/, CAP/The EU sugar market situation: an unprecedented price decline

The EU sugar market situation: an unprecedented price decline

2018-05-09T14:07:18+00:00May 9th, 2018|

At 372 EUR/tonne in February 2018, the EU average white sugar price is currently at its
lowest level since the establishment of the European Commission Price Reporting System in
July 2006, and down by more than 25 per cent since August 2017. It is almost ten per cent
below the white sugar reference threshold, the only objective benchmark that exists to
monitor the health of the sector. And it is far below EU average production costs.
Current sugar prices are not sustainable for beet and sugar production. This is confirmed by
press reports that even the most competitive producers are sustaining heavy losses.1
Unfortunately, calls from the European Commission for the sector to regulate itself take no
account of market realities:

  • Sugar production is up by logic: relative high world market prices at the end of 2016
    and the abolition of quotas led to higher production. Higher production also allows for
    a greater distribution of fixed costs, increasing operators’ competitiveness in a more
    liberal environment characterised by increased competition
  • Meanwhile, low world market prices are dragging down the EU market. Sugar
    exports, while greater than under the quota system, are restricted by current world
    market price levels, debasing a major outlet. Substantial zero- and reduced-tariff
    import quotas set up since 2013, along with complete market opening to the
    ACP/LDC, prevents the gap between EU prices and world prices from exceeding 100
    EUR/tonne for any sustained period. But world market prices do not reflect economic
    realities: as a residual dump market, world sugar prices are depressed in large part
    by subsidised production and exports from Brazil, Thailand, Pakistan, and India, and
    by excess production pushed onto the world market by a host of smaller players that
    is often sold at below cost.

If the gap between current EU prices and those until September 2017 remains at the present
level, the net transfer of wealth from the sugar sector (farmers and industry) to secondary
processors and retailers will be at least 2 billion EUR by the end of 2018.
We urge the European Commission and Member States to take account of the
escalating crisis in the sector, and to consider ways to minimise the ongoing and
potentially irreversible damage to farmers, workers, and sugar manufacturers.

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