Divided EU likely to scrap sugar quotas in 2017/2018

 EU sugar quotas, originally set to end in 2015, will get only a limited reprieve in the current round of agricultural reforms and their demise is now expected in 2017 or 2018, sources familiar with the process said. The EU introduced its system of national production quotas and minimum beet prices in 1968, to guarantee domestic supplies and provide a minimum income to Europe’s sugar beet farmers. 

But in recent years, the strict quota limits have been blamed for creating artificial shortages in Europe and pushing up prices, increasing pressure to scrap them once and for all. The current rules restrict “in-quota” production to 13.3 million tonnes each year, divided into national production limits in 19 member states. France has the biggest annual quota at about 3 million tonnes, followed by Germany and Poland. 

With EU sugar consumption broadly stable at about 17 million tonnes a year, the bloc normally fills the gap with imports from poorer countries in Africa, the Caribbean and Pacific region, which are granted special access to sell at the high EU prices. But high world prices have at times limited imports from these sources in recent years, forcing the EU to secure supplies by cutting the hefty duties it imposes on imports from big producers that do not qualify for special access, such as Brazil. 

Talks to finalise the reform of the EU Common Agricultural Policy (CAP) from 2014, including the sugar regime, will start next month between governments, the European Parliament and the European Commission, and are set to be concluded by June. The Commission, the bloc’s executive, has proposed ending quotas in 2015, as originally agreed by EU governments during a previous reform in 2006. 

The European Parliament has said the regime should be maintained until 2020, backing the argument from beet farmers that they need more time to prepare for deregulation. In their joint negotiating position, governments now say the current system should be kept until 2017. But that date is an uneasy compromise between those including France and Germany that have influential farm lobbies wanting to keep quotas until 2020, and a smaller group including Britain and the Netherlands who back a 2015 phase-out. 

EU officials involved in the talks believe a deal will be struck somewhere between the dates favoured by governments and the parliament. “If you look at the positions of the three institutions, the most likely outcome is either an end to quotas in 2017 with some sweeteners for the parliament, or in 2018 with something for the member states,” said one official, who spoke on condition of anonymity due to the sensitivity of the negotiations. Stefan Uhlenbrock, analyst with F.O. Licht in Germany, also said he believed a compromise was likely, with quotas most probably ending around 2018. “I think they (EU authorities) will find a compromise because sugar market reform is now part of a broader reform of CAP: the last market reform (in 2006) was purely sugar.” 

Copyright Reuters, 2013

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