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EU Council political agreement on extension of sugar production quotas until 2016/17

07 April 2013

At the meeting of the EU Agriculture and Fisheries Council meeting on 18–19 March 2013, a political agreement was reached on proposed regulations for the four main pillars of the CAP:

  • the direct aid payments regulation;
  • the single common market organisation regulation;
  • the rural development regulation; and
  • the horizontal regulation.

Among the issues covered, and of greatest concern to the ACP, was the political agreement on the extension of the sugar production quota regime “until the 2016/17 marketing year”.

In addition, the Council agreed to the establishment of standard provisions to govern agreements between sugar beet growers and beet processors, with such provisions at least containing “conditions governing the purchase delivery, taking over and payment of sugar”, with the EC empowered to establish these provisions by delegated powers.

In the sugar sector (along with several other sectors), the EC retains the right to:

  • use import and export licences to regulate trade;
  • impose additional import duties on products of sugar “in order to prevent or counteract adverse effects on the Union market which could result from certain agricultural imports”;
  • set the conditions under which aid for private storage is extended;
  • suspend inward processing arrangements, if a threat of market disturbance arises;
  • extend export refunds “to the extent necessary to enable exports on the basis of world market quotations or prices”.

The political agreement also included provisions designed to ensure the EC has flexible tools available for addressing “market disturbance”, “where the deployment of more traditional market support instruments appears inadequate”.

On direct aid payments, political agreement was reached on “increased flexibility on convergence of the level of direct payments” across and within member states. In addition, the Single Area Payment Scheme (SAPS) was extended until 2020 on a voluntary basis, and agreement was reached on the scope for “voluntary coupled support” (allowing member states to use “up to 7% of their annual national ceiling” or 12% of the national SAPS ceiling).

However, on a range of issues related to ‘greening’ measures, further clarification and elaboration was sought.

While the EU farmers’ organisation Copa-Cogeca welcomed the political agreement on the mandate in the Council, it expressed disappointment “that EU sugar quotas were not extended to 2020”, and called for this ‘to be included in the final agreement in June to give producers time to adjust”. The European Association of Sugar Producers (CEFS), the International Confederation of European Beet Growers (CIBE), the European Federation of Food, Agriculture and Tourism Trade Unions (EFFAT) and the ACP Group have all individually and collectively joined the called for an extension of the sugar production quota system until 2020, on the grounds that further time is required to complete ongoing adjustment processes.

Editorial comment

While efforts continue to defer production quota abolition until 2020, the political agreement to extend quotas until the 2016/17 marketing year potentially sets the date at which the market consequences of quota abolition will begin to have an impact on ACP sugar exporters.

On the assumption of production quota abolition in 2015, an EC staff working paper estimated that this would lead to:

  • sugar beet and white sugar prices falling “below the current support prices”;
  • an increase of 6.9% in EU sugar exports; and
  • a reduction of 4.7% in EU sugar imports.

The alternative would be an accumulation of sugar stocks in the EU.

However, according to the December 2012 edition of the EC report “Prospects for agricultural markets and income in the EU 2012–2022”, the decline in sugar imports is projected to be far more dramatic then this earlier assessment suggested. Indeed, the EU sugar sector is projected to “move even closer to self-sufficiency and indeed from time to time be a net exporter”.

Assuming the abolition of EU sugar production quotas in 2015, the EC’s December 2012 analysis projected a steady decline in EU sugar imports, from 3.8 million tonnes in 2011 to 2.0 million tonnes in 2017, 1.6 million tonnes by 2020 and 1.5 million tonnes from 2022.

The current political decision of the EU Council may defer this outcome by a season, but nevertheless the December 2012 EC projections strongly suggest that marketing opportunities for ACP sugar will lie increasingly beyond the EU (for more details see Agritrade article ‘ EU sugar sector developments and projections’, 7 April 2013).


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