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Sweet-sour conflict: EU plants to export extra 500.000 tons of sugar

Friday, January 29th 2010 - 11:53 UTC
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No need for export subsidies with high prices for sugar says EU No need for export subsidies with high prices for sugar says EU

The European Union plans to export an extra 500,000 tonnes of sugar because world sugar prices have soared and European beet farmers have surpluses. The European Commission says the export of extra, unsubsidised sugar will not violate international trade rules. It says the measure is temporary.

The EU's annual limit for subsidised sugar exports is 1.37m tonnes, under World Trade Organization agreements.

Brazil's sugarcane group Unica has told the EU not to exceed 1.37m tonnes.

But the Commission's agriculture spokesman Michael Mann told the BBC that “the export limit doesn't apply” to the extra 500,000 tonnes, because this extra is unsubsidised sugar.

He said that if sugar production costs were higher than the sale price, global competitors might argue that this amounted to an indirect EU subsidy.

“But the production cost is below the sale price,” he said. “People on the world market are crying out for sugar and we've got too much of it.”

A Commission statement described current world market conditions for sugar as “exceptional”.

“With production below consumption and diminishing sugar stocks, sugar prices have risen to unprecedented levels, to the detriment of consumers in poorer countries,” the Commission says.

Bad weather in India and Brazil has further diminished sugar stocks, pushing up prices, whereas “a very good harvest in the EU in 2009 led to the production of higher than expected quantities of out-of-quota sugar”.

The extra 500,000 tonnes will be exported in the next six months.

France, Germany and Poland are the largest sugar producers in the EU, together accounting for about half of the total, followed by Italy and the UK. But the EU as a whole is a net importer of sugar.

In 2008-2009 the EU exported 983,394 tonnes of sugar, down from 7.3m tonnes in 2005-2006.

The EU's own annual export ceiling for subsidised EU sugar is 650,000 tonnes. For 2010/2011, exports are expected to fall back to that figure, the Commission says.

Unica accuses the EU of “trying to externalise its surplus problems on world markets”.

A letter from Unica to EU Agriculture Commissioner Mariann Fischer Boel warned that “in the mid to long term, when global prices for sugar drop below the European price, the EU will be left with cross-subsidised surpluses of sugar that will need to be exported, putting the EU in clear infringement of its international commitments”.

In 2005 the EU embarked on a major reform of the sugar sector, cutting subsidies and encouraging beet farmers in poor growing areas to switch to more profitable crops.

Brazil is the biggest sugar exporter worldwide, far ahead of the EU. Australia, Thailand and Cuba are also significant sugar exporters.

Categories: Economy, International.

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