European sugar users welcome debate on sugar reform
The European Commission released proposals on CAP reforms in October last year, including measures to remove sugar quotas by 2015. The CIUS claims that the current system is detrimental to producers and food manufacturers alike. It supports the removal of production quotas established in 2006, which it says have led to market imbalances and high prices in the region.
“Reports of sugar users facing supply constraints during the current market year have continued, affecting growth potential and international competitiveness,” the CIUS said.
“…Sugar users in Europe are confident that the supply chain is sufficiently robust to face more market liberalisation. Furthermore, quota abolition will give European sugar producers and beet farmers the opportunity to capture a larger share of the global export market and benefit from increasing world demand for sugar.
“CIUS supports the development for fair contractual relations to ensure that reform does not lead to unintended consequences. However, every year of postponed reform maintains a barrier to European competitiveness and growth that the EU can no longer afford.”
Give us till 2020…
Meanwhile, the European Sugar Manufacturers Association (CEFS), which represents sugar manufacturers and refiners, says it accepts that quotas will end eventually, but claims that 2015 is too soon.
CEFS president Johann Marihart said in a statement: “European sugar manufacturers are committed to a more competitive European sugar sector. The cost of this has been substantial – 83 factories have been closed and more than 22,000 direct jobs lost since the reform – and we are now investing in a smart, sustainable and inclusive future. In order to ensure these investments bear fruit, we support the Commission’s management of the sugar sector and, while we recognise that the quotas will end in the long term, we support the continuation of the Single CMO [Common Market Organisation] for sugar until 2020”.
How it works
The EU has a fixed quota for sugar and isoglucose production (13.753m tonnes), but because of uncertainty around weather conditions at the time of planting, farmers always build some margin into their cropping plans. This leads to excess supply when conditions are favourable.
All sugar produced above the quota is called ‘out-of-quota’ sugar, and cannot be used on the EU market.
However, EU sugar consumption has remained stable at about 16.5 million tonnes, meaning sugar must be imported to meet demand – and imports are subject to tariffs, which drive up prices. The other option the EU uses to ease market pressure is to release out-of-quota sugar onto the market.