The EU Sugar Market Post 2017 April 2014 MECAS(14)05 International Sugar Organization ISO The EU Sugar Market Post 2017 MECAS(14)05 APRIL 2014 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 29 April 2014 Abstract This paper takes stock of major developments in the EU sugar industry over the past few years with the view of investigating the possible implications of the 2017 Reform of its Sugar Regime and its impact on the world market. This paper has three main objectives: first, to examine EU sugar production, consumption and trade and the major developments/industry characteristics across the 28 countries of the bloc in the wake of the 2006 Reform of the EU Sugar Regime. Second, to investigate the implications of the recently announced 2017 Reform to the key stakeholders, particularly EU beet/sugar producers, and to present recent developments on the status of the Economic Partnership Agreements with ACP countries and other Free Trade Agreements. Finally, the paper presents two scenarios on how beet sugar production is likely to respond, by taking into account different levels of world market prices and import parity prices. What implications will a higher or lower level of world sugar prices, amid the threat of competition from isoglucose, have for beet sugar production in the EU and imports from preferential sugar trade partners of the LDC/ACP group as well as others? Will the EU turn into a net sugar exporter after the 2017 Reform? The paper concludes it is unlikely that volumes greater than 3.0 mln tonnes will be imported in any given year by a production quota-free EU-28 bloc from 2017 onwards. Sugar production is forecast as ranging from 15.8 to 19 mln tonnes, white value, in 2017/18, while sugar consumption may fall from the current level of 18 mln tonnes due to the likely increased penetration of isoglucose in the bloc’s soft drink industry. Projected sugar imports range from a low of 1.5 mln tonnes to a high of 3.0 mln tonnes, with the EU in one of the two scenarios becoming a net sugar exporter (2.5 mln tonnes of exports as against 1.5 mln tonnes of imports). As a result, the EU may lose its status as one of the world’s largest sugar importers (it was the largest between 2008 and 2011). Part 1 of the paper presents the characteristics of the EU sugar industry, its role in the world market since the 2006 Reform of the Sugar Regime, as well as the major developments in domestic beet sugar production, consumption, raw sugar refining, imports and exports over recent years. Part 1 also describes the bloc’s major preferential trade agreements, especially the progress of Economic Partnership Agreements with countries of the ACP group, EBA arrangements, the CXL imports and other Free Trade Agreements. Part 2 of the paper assesses the key pillars of the upcoming 2017 Reform of the Sugar Regime, with a focus on the threat that the abolition of isoglucose (HFS) quota can bring to the EU sugar market. Part 3 presents the ISO forecasts for EU sugar production, consumption, imports and exports Post 2017. International Sugar Organization i MECAS(14)05 Market Evaluation Consumption and Statistics Committee International Sugar Organization One Canada Square Canary Wharf London E14 5AA INDEXES The EU Sugar Market Post 2017 TABLE OF CONTENTS IV INDEX OF TABLES INDEX OF BOXES INDEX OF FIGURES GLOSSARY OF TERMS AND ACRONYMS INTRODUCTION IV IV IV V 1 PART 1: DEVELOPMENTS SINCE THE 2006 EU SUGAR REGIME REFORM THE EU SUGAR BALANCE THE 2006 REFORM OF THE EU SUGAR REGIME SUGAR PRODUCTION SUGAR CONSUMPTION SUGAR TRADE NON-LDC ACP SUGAR IMPORTS TRANSITIONING FROM ACP SUGAR PROTOCOL TO EPA Caribbean EPA Pacific EPA West Africa EPA Central Africa EPA Southern African Development Community (SADC) EPA Eastern and Southern Africa (ESA) EPA East African Community (EAC) EPA SUGAR IMPORTS UNDER EVERYTHING-BUT-ARMS (EBA) INITIATIVE CXL IMPORTS SPECIAL ARRANGEMENTS MFN IMPORTS SUGAR IMPORTS FOR THE INDUSTRIAL/CHEMICAL SECTOR THE NEW FREE TRADE AGREEMENTS General Enquiries: 00 44 20 7513 1144 Publications: 00 44 20 7715 9436 E-mail: [email protected] Website: http://www.isosugar.org With Central America With Colombia and Peru Other Potential FTAs SUGAR REFINING EXCEPTIONAL MEASURES PRICE DEVELOPMENTS PART 2: THE 2017 REFORM THE NEW LEGAL PROVISIONS IN A NUTSHELL ISOGLUCOSE: HOW BIG A THREAT? PROSPECTS FOR ETHANOL FOR THE EU-28 2 2 2 3 9 10 12 13 15 15 15 15 15 15 15 16 17 18 19 19 19 19 20 20 20 23 26 28 28 29 33 PART 3: PRICE SCENARIOS AND IMPACT ON THE WORLD 34 TRADE PREVIOUS IMPACT ASSESSMENT STUDIES ISO ASSESSMENT AND FORECAST CONCLUSIONS International Sugar Organization 34 36 39 ii MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Indexes Index of Tables Table 1 – EU Production, Imports, Exports, Consumption and Stocks, 2005-2012 (Tonnes – Raw Value) Table 2 – Annual Sugar Production Quotas by Member State, 2003-2014 (Thousand Tonnes – White Value) Table 3 – Selected Indicators of the EU's Sugar Industry Table 4 – Total Sugar Imports by the EU from Non-LDC ACP Countries (Tonnes – Raw Value) Table 5 – EPA Regions Table 6 – Total Sugar Imports by the EU from EBA Countries (Tonnes – Raw Value) Table 7 – Total Sugar Imports by the EU from CXL Countries (Thousand Tonnes – Raw Value) Table 8 – Total Sugar Imports by the EU from Balkan Countries (Thousand Tonnes – Raw Value) Table 9 – Industrial Import Quota Available and Allocated (Tonnes) Table 10 – Central America – EU Tariff Quotas (Thousand Tonnes – Raw Value) Table 11 – Refineries and Refining Capacity by Member State in 2013 Divided Into FullTime and Non-Full-Time Refineries (Tonnes – Raw Sugar) Table 12 – Import Tonnages Entering Under Exceptional Measures Table 13 – Commission Exceptional Measures Since MY 2010/2011 (October/September) Table 14 – Isoglucose Quotas by Member State (Tonnes – Dry Matter) Table 15 – Number of Isoglucose Production Sites by Companies and Location Table 16 – Indicative Gasoline and Fuel Ethanol Use in the EU 28 in 2020 (Mln Litres) Table 17 – Scenario 1 – EU 28 Sugar Balance (Mln Tonnes) Table 18 – Scenario 2 – EU 28 Sugar Balance (Mln Tonnes) Table 19 – Average Scenario – EU 28 Sugar Balance (Mln Tonnes) Index of Boxes Box 1 – Key Policy Changes of the 2006 EU Sugar Reform Box 2 – Climate Change and EU Sugar Beet Production Box 3 – Prospects For Bioplastics Production From Beet Index of Figures Fig. 1 – Sugar Production Quotas by Groups of Countries and Share in EU Total, 2011/2012-2013/2014 Fig. 2 – Yield Developments in The EU, 1992-2012 Fig. 3 – Sugar Production and Consumption in the EU – 2002-2012 (Mln Tonnes – Raw Value) Fig. 4 – EU Imports and Exports of Sugar, 2002-2012 (Thousand Tonnes – Raw Value) International Sugar Organization iv MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Fig. 5 – EU Imports of White and Raw Sugar, 2002-2012 (Thousand Tonnes – Raw Value) Fig. 6 – EU Quota White Sugar Price Versus ISO White Sugar Price Index Fig. 7 – EU Domestic Quota Sugar Prices Versus Duty-Free Import Parity Price Fig. 8 – EU Domestic Quota Sugar Prices Versus CXL Sugar Import Parity Price Fig. 9 – Sugar/Grain Balances Fig. 10 – EU and Import Parity Prices: Lower World Price Scenario Fig. 11 – EU and Import Parity Prices: Higher World Price Scenario Glossary of Terms and Acronyms ACP AMSP CAP CARIFORUM CEMAC CETA CMO DG EAC EBA EC ECOWAS EPA ESA ESI Funds FAO FDI GHG GM GSP HFS ILO IPCC LDC M&A MFN OECD RED SADC STP TRQ WTO African, Caribbean and Pacific Group of States Accompanying Measures for Sugar Protocol Common Agricultural Policy Caribbean Forum Economic and Monetary Community of Central Africa Comprehensive Economic and Trade Agreement Common Market Organisation Directorate-General of the European Commission East African Community Everything But Arms Initiative European Commission Economic Community of West African States Economic Partnership Agreement Eastern and Southern Africa European Structural and Investment Funds Food and Agriculture Organization of the United Nations Foreign Direct Investment Greenhouse Gas Genetically Modified Generalised Scheme of Preferences High Fructose Syrup International Labour Organization Intergovernmental Panel on Climate Change Least Developed Countries Mergers and Acquisitions Most Favoured Nations Organisation for Economic Co-operation and Development Renewable Energy Directive Southern African Development Community São Tomé and Príncipe Tariff-Rate Quota World Trade Organization International Sugar Organization v MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Introduction This study monitors recent developments in the EU sugar industry with the view of investigating the possible implications of the 2017 Reform of its Sugar Regime and its impact on the world market. This paper has three main objectives: first, to take stock of EU sugar production, consumption and trade and the major developments/industry characteristics across the 28 countries of the bloc in the wake of the 2006 Reform of the EU Sugar Regime. Second, to investigate the implications of the recently announced 2017 Reform to the key stakeholders, particularly EU beet/sugar producers, and to present recent developments on the status of the Economic Partnership Agreements with ACP countries and other Free Trade Agreements. Finally, the paper presents two scenarios on how beet sugar production is likely to respond, by taking into account different levels of world market prices and import parity prices. What implications will a higher or lower level of world sugar prices, amid the threat of competition from isoglucose, have for beet sugar production in the EU and imports from preferential sugar trade partners of the LDC/ACP group as well as others? Will the EU turn into a net sugar exporter after the 2017 Reform? The 2006 Reform of the EU Sugar Regime, which eliminated domestic sugar price intervention and export refunds, already led the bloc to cut production by some 5 mln tonnes. As a result, the EU is now one of the world’s largest sugar importers. Between 2008 and 2011, the bloc was indisputably the world’s largest importer of sugar, being overtaken by China only in 2012. In this period, the EU was able to not only absorb greater quantities of sugar imports from preferential partners in the developing markets of the ACP (African, Caribbean, and Pacific) as well as the LDC (least developed countries), but also increasing volumes of sugar coming from other preferential trade agreements. At the same time, the EU has become a leaner and more efficient sugar producer. Sugar production is now concentrated in fewer groups, activities of M&A and FDI are as high as ever and investment in higher yields continues in addition to the gains bestowed on the sector by global warming. Crucially, the Reform of the EU Sugar Regime in 2017 will abolish sugar and isoglucose production quotas, as well as minimum beet prices altogether, leading to further market deregulation in the bloc. Sugar output in the EU is likely to become more responsive to the level of world prices: higher (lower) world sugar prices could render sugar imports less (more) attractive vis-à-vis domestically produced sugar in the EU and even provide producers in the bloc with an extra incentive to increase production for exports. Part 1 of the paper presents the characteristics of the EU sugar industry, its role in the world market since the 2006 Reform of the Sugar Regime, as well as the major developments in domestic beet sugar production, consumption, raw sugar refining, International Sugar Organization 1 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 imports and exports over recent years. Part 1 also describes the bloc’s major preferential trade agreements, especially the progress of Economic Partnership Agreements with countries of the ACP/EPA groups, EBA arrangements, the CXL imports and other Free Trade Agreements. Part 2 of the paper assesses the key pillars of the upcoming 2017 Reform of the Sugar Regime, with a focus on the threat that the abolition of isoglucose (HFS) quota can bring to the EU sugar market. Part 3 presents the ISO forecasts for sugar production, consumption, imports and exports for an EU Post 2017. Part 1: Developments Since the 2006 EU Sugar Regime Reform The EU Sugar Balance The EU is the world’s second largest sugar consumer (after India) as well as the world’s third largest sugar producer (after Brazil and India). The bloc is also one of the world’s largest sugar importers – it was the largest importer of sugar between 2008 and 2011, losing the first spot to China in 2012. Prior to 2006, the EU was the world’s second largest exporter (after Brazil). Since 2006, following a policy that encouraged production cuts in the bloc, sugar exports have collapsed from over 6 mln tonnes to less than 2 mln tonnes, while imports, by contrast, have risen from around 2.5 mln tonnes to around 4 mln tonnes, raw value – see table. 