SUGAR MARKETS

sugar demand
and supply
in the EU

Eu sugar sector sugar factory

one of the world's top sugar producers - scale and competitiveness

Eu sugar sector sugar production

the EU sugar sector

The European Union (EU) is one of the world’s top sugar producers – both in terms of scale and competitiveness. The majority of EU production is from sugar beet grown in 19 Member States, with leading country producers including France, Germany, Poland, the UK and the Netherlands 1.

Up to October 2017

 




imports and exports



Up till 2017 the EU was a net importer of sugar. Relative to its demand from the food sector of about 16 million tonnes/year, total import availability reached 3.5 million tonnes/year at zero or low duty, of which up to 3 million tonnes/year was typically actually imported.



met mainly from
duty free imports

In contrast EU sugar exports, which were restricted until 2017, averaged only about 1.3 million tonnes/year.



due to reforms and restricted globally traded exports




a significant change in EU supply and demand balance after 2017





After 2017

As a consequence of policy reforms and abolition of quotas, the EU supply and demand balance changed significantly after 2017. EU production increased, prices fell sharply which reduced the demand for imports, and exports were no longer capped and so increased. As a result, the EU has since become a net exporter.


EU policy reforms

The sector has been progressively deregulated by two substantive reforms in 2006 and 2013. The first of these resulted in the EU beet sugar industry closing almost half its manufacturing sites and cutting production capacity by 4.5 million tonnes (30%)2.

Increase in production



sugar imports significantly liberalised

Sugar imports into the EU have also been significantly liberalised, in line with the EU’s development and trade objectives. For example, unrestricted duty-free imports were introduced from 2009 for Least Developed Countries (LDC) and African, Caribbean and Pacific (ACP) countries, duty free imports were offered to Balkan countries, and an increasing number of free trade agreements are being agreed and introduced, mostly at zero duty3. Low duty (€98 per tonne) ‘CXL’ imports were also agreed for several countries including Brazil, Cuba, India and Australia. As a result of these changes, EU sugar import availability increased by 60% from about 2.2 million tonnes/year pre-2006 to 3.5 million tonnes/year by 2016/17. Of this, 2.7 million tonnes/year is now available duty free. The quantity actually imported each year fluctuates depending on the attractiveness of the EU market price compared to competing markets globally.



import

availability

increased

60%





a substantially deregulated sector

 

The last stages in this reform process were completed in 2017.

From 2018 the EU sugar sector became substantially deregulated, with sugar covered by the general provisions of the Common Agricultural Policy (CAP), including the decoupled basic payment scheme and crisis measures4. However, a few sugar-specific measures have remained in place beyond these general provisions, for example some limited voluntary coupled support has been agreed until 2019 for less efficient producers in 11 Member States5 for food and livelihood security and rural development.

This does not apply, however, for the more efficient Member State industries, including the UK’s.


References

  1. EU Commission data (FCA)
  2. Between 2005 and 2015 the EU beet sugar sector closed 83 factories, cut over 24,000 direct jobs and lost 165,000 grower suppliers. CEFS and CIBE statistics, 2016
  3. European Commission Sugar Management Committee trade reports, 2010/11 – 2015/16
  1. Council-Parliament Regulation 1308/2006, Articles 17-20 and Articles 219-221
  2. European Commission, voluntary coupled support for sugar beet, notifications by Member States, 15 April 2015
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