The cost of sugar is soaring: What does this mean for food manufacturers and consumers?

The invasion of Ukraine by Russia in February 2022 led to a sharp increase in the cost of ingredients such as wheat, vegetable oil and dairy. However, sugar escaped this rise, remaining steady until last year (2023), when external factors began to impact producers globally and sugar prices started to climb.

Why is the cost of sugar rising?

Climate change has previously been identified as a major threat to the production of commodities such as coffee, with growers warning that rising temperatures and unpredictable rainfall have altered conditions under which coffee plants are grown, leading to decreased yields and increased vulnerability to pests and disease.

Now, the impact of the climate crisis is beginning to be felt by sugar producers, with poor weather conditions, including severe drought, across Europe severely damaging beet crops. The European Union (EU) is the world’s leading producer of sugar beet, producing approximately 50% of the total amount annually. Similarly, sugar cane production in major producing countries, such as Brazil, has also been affected by extreme weather conditions pushing prices up.

The global cost of sugar has risen to its highest level since 2011, following concerns of underproduction rates from countries such as Thailand, which is facing a severe drought. Similarly, India saw sugar prices jump by more than 3% in two weeks, in September 2023, reaching their highest level in six years. This followed a period of low rainfall in the country’s key growing regions and raised serious production concerns, for the upcoming growing season. It also raised concerns internationally as there are fears traders and industry officials could discourage the country from allowing sugar exports, putting further pressures on demand and again driving prices upwards.