Trend Towards Reduced Sugar Content for Processed Food and Drink Products Taking Hold

Summary

Campaigns to reduce the sugar content of food and drink products are gaining traction with consumers, while coordinated efforts are underway to promote greater use of alternative sweeteners within the food and drink industry. The success of efforts to reduce ‘hidden sugars’ however will be strongly influenced by the UK’s future sugar sector trade policy. UK sugar tariff reductions post-Brexit could slow down current efforts to reduce sugar usage in food and drink products, undermining public health policy objectives.

The trend towards a reduction in the sugar content of processed food products is gaining ground amongst EU consumers. According to analysis from Mintel ‘consumers in European markets are cutting their consumption of sugar – in Poland and Spain 63% are actively reducing consumption or avoiding the ingredient altogether. Some 60% of Italians are doing the same, as well as 55% of French consumers and 54% of Germans’ (1).

Research commissioned by the labelling organisation Sugarwise found 73% of shoppers said they ‘might or would definitely switch from their usual brand to one carrying the Sugarwise logo’. Sugarwise certifies ‘food with less than 5g of free sugars per 100grams and drinks with less than 2.5g per 100 ml’. Sugarwise is expanding its activities to mainland Europe after initially launching in the UK (1).

The move towards reduced sugar usage in food and drink products will be facilitated by the initiative launched by the UK Food and Drink Federation (FDF) and the British Retail Consortium (BRC) to bring together data and analysis on the range of sugar alternatives and their practical use in different food and drink product manufacturing activities.

Ingredient manufacturers and researchers are being invited to provide details of products which would assist with industry reformulation efforts, aimed at reducing ‘hidden sugars’ in food and drink products without compromising  the quality, taste, safety or shelf life of the product. The initiative is explicitly aimed at taking food and drink industry reformulation efforts to the ‘next level’, in response to Public Health England’s guidelines and the UK government’s Childhood Obesity Plan, which targets a 20% reduction in sugar consumption by 2020 (2).

Meanwhile Sugarwise has called on the UK government post-Brexit to apply differential import tariffs, based on the sugar content of products imported into the UK. It has called for low or no-sugar brands to enter the UK market free of tariffs.  This is seen as necessary to address the current reality that ‘healthier products …tend to be more expensive’ (1).

Comment and Analysis

While the practicality of the proposals advanced by Sugarwise for the application of differential tariffs on food and drink imports based on their sugar content may be questioned, it does raise the broader question of the consistency of any UK government moves to liberalise access to the UK sugar market post-Brexit with government health policies aimed at reducing per capita sugar consumption both by imposing taxes based on the sugar content of products and through voluntary guidelines on sugar reduction in manufactured food products (see companion article ‘Multiple challenges pending for ACP sugar exporters’, 1 May 2017).

This issue of how the UK government plans to reconcile its public health objectives related to reducing ‘hidden sugars’ in food and drink, with pressures to liberalise import tariffs on agricultural products such as sugar, will be critical to the future pace of the erosion of the value of any preferential access which ACP countries may be able to reconsolidate on the UK for their sugar exports in the post-Brexit period.

Currently scheduled EU reforms are projected to reduce sugar prices on the EU market. However within 18 months, if current sugar sector tariffs are retained and the UK’s exit from the EU is mishandled such that MFN tariffs are introduced on UK/EU27 mutual trade, then UK sugar prices could recover strongly. At present EU27 suppliers provide around 20% of UK sugar consumption (mainly from France and Holland). This trade would grind to a halt if MFN duties were imposed on mutual UK/EU27 trade (see companion article ‘Agro-Food Sector Effects of the Application of MFN Duties on EU27-UK Trade:  An Area of Potential ACP Concern and Opportunity’, 18 August 2017).  In this context, with expanded UK beet production likely to meet only 15% of UK consumer demand by 2019, sugar shortages could emerge with disproportionately high increases in UK retail sugar prices occurring.

This could create new opportunities for ACP sugar exporters to the UK, if public health concerns around ‘hidden sugars’ were to outweigh the lobbying efforts of Tate & Lyle Sugar to secure a removal of current import duties on world market priced sugar (see companion article ‘What are the implications for ACP sugar producers of Tate & Lyle Sugars expectations on UK sugar sector policy post-Brexit?’, 10 April 2017) and UK Department of International Trade (DIT) efforts to fast track the conclusion of FTA arrangements with major developing country groupings such as those in the Mercusor Group.

