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