Confectionery manufacturers in Germany are faced with sugar supply gaps and dramatic price rises despite EU regulatory intervention on the crucial food ingredient, argues the German chocolate and confectionery industry association.
"Supply tightness on the European market has not been solved despite EU action," stresses the BDSI.
At the end of last month, the European Commission said member states agreed to open a further 200,000 tonne import quota for raw or refined sugar at zero import duty and the possibility for further imports at reduced import duty via a tendering system.
The Commission said the action was in response to the continuing exceptional market circumstances which see the EU sugar market in deficit and world market prices above average EU levels.
It acted to ensure “a fluid functioning of the EU sugar market avoiding any undersupply in the next months.”
But the chairman of the German confectionery industry association, Dr Dietmar Kendziur, argues that it is ‘unacceptable that in the EU there is enough sugar for bio-ethanol production but not for food’.
First quarter of 2011
The BDSI said a survey among its members seeking feedback on the first quarter of 2011 indicates that 57 per cent of participants see their financial situation as worse than last year.
In the first quarter of 2010, only 40 percent of companies were so pessimistic, notes the BDSI, and it cites the commodity price fluctuations as the underlying factor in the Germany confectionery industry’s outlook.
The trade group stresses that the confectionery industry is under intense pressure due to the ongoing price volatility in sugar and other essentials such as wheat, cocoa, butter, nuts, vegetable oils and packaging materials.
In February, the BDSI noted that price cutting by food retailers coupled with substantial simultaneous increases in raw materials prices has undermined profitability in the German confectionery industry in 2010, but recovery in exports has served the sector well.
The German confectionery manufacturing sector, which includes a substantial proportion of small and mid-sized companies, has not been able to pass all or part of increased raw material costs on to the purchasers, said the association at the time.
Moreover, it noted additional cost pressures on the sector arising out of the fact that retail confectionery prices for 2010, citing the German Federal Statistical Office's official figures, were generally lower than in the previous year by an average of 1 per cent.