Food and drink sugar supplier seeks EU pay out

By Jane Byrne

- Last updated on GMT

Related tags: Sugar, European union, Eu

Tate and Lyle Sugars, one of the main suppliers to the UK food and drink industry is seeking €35m in compensation from the EU Commission, claiming that due to EU sugar policy mismanagement its refinery is not at full capacity, placing upward pressure on pricing.

The UK cane sugar refiner and its Lisbon-based sister company Sidul Açúcares have filed a complaint against the EU regulator claiming they had forewarned the EC back in 2006 about a potential raw sugar shortfall in the EU market, but the Commission failed to respond accordingly. Both firms are owned by US headquartered American Sugar Holdings.

"In our plant in London we were producing 1.1 million tonnes of sugar a year until recently. At the moment we are operating at 60 to 70 per cent of that level,”​ claims Ian Bacon, president of Tate and Lyle Sugars.

Actions 'violates regulation'

The supplier argues that the Commission is also violating EU regulation that stipulates that any additional, out-of-quota sugar imports into the EU market must be of raw cane, whereas the extra imports this year have been of both raw and white sugar, as well as 500,000 tonnes of out-of-quota European beet sugar.

The refiner told this publication that the Commission has until the end of October to respond to the initial plea from the two companies.

Commission response

Roger Waite, spokesperson for the Commission's Agriculture & Rural Development DG, in an email to FoodNavigator.com, said: "the regulations contested by Tate and Lyle represent a balanced policy towards the sugar market and we will outline, in detail, policy reasons which led to their adoption."

That is the only comment he could make on the case at this juncture, he added.

Waite notes that world sugar markets have had a difficult year in 2010/2011 in terms of supply, which has meant that "prices have been particularly high."​ Naturally, he continued, this has had an impact on supplies for the EU market.

The spokesperson notes a number of Commission actions to help address the imbalance including: a zero duty for preferential sugar imports; enabling 500 000t of "out of quota" EU sugar normally held over until next year, to be sold on the EU market this year; tenders for the import of 500 000t of duty-free quota; and a tender for imports of reduced tariff imports.

Impact for sugar users

But Bacon argues that the Commission’s initiative to alleviate supply by enabling extra imports for any type of sugar - not just raw sugar but refined sugar - effectively allowed any operator to get involved in that process, with dire consequences in terms of price and supply for EU based food and drink processors and other users.

“This means that speculators are getting in on the act and asking the European Commission for a share of this quota. This leads to price inflation and will eventually lead to the export of jobs from Europe’s sugar refineries to outside Europe, to the detriment of sugar users,"​ explained Bacon.

Food producers demand

This month saw food producers demand EU help to mitigate the effect of spiralling prices.

James Lambert, ceo and executive chairman of R&R Ice Cream, Europe’s largest own-label ice cream manufacturer, told sister site ConfectioneryNews.com: ”We are urging the EU to either increase quotas and/or allow food manufacturers to import sugar tariff-free from the world market.

“The price is increasing virtually daily and we have to get some stability back into the market. Across Europe, more than 80 sugar production factories have closed down since 2004 and vast EU subsidies paid to the owners. The region has since gone from being one of the world’s largest exporters of sugar to one of its largest importers​.”

Increasing quotas would bring about “a stable, efficient and economically viable sugar industry​”, said Lambert.

Related topics: Regulation & Safety

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