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Sugar Update

EU greets added sugar supplies as US confectioners row with producers

By Oliver Nieburg+

20-Nov-2012

EU sugar users welcome added supplies, while US users quarrel with producers
EU sugar users welcome added supplies, while US users quarrel with producers

Sugar users in the EU have welcomed plans to release more sugar to the market, while counterparts in the US have condemned the sugar lobby for allegedly exaggerating available supplies.

The contrasting circumstances come amid efforts in both regions to reform sugar policy.

CIUS: No levies on additional EU sugar

In Europe, the EU is finalizing reforms to the Common Agricultural Policy (CAP), which are expected to see sugar quotas scrapped.

The European Commission recently announced plans to release 1.2 m tons of additional sugar onto the EU market as an interim measure following calls from European Sugar Users (CIUS), an organization whose members includes Mars, Nestlé, Ferrero and Mondelez International.

“1.2m tons is the minimum volume to improve the stock situation. This should be revised later if consumption is higher and imports lower than expected,” said CIUS.

The CIUS has called for sugar quotas to be abolished and import tariffs to be lowered in upcoming CAP reforms.

It wants the additional sugar due to be released to be free from levies and import duties.

It said that the Commission has previously justified levies due to differences between the world market price and the EU reported price.

However, the CIUS claimed this was unfair as the world market price failed to account for transport costs and is currently similar to the EU reference price.

The average sugar price in the EU has increased by 64% since the last marketing year, according to the CIUS.

US: Confectioners battle producers

While additional supplies have been welcomed in the EU, US confectioners are engaged in spats with sugar producers as Congress revises the sugar program under the 2012 Farm Bill.

The Coalition for Sugar Reform recently launched its “Unwrap the Facts” campaign, which criticizes lobbying tactics from sugar producers.

Larry Graham, chairman of the Coalition and president of the National Confectioners Association (NCA), said. “The sugar lobby continues to distort the facts about the sugar program and its costs to consumers and businesses”

“While they continue to falsely claim that the sugar program operates at no cost, the fact is, the wasteful sugar program is a sweet deal for sugar growers, but it costs American consumers and businesses $3.5bn a year and puts 600,000 US sugar-using industry jobs in jeopardy.”

Producers bite back

The American Sugar Alliance, a producer’s organization, has counter-claimed that confectioners are enjoying huge surpluses and are “padding their profits” with higher margins than major oil companies and casinos.

Phillip Hayes, spokesperson for the American Sugar Alliance, said  “Big Candy says it needs rock bottom prices with surpluses as far as the eye can see, and it has spent millions of dollars lobbying Congress with the message that the no-cost US sugar policy stands in the way of that goal.”

He pointed to U.S. Department of Agriculture (USDA) data that he claimed showed big increases in surplus stocks. See data HERE.

“Now that their wish has come true, perhaps they can acknowledge that current US policy is not the bogeyman they pretend and can stop lobbying to put US  farmers out of business,” said Hayes

Graham argued that inventory and refined sugar prices remained higher than historic norms and were 50% of the world price.

A 2006 report from the US Department of Commerce found that “for each one sugar growing and harvesting job saved through high US sugar prices, nearly three confectionery manufacturing jobs are lost”.

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