EU Sugar Market: Current Situation and Policy Reform

							 EU Sugar Market:
Current Situation and
   Policy Reform

       Presented by
     LMC International
   Belgrade, 27 May 2004
 Presentation Format
Currentmarket situation
and policy

Options   for policy reform
 EU Sugar Regime (to 2005/06)

Key Features:
 Production   quotas
 Support   (intervention) prices
 Market   access arrangements
      EU Supply Demand Balance
       (‘000 tonnes, white value)

                  2000/01 2001/02 2002/03 2003/04
Production        17,018   14,908   17,212   15,179
Consumption       13,200   13,200   13,345   13,290
Imports - Total    1,855    1,976    2,110    1,980
Exports - Total    6,177    3,985    5,419    4,259
     Production Quotas
 Quantityfor sale at support
 prices (A and B quota)
 Additionalproduction
 exported to world market (C
 sugar)
      Support Prices
Guaranteed prices set for:
EU   beet sugar quotas
Raw   cane sugar imports
Basic   beet price
  Derivation of the Intervention
  Price of White Sugar, 2003/04
                                        €/tonne sugar

Raw Material Cost                         366.7
Beet Transport & Reception Costs           44.1
Processing Margin                         243.6
Total Expenses                            654.4
Less Return from the Sale of Molasses     -22.5
Intervention Price                        631.9
  Preferential Access
Raw sugar:
 SugarProtocol (ACP); EBA;
 MFN; SPS
White sugar:
 Western   Balkans
    EU Preferential Trade, 2003/04

                       Volume       Effective Duty
Trade Arrangement   ('000 tonnes)      (€/tonne)
Sugar Protocol          1,305              0
MFN                        82             98
EBA                        98             29
SPS                       178             29
Western Balkans           100              0
Total                   1,763
  EU Border Protection
 No imports enter EU outside
 of preferential arrangements
 White   sugar tariff €419 per
 tonne
 Plussafeguard duty (€117/mt
 at world price of US$230/mt)
 Presentation Format
Currentmarket situation
and policy

Options   for policy reform
 Pressures for Reform
 WTO   Doha Round
 WTO   challenge
 Access     arrangements
 Internal   reform process
  EU Regime – Post 2005/06
Influences:
   Likely outcomes from the
    WTO Doha Round
   EU Commission policy
    options
 EU Commission’s Reform
       Options
Status   Quo/Fixed Quotas

Price   Cut

Full   Liberalisation
Status Quo/Fixed Quota Option
 Supply   managed by quotas
 Requiressupply restraint by
 countries with duty-free
 access
 Higher   prices maintained
    Price Cut Option

Supply   managed by price
Quotas   phased out
Leads   to large price cut
      Liberalisation
Removal   of quotas and
tariffs

Substantial   price cut
  EU Price Mechanism
     Quotas: WTO
Fixed
 commitments dictate price
Price Cut: EU manages
 prices
Liberalisation:   World price
  EU Market Prices, € per tonne
         Liberalisation


             Price Cut


Status Quo/Fixed Quota


         Current Price


                          0   200   400   600   800
      WTO Challenge
Challenge to:
       subsidies on re-exported
 Export
 raw sugar imports
 Cross-subsidisation   of C sugar
 Potential impact on quotas and
 production, and support for
 Fixed Quota option
     EU Price Outlook
Price Cut Option: - 38%
Fixed Quotas Option: - 17%
Liberalisation: - 52%
 Serbia  – 160,000 tonne
 initiative falls within Fixed
 Quotas agenda