The EU sugar supply is constrained and the confectionery industry is nervous about upcoming sugar reforms, according to Nestlé’s procurement head, who is also chair of a UK sugar users group.
Tim Innocent, chair of UK Industrial Users of Sugar Group (UKISUG) and head of purchasing, direct materials, at Nestlé was giving evidence at the House of Lords Select Committee on the EU sugar regime on Wednesday last week ahead of an EU vote on abolishing sugar quotas as part of the Common Agricultural Policy (CAP) reforms.
Innocent said: “I’m not confident about the future of the reform. We are still in the process of constraining supply.”
“It’s now time to say enough is enough,”
UKISUG is calling for complete deregulation of the EU sugar market. It wants beet production quotas to be abolished at the earliest opportunity on 30 September 2015 and import tariffs to be reduced in the interim.
It is also seeking a guarantee for ‘adequate’ imports of duty free cane sugar after 2015.
Innocent said that the beet quota in the UK did not allow principal sugar refiner Tate & Lyle to have enough supplies to support the market needs, adding that there was “a high degree of politics in the sugar industry”.
“We no longer need quotas and we should be away from them sooner rather than later. And 2015 feels like a long time away – 2020 seems a hell of a long way away,” he said.
Sugar quotas were extended until 2014/15 in the EU’s 2005 reforms.
Innocent said that before the 2005 reforms, the industry could rely on a constant sugar supply.
“We didn’t have any supply issue. I think that was the key difference. That was driven through a market that had a lot of sugar available. We weren’t a constrained market,” he said.
Asked if he was concerned that there were only two refined sugar producers in the UK, he said: “I’m not really worried about how many sugar producers there are. My primary concern is to get a product within our specification, which can arrive at our factories at the time we want to use it.”
He said he was a “free marketeer” and could obtain supplies from traders outside the UK.
Nestlé and other confectioners can buy sugar from anywhere in the world, but will incur an import tariff of €419 per tonne for refined white sugar on top of the global market price. His organisation, UKISUG, is calling for reduced import tariffs until CAP reforms can be implemented in 2015.
Innocent was quizzed by peers on the potential health implications for consumers if the sugar market were to be deregulated.
He said there was an “element of choice” from consumer and added that Nestlé and the industry had reformulated many products to make them healthier.
He said that he was concerned that sugar alternatives, such as high fructose corn syrup, were contained in the same legislation as sugar.
“It seems strange in a constrained market to have a further constraint on an alternative use.”
The committee also heard from Ian Bacon, president of Tate & Lyle Sugars, who said that refiners were much worse off than before the 2005 reforms.
EU sugar reform
The Commission released its proposals for reforms to the EU’s CAP on 12 October 2011, which included measures to remove sugar quotas by 2015.
It is now up to the European Parliament and the Council to approve the regulations.
MEPs have until 9 July to table amendments to the CAP reforms.