Additional EU sugar imports expected as industry squeezed by quotas

By Oliver Nieburg

- Last updated on GMT

Additional EU sugar imports expected as industry squeezed by quotas
The European Union is expected to allow additional sugar imports to the market in the coming weeks in a move welcomed by the confectionery industry.

The European Commission said that many EU member states were experiencing supply problems, following recent discussions.

It confirmed that a decision on whether or not to allow more sugar onto the market was expected by 12 April.

The Association of the Chocolate, Biscuit and Confectionery of Europe (CAOBISCO), the industry body representing companies such as Nestle and Kraft, and European Sugar Users (CIUS) welcomed the potential of improved stocks.

Industry: ‘Everyone is concerned’

Muriel Korter, economic affairs director at CAOBISCO, told this site: “There are clear signs of tension on the market and it’s very difficult to find supplies right now.”

“We are getting feedback that the situation is extremely tight.”

She said that manufacturers had been making forecasts themselves due to high levels of uncertainty.

CAOBISCO and CIUS are looking for an additional 1.6 million MT for the market by the end of the marketing year.

The bodies want an additional 600,000 MT of out of quota sugar onto the market and 1m MT more of imports.

“Everyone is really concerned about what’s going to happen, especially ahead of the summer season,”​ said Korter.

“We would like to see measures implemented as soon as possible,”​ she continued.

She added that the industry was cautious about what about what the EU were going to do.

EU: member states report tight supply

Roger Waite, European Commission spokesperson for Agriculture and Rural Development told​: “We can confirm that last week we had discussions with member states.”

“Response indicated that stocks were tight in many member states and prices were therefore under pressure.”

Although he was unable to comment on figures, he said that the EU was taking steps to increase supply on the market and had two options available: one, to allow more out of quota on the market or two, to allow more imports.

Historically, the EU has used a combination of these measures.

An unnamed source told Bloomberg the most likely route would be additional imports through tenders.

This marketing year, 400,000 MT of out of quota sugar has been released onto the EU market and 191,000 MT through import tenders with reduced duty

When will this happen?

Waite said internal procedures were on-going, though a decision could come in one of two Sugar Management Committees in the coming weeks.

He said the first meeting on the 29 March would perhaps come too soon, but a decision was likelier at the second meeting on 12 April.

Portugal and Bulgaria are believed to be experiencing shortages related to raw can for refinery, while other EU member states have different needs.

Waite said there were several countries experiencing problems and gave Ireland as an example.

"I have seen reports indicating that sourcing sufficient supplies has been particularly difficult for Irish SMEs,"​ he said.

However, he added that most member states were saying that the situation was better than last year when reduced imports led to shortages.

CAP reforms

The Commission released its proposals for reforms to the EU’s Common Agricultural Policy (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.

“As soon as we get rid of quotas we get rid of export restrictions and encourage investment in the industry, which will encourage more long-term investment in what is potentially a highly competitive EU sector",”​ said Waite.

Related topics: Commodities, Cocoa & Sugar, Ingredients

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