Should the EU extend sugar quotas until 2020 any temporary measures to improve supply for food manufacturers will have little impact on prices and availability, according to Nestlé.
The Agricultural Committee of the European Parliament recently voted to extend sugar quotas until 2020 rather than abolish them in 2015. The decision is not final and a vote will be made at a plenary session in Parliament in March. A final decision must be made by June.
Low impact temporary measures
Meike Schmidt, corporate spokesperson, for Nestlé told ConfectioneryNews.com: “The committee has proposed temporary measures for the management of the market to try to ensure there is a balance between supply and demand. However, we remain concerned that these measures would not have any impact on the price or the availability of sugar.”
Although large amounts of sugar are produced in the EU market, only a certain amount is available for food production under the quota system. Nestlé contends that reform is needed to ensure supply and demand is balanced.
“The current EU sugar regime is based on the presumption that 15-20% of the EU’s sugar demand for use in food is met by preferential imports. Over the past few years these imports have not arrived as anticipated,” said Schmidt.
She said that the quotas had led to sugar price hikes that were detrimental to European consumers.
The European Sugar Users association (CIUS), to which Nestlé is a member, has said that the quota system had led EU beet sugar production to fall 20% short of EU demand, causing a 47% price hike between October 2010 and October 2012.
EU member states agreed in 2006 to abolish quotas in 2015. However the recent vote from the European Parliament’s Agricultural suggests the system may remain until 2020.
“We believe the Commission’s position to end the sugar quota system in 2015 is the appropriate course of action. Such an action will minimise the risk of future supply shortages and ensure the competitiveness of food manufacturing in their countries,” said Schmidt.
Sugar outside Europe?
Under 10% of commodities used by Nestlé in Europe, including sugar, are produced outside of Europe and exported-in.
Confectioners are able to buy sugar from outside the EU, but will incur an import tariff of around €400 ($533) per metric ton on top of the market price and transportation cost.