Beet’s Me Why The EU Can’t Figure Out Quotas By Meghan Sapp

Another fortnight, another sugar tender for more imports into Europe and release of out-of-quota sugar. It was meant to be the way of the past, but it seems to be the way of the future. At least until there are no more beet quotas, anyway. Not surprisingly, the European Sugar Users Association CIUS is not pleased. They say that users can’t plan because they don’t know how much they’re going to have to pay for sugar now and through the rest of the year. What they want is for the EU to release all of the 1.2 million metric tonnes of out-of-quota sugar onto the European market as promised, and without levy, so they can get on with making sweet things. But the European Commission doesn’t appear to agree that’s the way to go. At Thursday’s fortnightly tender, it released 150,000 tonnes of out-of-quota sugar at a reduced levy of €172 per tonne. That’s on top of the 200,000 tonnes that were released two weeks ago. That’s not all, though. The Commission also allowed the import of 127,000 tonnes of raw sugar for refining at a minimum import tariff of €141 per tonne and 95,293 tonnes of white sugar at a minimum tariff of €161 per tonne. And in another two weeks there will be another tender. And two weeks after that. And two weeks after that. What’s at issue remains the fact that the EU sugar reform didn’t do what it promised. Yes, production wound down in several countries and the strongest (apart from Ireland, of course) got stronger. Now 75% of sugar production lies in the hands of six companies (in France, three companies hold 95% of the market) while France and Germany produce more than 53% of the sugar in Europe. Despite what has recently been called an “oligopoly” of sugar producers, farmers are pushing hard to keep their quotas in place. They, along with the companies who process their beets, say that they are at risk of going out of business if they are exposed to the world market in 2015, so beet quotas must remain until 2020 to ensure they can transition through. But that the market would turn into one that functioned smoothly and make Europe’s industries competitive didn’t quite happen as promised back in 2006. Sugar prices are at double the world market price (which is better than when it was triple the world market price, eh?), despite being more efficient with lower production costs, and refiners are stuck in the middle of the beet quota debate with neither option serving their needs either. It’s clear that the debate in Brussels to extend beet quotas beyond 2015 is heating up, because all the stakeholders are out going door-to-door with MEPs and the member states trying to get the quotas extended. Or not, as is the case for some. This week a whole host of sugar using associations from biscuits to ice cream makers got together to jointly lobby decision makers against extending beet quotas beyond 2015. Their big gripe is that existing law says quotas should end in 2015, and they’re losing out every day that quotas exist. A question one hears in Brussels is, “if the farmers knew beet quotas were set to end in 2015, and until recently extension wasn’t even a possibility, then why didn’t they spend the past few years preparing for 2015?” It’s not a very popular question and can get quite a few feathers stirred up, so be careful where one is standing when the question gets asked. It’s getting down to the wire now because the vote in the European Parliament is meant to take place the week of March 11, with tripartite negotiations between the Parliament, the EU’s 27 member states and the European Commission set to begin shortly after. The possibility of a compromise exists, that rather than 2015 or 2020, that beet quotas could be ended in 2018, but it hasn’t come down to that quote yet. A final decision is expected in June when the game will be over, with lots of winners and losers littering the battleground. And as is seen across most industries who get their production and trade tied up in political nightmares in Brussels, a compromise of a compromise of a compromise doesn’t tend to work out well for anyone. Unless the sugar regime is scrapped entirely and a new policy is developed from scratch with all stakeholders at the table, the only result of all these sugar reform negotiations is likely to be a larger and larger mess.

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