Regulatory fast-tracking needed to remedy sugar deficit, says food and drink lobby

By Jane Byrne

- Last updated on GMT

Related tags Eu sugar European union

The food and drink sugar users lobby has warned the European Commission that any further delays in intervention to remedy the sugar deficit in the market could result in even greater supply repercussions this autumn.

While welcoming the announcement by the EU sugar management committee last week that it is considering allowing additional imports and releasing out-of-quota sugar onto the bloc, the food and drink sector representatives, CIUS, said that any move to open imports should include a mechanism to ensure they are accessible by manufacturers.

“Opening up tariff quotas on imports must result in a situation where white sugar, and not just raw sugar, is available in the necessary volumes to ensure supply to processors in the baked goods, confectionery and wider food and drink sectors,”​ said Muriel Korter, CIUS general secretary, speaking to this publication today.

Testimonies received in the last week, continued Korter, indicate that suppliers can not cover their EU sugar contracts from today, and she said it is imperative that the Commission continues in its recent constructive vein and fast track any regulatory preventative action on the shortfall in the commodity.

She also urges the Commission to reassess the tools it uses to support its sugar production and average EU sugar price estimates, with the current apparatus giving a distorted picture as it is “informed by expectations of imports and does not take into account the worse case scenario.”

“These reporting mechanisms need to be realigned to ensure they are closer to the reality of the market so that the regulators can determine ahead of time how to offset developments such as the lower than anticipated import levels,”​ commented Korter.

She said that CIUS, which includes companies such as Barilla, Danone, Kraft, Cadbury, Mars and Ferrero among its membership, was aware of emerging supply difficulties regarding sugar back in June 2010 and has been pressing the Commission on the deficit since then.

We support the Commission and see its recent efforts as constructive and positive. It is up to the stakeholders to create awareness of the supply challenges and inform the regulators to help ensure a balanced EU sugar market,” ​she added.

The EU sugar management committee’s announcement last week that it would potentially release out-of-quota sugar into the bloc and boost imports contradicted previous downplaying by the Commission of supply challenges as well as was contrary to its plans, announced in November, to issue export licences for the out-of-quota sugar tonnage.

Roger Waite, a spokesperson for EU farm commissioner Dacian Ciolos, told that the reason for the apparent policy shift was that there were a number of unknowns in the autumn including EU production figures, import levels, and also the amount of the commodity dedicated to biofuel output.

And, he continued, the sugar management committee in late October and early November was keen to send a signal to the market in the hopes of calming the global sugar price.

Now, added Waite, imports are lower than expected and the situation in the internal EU market is a concern. “But the Commission can not proceed without the final sugar production figures from EU members states, which are still pending,”​ said the spokesperson.

In Europe, the threat of shortages has been enhanced by the movement of world prices over the past few weeks, which have risen above the bloc's set prices of €404.00 a tonne for white sugar and €335.20 a tonne for raw sugar.

"Imports from the traditional developing country sources are down," ​commented Waite, which, he said, is exacerbating tightness of supply of the commodity in the EU.

“We will make a formal decision on intervention measures in two weeks – around 10 February - when we know how much out-of-quota sugar exists for release internally,”​ he explained.

Some trade sources have suggested that the amount of out-of-export quota sugar available to sugar users in bloc would be somewhere in the region of 500,000 tonnes.

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