The European Union (EU) is the world’s biggest producer of beet sugar and the principal importer of raw cane sugar for refining. The EU sugar market is regulated by production quotas (dating back to 1968), a minimum beet price and trade mechanisms. However, the Commission’s legislative proposals for the Common Agricultural Policy (CAP) for 2013 includes no proposal to continue the sugar production quota regime after 2015. An intense struggle is underway between EU sugar producers who want an extension to the quota regime and sugar users who support the Commission’s proposal. What is at stake for the public health community? Recently, EPHA took part in an EP debate on the EU Sugar Regime.
This autumn, the future of sugar quotas will be part of a far broader debate over the CAP beyond 2013, including financing and Commission proposals to encourage sustainable farming.
There are two scenarios:
1. The EU keeps the sugar quotas (only a specific amount of sugar per year can be produced in the EU) whilst subsidising its within-quota production (prices are artificially kept high). From a public health perspective, this system at best keeps the sugar prices available on the EU internal market for the food and drink industry high theoretically leading to higher consumer prices for food and drink products sweetened by EU-quoted sugar. EU-produced sugar comes mainly from beet production (particularly from northern European countries like France, the UK and Poland), with the rest of EU sugar supply imported in the form of raw sugar cane (processed through a well-developed EU refining industry). However, there are still major entry points for sugar to enter the EU market, although these are governed by strict WTO regulations and limitations.
There are number of equity questions related to this scenario, however. First of all, some wonder whether it is reasonable to keep the prices of sugar high whilst damaging internal market competitiveness. Giving the power to sugar factory farms, instead of supporting small-scale farmers, or even subsidising agro-food producers of proven health detrimental food products is likely to increase still further the numbers of citizens with diet-related, non-communicable diseases. Because EU within-quota sugar production covers less than 85 percent of EU needs for food, processors cannot satisfy all demand and prefer to conclude sales contracts with the largest users. However, subsidising farmers’ incomes keeps them out of poverty and reduces social exclusion in rural areas – two benefits worth noting. Some even say that keeping sugar prices in the EU high is a natural driver for high sugar import flows from developing countries (many of which are major sugar cane producers), contributing to their income and theoretically leading to their countries’ economic, social and health development.
France, Germany and Spain are among the countries that want to extend the sugar quotas to 2020 and farmers’ groups intent on defending EU payment schemes also want more time.
2. The EU abolishes the sugar quotas quickly followed by liberalisation of the sugar production market. This might lead to significant increases in internal market-produced sugar from sugar beet, a lowering of prices, both for producers and the agro-food industry and ultimately for consumers. Lower prices for producers might mean many of them going out of business if they are unable to compete. Only some Member States are able to make full advantage of producing more sugar (19 out of 27 EU Member States currently benefit from the sugar quotas regime, with only a handful having leading sugar producers or refiners). With reduced imports from developing countries the global market may become distorted and harm the development of countries’ economies. The abolition of quotas is likely to encourage further concentration of beet sugar production in the hands of a small number of agro-industrial groups or countries.
From a public health perspective, liberalisation of the EU sugar markets, by abolishing its quota system, is likely to lead to increased cheap sugar production available to the food and drink industry and lower consumer prices for sweetened products – many of which are believed to be the cause of European and global chronic diet-related, non-communicable diseases and conditions such as diabetes type-2 and obesity.
The beverage, confection and starch industries have called on the EU to stick to its 2015 commitment to end quotas on sugar beet production.
Impact Assessments, based on social and public health grounds need to be considered for both scenarios relating to sugar quotas. More research into which models would ultimately benefit – or cause less harm – to the general public is vital.
For more information:
– DG Agriculture and Rural Development: Market sectors – Sugar
– Common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) governing sugar quotas