Political Agreement Reached to End EU Sugar Quota Regime

28 June 2013 --- In their negotiations on the future of the Common Agricultural Policy (CAP), the European Commission, the Council of Agriculture Ministers and the European Parliament agreed on 26 June 2013 that the sugar market regime will expire at the end of the sugar marketing year 2016/2017 (30 September 2017). This brings to an end a market regime whose basic elements of a quota system and a minimum beet price have been in place since 1968.

“Our aim was to obtain an extension of the sugar market regime until 2020 in order to have appropriate time to implement the measures that are necessary to boost the competitiveness of the sugar industry,” commented CEO Hartwig Fuchs after the decision was announced. “Our beetgrowers above all, but also we as a company now have less time to make up for the significant changes imposed by the 2006-2009 reforms and at the same time to chart our course for the future.” Overall, the sugar market regime will remain in place in its current form for a further four financial years.

Since the last sugar market reform, the EU has covered around 85 per cent of the sugar required for the food industry from domestic production. After 2017 all the sugar produced in the EU will be allowed to be used for food purposes in the common European market. However, this also means that the competitiveness of beet cultivation and sugar production in the EU must be strengthened in the years ahead in order to stand their ground against alternative crops, the rising supply of isoglucose and possibly greater competition from raw sugar imports.

In view of the increasing competition, Hartwig Fuchs expects further consolidation in the EU sugar sector. “We made an early start on implementing continuous improvements to our competitiveness, with our internal efficiency programmes for instance. Furthermore, with the “20•20•20” project, we have already done a great deal in the area of beet cultivation to lift beet yields to a much higher level. Now the aim is to intensify these efforts within the new timeframe,” the CEO added.

Coming after the 2006 reform, the end of the sugar market regime in 2017 represents the next, even more challenging change in the economic environment for the sugar industry. “We definitely believe that the politicians have a responsibility to support us by creating a reasonable economic framework. At the same time it must be ensured that our efforts to develop a competitive sugar sector in the EU are not undermined by rising world market imports i.e. as part of bilateral trade agreements,” said Hartwig Fuchs.

According to Dutch sugar company Suiker Unie, “An extension with an additional year till 2018 was given up so that no additional conditions had to be accepted, such as a reallocation of quota for countries that stopped in 2006 and additional privileges for the refineries. What the system will look like after 2017 must be considered further. The final text has not been published yet, this could take another week. Since the details of the new regime could have significant effects, it is not yet possible to give a final assessment of the agreement.”