EU Sugar Policy

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The "common organization of the markets in the sugar sector" is better known as the EU sugar policy. The EU sugar policy is a transparent set of rules, agreed by the Council of EU ministers of agriculture, which ensures a balance of economic and competitive interest between ACP and EU sugar producers, industrial sugar users and sugar consumers.

Sugar from African, Caribbean and Pacific countries has a centuries-old place in the EU market and thus in the EU sugar policy.

In 1974, ACP sugar became an integral part of the EU sugar policy further to an EU ministerial compromise reached at the time the UK's accession to the Common Market, whereby it was agreed that the costs of exporting any surplus EU sugar which might otherwise have displaced ACP sugar from its traditional markets would be borne by the agricultural budget FEOGA rather than under the self-financing provisions of the sugar policy.

In the jargon, ACP sugar is one of the "pillars" of the EU sugar policy. In 1995, the agreement on Special Preferential Sugar even more fully "cemented" ACP sugar into the EU sugar policy.

Full description of the EU sugar policy

Europe's sugar policy embraces the fifteen Member States of the Union, including the French Overseas Departments, and the ACP states which are signatories of the Sugar Protocol to the extent of the undertakings contained in the Sugar Protocol and the Special Preferential Sugar (SPS) Agreement.

The scope of the EU sugar policy also embraces both beet and cane sugar production, both small and large farmers (working from arctic to tropical climates), both small and large factories and mills, and both large and small sugar companies (the largest of which produces more than three million tonnes of sugar, the smallest less than 10,000 tonnes).

The EU sugar policy is part of the Common Agricultural Policy (CAP). The CAP is a collection of market management mechanisms covering most of European agriculture. The CAP policies are administered by the European Commission based on the decisions of the Agriculture Council of the EU (comprised of EU Ministers of Agriculture).

The EU sugar policy strives to achieve the objectives of the CAP set out in Article 39 of the Treaty of Rome: these are (i) to increase agricultural productivity, (ii) to ensure a fair standard of living for the agricultural community, (iii) to stabilize markets, (iv) to assure availability of supplies, and (v) to ensure that supplies reach consumers at reasonable prices. These objectives are still topical for sugar, for example, the European sugar producing and refining industries ensure the supply of quality products to consumers at reasonable prices ... since 1986, despite inflation, sugar prices have either been frozen or decreased (expressed in euros or agricultural ecus ... see statistics).

In practical terms, the aims and principles underlying the EU sugar policy are achieved by means of:

a common market intervention price for bulk white sugar, ex-factory, loaded onto a means of transport, of 631.9 euros per tonne (in US and UK currency, approximately 69¢ or 43p a kilo);
protection from the world market by means of fixed import duties bound in GATT and additional duties under the special safeguard clause (Article 5 of the WTO Agricultural Agreement);
a system of export refunds on sugar and sugar containing products designed to bridge the gap between internal and external prices;
a system of production quotas which limits price support to a maximum quantity of sugar production and which is also used to administer the self-financing of the policy (the costs of export subsidies are passed directly back to farmers and processors by means of production levies). The policy ensures that ACP and EU sugar producers can benefit from Community support in terms of the amount they produce within the quotas, however, the revenue to be derived from A&B quota production varies in line with the cost of exporting surplus quota sugar;
a raw sugar policy covering cane sugar production in the French overseas departments (Réunion and French Antilles), and providing for reduced duty and duty-free imports from African, Caribbean and Pacific (ACP) countries (under tariff quotas), to meet the supply needs of EU cane sugar refiners.