1. Table 1: EU Production, Imports, Exports, Consumption and Stocks, 2005-2012 (Tonnes – Raw Value) Calendar Production Imports Exports Net Trade Consumption Ending Year Stocks 21,697,646 2,416,931 6,639,198 4,222,267 16,764,547 17,892,886 2005 17,579,659* 2,642,921 6,687,461 4,044,540 17,397,963≈ 14,030,042 2006 16,904,337* 3,281,335 1,625,989 -1,655,346 18,540,865 14,522,647 2007 14,707,994* 3,505,094 1,493,606 -2,011,488 18,898,641≈ 12,343,488 2008 16,367,884* 3,246,634 1,568,087 -1,678,547 17,796,386≈ 12,593,533 2009 16,818,760* 3,287,341 2,362,255 -925,086 19,159,177≈ 11,178,202 2010 18,185,101* 4,726,398 1,479,302 -3,247,096 19,258,646≈ 13,351,753 2011 18,314,654* 3,843,488 2,081,709 -1,761,779 19,542,751≈ 13,885,435 2012 Source: International Sugar Organization Sugar Yearbook. Campaign: July – February. From 2007 including figures of Bulgaria and Romania. *: Excluding production of sugar and sugar syrups used for fuel ethanol production: 2006-518,323t; 20071,541,064t; 2008-1,667,868t; 2009-1,763,511t; 2010-1,141,536t; 2011-1,347,021t; 2012-1,413,000t ≈: Excluding use of sugar and sugar syrups for fuel ethanol production: 2006-129,581t; 2007-774,012t; 2008-1,572,765t; 2009-1,691,778t; 2010-1,608,015t; 2011-1,192,908t; 2012-1,363,518t. The 2006 Reform of the EU Sugar Regime The 2006 Reform of the EU Sugar Regime, operational since 1st July 2006, had the main objective of incentivizing sugar production to migrate to more cost effective regions by International Sugar Organization 2 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 offering higher cost producers a chance to surrender production quotas and leave the industry upon compensation. 1 With the Reform, the European Commission targeted a cut in overall EU sugar production of as much as 6 mln tonnes. The Reform was implemented in the wake of a WTO panel ruling, which established that EU sugar exports, at the time in the order of around 5 mln tonnes a year, were cross-subsidised and, as such, should be capped to no more than 1.35 mln tonnes, white value. The capped amount would correspond to the equivalent shipments of preferential ACP/LDC sugar. In September 2007, new elements were agreed to speed up the Reform. 2 The European Commission, in a 2011 full impact assessment study 3, considered the 2006 Reform to be relatively successful, as it eliminated some key market control measures of domestic support, such as price intervention, production and export refunds. Box 1: Key Policy Changes of the 2006 EU Sugar Reform • • • • • • Reference sugar prices, which have replaced intervention prices, were reduced by 36% over four years starting from 2006/07. The 2006/07 white sugar support price of EUR 631.9/tonne was reduced to EUR 404.4/tonne by the end of the transition period in 2009/10. The reference price for raw sugar was set at initially EUR 523.7/tonne in 2006/07, and was reduced to EUR 335.2/tonne by 2009/10; The Sugar price intervention (an obligation of the Commission to buy from the industry any unsold quota sugar at a guaranteed price) was abolished after 2009/10 and replaced with a system of private storage. Producers taking advantage of the scheme are paid a private storage aid. Intervention up to 2009/10 was limited to 600 thousand tonnes per marketing year and the buyingin took place at 80% of the reference price of the following marketing year; Export refunds for sugar were suspended from 2008; To compensate farmers leaving the sector, direct payments covered 64.2% of the income loss; A restructuring fund paid a basic EUR 730/tonne up to 2007/08 for producers to renounce their quotas and quit the industry, with at least EUR 73/tonne going to ex-growers (the fund was paid for by a levy on continuing processors). To qualify for the restructuring money, which fell to EUR 625/tonne in 2008/09 and EUR 520/tonne in 2009/10, sugar companies had to give up their rights to the quota, stop production altogether in at least one factory, close the factory (or factories) and restore good environmental conditions of the site and help the redeployment of factory staff; The quota system was simplified: the “A” and “B” quotas were merged into a single quota. See also MECAS(08)18 – EU Sugar Policy Reform – Ramifications for Preferential Exporters Sugar Production The 2006 Reform of the Sugar Regime in the EU ended in 2009/10, with over 5.2 mln tonnes of quota sugar, white value, renounced. However, some 1 mln tonnes of quota 1 European Union. 2006. “Council Regulation (EC) N°318/2006”. http://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:32006R0318&rid=1. This was integrated into a Unique CMO Council Regulation n°1234/2007: European Union. 2007. “Council Regulation (EC) N°1234/2007”. http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:299:0001:0149:EN:PDF. 2 These included additional payments of EUR 237.50/tonne for farmers who gave up the quota as well as waivers on restructuring levies for later year withdrawal of quotas. 3 European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. International Sugar Organization 3 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 sugar had been purchased by groups, mostly in France and Germany, leading to a net reduction in EU-wide production quotas in the order of 4 mln tonnes. Currently, several regulatory measures still apply: a) minimum beet prices; b) sugar production quotas; c) production charges (levied on the quota, amounting to EUR 12/tonne for sugar and inulin syrup and EUR 6/tonne for isoglucose); d) carry forward; e) private storage aid (never applied); f) withdrawal schemes. As detailed later, most of these regulatory measures (except for e) will be abolished with the upcoming 2017 Reform of the Sugar Regime. The import duties have been and will be maintained at the level of EUR 419/tonne for white sugar and EUR 339/tonne for raw sugar, with CXL sugar imported at a EUR 98/tonne duty, and access for preferential partners of the EPA/EBA group and others kept within a duty free quota free mechanism – see later discussion. The system of production quotas, which will expire in 2017, is a major pillar of the current EU Sugar Regime. Both sugar and isoglucose (HFS – High Fructose Syrup) production are regulated by fixed quotas distributed to Member countries and any production above the quotas cannot be freely released in the EU market. Instead, they need to be sold to the chemical or bioethanol industry or exported within the WTO limits of 1.35 mln tonnes. Sugar production quotas in the EU have fallen from 17.4 mln tonnes in 2005/06 to 13.3 mln tonnes in 2009/10 (rising slightly to 13.5 mln tonnes with the accession of Croatia in 2013). Isoglucose production quotas fell only slightly from about 800 thousand tonnes to 700 thousand tonnes now. After the 2006 Reform of the EU Sugar Regime, sugar production quotas were significantly reduced in Italy, Spain and Greece and production stopped altogether in five Member States - Ireland, Latvia, Slovenia, Bulgaria and continental Portugal. As a result, there has been a further concentration of production in the leading Member States: the market share of France and Germany increased from 43% of EU production to 52% on average. Fig.1 shows that the largest 7 sugar producers in the EU-28 (France, Germany, Poland, United Kingdom, Netherlands, Belgium and Italy) today account for a massive 85% of overall production quotas in the bloc. This is significantly up from the 76% of EU production quotas held by the seven largest producers prior to the 2006 Reform. The current distribution of beet sugar quotas in the EU is presented in table 2. A major consequence of the Reform is a leaner industry, with significantly higher sugar/sugarbeet yields from a much-reduced number of players (factories) and on a reduced crop area. The number of beet sugar factories decreased sharply from 191 prior to 2006 to 108 in 2012/13. 4 Sugar beet areas declined sharply from 2.2 mln ha in 2002/03 to 1.7 mln ha in 2012/13. By contrast, average sugar beet yields increased from about 60 tonnes/ha to over 70 tonnes/ha in recent years – see table 3. Average sugar yields per ha also rose significantly from 9 tonnes/ha to over 11 tonnes/ha. Sugar production dropped by 20% over the period while the use of sugarbeet for ethanol production has risen from less than 5 mln tonnes to nearly 9 mln tonnes. 4 EU Sugar Yearbook, Bartens. International Sugar Organization 4 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Fig. 1: Sugar Production Quotas by Group of Countries and Share in EU Total, 11/12-13/14 0% 3% 12% No sugar production quotas: Bulgaria, Cyprus, Estonia, Luxembourg, Malta, Slovenia, Latvia, Ireland Below median quota holders: Portugal, Finland, Lithuania, Romania, Hungary, Slovakia Above-median quota holders: Greece, Croatia, Sweden, Austria, Denmark, Czech Republic, Spain Major quota holders: Italy, Belgium, Netherlands, United Kingdom, Poland, Germany, France 85% Source: European Commission. 2014. “Single CMO Management Committee – Balance Sheet”. One of the most notable consequences of the 2006 Reform of the EU Sugar Regime was a further concentration of the EU sugar industry in the most efficient producing groups. The EU hosts many of the world’s largest sugar conglomerates, such as Südzucker, AB Sugar, Tereos, Nordzucker, Pfeifer und Langen and Cristal Union, which have pursued aggressive expansion/consolidation over the past few years. These top producing groups dominate sugar production in the European Union and have expanded to reach 80% of the bloc’s total production. This makes the EU today one of the most concentrated producers in the world. For example, Südzucker, the world’s largest sugar conglomerate, has stakes in 32 plants in Europe, including 9 in Germany, 5 in France and another 18 factories in another 9 European countries. For full details about location and production capacity, see ISO paper on FDI and M&A in the World Sugar Industry, MECAS (12)17 5. 5 The concentration of the EU sugar industry goes beyond beet processing. Cristal Union and Pfeifer & Langen are now in refining and marketing joint ventures in Italy. Also significant was the 2012 purchase of 25% minus one share of ED&F Man’s shares by Südzucker. International Sugar Organization 5 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 2: Annual Sugar Production Quotas by Member State, 2003-2014 (White Sugar Equivalent, Thousand Tonnes) 6 Countries Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom Total EU 15 Total EU 25 Total EU 27 Total EU 28 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 309 665 314 674 387 819 405 862 405 882 4 351 676 351 676 351 676 351 676 351 676 351 676 319 131 2,922 2,566 286 179 1,293 673 71 951 331 1,025 11,721 Average 03-06 337 719 Average 11-14 351 676 192 192 441 325 454 420 469 420 372 452 372 372 372 372 372 372 372 372 372 372 372 372 448 355 372 372 132 2,970 2,612 288 400 181 1,310 66 103 146 3,768 3,416 317 401 199 1,557 66 103 146 4,120 3,655 317 406 0 778 66 103 90 4,120 3,655 158 298 0 753 0 111 80 3,437 2,898 158 105 0 508 0 90 80 3,437 2,898 158 105 0 508 0 90 80 3,437 2,898 158 105 80 3,437 2,898 158 105 80 3,437 2,898 158 105 80 3,437 2,898 158 105 80 3,437 2,898 158 105 508 508 508 508 90 90 90 90 136 3,220 2,865 297 401 186 1,387 66 103 684 1,580 72 864 1,671 79 876 1,771 44 207 52 996 368 1,138 210 52 903 325 1,221 804 1,405 9 104 112 0 630 293 1,056 804 1,405 9 104 112 0 498 293 1,056 804 1,405 9 104 112 804 1,405 9 104 112 804 1,405 9 104 112 804 1,405 9 104 112 740 1,626 74 189 48 957 334 1,035 11,888 14,715 931 1,772 24 109 145 0 887 343 1,221 804 1,405 9 104 112 498 293 1,056 498 293 1,056 498 293 1,056 498 293 1,056 17,428 17,149 16,619 16,732 13,460 13,328 13,328 13,328 13,328 13,328 13,520 198 50 968 344 1,066 12,694 14,621 14,621 14,621 508 90 498 293 1,056 11,140 13,224 13,328 13,392 6 Columns 05/06-08/09: European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 15. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. Columns 09/10-13/14: European Commission. 2014. “Single CMO Management Committee - Balance Sheet”. Columns 03/04-05/06: Bartens/Mosolff. 2006. “Zuckerwirtschaft Europa 2006”, pp. 44-49. International Sugar Organization 6 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 3: Selected Indicators of the EU's Sugar Industry 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 1.848 1.701 2.146 2.142 1.690 1.564 1.363 1.338 1.586 1.624 1.636 112.739 99.270 129.448 132.112 100.792 95.185 83.778 90.682 103.815 123.977 114.548 Sugar beet yields (t/ha) 9 61.0 58.4 60.3 61.7 59.6 60.9 61.5 67.8 65.4 76.3 70.0 Sugar beet producer price (USD/t) 10 37.8 49.8 53.5 54.8 43.6 43.2 45.9 41.1 41.9 47.1 n/a 932 87,349 1,150 87,349 1,145 70,810 664 47,405 352 21,425 70 5,622 60 5,100 63 5,150 65 5,320 62 5,300 62 5,300 Sugar cane yields (t/ha) 13 88.6 75.9 61.8 71.3 60.8 80.3 85 81.7 81.8 85.4 85.4 Sugar cane producer price (USD/t) 14 33.3 44.1 43.7 43.3 40.3 21.5 30.9 29.3 40.6 46.2 n/a 18.407 16.496 21.258 21.887 15.614 16.338 15.244 15.574 15.725 18.875 17.620 Sugar beet area (mln ha) 7 Sugar beet production (mln t) 8 Sugar cane area (ha) 11 Sugar cane production (t) 12 Beet sugar production (in mln mtrv) 15 7 International Sugar Organization. International Sugar Organization. 