* Plenary European Parliament vote set for March
* Smaller sugar users risk going out of business
* Protected regime limits production of isoglucose
By David Brough
LONDON, Feb 20 European consumers look set to
pay a premium on sugar for longer, even while global prices bump
along at 2-1/2 year lows, as the European Union debates
extending the years of protection for sugar beet farmers and
The EU sugar beet industry had been bracing for the end to
restrictive production quotas by a target date of 2015, which
would leave them to compete with imports from low-cost producers
such as Brazil.
But the European Parliament's agriculture committee on Jan.
23 voted to extend the current European Union sugar regime, one
of the most highly protected aspects of European agricultural
policy, until October 2020.
A plenary European Parliament vote is scheduled for the week
starting March 11, with a final decision due by June after talks
involving the European Commission and the European Council.
Food and beverage companies that use sugar and starch say
extending the quotas will damage small and medium-sized firms by
inflating their costs and could put the least efficient out of
Sugar growers and refiners say they need more time to make
improvements to be able to compete in the global market and that
removing barriers too soon would threaten their survival.
The average reported price for white sugar in the EU is
around 728 euros ($970) per tonne, according to European
Commission data, well above the world price of 372 euros on
"We are trying to demonstrate to members of the European
Parliament the negative economic impact that the current regime
has on users, particularly small and medium-sized businesses,"
Muriel Korter, secretary general of the Committee of European
Users of Sugar (CIUS), said in an interview.
"Quotas are benefiting the sugar processing industry hugely,
whereas some small sugar-using companies are struggling for
survival," she added.
Members of the Brussels-based CIUS, which includes companies
such as Coca-Cola, Danone and Nestle
, buy almost 70 percent of Europe's annual consumption
Jorn Dalby, president of the International Confederation of
European Beet Growers (CIBE), said the agriculture committee
vote was a step towards ensuring the future survival of beet
farming in the European Union.
The European beet sector has raised efficiency and yields
since the 2006 introduction of EU reforms to phase out
protection, Jamie Fortescue, managing director of the European
Starch Industry Association (AAF), said in an interview.
The latest proposal acknowledges that the EU sugar sector
needs more time to be able to compete effectively on the world
market, Johann Marihart, president of the European Committee of
Sugar Processors (CEFS), said in a statement.
The debate over whether to prolong quotas pits Britain,
Italy, Scandinavian countries and the Netherlands, which favour
2015, against France, Germany and Spain which want protection to
carry on for a further five years, EU trade sources said.
This issue is part of planned reforms to the EU's hugely
expensive Common Agricultural Policy (CAP), which protects
farming by subsidising growers' livelihoods.
An eventual compromise solution involving a partial
extension of quotas, perhaps to 2018, is a possibility.
"Chances of getting a 2020 deal waved through without
compromise are reasonably limited," said John Ireland, a trader
at London-based commodities house Czarnikow.
"In reality, we'll probably see a negotiated settlement,
possibly what the Commission describes as a 'soft landing'."
The EU sugar regime has limited output of isoglucose, a
cereal-based sugar used in soft drinks, also known as
high-fructose corn syrup.
"The proposal merely extends an unfair and anti-competitive
system and continues to restrict the European starch industry's
production of isoglucose to less than 5 percent of the total EU
sugar production quota," the AAF said in response to the
The AAF's Fortescue said that in times of economic crisis,
continuing to artificially limit the production and
competitiveness of a European sector processing EU-grown cereals
cannot make sense and called for an end to the quotas.
He said the EU's isoglucose output would be 2 million to 3
million tonnes in a free market, far more than the current quota
at 670,000 tonnes.
Fortescue said that if quotas were extended to 2020, they
would then fall under the next review of the CAP when they
potentially could be extended further.
"The debate would start all over again," he said.
European beet growers and processors welcomed the committee
"We need time to rebuild our capacity as an industry," said
William Martin, head of the NFU Sugar Board, which represents UK
beet growers, and who produces sugar beet and other crops on a
1,000-acre family farm in the Cambridgeshire Fens.
"If we were forced to compete with Brazil, I don't think we
could do it," he said.
A spokesperson for processor British Sugar, a unit of
Associated British Foods, said, "Maintaining quotas to
at least 2020 will provide our industry with the opportunity to
continue to invest in further advanced manufacturing in pursuit
of achieving a globally competitive and sustainable operation."