ACP sugar producing countries welcome new study on current and forecast market developments for ACP sugar suppliers to the EU market
Brussels, 18 November 2016/ ACP: The ACP Sugar Group welcomed the recent publication of the “Study on Current and Forecast Market Developments for ACP Sugar Suppliers to the EU Market”, which was undertaken by Cardno/LMC International and funded by the European Union. The study sets out a comprehensive assessment of the risks for ACP/EBA sugar producers as a result of changes to the EU sugar regime and it contains a series of helpful recommendations aimed at mitigating the impacts of the reform on the ACP sugar sector.
The Chairman of the ACP Sugar Group, the AMbassador of Barbados to the EU H.E. Samuel Chandler said the ACP will actively pursue the implementation of the recommendations.
The sugar industry is widely recognised as making a significant socio-economic contribution to many ACP states, particularly in generating export earnings and creating employment in rural areas. The ACP Sugar Group includes some of the world’s lowest cost sugar cane producers whose production has been growing over time. It also includes some higher cost industries, where cane production has been falling and the milling sectors are suffering from poor financial performance.
The abolition of both beet sugar and isoglucose quotas from 1 October 2017 will create a more competitive EU market. The EU beet sugar and isoglucose producers will be free to increase and sell all their output within the EU market. This will likely reduce the need for imports and, as such, affect the prospects for overseas suppliers with preferential market access. It will also affect the prospects of EU sugar refiners, because they rely on sugar cane imports from ACP countries.
The study notes that ACP sugar industries are in varying states of readiness for the market changes that are expected following the abolition of quotas. Whilst Accompanying Measures for former Sugar Protocol countries (AMSP) have helped ACP countries to adjust in anticipation of the new market environment, many industries still rely heavily on the preferences they receive from exports to the EU.
Furthermore, the study highlighted that whilst problems that arise are highly context specific, all ACP countries are likely to experience lower average selling prices of sugar as EU prices become more closely aligned with world prices. This is likely to result in a decline in incomes in sugar-dependent areas in these countries.
It has been also recognized that efforts to mitigate the impact of preference erosion have been undermined by events that are outside of the control of some countries. Drought in southern Africa and the effects of Cyclone Winston in Fiji mean that these industries will be heading towards 2017/18 below full strength.
The ACP underscores that, at this crucial stage of preparation for the changing market dynamics, all efforts are made to follow up on the recommendations with vigour to reduce the inevitable socio-economic impacts otherwise confronting ACP sugar producers as a result of changes to the EU sugar regime.
The “Study on Current and Forecast Market Developments for ACP Sugar Suppliers to the EU Market” is available for download here.
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