News
29.01.2010
European Commission plans temporary boost to sugar quota
The European Commission has proposed to increase its export quota for sugar to combat diminishing sugar stocks and soaring prices.
The EC has submitted a draft regulation to the Management Committee that allows the export of an additional 500,000 tonnes of out-of-quota sugar in the 2009/2010 marketing year (up to July 31st 2010).
However, the plan has prompted the Brazilian Sugarcane Industry Association (UNICA) to urge caution, warning that it could damage the EU sugar market.
UNICA believes it sends the wrong signals to EU farmers, who are being incentivised to more sowings ahead of the next campaign.
Marcos Jank, UNICA president and CEO, said: “This short-sighted policy is potentially damaging for the EU sugar market as EU farmers will be left with additional surpluses to be exported; this when global prices return below the EU price.”
Announcing the draft plan, Mariann Fischer Boel, European Commissioner for Agriculture and Rural Development, said: “The current situation on the world market is exceptional. With production below consumption and diminishing sugar stocks, sugar prices have risen to unprecedented levels, to the detriment of consumers in poorer countries. This situation has coincided with the end of the restructuring of the EU sugar industry.
She added that the competitiveness of the EU sugar sector had improved and said: “The price situation on the EU and world market as well as production costs for beet and sugar in the EU are such that out-of-quota sugar produced in the EU can be exported without violating the EU's WTO subsidy commitments.”
World market sugar prices are currently at record levels, well above the market price for EU quota sugar. Unfavourable weather conditions in India and Brazil have worsened the global sugar deficit and further diminished sugar stocks, triggering an upward pressure on world market prices.
In contrast, a very good harvest in the EU in 2009 led to the production of higher than expected quantities of out-of-quota sugar.
The EC said that the extra quota should be regarded as an exceptional measure for the 2009/2010 marketing year only and it will continue to closely monitor the EU and world market.
For 2010/2011, the export limit is expected to be 650,000 tonnes, as fixed in the regulation.
FoodBiDaily.com
