Sugar beet growers are demanding an immediate increase in the amount of sugar that can be exported by the EU, to help ease a chronic world shortage and avoid the EU having to stockpile its own surplus.
A statement from the Brussels-based International Confederation of European Beet Growers (CIBE) explains that, with almost 90% of the EU’s beet harvested, the industry is looking at a 2.4m tonne surplus.
But under the agreement with the World Trade Organisation, following a key anti-dumping ruling in 2004, the EU is only allowed to export up to 1.374m tonnes.
The EU is limited to such a small export allowance because, under the original WTO case, as it was ruled that the high prices paid for A and B quota sugar in the EU acted as a subsidy for exports of C beet.
As such, the EU will have to store an estimated 800,000t of sugar this season. CIBE says this makes little sense at a time when world sugar prices are at a 20-year high.
CIBE also claims that EU sugar exports cannot be considered to be in any way “subsidised”, because world prices are now significantly above EU reference prices anyway.
It is therefore calling on the EU Commission and agriculture council “to immediately correct this unjustified and inappropriate European sugar export policy”.
“If the Commission does not take this decision without delay, it will be guilty of contributing to the increasing shortage of sugar on the world market, while the world sugar deficit is estimated at 7.2m tonnes in 2009/10,” said a statement.
“For the same reason, the WTO must support this decision, otherwise it will be complicit in a situation where an inappropriate storage policy will cause a new price increase in world prices of a commodity which is indispensable for the food security of the poorest countries.”
The call has been supported by NFU sugar board chairman William Martin. “There was justified criticism two years ago of countries who stockpiled cereals when the world price increased dramatically and supplies were tight,” he said. “Now is the time for the EU to play its part in ensuring the smooth operation of global food markets.”
But indications from the EU Commission are not encouraging, with a spokesman this week saying there were no plans to increase the export ceiling, suggesting the surplus will be carried over into next season.
“The danger is that next year we will have to cut our production in order to accommodate this surplus, even at a time when there is a world sugar shortage,” said NFU sugar adviser Lee Abbey.
World sugar prices have more than doubled in the past 12 months as poor weather has hit production in Brazil and India.
* For more on this story, see Phil Clarke’s Business Blog