EU sugar quota abolition could push prices down
Published:  23 September, 2011

Bakers could benefit from falling sugar prices if the EU's widely leaked plan to abolish sugar quotas is successful.

The EU is expected to announce next month that it proposes to scrap the current system of production quotas and guaranteed minimum prices for sugar far-mers by September 2016. News agency Reuters said the EC commissioned an impact report on the changes, which predicted there would be a 1.9% increase in the EU sugar beet area by 2020, and an 8.2% fall in EU sugar beet prices by the same date.

However, Ben Eastick, director at specialist sugars supplier Ragus, said he doubted the changes would have much effect. "The abolition of the quotas will have little or no impact if the EU continues to be dependant on imports ie, [it is] not self sufficient," he said.

Peter Hough, sugar sourcing director at sugar supplier Napier Brown, said that if quotas were abolished, European sugar prices would become even more closely aligned with world prices, although predicting what would happen with world sugar prices was a difficult task. "[The EU proposal] will get all interested parties to consider their positions and come up with a solution. It will stimulate debate and discussion," he said. "What bakers really want is a good supply of sugar at a competitive price."

Bakers have been hit by soaring sugar prices and supply shortages in the past year, caused by a fall in global production and an increase in consumption. Earlier this month, the Committee of European Users of Sugar, which represents some of the EU's largest food manufacturers, said that EU sugar supply was at its most critical level since 2005, "causing extreme volatility, instability and disruption to the EU food and drink industry".

The Committee called on the EU to abolish quotas as soon as possible and release at least 550,000 tonnes of out-of-quota sugar onto the domestic EU market by November. It also called for a suspension of duty on concessionary imports.

The recently formed European Sugar Refiners' Association has also called for the duty to be permanently scrapped on raw cane sugar.




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