needs it".
It is a complex situation that processing companies must address with a view to convincing farmers to remain committed to this crop.
In terms of zones, production is concentrated in the north, and the cooperative Acor has been especially generous, providing its members with higher remuneration than British Sugar (which owns Spanish company Azucarera).
Adverse weather during the planting season was partly responsible for the smaller cultivated area, which was reduced by 5,000 hectares, almost all of which corresponded to Azucarera's quota. If the right measures aren't taken this year, the situation will repeat itself.
The president of Asaja in Castile-León, Spain's main beet-producing region, has asked the governments "to believe in this sector and to guarantee its continuity, providing it with the necessary assistance, either through coupled support or other specific aid which enables it to address the situation as from 2017, when quotas will be eliminated."
The sector's future
The elimination of quotas will be a major challenge for the entire sector in Europe, not only in Spain, where the threat of an increase in production in northern countries, especially France, further complicate the industry's future. There's also a risk of increased isoglucose production, which is dependent on corn prices in international markets and is a substitute for sugar in soft drinks, with the result that it would have a direct effect on beet production.
According to Spain's Ministry of Agriculture, Food and the Environment (MAGRAMA), Spain produced 531,845.28 tons of sugar during 2012/13. It's worth nothing that the European Commission's most recent data on Spain's sugar production (423,784 tons during that campaign) is incorrect, despite many efforts by MAGRAMA to rectify it.
In the Iberian market, sugar production totals around 1.5 million tons. Europe's quota for Spain is 498,000 tons; the remainder is refined sugar and amounts that are imported from other European countries, mainly France. In Spain, sugar is refined at mills in Olmedo and Guadalete (Azucarera), and at the company's plants in the north where they also mill beets.
Another situation worth mentioning with regard to sugar produced in Spain and which has been in the news in recent months involves Acor, which has become a main supplier of sugar to Mercadona, currently Spain's leading supermarket. Any company can be a supplier, as long as it has the production and logistical capacity to provide for the entire Peninsula; however, this battle is going to be complicated and may involve certain exclusive suppliers of Mercadona whose products contain sugar.
Mercadona sets trends, and selling products through the chain requires very competitive prices and notably enhances brand visibility; however, other stores also represent an important market that is up for grabs.
Outlook for the 2013/2014 season
Azucarera expects to receive 1.5 million tons of beets at its mills in the north: 568,000 in Toro, 432,000 in Miranda de Ebro, and 500,000 in La Bañeza.
In the south, around 8,000 hectares are expected to be planted. If these plans materialize, Azucarera could jeopardize the production of its assigned quota (378,000 tons) even though it already has a yield of over 20,000 tons (production from the previous season transferred to the current one). Planting should begin very soon in the south and the sector will be waiting to see if it meets those figures, since the cultivated area declined by 5,000 hectares in the previous season.
Acor has notified the Mesa Nacional (a national board with representatives from the sugar and beet industries) that it expects to receive 850,000 tons, i.e. enough to produce slightly more than its quota (120,000 tons).