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EU food and drink sector backs Brussels decision to end sugar quotas

By Jane Byrne , 13-Oct-2011

The EU food and drink manufacturing sector has welcomed Brussels decision to abolish the EU sugar quota system by 2015, claiming it will allow a more market-focused sugar regime.

The announcement was made yesterday as part of the proposals on the Common Agricultural Policy (CAP) post-2013 reform package.

Sugar quotas should expire on 30 September 2015, revealed the European Commission, in a publication outlining the future agriculture policy for the 27 member states.

The quotas currently restrict the amount of sugar that can be produced for the EU’s domestic market.

“Restrictive EU production quotas have little place in meeting the challenges of delivering EU and global food security. Particularly due to the current supply difficulties sugar users are facing,” said Robert Guichard, president of CIUS - an association of food and drink makers including Cadbury, Coca-Cola, Danone, Unilever and Kellogg’s, among others.

The trade body argues that establishing market dynamics in the EU sugar market will help the whole value chain to meet future supply and sustainability challenges.

In August, the world’s biggest food producer Nestle called for significant changes to the EU sugar regime including the phasing out of sugar quotas by 2015.

The move to do away with the quota system is aimed cutting prices for the key food and beverage manufacturing ingredient within Europe, as well as making the sector more market driven and competitive.

System failings

The past 18 months were particularly challenging in terms of sugar supply in the European market, with world market prices above EU levels for the first time, and sugar exports from emerging nations, normally imported into the EU duty-free, diverted to the world market to benefit from those more attractive prices.

“This has shown up one or two failings in the system as it currently stands,” a Brussels source told FoodNavigator.com last month.

The CIUS stressed the process of deregulating the EU sugar sector should begin without delay in 2015 and the elimination of quotas should also be accompanied by reductions in import tariffs to a level that will “stimulate competition in the market.”

Such a move, continued the trade group, would also bring sugar into line with the majority of EU agricultural commodities, many of which have been open to the market for nearly ten years.

Competitiveness hit

Food and beverage industries in the EU, said the CIUS, continue to experience immediate supply difficulties with significant detrimental impact on their competitiveness, as a result.

Robert Guichard continued: “The current system is clearly not working, supporting the call for long term change. Members continue to struggle to secure supplies making it very difficult to establish long term supply relationships and contracts.”

And the industry representatives claim that there will be little let up in these difficulties for the foreseeable future, which they directly attribute to the “weaknesses of the current EU sugar regime”.

Cane and beet competition

João Pereira, president of the European Sugar Refiners’ Association (ESRA), commented that the CAP reform proposals are “silent on how fair and equal raw material supply arrangements for Europe’s cane sugar refiners will be established.”

But the cane sugar refiners group said it is willing to engage with Brussels in the coming months to ensure “fair and equal terms of competition on raw material supply for both the cane refining and beet manufacturing sector.”

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