The 'ignored’ commodity: Confectioners face tough choice on sugar sustainability

By Oliver Nieburg contact

- Last updated on GMT

The candy industry can easily clean up its sugar supply chain by sourcing from developed nations, but will it be turning its back on those who need it most? Photo: Joe Woodruf – Bonsucro.
The candy industry can easily clean up its sugar supply chain by sourcing from developed nations, but will it be turning its back on those who need it most? Photo: Joe Woodruf – Bonsucro.
Sustainability in sugar has been side lined by the health debate, but the confectionery industry is a heavy user and must now decide whether it will support cane growers in the developing world, says Bonsucro.

The non-profit organization says sugar users have an important decision to make: Whether to source beet sugar in the developed world or to support smallholder cane producers in emerging economies.

Speaking to ConfectioneryNews, Bonsucro chief executive Simon Usher said food and drink makers can readily swap cane for beet for their white sugar needs to obtain a favorable price without impacting quality.

This shift is likely to become easier in Europe with the abolition of EU beet sugar production quotas next year, (see fact box) but Usher cautioned against such “short-termist, risk adverse strategies”.

He said the industry’s major players’ needs were so great that some firms cannot source beet entirely from Europe, so will require cane sugar from outside the EU and US and should source sustainably.

Factories in developing countries

The NGO has established a global sugarcane platform with members such as Ferrero, Mars, Nestlé and Mondelēz, intended to help companies source sugar sustainably from developing countries.

But Bonsucro says the confectionery industry is only just starting to engage in sugar sustainability, with many companies much further ahead in cleaning up cocoa supply chains.

Usher estimates that around 80% of use in confectionery is cane sugar, but adds that European manufacturers may source significant amounts of beet as it is cultivated domestically.

He said 70% of sugarcane is consumed in the country of origin.

“The challenge of sugarcane for global companies is less about what’s going into their factories in Europe and more what’s going in in other parts of the world,” ​he said.

Social and environmental challenges of sugar production

sugarcane wind
Photo: Joe Woodruf – Bonsucro.

Economic constraints

Sugarcane is the primary income source of many smallholder farmers in developing nations, according to Bonsucro.  “Too many growers suffer from low yields and high input costs, which leaves them with insufficient incomes and the inability to exit the poverty cycle,”​ says supply chain advisor Solidaridad.

Social issues

Child and forced labor​ is not uncommon in sugar cultivation in remote rural areas as its producers can be in absolute poverty. The agricultural sector employs an estimated 98 million children, according to the International Labour Organisation (ILO) in sectors such as sugarcane, cocoa, tea and coffee. But its numbers are not disaggregated by commodity. As in cocoa, many of the next generation sugar farmers are exiting farms and moving to cities, leaving an older cohort of producers. Solidaridad estimates perilous working conditions for sugarcane cutters in Central America have claimed around 20,000 lives​ through Chronic Kidney Disease of non-Traditional causes (CKDnT ).

sugarcane shards
Photo: Joe Woodruf – Bonsucro.

Environmental concerns

Sugar cultivation is also water-hungry and irrigation systems are poorly distributed and inefficient, according to Solidaridad. This can be problematic in areas affected by water shortages, and sugarcane may further damage the environment through improper pesticide and land use.  

There are around 15 million sugarcane cutters and 60 million small-scale sugar growers globally, according to Solidaridad. Brazil is the world’s largest sugar producer but the crop is also cultivated in many developing nations such as Swaziland, Thailand, India, the Philippines and Guatemala.

Largest commodity no-one cares about

Usher said sugar sustainability is below the radar in confectionery as NGOs have not taken as strong a stance as with other commodities, choosing instead to focus on the sugar health debate.

“I don’t think the confectionery industry has grasped this yet,”​ said Usher. “It’s the largest agricultural commodity that no-one cares about. It’s ignored and that’s something we are trying to put right.”

EU sugar quotas: ‘Disturbing trend’

sugar hand
Photo: Joe Woodruf – Bonsucro.

