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EU co-refiners enjoy cost advantages

28 May 2012

According to USDA’s review of the Spanish sugar sector, Spanish ‘imports of raw sugar have been increasing for the last four marketing years’, reaching 716,000 tonnes in 2010/11. This level of imports is expected to stabilise or grow further in the coming years. According to USDA, this is the result of an increase in co-refining of raw cane sugar by sugar beet processors.

Two of Spain’s five sugar beet processing plants ‘are now off-season cane sugar refiners and three are on-season sugar cane co-refiners’. USDA maintains that ‘these companies are thought to enjoy a competitive advantage over full-time refiners in other countries as ‘their fixed costs are mostly covered by their main activity of sugarbeet processing, allowing them to bid higher for the purchase of raw sugar on the world market to supply their second activity’.

This has seen a corresponding decline in imports of refined sugar imports (down 550,000 tonnes in raw value) and a small increase in refined sugar exports, in the context of decline in Spanish sugar consumption of 1.7% in both 2010 and 2011. Consumption is now expected to stabilise.

Spanish sugar production and trade 2010/11 to 2012/13 (tonnes)



(USDA estimate)


(USDA estimate)


(USDA projection)

Total sugar production 606,000 642,000 638,000
Raw imports 716,000 720,000 725,000
Refined imports (raw value) 553,000 550,000 550,000
Total imports 1,269,000 1,270,000 1,275,000
Raw exports 3,000 4,000 4,000
Refined exports (raw value) 153,000 155,000 160,000

Source: Extracted from USDA, Report no. SP1207, Table 1, p. 3.

At the policy level the Spanish minister of agriculture has pledged to maintain sugar production quotas until 2020. As a number of governments are supporting the Spanish position, the minister believes that sugar production quotas can be maintained until that year.

In contrast, problems have been faced in Portugal in accessing raw sugar imports ‘at competitive prices’. This has seen raw sugar imports decline in the last 2 years (down from 523,000 tonnes in 2008/09 to 463,000 tonnes in 2010/11), creating problems for Portugal’s three sugar refiners.  According to the USDA, ‘if refiners cannot get political support at national and EU level to guarantee access to raw sugar at more competitive prices, they may be forced to continue decreasing their refining activity and resorting to using their packaging lines to package imported white sugar’. For these reasons, Portuguese refiners are calling on the EC to make it easier for full-time refiners to access raw sugar imports.

EU Commissioner Dacian Cioloş has indicated that there may be scope for once again authorising ‘the introduction in the EU market of extra-quota sugar’ (i.e. out-of quota sugar) and/or ‘allowing supplementary imports with reduced duties.

This needs to be seen against the background of criticisms in the UK that the operation of the current EU sugar regime is threatening jobs at Tate & Lyle’s Thames refinery. 

Editorial comment

The contrasting prospects for full-time cane sugar refiners in Portugal and co-refiners in Spain highlights the conflicting pressures on the EC in terms of the future of the EU sugar regime. The maintenance of production quotas and higher EU domestic sugar prices helps co-refiners cover their fixed costs from beet refining and places them in a better position to compete for globally sourced raw sugar (by offering higher prices). This can be seen to undermine the position of traditional cane sugar refiners, who have to pay high import duties outside TRQs. The maintenance of import restrictions on non-traditional sugar suppliers in the context of high global sugar prices similarly undermines the position of full-time raw cane sugar refiners.

These domestic EU pressures would appear to carry implications for the twin ACP objectives of ensuring the maintenance of production quotas until 2020 and a continuation of restrictions on access to the EU market for non-traditional suppliers.

The observation that co-refiners are able to bid higher for the purchase of raw sugar raises the question as to whether ACP suppliers linked to the supply chains feeding into Spanish co-refiners have been able to gain additional price advantages as a result of this dimension of the operation of the reformed EU sugar regime.


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