Review of sugar regime comes with no guarantees
- ACP sugar producers
Kaieteur News
July 12, 2004
A review of the sugar regime started late in 2003, when the European Commission presented a paper on the options for reform in key agricultural areas, particularly the sugar sectors.
During this time it was anticipated that the legislative proposals for reform in sugar would have come about in mid-2004, and so they did, much to the disadvantage of the African, Caribbean and Pacific (ACP) sugar producing countries.
There have been few changes to the regime since its inception in 1968. The most significant changes were made in 2001 and included the abolition of storage cost aid, the abolition of the requirement to keep minimum stocks, and a permanent 115,000 tonne EU wide quota cut.
The introduction of duty free imports from Least Developed Countries (outside the ACP Sugar Protocol) into the EU from 2001-02 under the Everything But Arms Agreement is a further change likely to have a significant impact on the sugar regime. The duty free quota under the Everything But Arms (EBA) will gradually increase until full liberalisation in 2009.
The sugar regime was introduced in 1968 and was extended most recently in 2001 until June 30, 2006.
The main features of the regime are: Guaranteed internal prices for white sugar, sugar beet and cane sugar; production quotas limiting the amount of sugar benefiting from price guarantees; protection of the internal market against low world market prices by high import tariffs; export refunds to bridge the gap between EU and world prices; and Import of tariff free African Caribbean and Pacific (ACP) raw sugar for refining.
Many in the ACP region now argue that these proposals seek to destroy the faith and trust of this agreement. According to European researchers, world sugar consumption has been steadily rising over recent years, in particular in the developing world where population levels are also rising.
The rise in consumption has been outstripped by the rise in production, resulting in a surplus of sugar on the world market and low prices. They determined that around 16 tonnes of sugar are in store worldwide, representing some13 per cent of the current world annual consumption of around 130 tonnes.
This situation is unlikely to change significantly in the foreseeable future. The least developed countries like Guyana feel the impact of reduced prices on the world market and while production in sugar increases each year, markets may soon be a problem.
There is much talk of a massive diversification drive within the sugar regime over the next few years. The major stakeholders believe that this will certainly offset the impact of the EU proposals if they kick in.