9 International Sugar Organization. 10 Food and Agriculture Organization of the United Nations. 2014. Online. http://faostat3.fao.org/faostat-gateway/go/to/home/E. 11 Food and Agriculture Organization of the United Nations. 2014. Id. 12 Food and Agriculture Organization of the United Nations. 2014. Id. 13 Food and Agriculture Organization of the United Nations. 2014. Id. 14 Food and Agriculture Organization of the United Nations. 2014. Id. 15 International Sugar Organization. 8 International Sugar Organization 7 MECAS(14)05 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Production of out-of-quota sugar in the EU is currently diverted to three ends: the ethanol industry, the chemical industry and sugar exports. For instance, the out-ofquota sugar production of about 4.1 mln tonnes in 2012/13 was split into three distinct uses: 1.3 mln tonnes were exported, 0.8 mln tonnes were sold to the chemical/industrial sector and 2 mln tonnes were diverted to production of ethanol. Because out-of-quota sugar can only be sold to these three markets, it fetches significantly lower prices than the EU average quota sugar price. In January 2014, the average price of industrial sugar was EUR 351/tonne (USD 478/tonne), compared to an average quota sugar price of EUR 629/tonne (USD 855/tonne). Therefore, the trend has been that beet growers also receive a much higher price for quota sugar beet production compared to out-of-quota sugar beet production. It is important to highlight that beet production is always rotated with other crops and rarely represents more than a third of a farm area, even in the most specialized farms. Therefore, the income of beet growers is the result of revenues from beet sales and other crops, as well as decoupled support. Together with a faster-than average rise in agricultural beet yields relative to other crops, this mechanism has ensured that beet production in the EU continues to be a relatively profitable activity in several areas. Figure 2 shows that, since 2005, average beet yields in the EU have risen by 20%, whilst maize and wheat yields have not shown any significant upward trend. Longer term over the past 20 years, beet yields in the EU have risen by 50%, whilst for maize and wheat the growth have been a more muted 30% and 20%, respectively. Source: Food and Agriculture Organisation of the United Nations (FAO). ________________________________________________________________________________ International Sugar Organization MECAS(14)05 8 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Box 2: Climate Change and EU Sugar Beet Production A recent ISO paper - (MECAS(13)07) Climate Change and Sugar Crops - has highlighted the impact that climate change has had on beet yields with evidence that greater rainfall, coupled with warmer conditions, has been benefiting sugar beet growing in temperate areas. Between 1999/2000 and 2008/09, while the beet area for sugar production in the EU has almost halved, the average sugar yield per hectare has risen by around 15% - see table below. It is believed that a significant part of this gain in yields can be explained by climate change, due to a favourable combination of high temperatures and water supply. Mean in t/ha France Germany Netherlands Poland United Kingdom Average yields in t/ha 1990s 2000s 76 57 63 41 55 70 52 59 35 51 80 60 66 45 58 Growth 1990s2000s 13% 13% 11% 22% 13% Quartile distribution (years) Q0 Q1 Q2 Q3 Q4 2001 1991 1998 1994 1995 1998 1997 2002 2001 1992 1997 1999 1999 2000 2010 2005 2000 2007 2002 1999 2011 2009 2011 2011 2011 Although benefitting from higher yields, the European Sugar industry is one of the leading players in mitigating climate change in the world sugar industry. Current tools used include: • Rotation: sugar beet in Europe is grown on the same field only every three to five years over 8 months and this rotation contributes to an increase in cereal yields of as much as 10 to 20% in Europe, as well as reducing the need for fertilizers • 30% reduction of nitrogen fertilizer over the past 10 years in addition to continue to accrue yield growth • Decline in pesticide use • Adoption of beet varieties which are either tolerant or resistant to diseases such as rhizomania, nematodes, rhizoctonia and cercospora, and have a higher sugar content • Improved soil management • Water management to help cope with potentially increased water stress in future as well as to comply with the Water Framework Directive • Combined heat and power systems • Installation of multi-effect evaporation • Improvement in pulp pressing efficiency • The beet and sugar sector produce biogas, used for heating purposes and replacing fossil fuels. The European Union also play an important role to mitigate climate change and its impacts through: • Directives • Adaptation schemes provided by the five European Structural and Investment Funds (ESI Funds), the European Investment Bank, and the European Bank for Reconstruction and Development. • The Kyoto Protocol • The cap-and-trade Emissions Trading Scheme (EU ETS) developed in 2005 to trade CO2 emissions. The EU’s overall environmental target is still for a 20% reduction in GHG emissions and a 20% share of renewable energy in the EU's total energy consumption by 2020. Sugar Consumption The EU is a mature sugar market, with a high level of per capita consumption – 39kg in 2012 compared to a world average of 25kg. According to the ISO Sugar Consumption model, similarly to other developed markets, but unlike developing countries, sugar ________________________________________________________________________________ International Sugar Organization MECAS(14)05 9 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 consumption growth in the EU can be largely explained by population growth – elasticity of demand of 66% - and to a lesser extent by income growth – elasticity of demand of 30% 16. Of interest, the EU received a major boost to its overall consumption levels from the accession of ten new member countries in 2004, which brought additional sugar consumption of 3 mln tonnes – see fig. 3. The further enlargement of membership with the incorporation of Bulgaria and Romania in 2007 added another one mln tonnes, taking overall consumption to over 18 mln tonnes, raw value. Since then, consumption has been rising slowly at an average rate of about 1% a year, excepting the year of 2009, when consumption slumped as a result of the world financial crisis. Source: International Sugar Organization. According to the ISO sugar consumption model, total sweeteners (sugar and isoglucose) consumption in the EU is set to continue to rise at around 1% a year. Nevertheless, sugar consumption might rise by less or even fall in the aftermath of the 2017 Reform due to a likely higher penetration of isoglucose – see last part of the paper for a full discussion. Sugar Trade As discussed earlier, the Reform of the EU sugar market regime resulted in net beet sugar production quotas being cut to 13.5 mln tonnes from 17.4 mln tonnes, white value. With sugar consumption at around 18 mln tonnes, and annual consumption growth averaging around 1%, the production cuts led the bloc to shift from being a large net sugar exporter to a large net sugar importer. Figure 4 shows that since 2007 16 International Sugar Organization. 2010. “MECAS(10)17 – World Sugar Demand Outlook to 2020” ________________________________________________________________________________ International Sugar Organization MECAS(14)05 10 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 gross sugar imports have been consistently larger than 3 mln tonnes, raw value, while net sugar imports by the EU have averaged about 2 mln tonnes a year. Source: International Sugar Organization. Figure 5 shows total EU imports of white and raw sugar between 2002 and 2012. Raw sugar imports traditionally account for up to 80% of the total volume of EU imports, with the sugar sourced mainly from traditional preferential partners of the ACP/LDC group (duty free) and CXL countries (import duty of EUR 98/tonne). White sugar imports originate mainly from the West Balkans and other European countries as well as more recently from Mauritius, the largest ACP sugar exporter to the EU. Sugar imports from ACP (African, Caribbean and Pacific) countries and LDCs (Least Developed Countries) are now duty-free quota-free. Duty-free quota-free exports for ACPs will from October 2014 become conditional on their joining Economic Partnership Agreements.17 The EU has also signed some Free Trade Agreements with Latin American countries and others. Last but not least, the Commission has kept its prerogatives to allow duty-free imports of sugar and isoglucose for industrial use until 2016/17, which has been set at a level of 400 thousand tonnes since the 2008/09 season, although only a fraction of these quotas have in reality been filled. 17 ASSUC Presentation to Kingsman EU Conference, April 2014. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 11 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Total imports by the EU in thousand tonnes Fig. 5: EU Imports of White and Raw Sugar, 2002-2012 (Raw Value, Thousand Tonnes) 5,000 4,500 Raw Sugar 4,000 White Sugar 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Years Source: International Sugar Organization. Non-LDC ACP Sugar Imports Table 4 shows that total sugar imports from non-LDC ACPs have averaged around 1.3 mln tonnes over the past few seasons. Several ACP countries have been struggling to increase sugar production for further exports due to difficulties encountered to modernize their industries amid an increasingly competitive environment internationally. Of interest, among the current exporters of duty-free quota-free sugar to the EU (LDCs and ACPs), the share of non-LDC ACPs has fallen from over 80% in the middle of the past decade to less than 70% now. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 12 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 4: Total Sugar Imports by the EU from Non-LDC ACP Countries (Tonnes, Raw Value) Origin 2006 2007 2008 2009 2010 2011 2012 Mauritius 523,838 468,956 454,730 395,112 396,431 439,556 340,891 Swaziland 153,976 139,964 193,540 205,415 315,330 311,489 298,734 158,791 Zimbabwe 67,688 31,199 79,874 133,959 74,424 190,294 Fiji 219,498 184,087 232,051 209,684 105,634 156,997 80,500 Guyana 175,693 215,944 224,927 185,492 161,740 170,341 164,077 Belize Jamaica Dominican Republic Cote d'Ivoire Barbados Kenya Trinidad & Tobago 59,710 72,297 70,302 82,871 77,147 72,670 104,065 142,490 154,982 143,318 126,595 82,906 99,464 87,542 0 0 12,602 53,229 0 2 0 1,608 0 5,398 3,028 0 0 122 33,917 34,533 29,273 33,678 25,638 24,156 23,088 7,056 44 2,905 2,438 0 16,260 0 36,661 26,720 0 0 0 0 0 Imports from non-LDC ACP 1,422,135 1,328,726 1,448,920 1,431,501 1,239,250 1,481,229 1,257,810 Total imports from LDC + ACP 1,653,711 1,643,540 1,863,186 1,804,308 1,555,023 2,000,019 1,878,150 86.0% 80.8% 77.8% 79.3% 79.7% 74.1% 67.0% Share of ACP in ACP + LDC Source: International Sugar Organization. The largest non-LDC ACP sugar exporter to the EU is Mauritius, with a share of around 30% of total ACP shipments. Since 2009, Mauritius has been exporting 400 thousand tonnes of white sugar to Südzucker under a 6-year contract. The other non-LDC ACPs export mostly raw sugar to the EU. While countries like Swaziland have managed to nearly double the volume of exports over recent years to over 250 thousand tonnes, raw value, others like Fiji and Jamaica faced difficulties, with shipments falling by as much as 50%. Transitioning from ACP Sugar Protocol to EPA 18 The last 15 years or so have seen some significant changes to the treatment of ACP sugar within the EU Regime. Whilst historically signatories of the ACP Sugar Protocol had guaranteed tonnages and guaranteed prices for their exports to the EU, it has been decided that new terms to this duty free quota would have to be agreed by end-2007, a date coinciding with the expiry of a WTO waiver for the system on non-reciprocal trade preferences 19. On 17 June 2002, the EU Council opened negotiations between EU and the ACP countries on Economic Partnership Agreements (EPAs) for WTO-compliant 18 European Commission. 2014. “Overview of EPA Negotiations”. Online. http://trade.ec.europa.eu/doclib/docs/2009/september/tradoc_144912.2.14.pdf. 19 Overseas Development Institute. 2007. “Briefing Paper 23 – Economic Partnership Agreements: What Happens in 2008?”. Online. http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinionfiles/556.pdf. Under WTO rules, developed countries can only give non-reciprocal trade preferences to either all developing countries, on the one hand, or to Least Developed Countries only, on the other. This should ensure that no discriminatory measures are applied to any other sub-group of developing non-LDC countries. It was therefore concluded that the ACP preferential access by the EU appeared as discriminatory and not justifiable under existing WTO procedures. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 13 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 agreements, covering “substantially all trade” in goods (at least 80%) plus services, investment and trade-related rules, with a view to fostering ACP integration into the world economy thereby promoting their sustainable development. In short, duty-free quota-free access to the EU market would be conditional on signing and ratifying an EPA. The increasing lack of security associated with the dismantling of the ACP Sugar Protocol has been partly tackled by the EU through an 8-year assistance scheme of accompanying measures (AMSP), funded from the EU budget 20. In the framework of EPAs, the EU grants duty-free quota-free access to the products originating in ACP countries (with a transition period for sugar) while ACPs offer progressive liberalisation of trade and can exclude products from liberalisation. By 7 February 2014, there were seven regions with on-going EPA negotiations with the EU: Caribbean, Pacific, West Africa, Central Africa, Southern African Development Community (SADC), Eastern and Southern Africa (ESA) and East African Community (EAC). Of interest, some countries within these regions have also initiated bilateral “stepping stone” (or “interim”) EPAs. Interim agreements establish provisions on market access of goods but leave other aspects of the EPA (services, investments and trade related matters) open for further negotiations. Table 5: EPA Regions 21 Caribbean (CARIFORUM) Pacific Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti*, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, Saint Kitts & Nevis, Suriname, Trinidad & Tobago Cook Islands, Federated States of Micronesia, Fiji, Kiribati*, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, East Timor, Samoa*, Solomon Islands*, Tonga, Tuvalu*, Vanuatu* West Africa (CEDEAO+Mauritania) Central Africa (CEMAC+STP) Benin*, Burkina Faso*, Cape Verde*, Gambia*, Ghana, Guinea*, Guinea Bissau*, Côte d’Ivoire, Liberia*, Mali*, Mauritania*, Niger*, Nigeria, Senegal*, Sierra Leone*, Togo* Cameroon, Central African Republic*, Chad*, Congo, Democratic Republic of Congo*, Equatorial Guinea*, Gabon, Sao Tomé and Principe* Southern African Development Community (SADC) Angola*, Botswana, Lesotho*, Mozambique*, Namibia, Swaziland, South Africa Eastern and Southern Africa (ESA) Comoros, Djibouti*, Eritrea*, Ethiopia*, Malawi* Mauritius, Madagascar*, Seychelles, Sudan*, Zambia*, Zimbabwe Eastern African Community (EAC) Burundi*, Kenya, Rwanda*, Tanzania*, Uganda*. In italic –holders of ACP sugar quotas * LDC 20 For further details, see MECAS(08)18 on EU Sugar Policy Reform – Ramifications for Preferential Exporters. 21 European Commission. 2014. “Economic Partnerships”. http://ec.europa.eu/trade/policy/countries-and-regions/development/economic-partnerships/. Online. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 14 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Caribbean EPA This was the first EPA to be signed with the EU. In October 2008, 14 CARIFORUM states signed the Caribbean EPA with the EU (the agreement included all Caribbean states minus Haiti). This EPA was approved in March 2009. According to the EC, the agreement: a) opens up trade in services as well as in goods; b) seeks to spur more investment in the Caribbean; c) commits governments to other trade-promoting measures, like ensuring free and fair competition; d) promotes development that respects the environment and people’s rights at work. Pacific EPA As of 7th February 2014, Papua New Guinea and Fiji had already signed the Pacific EPA with the EU. Both Papua New Guinea as well as the EU Council have ratified the Pacific interim agreement. The EU Commission is “ready to explore the possibility to widen the membership and deepen the content of the existing EU-Pacific interim EPA”, although more details have yet to arise. West Africa EPA Interim EPAs were initialled bilaterally with Côte d’Ivoire and Ghana at the end of 2007. Côte d’Ivoire signed the interim EPA on 26 November 2008. No further signatures or ratifications have taken place by either side since then. In early 2014, new steps were undertaken for a fresh EPA for the region, with West African countries and the EU agreeing to prepare the agreement for initialling. Central Africa EPA Cameroon signed the interim EPA for Central Africa on 15 January 2009. No further signatures or ratifications have taken place by either side since then. Southern African Development Community (SADC) EPA The EU and Botswana, Lesotho and Swaziland signed an interim EPA on 4 June 2009. Mozambique followed by signing on 15 June 2009. No further signatures or ratifications have taken place by either side since then. At the current stage, it looks like there are moves towards a more comprehensive agreement, which would include South Africa. Eastern and Southern Africa (ESA) EPA The interim EPA agreement was signed in 2009 by Mauritius, Seychelles, Zimbabwe and Madagascar. There are open issues in the negotiations, such as market access offers for both goods and services by the ESA states, as well as inter alia export taxes, special agricultural safeguards, rules of origin and cumulation, export subsidies, non-execution clause, institutional provisions and dispute settlement. East African Community (EAC) EPA Burundi, Rwanda, Tanzania, Kenya and Uganda initialled an EPA framework in 2007 but are now working towards a comprehensive regional EPA, which is yet to be signed or ratified. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 15 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 A crucial element that will ensure the competitive of ACP/EPA sugar relative to other origins is the extent to which countries within the group will be able to cut their costs in the period to 2017. There is a possibility of a further loss in market share of non-LDC ACPs to LDCs. According to Tate & Lyle, the cost of production in some ACP suppliers is as high as 30 cents/lb, some 70% higher than the current world market price for raw sugar, ICE n.11 NY contract. Sugar Imports Under Everything-but-Arms (EBA) Initiative Sugar imports by the EU from LDC (Least Developed Countries) producers are currently regulated by the Everything But Arms (EBA) initiative. In 2012 imports from this group of countries reached a record 600 thousand tonnes, significantly higher than the less than 200 thousand tonnes prior to the Reform of the EU sugar regime. As a result, the share of LDCs in total ACP/LDC preferential exports to the EU has increased from around 10% in the middle of the past decade to over 30% now. Although the EBA initiative was already adopted in 2001, as an amendment to the EU's Generalized System of Preferences (GSP), duty-free sugar imports were still restricted by quotas until 2009. Sugar, alongside another two sensitive products – rice and bananas – had some specific regulation within the EBA mechanism whereby implementation of duty-free access would be delayed. In the case of sugar, the import duties had been phased out progressively from 2006, and reached full duty-free status in 2009. There are currently 48 LDC countries, down from 50 a few years ago following the recent upgrades of Cape Verde and Maldives 22. According to the Framework Agreement on EBA Sugar, the following 25 countries are identified as the LDC sugar supplying states: Angola, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Congo RDC, Ethiopia, Guinea, Haiti, Laos, Madagascar, Malawi, Mali, Mozambique, Nepal, Rwanda, Sierra Leone, Senegal, Somalia, Sudan, Tanzania, Togo, Uganda and Zambia. Of these, 17 countries have exported some sugar to the EU over the past 8 seasons – see table 6. 22 Even after a country loses LDC status, preferential EBA trade is still applied for a transitional period of 3 years. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 16 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 6: Total Sugar Imports by the EU from EBA Countries (Tonnes, Raw Value) Origin 2006 2007 2008 2009 2010 2011 2012 Mozambique 38,846 85,615 138,883 104,393 86,975 158,701 234,324 Zambia 37,469 36,371 50,313 70,471 82,184 180,112 123,864 Sudan 15,649 30,638 28,663 31,751 21,434 21,142 43,815 0 0 0 0 10,544 23,723 16,342 Malawi 49,082 48,935 85,035 48,206 49,280 61,500 107,438 Madagascar 17,513 4,940 10,205 28,125 9,832 8,997 29,376 Cambodia Laos Tanzania Bangladesh Sierra Leone Uganda Benin Burkina Faso 0 0 0 24,187 40,932 44,283 45,167 21,298 41,382 20,581 23 0 0 0 365 0 12,700 13,667 0 0 6 5,916 7,258 7,222 4,992 4,757 1,832 3,695 0 0 0 0 0 9,336 435 10,674 16,531 21,297 18,830 9,835 9,164 15,878 5,547 0 0 0 0 0 0 Congo, Rep. of 10,455 0 0 0 0 0 0 Ethiopia 14,769 25,709 22,757 28,162 0 0 0 0 13,705 11,076 0 0 0 0 Nepal Togo Total LDC Total imports from LDC + ACP Share of LDC in ACP + LDC 3,993 3,730 5,534 0 0 0 0 231,576 314,814 414,266 372,807 315,773 518,790 620,340 1,653,711 1,643,540 1,863,186 1,804,308 1,555,023 2,000,019 1,878,150 14.0% 19.2% 22.2% 20.7% 20.3% 25.9% 33.0% Source: International Sugar Organization. The bulk of current deliveries from the LDC group come from seven countries: Mozambique, Zambia, Sudan, Cambodia, Malawi, Madagascar and Laos. Exports from Mozambique and Zambia have risen quite spectacularly over the recent years, with Mozambique shipping a record 234 thousand tonnes to the bloc in 2012, up from less than 40 thousand in 2006. Among other top LDC exporters, countries like Cambodia and Laos only started shipping sugar to the EU from 2008. Raw sugar deliveries from Cambodia in 2012/13 tripled to 50,700 tonnes as new mills came on stream and local output continues to rise. The last addition was a Vietnamese-owned sugar mill with a cane crushing capacity of 3,500 tonnes per day, which was inaugurated in May 2013. Meanwhile, Laos has also established a commercial relationship with Tate & Lyle, with the first sugar shipments to the UK's refinery arriving in 2008/09. CXL Imports The third category of sugar imports comprise sugar bought under special CXL arrangements, which incur an import duty of EUR 98/tonne for an annual quota of up to 677 thousand tonnes and include quantities calculated from compensatory adjustments regarding traditional partners of newer member states, such as Finland, Romania and Bulgaria. It also includes India under special duty-free access for 10 thousand tonnes. Actual export volumes by CXL quota holders have been greater, as the commission has ________________________________________________________________________________ International Sugar Organization MECAS(14)05 17 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 increased access through exceptional measures at times of low export availability from preferential partners. Table 7: Total Sugar Imports by the EU from CXL Countries (Thousand Tonnes, Raw Value) 23 Origin 2002 2003 2004 45 65 165 Brazil 94 66 110 Cuba 1 2 1 Australia 57 18 22 India 197 151 298 Total CXL 22.8 43.0 55.3 Share of Brazil (in %) Source: International Sugar Organization. 2005 2006 2007 2008 2009 2010 2011 2012 164 40 1 11 216 76.0 165 63 1 28 257 64.3 855 131 18 48 1,052 81.2 993 73 11 14 1,091 91.0 775 125 27 14 941 82.3 1,161 75 0 5 1,241 93.5 1,720 74 12 28 1,834 93.7 1,066 210 13 17 1,306 81.6 Special Arrangements Other agreements ensure duty-free tariff quota for white sugar imports from western Balkan countries. This is embodied in the 'Balkans Initiative', which was adopted in 2000. This initiative initially granted duty and quota free access to the European Union market for nearly all agricultural products, including sugar, originating from the Western Balkans, to volumes that are equivalent to domestic output. Later however tariff quotas were introduced for the eligible sugar products originating in Croatia, Serbia, Albania, Bosnia and Herzegovina and the former Yugoslav Republic of Macedonia. Table 8 shows that only Croatia and Serbia have regularly shipped significant volumes of sugar to the EU under these arrangements. Table 8: Total Sugar Imports by the EU from Balkan Countries (Thousand Tonnes, Raw Value) 24 Origin 2002 2003 2004 2005 Croatia 73 175 52 204 Serbia 205 131 195 104 Others 6 4 8 35 Total Balkans 284 310 255 343 Source: International Sugar Organization. 2006 2007 2008 2009 2010 2011 2012 259 226 6 491 246 215 2 463 192 203 0 395 158 184 0 342 195 206 0 401 194 201 0 395 204 182 0 386 Prior to Croatia joining the EU in mid-2013, Serbia had a tariff rate quota of 180 thousand tonnes of sugar of exports to the EU. The two parties are still agreeing on whether bilateral exports from Serbia to Croatia prior to enlargement should be counted as part of the 180 thousand tonne quota or not. This has lead Serbia to recently seek an additional quota of 46 thousand tonnes to ship to the EU. Serbia's current sugar production amounts to around 450 thousand tonne of sugar a year. Moldova benefits from an Autonomous Trade Preferences agreement with the European Union, which includes a sugar export quota of 34 thousand tonnes. In addition, in 2012, as part of the negotiations to establish an EU-Ukraine free trade 23 24 International Sugar Organization. 