Source
(1) Foodnavigator.com, ‘Healthiest products should be tariff free post-Brexit, says Sugarwise’, 25 August
http://www.foodnavigator.com/Policy/Healthiest-products-should-be-tariff-free-post-Brexit-says-Sugarwise
(2) Foodnavigator.com, ‘FDF-BRC-back-coordinated-approach-to-sugar-reduction’, 21Augusts 2017
http://www.foodnavigator.com/Ingredients/Carbohydrates-and-fibres-sugar-starches/FDF-BRC-back-coordinated-approach-to-sugar-reduction

Key words:    Sugar, Food and Drink Federation, British Retail Consortium, Sugarwise
Area for Posting: Sugar, Brexit

EU Milk Production Responding Once More to Price Recovery, with Buoyant Exports

Summary

Efforts to curb EU milk production expansion through financial incentives for voluntary production reduction are held to have met with some success in promoting improvements in farm gate milk prices. However rising farm gate prices is now stimulating a renewed expansion of milk production. This is despite prices still being below farm production costs. The EMB continues to call for a comprehensive Market Responsibility Programme which includes mandatory production restraint.

EU exports of SMP and fat filled milk powders to ACP markets continue to grow, with WMP exports being sustained. Certain ACP markets are also being targeted for increased cheese and butter sales.

While ACP markets remain of marginal significance to overall EU dairy exports, for certain products and for countries these markets collectively are of growing significance. In addition it should be borne in mind it only requires a small volume of EU exports to have a disproportionate effect on individual African dairy markets.

ACP governments seeking to grow their own milk production, as part of integrated dairy sector development strategies, will need to closely monitor current EU export trends, including in fat filled milk powders. ACP governments may need to look at what trade measures can be set in place to sustain local dairy sector development efforts. Extending the product coverage of EU MMO analysis of trade flows to include fat filled milk powders could assist in this regard. Read more “EU Milk Production Responding Once More to Price Recovery, with Buoyant Exports”

EU poultry meat production rising despite avian flu outbreaks

Summary

Avian flu outbreaks have left overall EU poultry meat production largely unaffected. Although AI related restrictions reduced EU poultry meat export volumes in the first half of 2017, particularly to South Africa the largest single export destination (-63%). Export growth to Gabon, DRC and Ghana while extremely high (+120%;96% and 69% respectively) could not outweigh declines in EU exports to South Africa and Benin. Beyond the current AI crisis in the EU, expanding imports of whole birds from Ukraine, the impact of lower feed costs on EU production and possible Brexit related disruptions of the EU27-UK poultry trade, could all fuel a further expansion of EU exports to Africa. This could continue to inhibit efforts to promote local poultry sector development across Africa. Patterns of Belgium poultry meat exports suggest African governments need to pay closer attention to the origin of poultry meat imports nominally originating in particular EU member states. Read more “EU poultry meat production rising despite avian flu outbreaks”

Tereos Expanding its Presence the East African Sugar Sector

Summary

The planned growth in beet production by Tereos growers in France and the expansion of sugar production in the Czech Republic, alongside concerns over a possible Brexit related disruption of exports to the UK is seeing a major international export drive being launched. While South Asia the main target market, a sales office has also been opened in Nairobi. Tereos also has an expanding sugar cane production presence in East Africa. These developments could greatly increase competition for less competitive African sugar producers.

Expanded EU sugar exports could also contribute to stalling ant recovery in global sugar prices, which would be bad news for all African sugar exporters, given EU price developments will increasingly shadow world market price trends post sugar production quota abolition. Read more “Tereos Expanding its Presence the East African Sugar Sector”

EU Farmers Continue Campaign for Stricter EU Citrus Black Spot Controls

Summary

EU farmers organizations continue to push for stricter SPS controls on citrus imports including the mandatory use of cold treatment. The South African citrus industry believes such a requirement would be an economic disaster for the industry. In the context of the Spanish citrus industry’s pressure for stricter EU SPS controls, the UK’s departure from the EU could offer a life line for the South African citrus industry. If SPS controls not relevant to UK agricultural production were lifted and duty free-quota free access to the UK market could be secured in line with the South African government’s current aspirations for post-Brexit trade relations with the UK, then less restrictive market access requirements would apply potentially opening up additional export opportunities to the UK market. Read more “EU Farmers Continue Campaign for Stricter EU Citrus Black Spot Controls”

