EU's removal of sugar quotas is bad news for sugar cane manufacturers

EU's removal of sugar quotas is bad news for sugar cane manufacturers
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The European Union’s sugar quotas, which have been around for nearly fifty years, have been removed at the start of the month. The result is that more sugar can be manufactured and the industry will be able to set the pricing itself.

Higher production, lower prices

CIUS, the European association of sugar-using companies, welcomes the end of the “market-distorting” quotas. Market researchers forecast the sugar productions to grow about a third in the next four years, which in turn will lower prices by about 30 %.  Problems could also surface just like when the milk quotas disappeared in 2015. At that time, plenty of milk farmers sturggled and many had to shut down.

 

In order to avoid such scenarios this time around, the European Union invested 5.4 billion euro into the industry between 2006 and 2010, to prepare it for the end of the quotas. The Sugar Market Observatory was founded, designed to give sugar famers information and to help the market remain relatively steady.

 

Sugar cane manufacturers dissatisfied

Not every sugar manufacturer is happy about the new legislation: sugar cane manufacturers feel they have been constrained compared to the sugar beet farmers. Sugar cane is mostly grown outside of Europe and to help the local market, it has high import tariffs.

 

The end of the quotas will also lead to more cheap sugar and therefore more sugar in food, which may become a health concern. However, the EU believes that a higher production will mostly lead to more export and believes it will not lead to higher European consumption. Nevertheless, there is doubt whether manufacturers will be able to resist the cheap sugar’s call.

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