EU May Ease Curbs on Domestic Sugar Supplies on Shortages

(Businessweek) – The European Union, the world’s third-largest sugar producer, may ease curbs on domestic supplies and imports after consumers complained about shortages, according to a person with direct knowledge of the proposals.

Additional imports would probably be done through tenders, said the person, who declined to be identified because the plans haven’t been publicly announced. The bloc may also allow local producers to sell more sugar in the domestic market, according to the person. The 27-nation bloc’s Sugar Management Committee may meet April 12 to consider the proposals, the person said.

While sugar has slid 33 percent on the international market from a 30-year high of 36.08 cents a pound in February last year, prices in the EU reached the highest level since at least 2006 in January, figures on the European Commission’s website show. The average price reached 683 euros ($889) a metric ton that month, according to the data.

“The situation in Europe is still problematic, and there is still tightness of supply,” Muriel Korter, secretary general of the Brussels-based Committee of European Sugar Users, representing companies including Kraft Foods Inc. and Nestle SA (NESN), said by phone today. “As sugar users, we would welcome additional measures to improve supplies before the end of the campaign in September. The sooner the better.”

Import Tenders

The EU suspended import tenders in January, saying supplies were sufficient. The commission, the bloc’s executive arm, has sought to reduce sugar production since the World Trade Organization said in 2005 it was disrupting global markets by exporting subsidized output. Curbs are “creating an artificial shortage and pushing up prices,” the Association of the German Confectionery Industry said in a statement this month.

The commission has already said it may abolish production limits in 2015 as part of changes to the Common Agricultural Policy, a subsidy program that cost 58.2 billion euros in 2010. EU production will climb to 18.26 million tons this season from 15.43 million tons a year earlier, the bloc estimated Jan. 13.

EU rules limit the amount of sugar local producers can supply to the domestic market, and any surplus must be exported or put to non-food use. Brazil and India are the world’s biggest sugar producers, according to the U.S. Department of Agriculture.

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.