Yesterday the EP’s Agricultural Committee (AGRI Committee) voted down the proposal to scrap quotas and voted instead (by 32 to 11) to extend quotas until 2020, with a plenary Parliament vote on this measure now scheduled for the week commencing March 11.
The Committee move dismayed trade body the Committee of European Sugar Users (CIUS), whose position also represents that of European soft drinks trade body UNESDA, as well as that of Coca-Cola Europe.
UNESDA Communications director Sam Rowe told BeverageDaily.com: “UNESDA is a member of the Committee of so we are aligned with their opinion, and were party to the statement on behalf of the soft drinks sector.”
Inflated prices, supply shortfalls
CIUS secretary general, Muriel Korter, told BeverageDaily.com today that any quota extension would hit the competitiveness of European beverage firms, since a "dysfunctioning sugar regime" (including sugar quotas) artificially inflated prices and limited supply, with bloc sugar beet production falling 20% short of internal demand.
CIUS members purchase almost 70% of Europe’s annual sugar production for use in food and beverages both for domestic and export sales.
Asked why a beverage SME could not simply buy sugar in from, say, Brazil, instead, Korter explained:
“First, you would have to go through a trader, raw imports must be refined via a refinery, then you have transport costs, then a high duty of €419/tonne ($653) for white sugar. So the total world market price would not be competitive for an SME.”
But there was a huge difference between the Commission reference price for sugar and average (higher) prices in the bloc, and again with (lower) average world market prices, Korter added.
EU sugar prices rose 47% between October 2010 and October 2012 due to shortages caused by the quota system, the CIUS said, referencing Commision figures.
Reneged on deal to scrap quotas
The AGRI Committee had reneged on a political agreement that quotas be phased out by 2015, the CIUS claims, but Korter said this lacked a specific end date, which meant that it was “apparently not being respected at all by different politicians,” who were revisiting the agreement’s terms.
So why was the Agricultural Committee taking this stance? “It is very conservative. The MEPs in the committee are either farmers or represent farmers in their constituencies, while beet growers are very strong on maintaining the quota, claiming they would be uncompetitive without it,” Korter said.
“But we say, ‘if you eliminate quotas, this does not mean that you open up the borders from one day to the next’. There would not be an import surge, and we believe the European beet growers are highly competitive when you compare their beet yields with other world players.”
No HFCS alternative
To make matters worse, beverage producers were unable to substitute scant sugar supplies with isoglucose/high fructose corn syrup (HFCS) since the EU also imposed a quota (5% of total sugar production) on that, Korter added.
“What’s happening is that the isoglucose quota is so small that the beverage industry has to use sugar. We support the elimination of both quotas,” Korter said.
“Eliminating the isoglucose quota would relieve the pressure on the beet/white sugar supply, which would benefit everyone,” she added.
“The starch producers are also keen on this, and could effect economies of scale to produce more isoglucose – this could happen fairly quickly.”
If the EP voted in March to extend quotas to 2020, an official trialogue would then start with the Council and Commission, Korter said, which both possess equal negotiating powers.
“It remains to be seen if this would be accepted by the two other institutions – it could go to a second reading,” she added.
The British Soft Drinks Association said its position reflected that of the CIUS.
The European Parliament had not replied to our request for comment as we went to press.