EU pro­duc­ers eye ex­ports when su­gar quo­tas end next year

The Myanmar Times - - International Business -

EURO­PEAN su­gar pro­duc­ers will tar­get ex­port mar­kets in ad­di­tion to look­ing for new do­mes­tic cus­tomers when the EU lifts quo­tas next year and fully em­braces free mar­ket farm poli­cies, of­fi­cials and an­a­lysts say.

How­ever, some an­a­lysts be­lieve ex­ports will face tough com­pe­ti­tion in at­trac­tive Mid­dle East and North African mar­kets while some pro­duc­ers, es­pe­cially in Italy, fear they may not sur­vive the tran­si­tion.

New mar­kets will have to be found in­side and out­side the 28-na­tion Euro­pean Union as pro­duc­tion is ex­pected to in­crease from the cap of 13.5 mil­lion tonnes a year to at least 16 mil­lion tonnes and pos­si­bly 18 mil­lion or 19 mil­lion tonnes an­nu­ally.

Euro­pean agri­cul­ture com­mis­sioner Phil Ho­gan said the bloc has for years care­fully pre­pared for lift­ing su­gar quo­tas on Oc­to­ber 1, 2017.

Care­ful prepa­ra­tions are all the more nec­es­sary given the crises grip­ping Euro­pean agri­cul­ture, par­tic­u­larly with soft dairy prices due to over­pro­duc­tion 18 months af­ter milk quo­tas were lifted.

Su­gar will be the last of the EU agri­cul­ture quo­tas set over the decades to pro­tect key sec­tors.

In 2006, the EU launched re­forms to boost com­pe­ti­tion, which forced 83 mills, or 40 per­cent of the to­tal, to close, ac­cord­ing to the Euro­pean As­so­ci­a­tion of Su­gar Pro­duc­ers (EASP).

Pro­duc­ers in the long run should now “be able to sur­vive in an en­vi­ron­ment of lower prices”, said a source at the Euro­pean Com­mis­sion, the EU ex­ec­u­tive.

A hand­ful of pro­duc­ers have held on in Europe, par­tic­u­larly those in France and Ger­many but also some in Poland and Bri­tain. Firms in Bri­tain, Por­tu­gal and Ro­ma­nia mean­while re­fine im­ported raw su­gar.

Com­mis­sion and in­dus­try sources pre­dicted that pro­duc­ers, sev­eral of whom work short of ca­pac­ity, will be able to raise out­put by 20pc once the quo­tas are re­moved.

“Europe, which is to­day a net im­porter, will be­come a net ex­porter,” pre­dicted Ger­ard Benedetti, the com­mu­ni­ca­tions di­rec­tor for French su­gar heavy­weight Tereos.

He es­ti­mated that Euro­pean su­gar pro­duc­tion will in­crease to 18 mil­lion tonnes or 19 mil­lion tonnes a year, above the 16 mil­lion tonnes es­ti­mate from Claudiu Covrig, an an­a­lyst with Kings­man-Platts S&P Global.

“It will be very dif­fi­cult for them to be com­pet­i­tive,” Mr Covrig said, point­ing out that Iraq and Al­ge­ria have built their own re­finer­ies in the past few years. –

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