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EU Releases Extra Sugar to Dampen Prices

The European Commission has released an additional round of out of quota sugar (it’s fourth in the current marketing year) in an attempt to boost supplies while reducing costs.

Tea anyone?

More than 300,000 metric tons (MT) will be released over the coming months, in addition to its annual cap of 13m MT on domestic sugar production.  That cap looks set to be abolished come 2015, although lobbyists including Nestlé and Mars have been pushing for an immediate cessation of the quotas for some time.

Confusingly, of the 300,000 MT being released, 150,000 will be sold at a substantial levy discount of €148 per MT (compared to the current going rate of €500 per MT for out-of-quota sugar), however this sugar can’t be used for food purposes until next year when it can legally be defined as quota sugar.

In addition, 150,883 MT of sugar will be imported at a minimum tariff of €141.1 per MT.

Currently, EU sugar prices are €731 per MT, hugely above the world market value of €360 per MT.  Meanwhile across the Atlantic, the federal government in America is spending up to $38m in an effort to prevent a predicted future bailout of sugar producers in the Minnesota area.


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