The Real Reason France Is Rushing Its Production Of Sugar

Although the U.S. has seen energy prices drop from their record highs earlier this summer, Europe is still facing skyrocketing power costs, as much of the continent is at least partially dependent on natural gas from Russia, which has reduced supplies and continues to threaten more cut offs in light of the European Union (EU)'s support for Ukraine. CNN Business has reported that energy prices have been the lead driver of Europe's record-breaking inflation this year. And on August 31,  prices spiked again as Russia's Nord Stream 1 pipeline was temporarily shut down for maintenance. Fears that Russia may shut down the pipeline for good to spite the EU have led many European countries to stockpile gas and begin planning for shortages.

One industry which is taking drastic measures to avoid a potential disaster is the French sugar market. While most people would most readily associate sugar production with hot-climate countries like Brazil and India, World Population Review notes that France is the ninth largest sugar producing nation in the world, and the leader of sugar production in the EU. This is thanks to its ample supply of sugar beets, which Encyclopedia Britannica notes are usually harvested beginning in late September or the early days of October. This year, however, Reuters reports that France's two leading sugar producers are pushing production schedules up, preparing to open their factories as soon as next week in order to avoid a potential winter shut-down should the country need to ration natural gas.

Heading off demand

As Reuters explains, sugar production is an energy-intensive process and French factories rely on natural gas to power it. Production usually runs from late-September through February, however, the French government has warned industry leaders that businesses will be the first sector impacted if stricter regulations on gas are needed this winter. France is particularly worried about the possibility of a gas shortage because over half the nation's nuclear reactors — which are responsible for 70% of the country's energy — are undergoing maintenance (per U.S. News).

In anticipation of a potential shut down or potentially soaring energy costs, Reuters reports that sugar manufacturers Tereos and Cristal Union have opted to push up their production and are offering incentives to beet farmers who are willing to begin their harvests early. The hope is that by beginning production early, the companies will be able to finish production before the coldest months of the year when gas would be in most demand for heating and electrical needs. It is a risky move since sugar beets yield less sugar if they are harvested too early. However, a Reuters report weeks ago suggested France's sugar beet harvest was expected to exceed the five-year average, despite the country's hot summer and drought conditions.

The spike in natural gas prices has led to other industries cutting back production, including fertilizer, which has led to a European CO2 shortage. By getting ahead of further price increases, the sugar industry may avoid similar issues.