Farm Ireland

Tuesday 25 October 2016

EU holds firm on ending sugar quotas despite fears

Sarah Collins

Published 19/10/2016 | 08:00

Phil Hogan
Phil Hogan

Brussels is trying to manage expectations ahead of sugar quotas expiring next year, though Italy and Poland want to stop the clock.

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The quota - the EU's last - has kept European sugar prices artificially high for almost 50 years, but is set to expire at the end of September 2017.

Poland is one of the EU's main sugar beet growers along with the UK, France and Germany. Italy is one of the bloc's refiners.

Poland - with Italy's support - said last week it wanted to keep the sweetener in place beyond 2017, arguing that ending quotas will result in "shutting down sugar factories and liquidating regions" of sugar beet growers. The Polish caution evokes memories of the EU's 2006 sugar reform, which saw the closure of 81 of the EU's 183 sugar factories, costing the EU €5.4b in compensation payments.

Greencore Plc closed Ireland's last sugar factory in Mallow in 2006 with €231m worth of aid.

In 2010, EU auditors said the shuttering of the "large, modern and potentially efficient sugar factory" may not have been necessary in a scathing report on the sugar reform.

The report and lingering nostalgia for the disappeared industry has led to sporadic calls for a revival of sugar production in Ireland. A group of farmers calling themselves Beet Ireland are pushing for a sugar comeback, arguing that beet is the most profitable arable crop available.

Sugar consumption in the EU is high, with the 28-member bloc importing roughly three million tonnes of sugar a year over its quota of 13.5 million tonnes. The EU expects prices to drop after the end of quotas, though at €437 a tonne, they are currently below world market prices of €550. The Commission estimates a slight increase in sugar production after the end of quotas but says the production of isoglucose, a sweetener made from corn starch, could skyrocket, boosting exports and reducing the need to import so much.

Still, EU officials are not taking the Irish beet campaign seriously, with one joking that the weather and the financial risks might put investors off.

The Government said it was up to the private sector to "turn their plans into a viable reality", though the Programme for a Partnership Government says that "State enterprise bodies will be asked to examine any substantial business plans related to rebuilding the industry with a view to considering appropriate State supports".

EU agriculture commissioner Phil Hogan (above) insisted last week there would be "no reversal" of the Commission's position on the end of quotas, which was decided back in 2013.

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