EU sugar beet production quotas will be abolished in 2017. Bonsucro chief exective Simon Usher said the move could spark a “disturbing trend”​ whereby manufacturers spurn sugar from Brazil or West Africa in favor of EU produced beet. He said smallholder sugar farmers in developing nations would struggle to compete with European sugar producers who can easily scale up. The UK government estimates​ EU sugar beet production will rise 6% by 2020. “The countries that will be affected most are the ones that are most vulnerable,” ​said Usher. European Sugar Users (CIUS), an association whose members include Mars, Mondelēz, Ferrero and Nestlé, had lobbied for an end to sugar quotas​ as it argued the system was harming SMEs competitiveness. Fairtrade International said the EU trade rules would push 200,000 people into poverty.

But he said some players such as Ferrero have begun to make progress, and hopes others will follow.

Ferrero has already committed to sourcing all its refined cane sugar from sustainable sources by 2020​. In 2014, it sourced 25% of its sugar from cane and 75% from beet. The company sources Bonsucro-certified cane sugar from Brazil and Australia for its EU and Canadian factories and was awarded Bonsucro's Leadership Award in 2014 for its commitments.

Sugar in candy: Traceability concerns

Confectioners and sweet snack producers are the biggest users of sugarcane in some markets such as India, while big brands like Mars, Mondelēz and Nestlé are all major buyers, said Usher.

The Bonsurco chief said the majority of users do not know the source of sugar used in company products. This lack of traceability has meant sugar is the least observed of all agricultural commodities by NGOs, he said.

The confectionery industry has pushed for cocoa sustainability, he said, as there is limited substitution in chocolate and little choice but to source from a tropical belt in developing countries.

“One of the biggest challenges we have with cane sugar is the ease of substitution​,” said Usher. “For the vast majority, it’s a low-cost traded commodity where people are agnostic about where it comes from.

“I think it will be a long time before sugar has the same level of campaigning.”

He added that while Bonsucro’s focus has been sugarcane, some beet is grown in China, Eastern Europe, Chile and North Africa, and faces its own sustainability challenges.

What can the industry do?

Usher said fair trade certification would allow smaller companies to play their part in sugar sustainability, but urged larger firms to go further.

One of the major certifiers, Fairtrade International, guarantees farmers a $60 premium per MT on top of the market price for sugar sold on fairtrade terms. Bonsucro also has its own certification for sustainable sugar mills and helps its members obtain certification.

But Bonscuro is pushing larger confectioners to engage with suppliers to obtain full traceability and support growers in regions that need help the most.

It acknowledges it will not be an “easy ride”,​ since many large firms have multiple suppliers.

“Certification is a useful tool,”​ said Usher, “but that’s all it is​.” He warned that commercial growers can often obtain certification easily, while impoverished smallholders may struggle.

According to Usher, Ferrero and Unilever’s approaches provide a model for the confectionery industry. Bonsucro will also host a sustainable sugarcane forum​ in London on December 1-2, 2016, advising companies how to establish sustainable supply chains. The forum features Mars Chocolate's senior sourcing manager David Pendlington.

Unilever and sustainable sugar

magnum unilever ice cream - memoriesarecaptured
©iStock/memoriesarecaptured

Unilever has set a target to source all of its cocoa and sugar sustainably by 2020.​ Its main sugar suppliers are CristalCo and Tereos and it sources sugar from France, Brazil and India. Sugar accounts for 6% of Univelver agricultural raw materials. It has been working with Bonsucro in the Americas and Asia to improve its sugar supply chain. It is aiming to obtain all its sugar from Brazil as Bonsucro certified by 2016. The company worked with CSC Sugar​ to help its supplier relocate its liquid sugar plant from Missouri to Covington, Tennessee, a short distance from Unilever’s Convington ice cream plant. This led to a reduction of 1.5 million pounds of carbon emissions from tucking miles, allowing both firms to reduce their environmental impact. Unilever’s raw sugarcane is also melted rather than refined to obtain syrup. This is in contrast to the majority of food and beverage companies that source pure white refined sugar with only the sucrose molecule, a process that is energy and water intensive and uses chemicals.

[Bonsucro has more than 450 members in 41 countries and represents around 24% of the world’s land under sugarcane. Its members include Cloetta, Mars, Kellogg, General Mills and Olam.]

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