The European Union looked to take advantage of near-record high world sugar, as it took steps to boost EU exports of refined sugar and secure cheaper imports of raw cane sugar for its refineries.
In a first move, the European Commission said it would grant export licences for up to 350,000 tonnes of out-of-quota sugar in the near future, which will raise total EU exports of subsidised sugar since October to 1 million tons.
Out-of-quota sugar refers to excess sugar produced above EU national quotas, which is usually sold onto the world market as, unlike quota sugar, it does not benefit from a guaranteed EU minimum sale price.
EU officials meeting in Brussels also voted to cut the bloc’s current 98 euro-per-tonne ($135) import duty on raw cane sugar to zero from December, in a bid to help EU refiners secure supplies of raw sugar, the Commission said.
Earlier this week ICE raw sugar futures hit a 30-year high and refined sugar prices also surged to near-record peaks.
EU imports of raw cane sugar at the zero duty rate will be capped at 660,000 tonnes, and import licences for 250,000 tonnes have already been issued, the EU executive said in a statement.
“High world market prices for sugar currently make the cost of these imports prohibitive, which risks disrupting supplies on the European sugar market. In this kind of situation, the Commission is empowered to act,” the statement added.
The EU import duty will be fixed at zero from Dec. 1 until the end of August 2011, the Commission said, boosting prospects for EU imports of raw cane sugar from major producing nations such as Brazil.
The move follows a request last month from Portugal to suspend the EU import duty. Portugal said high world prices had created serious supply difficulties for EU refiners, which could ultimately result in their shutdown.
Meanwhile EU exports of subsidised out-of-quota sugar in the 2010/11 marketing year will soon reach 1 million tonnes, after the Commission said it would shortly issue export licences for a further 350,000 tonnes.
Under a World Trade Organization agreement, the EU’s annual limit for subsidised sugar exports is set at 1.37 million tonnes.
Last year the EU angered major sugar producing nations including Brazil when it authorised the export of an additional 500,000 tonnes of out-of-quota sugar above its WTO limit, as sugar prices soared to similar 30-year highs. (Reuters)