2013. “ISO Sugar Yearbook”. Id. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 18 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 area, it has been agreed to establish export quotas for Ukrainian sugar to the EU in the amount of 20 thousand tonnes per year. MFN Imports For the rest of the world, MFN import duties have been applied. Imports of raw and white sugar from outside preferential arrangements accrue a duty of EUR 339 a tonne for raw sugar and EUR 419 for whites. Due to its prohibitive level, practically no sugar is imported into the EU with the full payment of the duty. Sugar Imports for the Industrial/Chemical Sector The current sugar regime also allows for a duty-free quota of 400 thousand tonnes of sugar imports for the industrial sector. This quota has never been filled, with imports reaching a maximum of 179 thousand tonnes in the 2008/09 season, when EU prices were double the level of world sugar prices. The relatively low prices for out-of-quota sugar have ensured that the industrial/chemical sector can source it at competitive rates compared to world market price levels. Table 9: Industrial Import Quota Available and Allocated (Tonnes) 25 Years 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 Source: European Commission. Quota available Allocated 200,000 0 400,000 400,000 400,000 20,194 0 179,474 7,860 2,144 The New Free Trade Agreements With Central America On 29 June 2012, the EU signed with Central America an agreement leading to dutyfree tariff quotas for agricultural products, which include sugar. The agreement was put in place in 2013. The trade deal has been applied with Honduras, Nicaragua and Panama since 1 August 2013, with Costa Rica and El Salvador since 1 October 2013 and with Guatemala since 1 December 2013. For Panama, the EU has opened a duty-free import quota for sugar and sugarcontaining products of 12,000 tonnes (in raw sugar equivalent) for 2013, which rises to 12,360 tonnes for calendar 2014 and will be increased by 360 tonnes each year from January 2015. For the other countries in Central America excluding Panama, the 25 European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 8. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 19 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 agreement allows duty-free imports of sugar and sugar-containing products at 150,000 tonnes (raw sugar equivalent) for 2013, rising to 154,500 tonnes for calendar 2014 and by 4,500 tonnes each year from January 2015. The breakdown for 2014 is 67,700 tonnes for Guatemala, 25,087 tonnes for El Salvador, 22,262 tonnes for Nicaragua, 19,726 tonnes each for Honduras and Costa Rica – see table 10. Table 10: Central America – EU tariff Quotas (Thousand Tonnes, Raw sugar) Countries 2013 2014 2015 2016 2017 2018 Costa Rica El Salvador Guatemala Honduras Nicaragua 19,464 19,726 19,987 20,249 20,510 20,772 24,391 25,087 25,783 26,479 27,175 27,871 65,000 67,700 70,400 73,100 75,800 78,500 19,464 19,726 19,987 20,249 20,510 20,772 21,681 22,262 22,843 23,424 24,005 24,586 Panama 12,000 12,360 12,720 13,080 13,440 13,800 162,000 166,860 171,720 176,580 181,440 186,300 Total Central America Source: Azucareros del Istmo Centroamericano. With Colombia and Peru On 26 June 2012, the EU signed a trade agreement with Colombia and Peru, which came into effect on March 1st 2013. The agreement with Colombia and Peru includes opening of a duty-free TRQ for 84,000 tonnes of sugar, of which Colombia has received 62,000 tonnes and Peru 22,000 tonnes. Other Potential FTAs A proposed Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU may include sugar provisions between the two parties. It is currently being negotiated whether sugar refined in Canada’s two sugar refineries – Lantic and Redpath – could be eligible to enter the EU as a duty free product. However CETA is not expected to be finalized until 2016. It is still unclear at what level the tariff rate quotas will apply. Sugar Refining The reliance on rising quantities of sugar imports over the past eight years has aided the further development of raw sugar refining sector in the EU. Since 2006, new refineries have been opened in Member States where there was no refining activity before, like Denmark, Italy and Spain 26. Second, some significant raw sugar refining capacity has been added to the EU with the accession of both Romania and Bulgaria, which traditionally imported some 300 and 500 thousand tonnes, respectively, of raw 26 European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 110. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 20 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 sugar for refining. All in all, there are today 34 refineries today in the EU, of which 30 are defined as full-time refiners – see table 11. 27 Full-time refineries (until marketing year 2016/17) currently have a 3 months’ window to apply in priority for import licenses of raw sugar. Once this prerogative expires in 2016/17, all operators, including part-time refineries, beet processors that refine off crop or co-refine, as well as traders, will be able to apply for licenses since the first day of the marketing year. In addition to Tate & Lyle, the largest with refining capacity of over 1 mln tonnes a year, another 29 full-time refineries now operate in the EU, including 1 in Finland, 9 refineries in Romania, 6 in Bulgaria, 3 in Spain, 3 in Portugal, 3 in Croatia, 1 in Italy, 1 in Denmark and 2 in France – see table 11. Over the recent years, some sugar refining capacity has been added to existing beet sugar factories for raw sugar processing. Now, several beet sugar producers in Europe are capable of refining raw sugar, including Südzucker, ABS Sugar, Tereos, Cristal Union and Nordzucker 28. 27 European Union. 2013. “Regulation 1308/2013 (EU) of the European Parliament and of the Council”. Online. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:347:0671:0854:EN:PDF. “Full-time refiner” means a production unit: (1) of which the sole activity consists of refining imported raw sugar, or (2) which refined in the marketing year 2004/2005 or, in the case of Croatia, 2007/2008 a quantity of at least 15,000 tonnes of imported raw cane sugar. 28 For a comprehensive list of refining capacities in existing beet sugar factories in the EU, see Appendix of MECAS(12)17 on FDI and M&A in the World Sugar Industry. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 21 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 11: Refineries and Refining Capacity by Member State in 2013 Divided Into Full-Time and Non-Full-Time Refineries (Tonnes of Raw Sugar) United Kingdom Portugal France Full-time refiners Finland Italy Denmark Spain Bulgaria Romania Non fulltime refiners Croatia Poland United Kingdom Netherlands 2013 Thames refinery (Tate & Lyle) – 1,200,000 Tate & Lyle Acucares de Portugal, Santa Iria de Azoia – 300,000 RAR – Refinarias de Acucar Reunidas, Porto – 240,000 DAI – Soc. De Desenvolvimento Agro Industrial Monte de Barca (Sfir + ED&Fman + others), Coruche – 70,000 Saint Louis Sucre S.N.C. Marseille (Südzucker) – 250,000 S.A. des Sucreries et Raffineries d'Erstein (Cristal Union) Suomen Sokeri Oy (Nordic Sugar), Kantvik – 60,000 Raffineria di Brindisi (ED&Fman) – 350,000 Nykobing Sukkerfabrik (Nordik Sugar) Azucarera Ebro de Guadalete (ABSugar) – 420,000 Accor-Tereos Olmedo – 135,000 Polígono Industrial El Tapiado, Murcia Zahar Bio, Ruse Devnenski zaharen zavod, Devnya Burgasky zaharen zavod, Burgas Bulgarska zahar 2002, Dolna Mitropolia Zaharen kombinat Plovdiv, Plovdiv Zahar, Stara Zagora S.C. Agrana Romania S.A. Roman (Südzucker) S.C. Agrana Romania Buzau (Südzucker) S.C. Agrana Romania Tandarei (Südzucker) S.C. Zaharul Oradea S.A. (Pfeifer and Langen) S.C. Zaharul Liesti S.A. S.C. Lemarco Cristal S.R.L. S.C. Zahar Corabia S.A. S.C. Fabrica de Zahar Bod S.A. S.C. Zahar Calarasi S.A. Viro Tvornica Secera d.d., Virovitica Sladorana Tvornica Secera d.d., Zupanja Tvornica Secera Osijek d.o.o., Osijek Nordzucker Polska S.A. Chelmza – 14,000 Pfeiffer & Langen Glinojeck – 180,000 British Sugar Newarc – 120,000 Suiker Unie – 20,000 Source: European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 110. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 22 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Exceptional Measures The EU market faced a significant supply shortage which first emerged in 2010, due in part to the fact that the flow of sugar from the developing countries that fall under the preferred access schemes of the EPA and EBA agreements remained below expectations since duty free and quota free access for them came into force on 1 October 2009. The EC was forced to enact several extraordinary measures to ensure supply. These measures resulted in 1.357 mln tonnes of extra sugar available in the market in 2010/11, 1.049 mln tonnes in 2011/12 and 1.15 mln tonnes in 2012/13, according to data from the Commission. The additional supplies were comprised of both conversion of out-of quota sugar into quota sugar and additional imports, with the latter facilitated by a tendering system for imports outside the bloc’s preferential schemes at reduced duties. Table 12: Import Tonnages Entering Under Exceptional Measures (mln tonnes) Year 2010/2011 2011/2012 2012/2013 Source: European Commission – DGAgri Import tonnage under exceptional measures 1.35 1.0 1.15 In 2010/11, the EC could no longer ignore sugar supply shortfalls in some MS and eventually in the spring of 2011 moved 500,000 tonnes of out-of-quota production to the food market and increased the duty-free sugar import quota by 300,000 tonnes. Because this additional import quota was hugely oversubscribed, the Commission expanded duty-free imports by another 200,000 tonnes, which was again widely oversubscribed. By “summer” 2011, the Commission then organised five import tenders at reduced duty yielding 358,000 tonnes of additional sugar imports. In 2011/12, the Commission announced that 400,000 tonnes of out-of-quota production would be released on the food market at a reduced levy of EUR 85 per tonne compared to the usual levy of EUR 500 per tonne that processors must pay for selling out-of-quota sugar for food on the EU market. At the same time, the Commission allowed exceptional import tenders at reduced duty, which yielded in total some 400,000 tonnes of additional imports. However, initially ten tenders were announced but three were cancelled when the Commission thought the market was improving. When it became clear that was not the case, the Commission released another 250,000 tonnes of out-ofquota production to the food market at a EUR 211 levy. Meanwhile the EU sugar price had doubled in only 18 months. To avoid continued problems in MY 2012/13, the EC agreed to new exceptional measures through reduced duty tendering totalling 1.2 mln tonnes, with 600,000 tonnes for the release of out-of-quota production to the food market and 600,000 tonnes of additional sugar imports at reduced duty. These exceptional measures were implemented through four tenders. