EU Agriculture Commissioner Says Sugar Beet Industry Not Favored

(Businessweek) – European Union rules for the sugar market don’t favor beet producers over refiners of cane raw sugar, according to EU Agriculture Commissioner Dacian Ciolos.

Ciolos doesn’t agree that measures taken to reduce shortages in the bloc favored one industry over the other, according to his comments in a letter that was provided by Roger Waite, a spokesman for the European Commission, the EU’s executive arm. The letter was sent to some members of the European Parliament and provided the basis of his comments to some members at a meeting in Strasbourg last week, Waite said.

Some members of the European Parliament from Finland, Portugal, Italy and Bulgaria wrote to Ciolos on May 24 saying EU rules on the sugar market were making refining in the EU“unviable.” They met with Ciolos on July 4, Waite said.

The European Commission allowed local beet producers to sell an additional 650,000 metric tons of sugar in the domestic market to improve supplies in the 2011-12 season that started in October. The duty on the first 400,000 tons was 85 euros ($104) a ton and the levy on the next 250,000 tons was 211 euros a ton, according to Waite in Brussels. Imports of 399,010 tons were also allowed at a reduced duty, which reached 312 euros a ton for raw sugar at the last import tender on June 7, data from the commission showed.

“I do not agree that this approach produces a system skewed in favor of the sugar beet sector,” Ciolos said in the letter. “These measures are intended to meet the needs of different operators, including refiners, who will thereby have the opportunity to participate in tenders, according to their needs and competitiveness.”

60% of Capacity

Cane-sugar refiners in the bloc say the EU’s measures are unfair and make them compete against each other in tenders to import the sweetener, according to Joao Pereira, the president of the Brussels-based European Sugar Refiners’ Association. The bloc’s refineries are currently running at 60 percent of their total capacity due to a lack of raw material, he said on July 4.

Some 4,500 jobs may be at risk at 18 cane sugar refineries in Europe unless the EU takes steps to allow for more imports, EU Parliament member Marina Yannakoudakis said last week. Tate & Lyle (TATE) Sugars, owned by American Sugar Refining Inc., has already cut 27 jobs in its London refinery, said Gerald Mason, vice president of EU Affairs and Strategy at the company. The refinery still employs 850 people.

Ciolos Letter

“It is not for the European Commission to judge if this or that refiner is obtaining sufficient raw cane sugar, because this is a function of business strategy decisions made by those companies,” Ciolos said in the letter given by Waite after a request by Bloomberg News. “The only point for the commission is to ensure that, in a system which is still not fully liberalized and where public policy tools do still affect volumes, the EU market is sufficiently sourced.”

Imports of raw sugar incur a duty of 339 euros a ton, according to the commission. Sugar from a group of least developed nations and some members of the Africa, Caribbean and Pacific group of states do not incur any levy. Supplies from these nations have lagged behind demand, leaving the EU in a shortage and forcing the bloc to allow imports at a reduced duty under a tender system and more sales in the domestic market.

To contact the reporter on this story: Isis Almeida in London at  ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at  ccarpenter2@bloomberg.net