EU to propose special sugar management measures to stave off short-term shortage

Published: 04/21/2017, 3:04:46 PM

The European Commission plans to appeal to EU member states next week for special measures to prevent a short-term crunch in sugar supplies, just months before the bloc rolls out reforms that will sharply boost production, according to Reuters.

The proposal, which industry sources said is expected to be voted on at a management committee meeting on April 27, looks to reclassify some of the bloc's out-of-quota stocks so they can be sold internally before the market is liberalised on Oct. 1.

At the moment, these excess supplies can only be used for non-food products such as biofuels or rolled into next year once this season is over.

The Commission, the executive body of the 28-country European Union, is also seeking permission to hold tenders for additional raw sugar imports from origins such as Brazil at potentially reduced tariffs.

The measures are meant as precautionary tools in the event of a shortage in parts of the bloc in the months before the EU lifts restrictions on sugar output.

In-quota stocks are expected to fall to just 509,000 tonnes by the end of the 2016/17 season, Commission figures showed in December, well under the roughly 1 million tonnes that prompted special measures in 2010/11.

The Commission had bet imports would boost available supplies, but the sources said preferential imports under the "EBA/EPA" and "CXL" schemes had lagged this year.

CIUS, the European sugar users association, said it welcomes the proposals since "it is almost certain that there will be a sugar supply shortage on the EU market this summer".

The Commission did not specify how much sugar it wants to add, but sources said roughly 250,000 to 300,000 tonnes of reclassified stocks, coupled with an equal volume of imports, are likely if the measures are approved.

The Commission did not respond to a request for comment.

Producers strongly oppose the proposal, saying there is enough sugar to tide the market over until the first post-reform harvest, which could be up to 20% larger.

German sugar industry association WVZ criticised the proposal, saying it would hit European prices and "sugar beet farmers would be the ones who have to pay" for the measures.

The Commission faced a similar pushback last year when it tried to add 300,000 to 400,000 tonnes of supply as stocks tightened. It ultimately abandoned the plan.

This time, some say measures are especially unnecessary because the Commission has already clarified that producers can sell the new crop before Oct. 1, though they usually have to wait.

"In September, there will be new-crop sugar available," said Timothe Masson of French sugar beet growers union CGB. "I'm not sure that even in the remotest parts of the EU there will be any supply tensions."

Trade sources said, however, they expect little of the harvest in northern Europe to be ready in time to ease a potential shortage.