Sugar system not to Germany's taste

- Last updated on GMT

Related tags: Sugar, European union, Baking, International trade

German confectionery and bakery producers have strongly criticised
the current EU system designed to keep sugar prices artificially
high, arguing that it makes European companies uncompetitive when
it comes to exports.

Anuga, the world's largest food exhibition, will open for business this weekend, but for one industry segment, doing business there will prove difficult.

The German confectionery and baked goods industry association (BDSI) said yesterday that its members would be hampered in their negotiations with potential customers at the show because of the continuing uncertainty over EU export prices for sugar.

In a statement, the BDSI said that it was "not prepared to accept that, because of the EU sugar market rules, we have to buy sugar for export at two or three times the price paid by our competitors on world markets and that EU compensation is distributed like a lottery"​.

"We have already lost export orders to companies from non-European countries,"​ said Rolf Beth of the Stieffenhofer bakery. "We need to see rapid changes to the EU sugar regime or we will be forced out of the export market in the long term,"​ he added.

The EU system, which is currently in the process of being revised, is designed to support the Union's sugar producers by keeping prices artificially high. But this in turn has a knock-on effect on EU companies buying the sugar - which they could find three times cheaper elsewhere. Users are compensated for buying the more expensive sugar through the export refund system.

But the complicated system for calculating these export refunds makes it all but impossible for companies to work out how much to charge for their export products - an important piece of information for companies to have at trade fairs such as Anuga.

"You can't have a system in which you only learn afterwards whether an export deal has earned money or not, simply because we have to pay so much for sugar,"​ said Herbert Mederer, owner of Mederer Suesswarenvertriebs.

Moreover, many companies are failing to receive the refunds to which they are entitled. For example, this summer German confectioners and bakers received just 4 per cent of the export refunds they had requested from Brussels - a shortfall which will rapidly put firms out of business if it continues unchecked.

Buying more sugar from other countries will not solve the problem, Mederer said, as this can entail increased costs, in particular for medium-sized companies. "The whole system seems designed to hurt medium-sized companies in particular,"​ he said.

The BDSI called on the Commission to remove the "intolerable conditions"​ of the current sugar regime as quickly as possible by reducing prices and reducing the level of protection for European sugar processors, as well as removing the current quota system. Only this, it said, would ensure that Europe's confectioners and bakers are able to compete effectively on export markets.

The proposed reforms of the sugar regime put forward last month by farm Commissioner Franz Fischler were a step in the right direction, the BDSI said. Fischler put forward three options: complete liberalisation, a reducing in prices and quotas or maintaining the status quo.

The association said European audit office figures showed that EU consumers were paying €6.3 billion each year in higher prices simply to support the current sugar system.

Related topics: Commodities, Cocoa & Sugar, Ingredients

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