Julian Price - presentation to Africa 2013 conference
EU Sugar Reform and Outlook
3rd Africa Sugar Conference
Nairobi, 15th April 2013
Latest Update on EU Commission Sugar
Reform and Outlook after 2015
• EU Sugar Market Overview
– Some statistics
• Supply and demand statistics
• Imports from third countries
• The commercial landscape
• EU sugar prices
• EU Commission CAP Reform Process
• Post 2015 market outlook
• Some tentative conclusions for African sugar
12th October 2011
• The European Commission proposes for sugar as from
1st October 2015:
– New Common Organization of the Markets (COM) regulation.
– EU production quotas abolished.
– EU sugar reference prices remain unchanged.
– Minimum beet price abolished.
– Direct payments to sugar farmers continues (€1.5bn/annum).
– Raw sugar supply needs for refiners abolished.
– Compulsory withdrawal abolished.
– Private storage mechanism maintained.
– MFN import tariffs – no proposal.
– FTA negotiations – will (presumably) continue.
European Parliament mandate
13th March 2013
• Amendments to proposed new COM regulation:
– Cut and paste old COM sugar legislation into new regulation.
– Maintain quotas until 1st October 2020.
– New (“Dantin”) mechanism for exceptional imports and
exceptional release of OOQ sugar.
– Reinstatement of renounced quotas (to Ireland, Portugal).
– Maintenance of existing rules for Full-Time Refiners.
– Maintenance of existing direct payments to farmers including
€1.5bn per annum (hypothecated) for beet farmers.
19th March 2013
• Irish Presidency compromise and mandate:
• Commission proposal for new COM regulation largely
– I.e. No legislation on sugar quotas, refining needs, etc.
– No reinstatement of renounced quotas.
– Council to decide reference prices “when necessary”.
• However, old COM regulation to be extended for sugar
until 30th September 2017.
– I.e. Sugar quotas, refining needs and all associated
paraphernalia extended until 30th September 2017.
“Co-decision” or “Trilogue” (Ordinary
EU free trade agreements
Where are we? (25th March 2013)
• Forthcoming negotiations
– United States of America
– Southern Mediterranean
• On-going negotiations
– Malaysia and Vietnam (ASEAN)
– Eastern neighbourhood
– Gulf Cooperation Council
– African, Caribbean and Pacific
• Completed negotiations, yet to
– Central America
– African, Caribbean and Pacific
• FTAs already in force
– Peru (1st March 2013)
– South Korea (1st July 2011)
– Mexico (October 2000)
– South Africa (2000)
– Chile (November 2002)
– ACP – Cariforum, ESA and
EU free trade agreements and WTO
Sugar quotas already agreed
Other sugar quotas 2013/14 Quantity (kt) Notes
CXL Australia 9.9 Raws only; licences allocated by "tender".
CXL Brazil 334.1 Raws only; licences allocated by "tender".
CXL Cuba 69.0 Raws only; licences allocated by "tender".
CXL "Erga Omnes" 254.0 Raws only; licences allocated by "tender".
CXL India 10.0 Whites or raws; licences allocated by "tender".
Central America 150.0 Increases by 3% per annum. Whites or raws. Imports likely to be "boat race".
Colombia 62.0 Increases by 3% per annum. Whites or raws. Imports likely to be "boat race".
Peru 22.0 Increases by 3% per annum. Whites or raws. Imports likely to be "boat race".
Total (so far) 910.9
• Rules of origin
– Direct transport rule (e.g. co-mingling of different ACP origins of
bulk raw sugar at loading or on board a vessel)
– Cumulation of origin (e.g. adding value to ACP sugar exports)
• Licence regulations
– Polarization cut-off at 99.5 ºZ
– Electronic documents
– Tolerances on import licences
– Documentary requirements (e.g. export licences)
– Uniform customs treatment
• The big issue for sugar – the only issue – is the end date for
EU sugar quotas.
• No harm in continuing to lobby until the last moment.
• Sugar may be left until the end of the CAP reform triologue
negotiations (20th June 2013).
• Simple average of 1st Oct 2015, 1st Oct 2017 and 1st Oct 2020
is 30th January 2018. Hence a compromise end date for
quotas could be 1st October 2018 ???
• If no decision under the Irish presidency, the negotiations will
likely continue after the summer under Lithuanian presidency.
• Declarations may be annexed to any decision, e.g. instructing
the Commission to make certain proposals should the EU
sugar market collapse after quotas abolished.
Commercial developments in the EU
Investment in supply chains /
logistics, intermodal freight, etc.
Investment in factory
efficiency, e.g. beet juice, longer
Investment in standalone and
off-crop cane refining capacity.
Transferable production quotas
(“travail à façon”).
Investment in farm
efficiency, e.g. winter
beet, GMO, etc.
Procurement of sugar from a
diversity of suppliers:
beet, cane, processors, refiners,
Implications for African sugar
• Arbitrage opportunities
• Routes to market
• Imports into southern Europe
(exports from the North)
• Quality and food safety
• Financial risk management
• The opinions, views and forecasts expressed herein reflect the personal
views of the author and do not necessarily reflect the views of ED&F
Man nor ASSUC nor the member companies of ASSUC (“we”, “our”).
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merely state our views and carry no guarantee as to their accuracy.
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herein is accurate, complete, fair or correct.
• All information, prices or projections are subject to change without
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