Restrictions on European sugar firms are lifted

02.10.2017

The European Union's scrapping of long held quotas on sugar firms could have implications for consumers

After a decade of quotas, sugar firms in the European Union can now produce and export as much as they want.

Companies such as France’s Tereos and Germany’s Suedzucker have been ramping up operations to get ready for the change, which will help fuel a global sugar glut.

The scrapping of quotas -- the last of the EU’s agriculture curbs -- may also lead to major changes in the global sugar trade.

With increased EU production, there will be less need to import supplies from places like Africa and the Caribbean.

While the industry has been readying for the change for years, it may further pressure prices that have dropped 28 per cent in 2017, the worst performance in a Bloomberg index of 22 commodities.

In the EU, the sugar-beet harvest is now in full swing and tests are showing higher-than-average yields in France and Germany, the region’s top growers.

“We have a big crop coming,” said Ruud Schers, an analyst at Rabobank International in Utrecht, Netherlands. The bank sees EU production surging 23 per cent in the season that started 1 October.

The quotas that ended this weekend were set in 2006 in preparation to phase out limits that were first imposed in the 1960s to ensure food security were rejected by the World Trade Organisation.

That curbed the amount of sugar EU producers could sell in the domestic market and boosted imports.

Scrapping the restrictions will help the EU boost exports by almost 50 per cent to 2.2 million metric tons this season, according to the US Department of Agriculture. Other analysts forecast even higher shipments.

Top grower France’s exports alone may triple to more than 1 million tons, crops office FranceAgriMer estimates.

The EU accounted for about 10 per cent of global sugar production last season, according to the USDA.

The region makes sugar grown from local beets or by refining raw supplies imported from countries with tropical climates.


independent

Readers choice: TOP-5 articles of the month by UkrAgroConsult