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EU Sugar Market: Current Situation and Policy Reform Presented by LMC International Belgrade, 27 May 2004

EU Sugar Market: Current Situation and Policy Reform Presented by LMC International Belgrade, 27 May 2004. Presentation Format. Current market situation and policy Options for policy reform. EU Sugar Regime (to 2005/06). Key Features: Production quotas Support (intervention) prices

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EU Sugar Market: Current Situation and Policy Reform Presented by LMC International Belgrade, 27 May 2004

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  1. EU Sugar Market:Current Situation and Policy Reform Presented by LMC InternationalBelgrade, 27 May 2004

  2. Presentation Format • Current market situation and policy • Options for policy reform

  3. EU Sugar Regime (to 2005/06) Key Features: • Production quotas • Support (intervention) prices • Market access arrangements

  4. EU Supply Demand Balance(‘000 tonnes, white value)

  5. Production Quotas • Quantity for sale at support prices (A and B quota) • Additional production exported to world market (C sugar)

  6. Support Prices Guaranteed prices set for: • EU beet sugar quotas • Raw cane sugar imports • Basic beet price

  7. Derivation of the Intervention Price of White Sugar, 2003/04

  8. Preferential Access Raw sugar: • Sugar Protocol (ACP); EBA; MFN; SPS White sugar: • Western Balkans

  9. EU Preferential Trade, 2003/04

  10. EU Border Protection • No imports enter EU outside of preferential arrangements • White sugar tariff €419 per tonne • Plus safeguard duty (€117/mt at world price of US$230/mt)

  11. Presentation Format • Current market situation and policy • Options for policy reform

  12. Pressures for Reform • WTO Doha Round • WTO challenge • Access arrangements • Internal reform process

  13. EU Regime – Post 2005/06 Influences: • Likely outcomes from the WTO Doha Round • EU Commission policy options

  14. EU Commission’s Reform Options • Status Quo/Fixed Quotas • Price Cut • Full Liberalisation

  15. Status Quo/Fixed Quota Option • Supply managed by quotas • Requires supply restraint by countries with duty-free access • Higher prices maintained

  16. Price Cut Option • Supply managed by price • Quotas phased out • Leads to large price cut

  17. Liberalisation • Removal of quotas and tariffs • Substantial price cut

  18. EU Price Mechanism • Fixed Quotas: WTO commitments dictate price • Price Cut: EU manages prices • Liberalisation: World price

  19. EU Market Prices, € per tonne

  20. WTO Challenge Challenge to: • Export subsidies on re-exported raw sugar imports • Cross-subsidisation of C sugar Potential impact on quotas and production, and support for Fixed Quota option

  21. EU Price Outlook • Price Cut Option: - 38% • Fixed Quotas Option: - 17% • Liberalisation: - 52% • Serbia – 160,000 tonne initiative falls within Fixed Quotas agenda

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