EU sugar reform planned as prices prove hard to swallow

By Mike Stones

- Last updated on GMT

Related tags Eu sugar regime European union

Cutting quotas could be a tasty solution to sour sugar prices.
Cutting quotas could be a tasty solution to sour sugar prices.
Help for food manufacturers battling soaring sugar prices could arrive in mid October when the European Commission (EC) will unveil plans to reform the European Union (EU) sugar regime, according to industry sources.

The plans are thought to contain proposals to abolish beet sugar production quotas; a key demand of food manufacturers which have been struggling to cope since last autumn.

James Lambert, ceo and executive chairman of R&R Ice Cream, Europe’s largest own-label ice cream manufacturer, told “The price is increasing virtually daily and we have to get some stability back into the market.

“Across Europe, more than 80 sugar production factories have closed down since 2004 and vast EU subsidies paid to the owners. The region has since gone from being one of the world’s largest exporters of sugar to one of its largest importers​.”

UK sugar prices rocketed by 60% to reach €880/t this year, compared with €500 - 550/t a year ago.

Economically viable

Lambert urged the EU either to increase quotas or to allow food manufacturers to import sugar tariff-free from the world market - or preferably both. Increasing quotas would bring about “a stable, efficient and economically viable sugar industry​”, he said.

Without extra quota, the firm said it would be forced to buy sugar on the world market. But, with EU tariffs totalling €417/t, that would bring the price to about €1000/t.

Nestlé agreed reform was overdue. “Significant changes are required to bring sufficient transparency and fair conditions to the market. As such, the EU reform should phase out sugar production quotas as of 2015,”​ a spokesman told the Financial Times.

Andrew Kuyk, the Food and Drink Federation’s director of sustainability and competitiveness, acknowledged the pain caused by high sugar prices. “Shortages of sugar and high prices have been a feature of the EU market for many months now – causing real problems for many food companies.

“But similar difficulties exist throughout the world market at the moment, so it is not simply a question of lowering tariffs or increasing import quotas, though the EU Commission has taken action on both these fronts to increase supply by up to one million tonnes in the last year​.”

Successful lobbying

A DEFRA spokesperson told this publication: “Following our successful lobbying in the EU, the UK food industry has benefited from more than one million tonnes of extra sugar entering the market this year. We are continuing to monitor the situation to see if further action is needed.

“The future of the EU sugar regime will be one of the areas under discussion as we continue to push for reform of the Common Agricultural Policy in Europe.”

Earlier this year, the EC suspended import duty on some categories of sugar imports. Two duty-free import quotas were opened for a total of 500,000t and 500,000t of surplus EU sugar production was released onto the market.

An EU spokesperson told that the next Management Committee adjudication on the imports is set for August 25. “This problem has been on our radar since last October,​” he said.

If need be, we will do more​ (to increase the supply of sugar within Europe).”

Rising prices have been attributed to lower-than-expected harvests in the key producing regions of Brazil and Australia, global demand rising at 2% each year and more of the European harvest being diverted to ethanol production.

EC plans to reform the EU sugar regime is expected to be launched on October 12.

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