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Impact of CAP reform agreement on the sugar sector

August 14, 2013

As part of the 26 June 2013 political agreement between the European Commission, European Parliament and EU Council, the abolition of EU sugar production quotas from 30 September 2017 was confirmed. According to an EC memorandum, sugar quota abolition will ensure improved competitiveness for EU producers on the domestic and world market alike (as EU exports are limited by WTO rules under quotas).

The memorandum maintained that ample supply on EU domestic markets at reasonable prices will also benefit the intermediate and final users of sugar. This needs to be seen in a context where average EU raw sugar prices in June 2013 were more than 50% above world market prices, and the gap between EU and world market white sugar prices even more pronounced.

Alongside the abolition of sugar production quotas, the EC announced that the organisation of the sugar sector will be strengthened on the basis of contracts and mandatory inter-professional agreements, which will include standard provisions for agreements between sugar factories and growers. In addition, for the period after quotas, white sugar will remain eligible for private storage aid. These measures are intended to provide added security to the functioning of the EU sugar market.

Isoglucose production quotas will also be abolished. According to representatives of the European Starch Industry Association (AAF), this will unleash production, investments and growth in the European starch industry. The European sugar users group CIUS, for their part, maintained that the end of sugar production quotas will allow the EU sugar sector to play an increasingly important role on the world market.

The president of the European farmers organization Copa, meanwhile, issued a press release welcoming the slight extension of production quotas, but maintained that this was not long enough to allow time for full adjustment in the sugar sector. This view was endorsed by the ACP Sugar Group which, according to their press statement, was appalled by the decision, arguing that the concerns and expectations of the ACP have not been taken into account.