British Sugar would be the biggest winner if South Africa gains duty-free access to the EU sugar market, experts are predicting.
As part of its trade negotiations with the EU, South Africa is currently pushing for a duty-free quota for sugar cane.
At present, only a small group of less developed countries can sell sugar to the EU tariff-free.
In recent years, European cane refiners, including Tate & Lyle Sugars, have complained this group does not produce enough sugar to meet their needs, and the shortfall of tariff-free cane sugar gives EU sugar beet producers an unfair competitive advantage.
In a recent letter to the EC, The Earl of Dartmouth, William Legge MEP, who is a supporter of Tate & Lyle’s campaign to open up the EU sugar market, asked it to consider the benefits to consumers and cane refiners of opening up the EU to South Africa.
South Africa is a major producer of cane sugar, so giving the country a duty-free quota would, in theory, benefit cane refiners such as Tate & Lyle. However, a deal would actually be of much greater benefit to its rival Associated British Foods-owned British Sugar, according to sugar industry insiders.
British Sugar is a European sugar beet producer, but it also owns South Africa’s largest sugar cane refiner, Illovo. The African refiner produced 1.87 million tonnes of sugar during ABF’s latest financial year - just short of the total tariff-free imports to the EU from the less developed countries of 1.92 million tonnes in the sugar marketing year 2012/2013.
“British Sugar would gain more than Tate & Lyle,” said one insider. “It reflects how Tate & Lyle has lost relationships with cane-producing countries over the years, while beet producers like British Sugar have diversified so they can co-refine, manufacturing sugar from cane outside the beet season.”
In response to Dartmouth’s question, the Commission said it would seek a “balanced agreement” that takes into account the interests of EU member states, industries and consumers. EU sugar prices have fallen from highs of around €900/t in 2011 to about €600/t after the world price plummeted.
commodity prices: increased demand drives up prices of cocoa powder
Cocoa powder prices continue to rise thanks to increased demand. Prices are up by nearly 10% on last month, although they remain significantly down on a year-on-year basis. It’s the opposite story for cocoa butter: prices are down month on month but up year on year. Demand for cocoa powder has contributed to cocoa butter prices falling over the past month, as both are produced in equal amounts from the bean, but demand for butter hasn’t kept pace.
Meanwhile, wheat prices across Europe are falling because of the euro strengthening and fears that Egypt, the world’s largest importer of wheat, could snub EU wheat for supplies from the Black Sea this season.
Soyabean and rapeseed oil are also falling, thanks to good global production outlooks.
No comments yet