Italian Sugar 2011

An Expert's View about Sourcing in Italy

Last updated: 7 Apr 2011

MY 2010/2011 Italian beet sugar production decreased to 440,000 MT due to severe weather conditions as well as to the cercospora blight.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 4/4/2011 GAIN Report Number: IT1108 Italy Post: Rome Italian Sugar 2011 Report Categories: Sugar Approved By: James Dever Prepared By: Stefano Baldi Report Highlights: MY 2011/2012 sugar beet area is estimated at 50,000 hectares (ha), 21 percent down from the previous MY due to the elimination of CAP payments, increasing prices of other crops (mainly corn), heavy rains that occurred during the sowing period, and to early spring frosts. MY 2010/2011 Italian beet sugar production decreased to 440,000 MT due to severe weather conditions as well as to the cercospora blight. General Information: Production, Supply and Demand of sugar 2009/2010 2010/2011 2011/2012 Sugar MY begin 10/2009 MY begin 10/2010 MY begin 10/2011 Current post data Current post data Current post data Planted area 61 63 50 Sugar beet production 3,307 3,550 2,800 Beginning Stocks 0 0 0 Beet Sugar Production 509 440 400 Raw Imports 52 55 60 Refined Imp.(Raw Val) 1,418 1,500 1,600 Total Imports 1,470 1,555 1,660 Total Supply 1,979 1,995 2,060 Raw Exports 6 5 6 Refined Exp.(Raw Val) 40 45 30 Total Exports 46 50 36 Human Dom. Consumption 1,932 1,945 2,024 Other Disappearance 0 0 0 Total Use 1,932 1,945 2,024 Ending Stocks 0 0 0 Total Distribution 1,979 1,995 2,060 General information The implementation of the new EU Common Agricultural Policy (CAP) for the sugar sector resulted in a significant reduction of subsidies to both farmers and refineries, which lead to the closure of most sugar refineries (15 plants shut down) and a drop in the number of sugar beet growers. As a result, sugar beet area and production dramatically dropped. Currently only 4 plants refine sugar in Italy (3 in the north and one in the south) and overall domestic white sugar production covers less than one third of domestic production. Italian Sugar Beet Area and Yield (1999=100) Source: Faostat. Production MY 2011/2012 sugar beet area is estimated at 50,000 hectares (ha), 21 percent down from the previous MY due to the elimination of CAP payments, increasing prices of other crops (mainly corn), heavy rains that occurred during the sowing period, and to early spring frosts. Although the Italian government budgeted aid for the sugar beet industry for both MY 2009/10 and 2010/11, this aid has not been paid yet to refiners or farmers, increasing uncertainty and disincentives. For MY 2011/12, farmers and sugar companies have agreed to establish a price of ?39.7/MT in the north and ?45/MT in the south, which should make sugar beet growing still profitable. This price includes ?26.29/MT processor price for raw beet, ? 3/MT refinery?s integration, ?4.51/MT per Article 68 (EU Reg 73/2009), and ?5.90/MT if the sugar beet pulp goes for bioenergy use (biogas plants). No bioethanol is produced in Italy from sugar beet derivatives. MY 2010/11 Italian beet sugar production is estimated at 440,000 MT, down 13.5 percent from previous MY. Severe weather conditions occurred during most of the growing season and the cercospora blight significantly damaged both the quality and quantity of the crop, especially in the North of Italy. Heavy rains and hard frosts occurred in March and forced farmers to delay sowing. Rain also negatively affected the crop in May, causing water stagnation, and again in August, which reduced sugar content. As a consequence, the average sugar content was 14.59 percent while sugar beet yield per hectare did not increase as is typical when sugar content is low. Average sugar yield is down to 7 MT/ha compared to 8.4 MT/ha in MY 2009/10. Despite low yields, beet production in MY 2010/11 was marginally profitable as prices were above ?40/MT. Consumption Sugar consumption has increased in Italy in the last few years and currently fluctuates between 1.9 MMT and 2 MMT. Trade Italy imports around 70 percent of its domestic demand due to the declining production trend. In MY 2009/2010 Italy imported approximately 1.5 MMT of sugar, almost 25 percent more than the previous year. About 95 percent of imports consist of refined sugar, mainly from other EU MSs, including France, Germany and the UK. Italian sugar exports are minor and totaled 46,000 MT in MY 2009/2010. Italian Refined* Sugar Imports (?000 MT) 2008/2009 2009/2010 Oct-Dec 2009/2010 Oct-Dec 2010/2011 EU-27 955 1.078 274 235 Germany 366 467 124 107 France 380 393 88 103 United Kingdom 170 127 43 9 Slovenia 1 22 3 7 Austria 17 20 3 5 Poland 0 15 0 1 Denmark 3 13 5 0 Extra EU-27 76 130 15 53 Mauritius 0 71 0 37 Swaziland 23 23 3 6 United Arab Emirates 8 10 5 0 World 1.031 1.208 289 288 *HS code 170199, not expressed in RSE Source: GTA. In this report, all sugar is in raw sugar equivalent (RSE) unless otherwise noted. The PSD in this report only pertains to sugar as defined by HS 1701. It hence excludes sugar beet production destined for fermentation or other industrial purposes. Conversion factors and methods used in this report: MY = marketing year for sugar October- September Raw cane sugar = 1,07 X Refined cane sugar Raw beet sugar = 1,087 X White (refined) beet sugar
Posted: 07 April 2011, last updated 7 April 2011

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