Anything that took dozens of European officials and hundreds of national experts and technocrats in European member states tens of months to come up with the miracle we have all now come to know as “sugar reform” is bound to be wrong. Turns out, it was.
A full five years after sugar reform, the signs that the policy’s execution failed are everywhere. Germany and France produce too much beet, so they turn it into ethanol. Obviously they should have gotten more quota than they were given. In Latvia, sugar imported from Belarus is cheaper than what it can get on the internal market. Before reform, Latvia produced its own sugar.
Then there’s Spain. Spain lost half of its sugar quota because it—like Ireland, Italy, Latvia, Finland and Portugal—was seen as too inefficient in its sugar production to deserve the honour to keep putting beet in the ground every year. Best leave that to the French, the British and the Germans (don’t forget the Belgians!).
That’s pretty funny though. As the slicing and dicing has come to an end, this week it was revealed that sugar produced around Miranda del Ebro, the remaining sugar factory in the north of Spain (the rest are all in the south, where it’s dry as a bone) saw average beet production of 105 metric tonnes per hectare.
If that sounds like a lot, that’s because it is. Nowhere in Europe have yields ever passed 100 tonnes per hectare. Yet in this isolated part of Spain along the Rio Ebro, farmers managed to boost their yields this past season by more than 14 tonnes per hectare.
It’s a miracle.
Or maybe it’s not. Maybe it’s just that this is where sugarbeet is meant to be grown but the European Commission was wrong in their analysis when they decided who got to keep their beet quota and who didn’t. Wow. There’s a shocker.
It’s not like the European Commission to get its figures wrong. After all, look at Ireland. They lost all of their quota primarily because the powers that be in Brussels used old data that made Irish sugar look like an inefficient proposition. Yet if they’d used the right figures, they would have seen some of the best numbers in Europe.
Greencore was happy with the bail out, no doubt, but the farmers are so raging mad that they’re doing their best to get beet quota or beet ethanol up and running, and in a hurry. Well, good on ‘em. If American farmers can build an ethanol industry out of excess maize, then the Irish ought to be able to pull this off too.
But don’t just look at the European producers. Look at what the Commission did to the European market. The EU went from being one of the top exporters to one of the top importers, and that’s even when there’s surpluses in some member states. Some member states have to distill their beets (make money) or store them until next year (spend money) or plow them back into the ground (lose money) because they’ve got too much. Others like Latvia have to import from outside the EU.
Yet despite unequal surpluses and deficits across the internal market, there’s a distinct lack of thought and an unequal surplus of reactionism within the Commission as it tries to keep everything under control. Instead it just faffles and fumbles about. One month you have excess exports that risk inflaming the sensitivities of Australia and Brazil (and Thailand!), the next you’re dropping tariffs on non-ACP/LDC raw sugar imports (because the EC was successful in ruining a dozen of those sugar industries) since there isn’t enough around for the refiners to refine.
Now it’s time to start figuring out what this next miracle, ahem, sugar reform is going to look like. Firstly it’s going to get rid of sugarbeet production quotas all together from 2015, something which has some (not all!) farmers in a fit. That’s supposed to let the market really do its job in making sure that Latvia doesn’t have to import from Belarus and that Ireland can distill all of the moonshine, mmm, ethanol, that it wants, and even produce some sugar if it feels like it too.
Reform options, beyond elimination of quotas, are still a bit of mystery but the dance of the seven veils should be gearing up after the summer. That’s when reform of the Common Agriculture Policy ought to really get interesting, and now that sugar won’t be (unless it is) a separate reform all on its own like during the last CAP reform, new opportunities for screwing up the sugar market should be come apparent about that time as well.
The true damage to the internal and world sugar market won’t be known for quite some time after that, however. Shall we meet back here in 2020 and re-hash it all out?