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