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 23 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 The limited sugar import supply from ACP and LDC countries has led to increased competition between EU sugar importers. The large reduction in EU domestic sugar production mandated by the 2006 Sugar Reform has encouraged EU processors of domestic sugar beet to diversify their business by investing in cane refining and participating in the sugar trade business. Some of these processors succeeded in securing exclusive sugar supply contracts with major ACP and LDC sugar suppliers, further limiting available duty-free cane sugar import supplies for the historical full-time cane sugar refiners. This has led to a bidding race for raw cane sugar supplies since late 2010 as full-time cane sugar refiners struggled to find supplies to meet their refining capacity because of the overall supply shortfalls when LDC countries reduced exports. The shortfall in refining output supply led sugar users in the food industry to seek imports of refined sugar. As a result, when the Commission opened additional sugar import tenders at reduced duty, the competition for licenses pushed tendered minimum import duties up to EUR 312.6/tonne for raw cane sugar for refining and EUR 345/tonne for refined sugar for the June 2012 tender. This compares to the full EU tariff for raw cane sugar for refining of EUR 339/MT and EUR 419/MT for refined sugar. As a result, spot prices for refined sugar topping EUR 1000/tonne were reported in some MS. While tendered minimum import duties eased significantly for the import tenders for 2012/13, EU domestic sugar prices for food maintained their high levels because of supply uncertainty and despite sugar prices on the world market having decreased to below the EU reference price. It was expected that EU sugar prices would eventually decrease when new supply contracts were signed with food processors at the end of the marketing year. The following table provides an overview of the exceptional measures that the European Commission has taken over the past three marketing years in response to market supply problems. Date Table 13: Commission Exceptional Measures Since MY 2010/2011 (October/September) MY 2010/11 February 24, 2011 - Mancom March 10, 2011 May 26, 2011 July 14, 2011 Mancom July 28, 2011 Mancom August 25, 2011 - Mancom Measure Total: 1 mln tonnes in O-O-Q releases and 348,846 tonnes through import tenders (1.35 mln tonnes) Commission allows release of 500,000 tonnes of O-O-Q sugar to the market at zero levy Opening of exceptional 300,000 tonne sugar import TRQ at zero duty voted. Allocation coefficient only 1.80% indicating huge oversubscription. Additional exceptional duty-free TRQ for 200,000 tonnes of sugar imports voted. Allocation coefficient even lower at 1.28% Measure to open further sugar import tenders voted. First tender for imports: 55,000 tonnes of raw cane sugar at minimum duty of EUR 131.11/tonne; 1,644 tonnes of raw sugar not for refining at EUR 150/tonne and 7,700 tonnes of white sugar at minimum EUR 217/tonne. Second tender for imports: 141,960 tonnes of raw cane sugar at minimum duty of EUR 151.05/tonne; 200 tonnes of raw sugar not for refining at EUR 170/tonne and 10,048 tonnes of white sugar at minimum EUR 225/tonne. Third tender for imports: 83,535 tonnes of raw cane sugar at minimum duty of EUR 170.06/tonne; 757 tonnes of raw sugar not for refining at EUR 190/tonne and 27,440 tonnes ________________________________________________________________________________ International Sugar Organization MECAS(14)05 24 Market Evaluation Consumption and Statistics Committee September 15, 2011 - Mancom September 29, 2011 MY 2011/2012 November 24, 2011 - Mancom December 8, 2011 December 15, 2011 - Mancom December 22, 2011 - Mancom January 12, 2012 - Mancom May 3, 2012 Mancom May 24, 2012 Mancom June 6, 2012 Mancom MY 2012/2013 November 8, 2012 - Mancom December 20, 2012 - Mancom January 24, 2013 January 28, 2013 - Mancom February 28, 2013 - Mancom May 2013 June 2013 June 2013 The EU Sugar Market Post 2017 of white sugar at minimum EUR 250/tonne. Fourth tender for imports: 0 tonnes of raw cane sugar for refining; 1,160 tonnes of raw sugar not for refining at EUR 208/tonne and 7,509 tonnes of white sugar at minimum EUR 275.10/tonne. Fifth tender for imports: 14,500 MT of raw cane sugar at minimum duty of EUR 227/tonne; 827 tonnes of raw sugar not for refining at 300/ tonne and 4,266 tonnes of white sugar at minimum EUR 308.8/ tonne Total: 650,000 tonnes in O-O-Q releases and 399,014 tonnes through import tenders (1.05 mln tonnes) Exceptional measure for release of 400,000 tonnes of O-O-Q sugar at levy of EUR 85/ tonne approved. First tender for imports: 100,000 tonnes of raw cane sugar at minimum duty of EUR 252.5/ tonne Second tender for imports: 36,000 tonnes of raw cane sugar at minimum duty of EUR 263.5/ tonne Third tender for imports: 15,000 tonnes of raw cane sugar at minimum duty of EUR 269.16/ tonne. Fourth tender for imports: 40,000 tonnes of raw cane sugar at minimum duty of EUR 270.16/ tonne Fifth tender for imports: 58,000 tonnes of raw cane sugar at minimum duty of EUR289.36/ tonne and 7,834 tonnes of white sugar at minimum EUR320/ tonne. Additional release of 250,000 tonnes of O-O-Q sugar Sixth tender for imports: 95,000 tonnes of raw cane sugar at minimum duty of EUR 306/ tonne and 2000 tonnes of white sugar at minimum EUR 340/ tonne. Last tender for imports: 40,000 tonnes f raw cane sugar at minimum duty of EUR 312.60/ tonne and 5,180 tonnes of white sugar at minimum EUR 345/ tonne. Total: 600,000 tonnes in O-O-Q releases and 550,000 tonnes through import tenders (1.15 mln tonnes) Commission presents plan for exceptional measures for 1.2 mln tonnes of sugar, with 0.6 mln tonnes of O-O-Q sugar restored and 0.6 mln tonnes of additional imports. Exceptional measures for 1.2 mln tonnes voted. Exports of 1.35 mln tonnes of O-O-Q sugar approved for MY2012/13. Vote on transitional measure for Croatia accession, providing the transitional import quota of 40,000 tonnes. First tender for imports: 54,000 tonnes of raw cane sugar at minimum duty of EUR 195/ tonne and 8,540 tonnes of white sugar at minimum EUR 240/ tonne. First release of 150,000 tonnes of O-O-Q sugar at EUR 224/ tonne. Second tender for imports: 127,000 tonnes of raw cane sugar at minimum duty of EUR 141/ tonne and 95,293 tonnes of white sugar at minimum EUR 161/ tonne. Second release of 150,000 tonnes of O-O-Q sugar at EUR 172/ tonne. Third import tender for imports: 40,000 tonnes of raw cane sugar at minimum duty of EUR 141/ tonne and O-O-Q sugar release of 150,000 tonnes at a levy of EUR177/tonne. Fourth import tender for imports: 150,883. tonnes of raw cane sugar at minimum duty of EUR 141/ tonne and 44,255 tonnes of white sugar at minimum EUR 161/ tonne, as well as a O-O-Q sugar release of 150,000 tonnes at a levy of EUR148/tonne. The approvals bring net total imports of raw and refined sugar for season ending 30 September to 546,092 and total OOQ reclassification to 600,000 tonnes. The system of “exceptional measures” from the expiring Single CMO is proposed to be replaced by a system of “Temporary measures” for the remaining three quota years beginning January 1, 2014 Mancom: DG Agri Management Committee. Source: European Commission DGAgri. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 25 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Looking ahead, the system of “exceptional measures” is to be replaced by a system of “Temporary measures” for the remaining three quota years beginning January 1, 2014. Temporary measures are expected to continue the system of exceptional measures, but the details about the mechanism, duties, etc. are still to be decided in an Implementing Regulation. It is expected to be politically difficult to deviate from the previous system. One exception, additional imports will be restricted to raw sugar only, while the old system allowed refined and raw imports. Price Developments The EU has been operating in a relatively deregulated beet and sugar price-setting scenario since guaranteed domestic prices were abolished in 2006. In some countries like in Germany, the effective price paid for beet has exceeded the minimum beet price of EUR 25/tonne by as much as EUR 10/tonne given the relatively high domestic sugar price environment. In other countries where the beet market is under monopsony conditions, like in the UK, fierce rounds of negotiations between farmers associations (NFU) and the sugar industry (ABSugar) have ensured that beet farmers get a single beet price for production to remain at desired levels. This price negotiation involves an Inter-Professional Agreement (IPA). Fig. 6 shows that average white sugar prices within the EU have rarely been lower than USD 600/tonne since the 2006 Reform of the Sugar Regime. While in the initial years domestic EU sugar prices within the bloc fell, closing the gap with then historically high world market prices (ISO White Sugar Price Index), more recently the average domestic quota sugar price has been significantly greater than the world price. As of November 2013, the difference between the EU sugar price and the world white sugar price was as high as USD 400/tonne. Source: International Sugar Organization. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 26 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Indeed, the difference between international and EU sugar prices remains crucial to the level of sugar supply both in the EU as well as from preferential suppliers. Fig. 7 shows that since September 2011 the import parity price for white sugar has been lower than the price of domestically produced white sugar, once freight, insurance and refining costs are added to the world raw sugar price (proxied by the ISA Daily Price). 29 As of late 2013, the difference between the EU price (USD 895/tonne) and the ACP/LDC sugar import parity price (USD 600/tonne) was as high as USD 295/tonne. Source: International Sugar Organization. Once CXL duties are added, the picture changes slightly. As fig. 8 illustrates, import parity prices become somewhat less competitive. As of late 2013 the gap between the domestic EU price and the import parity price (with CXL duty) was USD 171/tonne (USD 895/tonne versus USD 724/tonne). This shows that a further erosion of EU prices could significantly dent CXL shipments to the EU over the short to medium-term. 29 Refining and insurance costs are estimated at a respective EUR 80/tonne and EUR 2/tonne and vary in USD to reflect the evolving EUR/USD exchange rates. Freight rates are those of the ISO database. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 27 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Source: International Sugar Organization. Part 2: The 2017 Reform The New Legal Provisions in a Nutshell On 26 June 2013 a political agreement on the Reform of the CAP was reached between the Commission, the European Parliament and the Council. The agreement included extending the current market provisions for sugar until 2016/17 and abolishing sugar and isoglucose production quotas, as well as minimum beet prices, thereafter. These provisions were presented as a way of bringing the sugar sector more in line with other agricultural sectors in the EU. 30 On 20 December 2013 the four Basic Regulations and the Transition Rules were published in the Official Journal. 31 Similarly to the previous Reform, it is expected that exceptional measures may be needed during the first years of the new regime. The text of Regulation (EU) n. 1308/2013 establishes that: “[…] Specific instruments will still be needed after the end of the quota system to ensure a fair balance of rights and obligations between sugar undertakings and sugar beet growers. Therefore, the standard provisions governing 30 European Commission. 2014. “The Common Agricultural Policy After 2013”. Online. http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm. 31 European Union. 2013. “Regulation (EU) No 1308/2013 of the European Parliament and of the Council”. Onine. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:347:0671:0854:en:PDF. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 28 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 written agreements within the trade concluded between them should be established. […]”. Moreover, it also adds: “[…] Recent experience has demonstrated the need for specific measures to ensure a sufficient supply of sugar to the Union market during the remaining period of sugar quotas. […]”. The reference prices for unpacked sugar, ex-factory have been maintained at previous levels: i. For white sugar: EUR 404.4/tonne; ii. For raw sugar: EUR 335.2/tonne; Until 2016/17, it will still be a prerogative of the Commission to adopt acts determining the appropriate quantity of out-of-quota sugar and imported raw sugar that can be released onto the Union market. The quotas for the production of sugar, isoglucose and inulin syrup at national or regional level during the transitional period until 30 September 2017 remain fixed at basically the final level of quotas allocated in marketing year 2010/2011 32. The transitional provisions still allow for out-of-quota to be transferred to the chemical or ethanol industry, to be carried forward to the next marketing year, to be released into the domestic market under special circumstances or exported within quantitative limits. Otherwise they are still subject to a surplus levy. The new regime will still have general safeguard measures that the European Commission can use in case of market disturbances. For example, it will be still possible to make use of private storage aid in case of domestic prices falling significantly below the reference price. Isoglucose: How Big a Threat? One of the key market focuses regarding the consequences of the 2017 Reform of the EU Sugar Regime is the potential threat coming from HFS, known in the EU as isoglucose, a sugar substitute consumed by industrial users (especially soft drink industry but also dairy products) and produced mainly from maize (but also wheat) starch. The EU isoglucose industry has also been modernizing since the 2006 Reform, which gave producers the opportunity to increase their quotas without fees, as well as to renounce quotas. The isoglucose quota has been kept flat at a level of 0.7 mln tonnes. Therefore, similarly to the sugar sector, isoglucose production in the EU has become more concentrated. The average quantities processed per site have increased by 44% from an average of 41 thousand tonnes to 59 thousand tonnes of isoglucose in dry matter/year in the EU-27. Quotas for production of isoglucose are now concentrated in only nine member states, as opposed to 13 member states prior to the 2006 Reform – see table 14. 