Analyst: Messy EU sugar liberalization adds to world woes

-The Hagstrom Report

ASHEVILLE, N.C. – The European Union’s decade-long messy sugar liberalization is transferring $2.5 billion a year in wealth from farmers and EU taxpayers to food processors, with no discernible benefit to grocery shoppers while also resulting in inefficiencies and global overproduction, Patrick Chatenay, a European sugar market expert from the United Kingdom, said here last week at the American Sugar Alliance’s International Sweetener Symposium.

Chatenay noted that the European Commission had ended the previous quota production system as part of a larger plan to reduce the cost of ingredients so that European food manufacturing would be more competitive.

The EU succeeded in that goal, but along the way bowed to pressure to allow individual countries to subsidize their growers. The result, Chatenay said, is a “half-baked” liberalization in which inefficient farmers in Poland, Hungary and Rumania continue production while efficient producers go out of business. At the same time, the EU has opened its market to sugar from other countries that engage in subsidization.

“Eighty-three sugar mills were closed, some 150,000 farms gave up growing sugarbeets, and tens of thousands of sugar-related jobs were lost with the initial reform,” he said. “The latest reform will increase these losses because of the resulting low-price environment.”

Meanwhile, the European Association of Sugar Manufacturers has said that the European Common Agricultural Policy post-2020 should improve the market management system and not allow sugar from countries that violate social rights or environmental norms or use trade-distorting subsidies.

To the ASA, which represents U.S. cane and beet producers, the EU experience is a cautionary tale. ASA has endorsed a Zero-for-Zero sugar policy under which the United States would change its sugar policy if there is simultaneous reform of subsidies globally.