Brussels looks set to end sugar quotas by 2016

07-Sep-2011 - Last updated on 08-Sep-2011 at 12:33 GMT

The EU is set to abolish the system of sugar production quotas for the bloc as well as guaranteed minimum prices from 2016, according to a Brussels source.

Sharp rises in sugar prices have led to calls from food and drink manufacturers for the European Commission to increase sugar quotas or abandon them.

Indeed, a spokesperson for the world’s biggest food producer, Nestle told the Financial Times last month: “Significant changes are required to bring sufficient transparency and fair conditions to the market. As such, the EU reform should phase out sugar production quota as of 2015.”

The existing sugar quota regime runs until the end of September 2015. Proposals from the Commission are expected before then – sometime next month.

The EU source, who wished to remain anonymous, said that the proposals are designed to boost EU sugar beet output and cut prices for the key food and beverage manufacturing ingredient within Europe, as well as making the sector more “market driven and competitive”.

He notes that the situation in the marketing year 2010/2011 was particularly challenging in terms of supply in the bloc, 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,” the Brussels contact told FoodNavigator.com.

Cane sugar

But UK based refiner, Tate & Lyle Sugars, in a position statement on the CAP post 2013 and sugar reform, said that, in the event that quotas are removed, then any increase in the ability of the sugar beet sector to produce more should, for reasons of equity and fair terms of competition, be accompanied by equal measures to ensure the cane refining sector can compete fairly.

“In particular, this has to relate to raw material supply. Any policy change that allows for unrestricted production of beets should also allow for cane refiners to compete through increased access to raw material at competitive prices," it added.

CXL duty

And, the European Sugar Refiners’ Association (ESRA) is urging the Commission to permanently abolish the CXL sugar import duty of €98 per tonne.

The CXL duty was established at a time when EU institutional prices were set much higher and world prices were generally lower. “Given today’s lower EU institutional prices and higher world prices, only the removal of the duty will ensure predictable and economically viable access to raw cane sugar,” argues João Pereira, chairman of ESRA.