The European Union is the world's biggest producer of beet sugar and the principal importer of raw cane sugar for refining. The EU sugar market is regulated by production quotas, a minimum beet price and trade mechanisms.
The EU is the world’s leading producer of beet sugar, with around 50% of the total. However, beet sugar represents only 20% of the world’s sugar production; the other 80% is produced from sugar cane.
Most of the EU's sugar beet is grown in the northern half of Europe, where the climate is more suited to growing beet. The most competitive producing areas are in northern France, Germany, the United Kingdom and Poland. The EU also has an important refining industry that processes imported raw cane sugar.
EU sugar policy
In 2006 a major reform achieved simplification and greater market orientation of the EU's sugar policy, which is now part of the Single Common Market Organisation (CMO). Income support for sugar beet farmers has been integrated into the direct payment system.
EU sugar policy today concerns three main areas: quota management, a reference price and a minimum guaranteed price to growers, and trade measures. The quota management will end as of 30 September 2017.
The total EU production quota of 13.5 million tonnes of sugar is divided between nineteen Member States. Production in excess of the quota is known as "out-of-quota" sugar and strict rules govern its use. It can be exported up to the EU's annual World Trade Organisation (WTO) limit of 1.374 million tonnes, sold for biofuel or other industrial non-food uses, or counted against the following year's "quota" sugar. There is also a small quota of 0.72 million tonnes for the competing sweetener isoglucose (also known as Glucose Fructose Syrup).
If there are signs that there will be an excess of sugar on the EU market in the next marketing year – which runs from 1 October to 30 September - a decision can be taken to withdraw some quantities. A first "preventive" withdrawal must be decided by 16 March, well before the start of the new marketing year, to allow producers to reduce their beet sowings. If necessary, a further adjustment can be made in October.
If, on the other hand, there is a shortage, measures can be taken to increase supplies.
Inter-professional agreements between beet growers and sugar manufacturers lay down quality standards and fix purchase terms for beet.
Minimum price and reference threshold
Sugar factories are required to pay farmers a minimum price of EUR 26.29 per tonne for sugar beet for the production of quota sugar. Out-of-quota sugar beet does not benefit from this minimum price.
The EU reference threshold for white sugar is fixed at EUR 404.4 per tonne and EUR 335.2 per tonne for raw sugar. Private storage aid can be activated on the basis of the reference threshold, market prices, cost and margins.
Since the reform of the sugar market regime, the EU has become a net importer of sugar. Imports are mainly in the form of cane sugar for refining, from the African, Caribbean and Pacific states (ACP) and Least Developed Countries (LDC) which benefit from quota-free, duty-free access to the EU market.
For the ACP non-LDC countries a safeguard clause will remain in place until 2015. This is triggered if more than 3.5 million tonnes of sugar are imported into the EU in a single year, which has not been the case since the measure started in 2009.
In addition, the EU has several sugar import quotas that allow a total of about 1 million tonnes of reduced- or zero-duty imports each year. The main beneficiaries are the Balkans and Brazil.
>> Detailed information on the EU's sugar policy: