EU Commission to allow out-of-quota exports
Following intensive lobbying by CIBE and NFU, the European Commission has confirmed that it will increase out-of-quota sugar exports in 2009/10 by 500,000 tonnes.
The current shortage of sugar on the world market has forced the world market price up to record levels. At the same time, European producers have had record yields resulting in unexpected levels of surplus sugar. World Trade Organisation (WTO) rules cap EU exports of sugar onto the world market at 1.374 million tonnes, but this would still have led to unnecessary stockpiling of sugar within the EU when it could be used to restore some balance to the world market.
Sugar board chairman, William Martin, last year called the European sugar export policy unjustified and inappropriate. Successful lobbying forced the European Commission to submit a draft Regulation to the management Committee allowing the export of an additional 500,000 tonnes of out-of-quota sugar in 2009/10 in January 2010.
World market sugar prices are 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. This is in contrast to the EU where 2009 saw a very good harvest that led to the unexpected over production of sugar. It also meant that the quota sugar price continued to drop towards the post reform reference price, despite rising sugar price on the world market.
The Commission has also confirmed that there will be no final quota cut on EU producers following a successful restructuring programme that resulted in EU production reducing by 5.8 million tonnes. Although falling just short of its original target of 6 million tonnes, the sugar reforms were deemed a success, having improved overall efficiency and competitiveness within the sector by encouraging high-cost producers to cease production.