Canadian dairy TRQ administration replicates earlier EC practices to consternation of EU Exporters

Summary

EU dairy exporters have complained Canada’s system for the allocation of the CETA cheese TRQ unfairly favours local manufacturers. The EU makes use of similar yet even more severe arrangements for TRQ administration in sensitive sectors, with under the EU-South Africa TDCA import licences being allocated only to ‘approved undertakings’ (EU dairy companies) on food safety grounds.  Important lessons in regard to how to ensure TRQ regulated imports under recently concluded EPAs do not undermine local producers can be learned from EU practices with regard to TRQ administration. These lessons could prove useful in ensuring that expanded imports from the EU in sensitive sectors do not undermine local agro-food sector development. Read more “Canadian dairy TRQ administration replicates earlier EC practices to consternation of EU Exporters”

Proposed EC Regulatory Initiative on UTPs Needs to be Extended to ACP-EU Supply Chains

Summary

The EC is currently undertaking consultations on new proposals to reduce unfair trading practices (UTPs), to which farmers are seen as being particularly vulnerable. UTPs are seen as stifling innovation and undermining on-farm investment through reducing the commercial viability of farming activities. The envisaged regulations aim to ensure a fairer distribution of value along agricultural supply chains, and increase both farm incomes and on-farm investment.

There is an urgent need to extend EU regulations on UTPs to ACP-EU supply chains since in some major sectors abuses of the weak market position of smallholder producers are endemic. Investments in poverty focused export orientated smallholder production will be undermined unless issues of UTPs along ACP-EU supply chains are addressed. Read more “Proposed EC Regulatory Initiative on UTPs Needs to be Extended to ACP-EU Supply Chains”

Report highlights vulnerability of EU poultry sector to liberalisation of trade in poultry meat

 

 

Summary

A January 2017 report on the relative competitiveness of the EU poultry sector highlights the importance of continued tariff protection and managed trade (using TRQ access) to the future of the EU poultry sector.  This EU policy practice contrasts markedly with EU policy advocacy in its dealings with ACP countries. Without trade protection competitive third country poultry producers would gain a strongly competitive position in the EU market, exporting far higher volumes of poultry meat to the EU. However, EU tariff protection cannot be justified on the basis of higher EU standards, which are small relative to the differences in price competitiveness between EU and major third country poultry exporters. Read more “Report highlights vulnerability of EU poultry sector to liberalisation of trade in poultry meat”

CBS controls remain threat to South Africa citrus exports to EU despite recent expansion

Summary
Contrary to EU delegation claims, South African citrus exports to the EU have not tripled since 2007.  Export volumes since 2012 have in fact been 6.2% below the recent peak level attained in 2008. This is in part attributable to stricter EU CBS controls which have fallen particularly heavily on emergent and previously disadvantaged farmers, who find themselves commercially excluded from EU market supply chains. On-going campaigning by Spanish citrus growers for stricter CBS controls remains a threat to South African citrus exports, particularly given the burden the existing control measures place on government plant disease control capacities.

The issue of the differential impact which EU SPS controls have on small emergent commercial farmers and large commercial farmers raises the need to improve the design and application of EU SPS controls so as to support smallholder participation in high value export supply chains whilst still ensuring underlying EU SPS controls objectives are attained. Read more “CBS controls remain threat to South Africa citrus exports to EU despite recent expansion”

Hard Brexit Could Severely Disrupt EU27-UK Agro-Food Sector Trade

Summary

While the EU has been urged to ‘take a more active role in trying to shape a Brexit outcome that is least damaging to its interests’, the ACP Group needs to ensure this approach is extended to the EU’s traditional developing country partners such as the ACP Group.  It is becoming increasingly apparent that for major ACP agro-food export product groups, Brexit could have a major impact on the functioning of existing ACP supply chains currently serving the EU28 market.  This needs to be fully assessed so that as the Brexit negotiations develop the key priorities for administrative and regulatory initiatives and marketing adjustment support are identified.    Read more “Hard Brexit Could Severely Disrupt EU27-UK Agro-Food Sector Trade”