The European Commission has released a fourth round of out-of-quota sugar for the current marketing year at reduced levies in a bid to boost EU supplies as prices soar above world levels.
More than 300,000 metric tons (MT) will be released through a combination of imports and EU-grown supplies outside the production quota.
The EU currently has a 13m MT cap on domestic sugar production that looks set to run until 2020, unless a deal is struck to end the system earlier. See HERE.
Confectioners have complained that the quota system limits the available stocks on the market and hikes the price.
What’s been released?
The relevant EC committee is allowing 150,000 MT of domestically produced out-of-quota sugar to be released on the market at a reduced levy of €148 per MT (out-of-quota sugar typically costs €500 per MT). Producers can either use this sugar for non-food purposes, or hold it back until the next year when it would be defined as “quota” sugar for that year.
The committee has also accepted imports of 150,883 MT of raw sugar at a minimum tariff of €141.1 per MT - the same rate as tenders in February and May. In addition, 44,255 MT of white sugar have been accepted at a minimum tariff of €161 per MT.
Imports that are not preferential usually cost €419 per MT for white and €339 per MT for raw sugar.
EU price cruises above world price
European Commission spokesman Roger Waite told ConfectioneryNews: “Despite the fact that EU sugar stocks are increasing, sugar prices in the EU price monitoring system are €731 per MT for April and the gap with the world market (€360 euro per MT) remains high. Therefore the Commission will continue to monitor the market situation and will not hesitate to envisage further measures if appropriate.”
Robert Guichard, sweeteners procurement manager at Mondelez International and president of European Sugar Users (CIUS) previously told this site that exceptional measures such as these had become common in the past three years, making the measures far from exceptional.
CIUS is calling for an end to the quota system that has left its members (including Mars, Mondelez, Ferrero and Nestlé) unsure when their sugar would arrive, harming competitiveness and propensity to take risks.
Decision due on the quota
The last stretch of negotiations on whether to keep quotas will be in the week beginning June 24.
The Council, Parliament and the Commission will debate the issue this month after which a decision will be finalized.