Sugar-Regime


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What is the Sugar Regime.  Here is a summary from British Sugar:-http://www.britishsugar.co.uk/bsweb/bsgroup/facts/fsheet1.htm

It appears that sugar is not subsidised through taxation as the rest of CAP but by a system of high prices to growers paid by the sugar industry!  hence UK Sugar Industry saying that the sugar regime costs consumers £500M/a  see   http://www.parliament.the-stationery-office.co.uk/pa/cm200102/cmselect/cmenvfru/550/550ap06.htm

The EU Sugar Regime

Introduced in 1968, the sugar regime is a part of the EU's Common Agricultural Policy (CAP) covering the production and marketing of beet and cane sugar within the Member States. The purpose of the regime is to provide EU producers and consumers, as well as producers in certain ACP and least developed countries, with a stable market for sugar, a notoriously volatile commodity. This stability is ensured by price support for:
bulletEU beet sugar production within quotas defined for each Member State
bulletFixed quotas for cane sugar from those ACP countries who are signatories to the Sugar Protocol of the Cotonou Agreement (successor to the Lomé Convention)
bulletIncrementally increasing quotas for sugar from the least developed countries as part of the "Everything But Arms" agreement of February 2001.

The regime is reviewed every five years. The current regime, which would normally be reviewed in 2006, is to have a review in 2003 which is independent of the on-going CAP mid-term review.

Production quotas

Each individual Member State is allocated a production quota (see Table 1) which sets the limit to EU support for sugar production. Production over this limit (so-called "C" sugar) receives no support and may not be sold within the EU. This sugar must be exported at the prevailing world price with no export refund. Production quotas are based on past production references. As a result, there is a wide range of Member State deficits and surpluses. The UK's beet sugar production quota is just over 1.1 million tonnes which is only half of its domestic sugar consumption. This contrasts with the surplus sugar producing countries of the Continent where production quotas can exceed domestic consumption by more than 70% (see Table 1). Following agreement in the Uruguay Round of international trade negotiations, a system of coefficients is used to cut production quotas annually to reduce the quota surplus for export to meet the EU's WTO subsidised export constraints. The UK does not export quota beet sugar and does not draw any export refunds for this type of export. Quotas are for white sugar which national governments allocate to processors. Processors in turn contract with growers for the necessary quantity of sugar beet to fulfil the quota.

Producer Levies

The industry (processors and growers together) is charged a levy to meet the full costs to the EU budget of exporting surplus quota sugar to the world market. The UK industry pays this levy but does not draw on these funds.

Prices

The key institutional support price is the basic beet price which is paid to farmers by the sugar processors. Prices were cut in 1989/90 and have not changed since then. Real support prices are now some 45% lower than in 1980.

Imports

As with other agricultural products, the EU applies import tariffs which decreased in stages up to 2000/01 as part of the Uruguay Round Agreement.

The EU has a series of preferential import arrangements which result in the import of around 1.7 million tonnes of sugar from developing countries. Some 1.1 million tonnes (65%) of this is imported and refined in the UK. This places the EU amongst the largest sugar importers in the world. ACP sugar - Under the Cotonou Agreement, the EU imports 1.3 million tonnes of sugar from the ACP states and India which has duty free access to the EU market. EBA sugar - In 2001, the EU agreed to allow duty free and quota free access for the least developed countries in the world. This will be phased in from 2006 to 2009 so that from July 2009 all sugar from these countries will have completely free access. In the interim, import quotas have been set for EBA raw sugar. These imports come into the UK. M.f.n. - or Most Favoured Nations, was agreed under the 1995 enlargement. The EU set import quotas for 85,000 tonnes of raw sugar from Brazil and Cuba with a reduced import duty. This represents their traditional exports to Finland. SPS - or Special Preferential Sugar, is the balancing sugar needed to make up the supply needs of the cane sugar refiners. As the quota for EBA sugar increases, so the need for SPS sugar will reduce. SPS sugars come mainly from ACP states.

Exports

All of the sugar exported by the EU is white sugar, the market for which is generally very distinct from raw sugar. Because the quota arrangements limit quota surpluses, EU exports have been reasonably stable at around 5 million tonnes of sugar annually including "C" sugar which receives no support. Sugar exported from the UK with export refund represents the re-export of ACP sugar which is surplus to market requirements. These exports are funded, not from the producer levies, but directly from the EU's Development Budget.

Table 1 - Production quota surpluses and deficits.

For further information please contact:
Chris Carter - +44 (0)1733 422410
or Clare Wenner - +44 (0)1733 253006