The EU Sugar Regime reforms is now been undertaken which is going to affect a lot of ACP nations supplying sugar to EU.

The reason to reform the regime occurred due to several reasons and among the decisive elements were the unilateral decision to open the market to sugar from the Less Developed Countries (LDCs) under the Economic Bilateral Agreement (EBA) initiative, the World Trade Organization (WTO) dispute on export subsidy ceilings and the Doha Round considerations such as the perceived need to eliminate support from production and to reduce/remove tariffs.

These factors warrant a radical approach to reform in order to balance supply and demand and reduce the budget costs of the regime. The EU Commission persuaded the Member States that these aims could be achieved by a combination of substantial price cuts and quota restructuring.

The result of these reforms in the Commission’s vision was to stabilize the market, with consumption of around 16 million tonnes being met by domestic production of 12.5 million tonnes and imports of 3.5 million tonnes.

However the reform has not gone quite as the EU Commission would have desired initially. Voluntary quota renunciations so far total only 2.2 million tonnes far short of the expected target of 4 million tonnes. Hence, there is a over-supply on the market which has caused price decline. How the EU hopes to deal with this and get the reform back on track is to be awaited.

However as the prices would reduce by 36% by 2009 the focus thus need to be on the situation from 2009 onwards.

For Fiji, 2009 is an important year not only for the growers but also the nation and for the European market in many ways also as it marks the end of the transitional period of the reform of the regime. The reference price would have sunk to 335 euros for raw sugar.

If voluntarily quota renunciations have proved insufficient to balance supply and demand the Commission has in its power to impose quota cuts across the board on beet sugar production.

The Commission has recommended that the ACP-EU Sugar Protocol be replaced by a series of regional Economic Partnership Agreements (EPA) under these it is envisaged that Fiji being a member of ACP suppliers would also be able to access the EU markets without quota restrictions on a duty-free basis., subject to safeguard measures and by a minimum price provision at least until 2012.

Thus the EU market from 2009 should look very different from the market up to 2006. The Beet production should have decreased from 16.2 million to 13 million tonnes. Imports into EU should increase correspondingly. It is likely that most imports will be on a zero or preferential duty basis. The EU has promised to cut import duties as part of the Doha Round but will retain tariffs. At the lower prices expected to obtain from 2009 onwards, security of supply cannot be assured as it is now.

It is very possible that the market for imported sugar could be considerably greater than the present time. However, it is hoped that the Commission keep supply and demand balanced in the market for price stability.

Sugar Shipments

During the calendar year 2006, Fiji sugar was sold and shipped to the following destinations:-

Of the above quantity, 32,405 mt was from the 2005 crop sugar while 202,649 mt was from the 2006 season sugar. Below is a table of all sugar shipments made during the year.