32 European Union. 2007. “Council Regulation (EC) N°1234/2007”. Online. http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:299:0001:0149:EN:PDF, section 1, articles 124 to 144. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 29 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 14: Isoglucose Quotas by Member State (Tonnes of Dry Matter) Countries Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom Total EU 25 Total EU 27 Total EU 28 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 71,592 85,694 99,796 78,153 114,580 89,198 114,580 89,198 114,580 89,198 114,580 89,198 114,580 89,198 114,580 89,198 11,872 19,846 35,389 12,893 137,627 14,210 23,755 42,360 15,433 164,736 16,548 0 49,330 17,973 191,845 0 0 56,638 0 220,266 0 0 55,924 0 220,266 0 0 56,638 0 220,266 0 0 56,638 0 220,266 0 0 56,638 0 220,266 0 0 56,638 0 250,266 20,302 24,301 28,300 32,493 32,493 32,493 32,493 32,365 32,493 9,099 26,781 9,917 10,891 32,056 11,870 42,547 50,928 12,684 37,331 13,823 13,913 59,308 0 42,861 12,500 15,879 68,095 0 41,532 11,261 0 60,142 0 42,861 11,261 0 68,095 0 41,692 10,939 0 65,360 0 42,861 11,279 0 66,838 0 42,861 12,500 0 68,095 82,579 98,845 110,111 123,423 53,810 53,810 53,810 53,810 53,810 27,237 32,602 37,967 43,592 0 0 0 0 0 507,681 607,681 675,016 767,082 819,525 679,206 689,202 684,976 687,835 720,441 720,441 Source: Columns 05/06-09/10: European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 16. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. Columns 10/11-13/14: European Commission. 2014. “Single CMO Management Committee - Balance Sheet”. Unlike sugar, availability of raw material and its ability for storage does not create the need for a special link between growers and manufacturers, so in theory the isoglucose market is more sensitive to market price volatility. Currently, isoglucose is produced by Cargill, Hungrana, Roquette, Tereos-Syral, Copam, Sucros Oy, and Tate & Lyle – see table 15. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 30 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 15: Number of Isoglucose Production Sites by Companies and Location 33 Companies Cargill Copam Hungrana Roquette Sucros Oy Syral Tate & Lyle Number of sites 5 1 1 4 1 3 5 Before the Reform Member states Germany, Italy, Spain, Poland Portugal Hungary Spain, Romania, Italy, France Finland Spain, United Kingdom, Belgium Romania, Greece, Netherlands, Bulgaria, Slovakia Number of sites 4 1 1 2 0 1 2 2010 Member states Germany, Italy, Poland Portugal Hungary Spain, Italy Belgium Bulgaria, Slovakia Source: European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 33. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. Some market analysts estimate that up to 30% of the EU’s sugar consumption could be substituted by isoglucose, but that would mean an almost 100% penetration of isoglucose in the beverage industry, which is unlikely. As of 2014, isoglucose prices are lower than sugar prices by some 10-20% 34, although this gap could easily disappear and even change signs with additional sugar output following the abolition of quotas in 2017. According to a recent study by the European Commission, consumption of isoglucose in the EU will more than triple over the next decade. The EU Commission forecasts isoglucose usage to rise to 2.2 mln tonnes by 2023 from about 600 thousand tonnes in 2014. Isoglucose production is set to rise to 2.4 mln tonnes from the current 700 thousand tonnes 35. Isoglucose production is unlikely to rise in regions where there is already a grains production deficit in the EU. This includes the UK and Ireland in northern Europe, the Netherlands and Belgium as well as most of southern Europe, i.e. Portugal, Spain, Italy and Greece – See fig. 9. Nevertheless, following the dismantling of production quotas, isoglucose output may rise in grains surplus regions within the EU, which includes France, Germany and Poland, Austria and the Czech Republic. In these countries, the relative price between sugar and grains will be an important variable in determining the extent to which there will be substitutability in production between sugar and grains. Germany and Poland have already quotas for isoglucose of respectively 56.6 thousand tonnes and 42.9 thousand tonnes. 33 European Commission. 2011. “Evaluation of CAP Measures Applied to the Sugar Sector”, p. 33. Online. http://ec.europa.eu/agriculture/eval/reports/sugar-2011/fulltext_en.pdf. 34 Presentation of Jungen Bruhns, “Does Beet Sugar Have a Future in Europe?” Mumbai, 6th Sugar Asia Conference, 2014. 35 European Commission. 2013. “Prospects for Agricultural Markets and Income in the European Union http://ec.europa.eu/agriculture/markets-and-prices/medium-term2013-2023”. Online. outlook/2013/fullrep_en.pdf. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 31 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 In regions where there is a sugar deficit but a grains surplus, such as the Eastern European countries of Romania, Bulgaria, Hungary, Slovakia as well as the Baltic countries of Estonia and Latvia, isoglucose output could also rise but this should not happen at the expense of sugar production. Hungary, Bulgaria and Slovakia are already among the largest quota-holders of isoglucose in the EU, at respectively 250.3 thousand tonnes, 89.2 thousand tonnes and 68.1 thousand tonnes. Fig. 9: Sugar/Grain Balances36 Sugar deficit / Grain surplus Sugar and grain deficit Sugar and grain surplus Sugar surplus / Grain deficit 36 Tereos. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 32 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Box 3: Prospects for Bioplastics Production from Beet According to a recent report from Rabobank, “Bioplastics Moving to the Beet”, the demand for bioplastics production in the EU could require the equivalent of 1.2 mln tonnes of sugar by 2020. Indeed, total biopolymer production is expected to rise from 1.27 mln tonnes in 2012 to 5.8 mln tonnes by 2016, according to European Bioplastics, a producers and users body. Some food and agricultural (F&A) companies are already involved in bioplastics supply chains, while others are still exploring the possibilities. F&A companies with ethanol production capacity may benefit from the growth of drop-in bioplastics in the short term, but in the long run, higher revenues can be expected from investing in functional bioplastics. In a recent position paper, “Industrial use of agricultural feedstock”, European Bioplastics has defended the use of first generation agricultural feedstock for the production of bioplastics. They argue that carbon hydrate rich plants such as sugarcane or corn require the least amount of land to grow and produce the highest yields. In the context of the food versus fuel debate, the association argues that food biomass used as feedstock for bioplastic production currently accounts for less than 0.01% of global agricultural area. Prospects for Ethanol for the EU-28 The latest ISO forecast on EU ethanol consumption to 2020 optimistically puts the bloc’s total demand at 11 bln litres, compared to forecast gasoline demand of 114 bln litres, which effectively translates into a 10% blending – see table 16. This assumes that the current Renewable Energy Directive targets will not be significantly cut, impacting demand growth potential. With the approval of the Reform of the EU Sugar regime, it is unlikely that ethanol production from beets will increase significantly relative to ethanol production from other sources. At the moment, 50% of out-of-quota sugar is diverted to the ethanol industry in the EU, because the price of beet for ethanol is significantly lower than beet used for production of quota sugar. Once the quotas are abolished, the two-tier price system for beets will effectively disappear, meaning that beet may lose part of its appeal as an ethanol feedstock, with ethanol beet prices rising to converge with prices of beet for sugar. The extent to which beet ethanol can gain/lose further market share relative to other grains will also depend on the dynamics of agricultural prices. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 33 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 16: Indicative Gasoline and Fuel Ethanol Use in the EU 28 in 2020 (Mln litres) 37 Country (EU Blend Gasoline Demand 28) Rate 2012 10% 2,108 Austria 10% 1,724 Belgium 10% 431 Bulgaria 10% 882 Croatia 10% 525 Cyprus 10% 2,374 Czech Republic 10% 1,933 Denmark 10% 389 Estonia 10% 2,079 Finland 10% 9,818 France 10% 25,387 Germany 10% 4,086 Greece 10% 1,626 Hungary 10% 1,688 Ireland 10% 11,856 Italy 10% 326 Latvia 10% 354 Lithuania 10% 468 Luxemburg 10% 102 Malta 10% 5,603 Netherlands 10% 5,258 Poland 10% 1,571 Portugal 10% 1,910 Romania 10% 791 Slovakia 10% 768 Slovenia 10% 6,683 Spain 10% 3,966 Sweden 10% 18,891 United Kingdom 10% 113,598 Total EU 28 Source: International Sugar Organization. Gasoline Demand 2020 Fuel Ethanol Demand 2020 1,963 1,439 436 950 606 2,738 1,573 450 1,715 6,697 22,925 3,928 1,724 1,834 7,807 344 386 447 107 5,416 5,761 1,386 2,247 853 780 4,979 3,640 15,239 98,368 218 160 48 106 67 304 175 50 191 744 2,547 436 192 204 867 38 43 50 12 602 640 154 250 95 87 553 404 1,693 10,930 Part 3: Price Scenarios and Impact on the World Trade Previous Impact Assessment Studies Over the past few years, several studies have assessed the potential impact of abolishing sugar production quotas in the EU. According to a recent impact study by the European Commission, domestic sugar prices could decrease by 45% compared to 2012. 38 The study concluded that only beet growers that achieve yields above 70 tonnes/ha would remain in business while others might switch to alternative crops. The study forecast sugar consumption in the 28 countries of the bloc to drop 3.9% by 2023 to 17.1 mln tonnes from the current 17.8 mln tonnes. Sugar production, by contrast, is 37 International Sugar Organization. 2013. “ISO Ethanol Yearbook”. European Commission. 2013. “Prospects for Agricultural Markets and Income in the European Union 2013-2023”. Online. http://ec.europa.eu/agriculture/markets-and-prices/medium-termoutlook/2013/fullrep_en.pdf. 38 ________________________________________________________________________________ International Sugar Organization MECAS(14)05 34 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 projected to rise to 17.1 mln tonnes in 2023 from 15.6 mln tonnes currently from a forecast 119.3 mln tonnes of beet (up from 110.7 mln tonnes currently). Sugar prices in the bloc are forecast to go down significantly to EUR 405/tonne by 2023, from EUR 584/tonne in 2014. Moreover, isoglucose consumption is expected to rise from 0.7 mln tonnes during the 2013-2016 period to 2.2 mln tonnes in 2023, following the expiry of isoglucose production quotas in 2017. Imports are expected to decline, but would not disappear due to the seasonality and concentration of production in the bloc. Sugar imports are projected to be halved, from 3.9 mln tonnes in 2013 down to 2 mln tonnes in 2023 and exports are expected to increase to 2 million tonnes. The commission expected beet ethanol to lose some competitiveness relative to ethanol produced from other sources. In a 2014 assessment using the Aglink-Cosimo model, the OECD-FAO forecast sugar production of the EU-28 to rise from 18.141 mln tonnes, raw value (average 2011-13) to 18.560 mln tonnes, raw value in 2023. Imports are forecast to fall significantly from an average of 4.185 mln tonnes, raw value (2011-13) to only 1.895 mln tonnes in 2023. Exports are also forecast by the OECD/FAO to fall from 2.035 mln tonnes (average 2011-13) to 1.734 in 2023. The fall in net imports by almost 2 mln tonnes, despite a production rise of 400 thousand tonnes, is due to a higher penetration of isoglucose. According to an assessment by BNP Paribas, the EU beet sugar market will be structurally less attractive to both investors and industry participants when the current quota regime ends 39. The assessment anticipates lowers profits and a more competitive environment when the system of quotas is abandoned. BNP Paribas also expects the major players to step up investment to remain competitive, which will in turn subdue profits further, at least initially. New investment is likely to involve assets outside the European Union, which could change the evolving relationship between farmers and shareholders over the longer term. BNP estimated that Südzucker’s EBITDA (earnings before interest, tax and amortization) may be in 2018 45% below the level of 2013. BNP also forecast lower earnings in the sugar operations of AB Sugar, which is offset by higher profits elsewhere in the context of the broader equity held by parent company ABF. Tereos, a large producer of both sugar and starch products, has recently forecast a rather optimistic scenario for beet sugar production in the bloc inspite of the threat of isoglucose after the dismantling of production quotas in 2017 40. The Paris-based company estimates that most of the large European producers are able to produce sugar at a cost of USD 500/tonne, being effectively able to price out some future isoglucose production growth. The average length of the beet campaign is likely to increase by almost 20% to 130 days in 2017. The company forecasts EU output in 2017 at between 18 and 21 mln tonnes. The bloc’s largest producers in 2017 will be, in descending order: France (between 5 and 5.5 mln tonnes), Germany (between 4.5 and 39 40 F.O. Licht, 17 September 2013. Presentation of Pierre Henri Dieter to Kingsman Sugar Conference, Dubai 2014. