Starch sweetener sector braces for sugar reform impact
future for cereal starch sweetener producers, claims the AAC.
And despite a last-minute compromise by the European Council, the Association des Amidonneries de Céréales (AAC) says that its arguments concerning the total impact on the sector have been ignored.
"While we appreciate the modest improvements compared with the original proposal, such as a 50 per cent reduction to the restructuring levy and the granting of 75 per cent of the restructuring aid, in the event they abandoned isoglucose production quotas and the impact remains very serious indeed," said AAC managing director Lorenza Squarci.
"The profitability of the industry will be severely reduced and thereby its ability to invest in R&D and develop European green chemistry based on cereal starch applications."
The AAC says that the isoglucose production increase allowance of 300,000 tons will not be enough to allow the sector to cope with the competitive impact of expected sugar price cuts, nor the expected losses in other cereal starch sweeteners.
Squarci said that it was simply insufficient to build up economies of scale with only one fourth of the volume requested. The association previously warned that without a substantial increase, major job losses could be expected among the sector's 15,000 employees.
"We are disappointed that the reform does not make a serious move towards the liberalisation of isoglucose quotas which would have given all starch producers the possibility to diversify their sweetener production and whilst the minimum sugar beet price will decrease, cereal prices will not change," said Squarci.
The cereal starch sweetener industry has almost 40 manufacturing sites across Europe. Between them, they produce five million tons of natural sweetening products per year - accounting for 70 per cent of their overall total production, including isoglucose.
These natural products are produced from over 13 million tons of European cereals. In addition, the starch industry uses crops grown on more than two million hectares, i.e. roughly the same area used to grow sugar beet.
The EU agreement means that the sugar sector will come into line with the CAP reforms of 2003 and 2004. Based on the Council's decision, the Commission will now start preparing the legal text and the provisions that will be effective in the transition to the new sugar regime.
Only when that has been finalised and the European Parliament has given its opinion about the sugar reform in January 2006, can the Council adopt the sugar regime in its final form.
The AAC will now ask the commission to take what it sees as appropriate and necessary actions in the framework of the cereals common market organisation.
