On 22 February 2018 ACT Alliance convened Seminar on the Implications of Brexit in the agro-food sector for ACP countries and for the forthcoming ACP-EU Post-Cotonou negotiations. A series of twelve 2 page summary notes were produced for the seminar covering both substantive issues arising within the Brexit process and the current state of play in the Brexit process. Note 1 provided a summary of the main areas of impact of Brexit on ACP agro-food sectors. Read more “Summary of the Main Areas of Impact of Brexit on ACP Agro-food Sectors”
Category: Sugar
The reduction of EU sugar prices and scheduled abolition of EU sugar production quotas have and will continue to transform the market conditions faced by ACP sugar exporters to the EU. Under the impact of EU sugar sector reforms prices on sugar markets served by ACP sugar exporters are likely to be increasingly volatile. In addition the consolidation and internationalisation of European sugar companies which EU reforms have given rise to are having important effects on patterns of ACP-EU sugar trade. Intensified competition on EU sugar markets is bringing into question the financial sustainability of the full-time raw cane sugar refiners who traditionally refined ACP raw sugar exports. The final stages of EU sugar sector reforms will carry particularly profound consequences for smallholder sugar cane farmers in ACP countries. Close attention will ned to be paid to strengthen the regulatory framework for the functioning of ACP-EU sugar supply chains. This will need to include the development of new revenue sharing formulas which allow independent sugar cane growers to gain a share of revenues from the new products increasingly manufactured from sugar cane.
The challenges faced in ACP-EU sugar sector relations will be further complicated by the impending departure of the UK from the EU.
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ACP Members Vulnerability to the Loss of Preferential Access to the UK Market
On 22 February 2018 ACT Alliance convened Seminar on the Implications of Brexit in the agro-food sector for ACP countries and for the forthcoming ACP-EU Post-Cotonou negotiations. A series of twelve 2 page summary notes were produced for the seminar covering both substantive issues arising within the Brexit process and the current state of play in the Brexit process. Note 2 provided an exploration of the vulnerability of ACP Members to a loss of preferential access to the UK market. Read more “ACP Members Vulnerability to the Loss of Preferential Access to the UK Market”
Planned Northern Sugar Project in Yorkshire to ‘Die a Death’
Summary
The virtual cancellation of the Northern Sugar Project in Yorkshire, alongside processing difficulties at British Sugar, means the initially projected large scale expansion of UK beet based sugar production post-Brexit is now unlikely to occur. This could provide relief to the financial difficulties of Tate & Lyle Sugar, but only if it is accompanied by a firm commitment by the UK government to the abolition of the CXL duty once the UK is freed from EU rules and regulations. ASR is likely to intensify pressure for a firm UK government commitment in this regard. However this will carry different implications for different ACP sugar suppliers, depending on how the situation develops. However it should be noted Caribbean and Pacific suppliers will remain the most vulnerable to future policy developments. Read more “Planned Northern Sugar Project in Yorkshire to ‘Die a Death’”
Global Sugar Market Trends Could Increase Pressure on ACP Exporters to the EU Market
Summary
The EC has argued sugar imports under the CXL scheme will be discouraged in the coming period, given the much lower average EU market price premium. However world market sugar prices have got off to a bad start in 2018, losing 10.4% of their value by mid-January. These lower average world market sugar prices, by increasing the EU market price premium to around 22% above the EU’s CXL duty could encourage increased volumes of CXL sugar imports into the EU. This would then intensify competition for ACP sugar suppliers, in the context of a halving of EU import demand. This could potentially accelerate the process by which high cost ACP suppliers are squeezed out of the EU sugar market. Read more “Global Sugar Market Trends Could Increase Pressure on ACP Exporters to the EU Market”
Health Based Sugar Taxes Gaining Ground Globally
Summary
Health based sugar taxes are increasingly a global phenomenon, with sugar taxes now in use or pending in Europe, the Caribbean, Latin America, North America, Asia, Australasia, the Middle East, and Africa. The prospect of sugar taxes is also stimulating food and drink industry product reformulation initiatives, with varying levels of industry commitment. Some ACP sugar exporters are responding to shifting patterns of global demand growth and moving away from their traditional EU focus. All ACP sugar exporters will need a better understanding of the end use to which their sugar exports are put in order to assess their vulnerability to trends in reduced use of ‘hidden sugars’ in the food and drinks industry. Read more “Health Based Sugar Taxes Gaining Ground Globally”