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 35 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 5 mln tonnes), Poland (around 2 mln tonnes), UK (around 1.3 mln tonnes) and the Netherlands (around 1 mln tonnes) 41. The positive Tereos assessment is echoed by a recent evaluation by Rabobank, which projects that the larger EU beet sugar operations will thrive in a quota-free environment, with the smaller beet sugar producers as well as the cane sugar refiners suffering the bigger losses.42 Some sources estimate that sugar production costs in the EU can be as low as USD 500/tonne for most of the bloc 43, for a beet cost of USD 40/tonne, which equates to EUR 30/tonne or 20% less than today’s level 44. ISO Assessment and Forecast Discounting any further penetration of isoglucose, sugar consumption in the EU-28 is expected to continue to rise at around 1% a year, to a level around 18.8 mln tonnes, white value, in 2017. For the time being, the ISO is working with two scenarios for world raw sugar prices over the next three years: a lower world raw sugar price scenario of USD 350/tonne and a higher world raw sugar price scenario of USD 450/tonne. It is worth noting that under a new quota-free regime, it is still debatable whether exports from the EU might legally exceed the current WTO limits on the grounds that the last mechanism of cross subsidization and production control will have been deactivated. The ISO has prepared two scenarios for EU sugar production/consumption and trade in 2017. The first scenario is where sugar prices are relatively high in the EU – at USD 700/tonne for domestic white sugar- but relatively low in the world market – at USD 350/tonne for raw sugar – see fig. 10. In this scenario, EU sugar producers would be unable to avoid a higher penetration of isoglucose in the bloc’s industrial sweeteners consumption and would also fail to expand their presence into a depressed world market. Although this scenario sees the average EU sugar price falling, it will still remain above the threshold level of USD 650/tonne below which sugar starts to be considered as more cost-competitive than isoglucose in a quota-free environment. Production/consumption of isoglucose would rise to 2.7 mln tonnes, compared to 700 thousand tonnes today. Consequently, sugar consumption would fall from 18 mln tonnes to 16.8 mln tonnes. Crucially, imports of sugar under preferential agreements will remain profitable, with import parity, even with payment of the full CXL duty, still lower than EU prices. Imports are projected to remain as high as 3.0 mln tonnes. Exports to the world market would be around 2.0 mln tonnes. 41 42 43 44 Presentation Presentation Presentation Presentation of Pierre Henri Dieter to Kingsman Sugar Conference, Dubai 2014. by Ruud Schers to Kingsman Sugar Conference, Geneva, 2014. of Pierre Henri Dieter to Kingsman Sugar Conference, Dubai 2014 of Jurgen Bruns on the Future of EU beet Production, 6th Asia Conference, Mumbai, 2014. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 36 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Source: International Sugar Organization. Table 17: Scenario 1 – EU 28 sugar balance (Mln tonnes) Sugar production Sugar consumption Isoglucose consumption Imports Exports Source: International Sugar Organization. Today Post 2017 15.8 18.0 0.7 3.8 1.6 15.8 16.8 2.7 3.0 2.0 In the second scenario, EU sugar prices would be relatively low at USD 600/tonne, with world raw sugar prices higher than in the first scenario at USD 450/tonne – see fig. 11. In this scenario, sugar would be able to fend off some of the threat coming from isoglucose production. Here we estimate production/consumption of isoglucose rising to only 1.5 mln tonnes. At the same time, domestically produced sugar would be cheaper than imported sugar under preferential agreements, whether they incur the CXL duty or not. This means that sugar production within the EU would also have an incentive to expand to export, as the EU price would be closer to the world market price. In this scenario, sugar production could expand by as much as 3.2 mln tonnes, with isoglucose production/consumption doubling from the current 700 thousand tonnes to 1.5 mln tonnes. Imports from the world market would drop to 1.5 mln tonnes, and exports would be as high as 2.5 mln tonnes. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 37 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Source: International Sugar Organization. Table 18: Scenario 2 – EU 28 sugar balance (Mln tonnes) Sugar production Sugar consumption Isoglucose consumption Imports Exports Source: International Sugar Organization. Today Post 2017 15.8 18.0 0.7 3.8 1.6 19.0 18.0 1.5 1.5 2.5 One must not forget that, crucial to the above assumptions, is the dynamics of USD/EUR exchange rate. These have trended in the range between 1.3 and 1.4 over recent years. A stronger USD ceteris paribus would somewhat reduce the import parity value in USD (due to a lower USD-nominated duty as well as lower refining costs) but at the same time would sharply decrease the EU domestic price when expressed in USD. The average scenario forecasts a balanced market in the EU, with production and consumption of sugar at 17.4 mln tonnes, and isoglucose production/consumption rising by 1.4 mln tonnes to 2.1 mln tonnes. Imports and exports of sugar would balance out at 2.3 mln tonnes, meaning that imports from the ACP/LDC group would still be prioritized but any hopes of significantly higher imported quantities are likely to be frustrated. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 38 Market Evaluation Consumption and Statistics Committee The EU Sugar Market Post 2017 Table 19: Average scenario – EU 28 sugar balance (Mln tonnes) Sugar production Sugar consumption Isoglucose consumption Imports Exports Source: International Sugar Organization. Today Post 2017 15.8 18.0 0.7 3.8 1.6 17.4 17.4 2.1 2.3 2.3 Conclusions This paper has taken stock of major developments in the EU sugar industry over the past few years and presented an outlook for sugar production, imports and exports in the context of the 2017 Reform of the EU Sugar Regime. The study has shown that the future abolition of sugar and isoglucose production quotas as well as minimum beet prices from 2017/18 will possibly lead to higher production on the back of a more efficient and leaner industry and relatively profitable margins. Sugar production costs in the EU will continue to fall (as a result of higher yields and greater investment), to remain below the import parity price level for raw sugar under preferential trade (including EPA/EBA and CXL). As such, the EU may lose its current status as one of the world’s largest sugar importers (it was the largest between 2008 and 2011). This work has concluded that it is unlikely that volumes greater than 3.0 mln tonnes will be imported in any year by a sugar production quota-free EU-28 bloc from 2017. This paper presents two scenarios for EU production and trade post 2017. Sugar production is forecast as ranging from 15.8 to 19 mln tonnes, white value, in 2017/18, and sugar consumption may fall from the current level of 18 mln tonnes due to the likely increased penetration of isoglucose in the bloc’s soft drink industry. While sugar and isoglucose are not perfect substitutes (they only compete in about 30% of the total sweeteners market in the bloc), a scenario of high domestic EU prices will prompt consumption of isoglucose by the industrial end users to rise by as much as 2 mln tonnes, denting the sugar market share in that branch of the EU market. Alternatively, lower EU prices for domestically produced sugar may prevent isoglucose offtake to rise by as much, securing a domestic market share for beet sugar whilst at the same time fending off further imports. Projected sugar imports range from a low of 1.5 mln tonnes to a high of 3.0 mln tonnes, with the EU in one of the two scenarios becoming a net sugar exporter (2.5 mln tonnes of exports as against 1.5 mln tonnes of imports). Finally, preferential exporting countries, especially those of the LDC/ACP group, which will continue to enjoy duty-free access into the EU, might be disappointed with forecast imports by the EU failing to even exceed 3.0 mln tonnes. Further investment in these countries’ sugar industries should be therefore also aimed at regional as well as world markets. Nevertheless, a faster than expected development of a beet bioplastic industry as well as a significant offtake of beet ethanol production could still come as welcome surprise, boosting further potential sugar import demand by the EU beyond current market expectations. ________________________________________________________________________________ International Sugar Organization MECAS(14)05 39 International Sugar Organization PUBLICATIONS PRICES FOR 2014 Seminars Proceedings: 2013: Commercial Success for Sugar Crops - Investment, Innovation and Efficiency Online £370 2012: Sugar Crops - Unleashing Growth Potential Online £150 2011: Competitive Edge in Sugar - the Road to 2020 Online £150 Workshops Proceedings: 2013: Developing Countries - Options for Growth in Sugarcane Online £275 2012: India - Key Player in the World Sugar Economy Online £70 2011: Sugar Industry Potential in Africa Online £70 ISO Studies: Productivity and Innovation in the World Sugar Industry (MECAS(13)18)* £305 Indonesia: Future Sugar Prospects (MECAS(13)17)* £305 Prospects for Sugar Refineries in Destination Markets (MECAS(13)16)* £305 Climate Change and Sugar Crops (MECAS(13)07)* £305 International Survey on Prices for Sugar Cane/Beet and Competing Crops (MECAS(13)06)* £305 Future Role of Sub-Saharan Africa in World Sugar and Sugar Crop Renewable Energy (MECAS(13)05)* £305 World Fuel Ethanol Outlook to 2020 (MECAS(12)19* £280 Sugar Perspectives of the MENA (Middle East & North Africa) Regions (MECAS(12)18)* £280 FDI and M&A in the World Sugar Industy (MECAS(12)17)*£280 Developments and Drivers of the Sugar Market in CIS Customs Union Countries (MECAS(12)06)* £280 Outlook of Sugar and Ethanol Production in Brazil (MECAS(12)05)* £280 Alternative Sweeteners in a Higher Sugar Price Environment (MECAS(12)04)* £280 International Survey on Yields and Prices for Sugar Crops (MECAS(11)19)* £250 Input Costs in Sugarcane and Sugarbeet Farming (MECAS(11)18)* £250 Thailand’s Sugar and Fuel Ethanol Outlook (MECAS(11)17)* £250 ISO Studies (cont): South American (excluding Brazil) Sugar and Ethanol Prospects (MECAS(11)07)* £250 Government Sugar Trade Related Policy in a New Market Environment: a Survey(MECAS(11)06)* £250 Niche Sugar Markets (MECAS(11)05)* £250 Fuel Ethanol Prices & Drivers - a World Survey (MECAS(10)19)* £205 Industrial and Direct Consumption of Sugar - an International Survey (MECAS(10)18)* £205 World Sugar Demand: Outlook to 2020 (MECAS(10)17)* £205 Central American/Caribbean Sugar & Ethanol Prospects (MECAS(10)07)* £205 World Trade in Raw & White Sugar - Recent Trends & Prospects (MECAS(10)06)* £205 GM Beet & Cane : Prospects in a New Market Enviroment (MECAS(10)05)* £205 The International Physical Trade of Sugar - a Survey (MECAS(09)19)* £205 The International Physical Trade of Sugar - a Survey (MECAS(09)19)* £205 Domestic Sugar Prices (MECAS(09)18* £205 Market Potential of Sugarcane & Beet Bio-products MECAS(09)17* £205 Sugarcane Ethanol and Food Security (MECAS(09)07)* £185 Outlook on Brazil’s Competitiveness in Sugar & Ethanol (MECAS(09)06)* £185 Regular Publications: Quarterly Market Outlook* £350 Monthly Statistical Bulletin* £250 Monthly Market Report & Press Summary* £225 Sugar Year Book 2013 * £245 Ethanol Year Book 2013* £200 Mid-term analysis on Sugar, Ethanol & Sweeteners market development Providing updates on the world sugar Situation Report on sugar and ethanol markets for the previous month Hardback , 400 pages, 150 Country Tables with full details of production, consumption, trade and stocks (7-8 yrs series) Hardback , over 30 pages of explanatory text plus 120 pages of tables with details of fuel ethanol production, consumption, trade and stocks for key and emerging countries (7-10 yrs series) World Sugar Balance* Current forecast and historical data (7 years series) on production, consumption, import and export £250 *ALSO AVAILABLE AS A SOFTCOPY Tel: +44 20 7513 1144 International Sugar Organization 1 Canada Square, Canary Wharf, London E14 5AA Fax: +44 20 7513 1146 Email: [email protected] Web: www.isosugar.org
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