Small Pacific island sugar producer Fiji has been warned that it could lose a A$350 million (207 million euros) contract to supply raw sugar to Europe unless the quality improved, Fijian news groups reported on Thursday. Pacific Island Broadcasting Association (Pacnews) said that visiting executives from British sugar group Tate & Lyle said Fiji was at risk of losing its annual quota to supply around 165,000 tonnes of sugar to the E.U. after a consistent drop in quality. Tate & Lyle chief John Walker said his company was forced to spend an additional A$1.31 million last year to refine Fijian sugar that had very high levels of dextrin, caused by burnt or stale sugar cane supplied for crushing. Fiji's four sugar mills have until 2006 to improve quality, before the current contract between Fiji and the E.U. expires. Pacnews reported that Fiji Sugar Marketing managing director John May said the only solution would be to introduce a "quality cane payment system," which would monitor the quality of sugar supplied to mills. No officials in Fiji's sugar industry could be contacted by Reuters on Thursday because of a public holiday in the Pacific nation. Sugar production is Fiji's second largest industry, behind tourism. As its 2001 sugar crush winds down, Fiji is headed for production of approximately 330,000 raw tonnes this season, down from 341,000 last year.