Dramatic Changes Ahead in the EU Sugar Market
Summary
The EU sugar sector is entering a new period in its development with the abolition of sugar production quotas: boosting production at the same time as domestic consumption is contracting; lowering average prices; and doubling exports at the same time as imports are halved. This will impact not only on domestic EU markets but also international markets, given the growing global orientation of EU sugar companies and the increased price competitiveness of EU sugar production. This will transform the market context facing ACP sugar exporters as well as the competitive position of ACP producers on regional markets. This will make the continued use of non-tariff trade policy measures a critical policy issue. This adverse market situation will be compounded by the market effects of Brexit, a policy development not yet factored into EC projections given the uncertainty surrounding the final EU27/UK post Brexit trade arrangements. Read more “Dramatic Changes Ahead in the EU Sugar Market”
EU Pacific EPA Trade Committee Meet, but with no discussion of the impact of BREXIT
Summary
While the meeting dealt with market access obligations, this focused on the obligations of Pacific signatories towards the EU. There was no discussion of the implications of the UK’s withdrawal from the EU on the value of the market access enjoyed by Pacific signatories to the EU under the EPA. With the prospects for a ‘hard BREXIT’ increasing, getting to grips with the implications for the value of EPA market access for Pacific EPA signatories in the absence of the UK would appear to be some important issue for discussion at the next Pacific-EU EPA Trade Committee meeting. Read more “EU Pacific EPA Trade Committee Meet, but with no discussion of the impact of BREXIT”
Sugar Reduction Campaign Taking Hold Globally
Summary
Health based campaigns to reduce ‘hidden’ sugars in food and drink products are gaining ground across the globe. This is beginning to impact on global sugar consumption, global consumption is projected to fall over 700,000 tonnes in the coming year despite the current low prices. The trend towards reduced sugar use in food and drink products is being aided by the development of alternative sweeteners which are better suited to use in processed food and drinks. In this context individual ACP sugar exporters will need to develop a better understanding of which components of the market their exports serve and if necessary, develop market repositioning initiatives aimed at reducing their vulnerability to the current health campaigns which are targeting high sugar content food and drink products. Read more “Sugar Reduction Campaign Taking Hold Globally”
USDA projects lower EU sugar price post production quota abolition
Summary
While USDA maintains EU sugar prices will need to fall if EU projections for growth in sugar exports in the post-quota period are to be met, this neglects the long experience EU sugar companies have of operating within a dual price system. It is possible substantial price premiums could be maintained on the EU sugar market, with this raising the issue of what regulatory initiatives are required to ensure traditional ACP suppliers share in any EU sugar market prices premiums. This would appear to require an extension of the EC’s current regulatory initiative on UTPs to ACP-EU sugar supply chains. This could potentially include regulatory requirements mirroring those which govern relations between domestic EU sugar beet growers and EU sugar beet millers. Read more “USDA projects lower EU sugar price post production quota abolition”
Global Market Context Far From Favourable in the Context of the End of EU Sugar Production Quotas
Summary
Projected global sugar price trends are unlikely to support EU sugar prices in the post quota abolition period. Caribbean and pacific ACP sugar exporters will be potentially the most vulnerable to EU price declines over the 2017/18 season. This situation could then be compounded by the sugar market effects of the UK’s withdrawal from the EU, currently scheduled for 30th March 2019. These effects however may be deferred following Prime Minister May’s acceptance that during the implementation period (transitional period) UK/EU27 trade would need to take place within ‘the existing structure of EU rules and regulations’.
Nevertheless there remain profound policy uncertainties around UK sugar market developments which make any projections of likely developments hazardous. Against this background over the coming years ACP sugar exporters will need to closely monitor developments in the Brexit negotiations and the evolution of UK’s autonomous trade policies as they impact on the sugar sector, in order to identify and exploit any market opportunities which might emerge. Read more “Global Market Context Far From Favourable in the Context of the End of EU Sugar Production Quotas”