The Committee of European Sugar Users (CIUS) has called on EU member states and the Commission to take adequate measures to avoid sugar shortages and guarantee a sufficient stock level at the end of this business year.
The committee, which represents European sugar-using food and beverage firms such as Mondelez International and Nestlé, said there was an “inherent supply deficit” in the current sugar system that required exceptional market measures to deal with.
Muriel Korter,secretary general for the organization, told ConfectioneryNews: “The current sugar regime under production quotas, which will be eliminated in October 2017, limits production in Europe to around 80% of its needs. The left needs to be supplied by imports. These are since 2009 not filling the gap of what is needed for users.”
Industry competiveness at stake
The organization said that allowing shortages on the market ran contrary to the latest Common Agricultural Policy (CAP) reforms for a sustainable transition to an EU sugar supply chain, and annulled all efforts by the European Commission to stabilize EU sugar market supply.
“The competitiveness of the European sugar-using food and drink sector is at stake," the organization said.
Korter said the CIUS welcomed the elimination of the production quotas from 2017/18, but added that it needed to be accompanied by a gradual decrease in import protection as sugar consumption increased with economic recovery.
The organization suggested tendering as a “transparent market-based measure” to ensure improvements already seen in end stock levels are sustained. “If there is sufficient sugar on the market, producers and refiners will not bid as there is no market opportunity. But any additional sugar should be made available in equal amounts to each sector, beet or cane, and at zero duty,” the group said.
It said market management over the last three years had already made over one million tons of additional sugar available to the industry each year meaning end stock levels had finally reached a “reasonable level”. However it said the competitiveness and price goals were still far from being achieved.
It said that several factors could still led to lower than expected stock levels, including a failure to meet CXL import quotas, currently only at 50% of capacity. The CXL import grants preferential access to the EU market to countries that may have otherwise lost out on trade as countries like Finland, Portugal, Bulgaria and Romania joined the EU.
But CIUS said: “The import quota attributed to Brazil has still not been filled, a volume of around 300,000 tons.”
It also said that EPA/EBA preferential imports has always been over estimated, meaning an overestimation of sugar entering the EU market from these countries. It also said that sugar consumption in the EU could increase with economic recovery and that this had already been acknowledged by the Commission and member states in their sugar market balance sheet forecast.
Sugar firm Tate & Lyle has said that the CXL duty, borne by the European sugar refiners, is out dated and unfair. “In short, at €98 per tonne, the CXL duty is punitive and makes it significantly more expensive to source raw cane sugar for import. This is unfair because the beet sector will be unleashed from quotas and levies in 2017, meaning they can produce as much as they wish without policy interference. The €98 duty is over 20 years old and there appears to be no surviving evidence of how the duty was determined at this level,” the company said .
CIUS members purchase and use almost 70% of the European annual consumption of sugar.