The Sugar SectorEuropean Union Seminar on

Standards for Agri-food products

19-20 November 2018

Tehran, Islamic Republic of Iran

Agenda

1) Brief summary of the EU sugar policy

2) Sugar and sweeteners production and refining

3) External sugar trade

4) Food safety, quality and sustainability of EU sugar

5) Potential of the Iranian markets

6) Sources of further information

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Brief summary of EU sugar policy• Sugar is part of the common market organisation (CMO) of the common agricultural policy

(CAP). The aims of the CAP are inter alia to support farmers as the price of food declines as a percentage of incomes, and to assure consumers have a stable supply of affordable food.

• Income support is granted to EU farmers, including sugar beet farmers, in the form of direct, de-coupled payments and other payments linked to preservation of the environment and to climate change mitigation. In total CAP spending amounts to around 0.4% of the Union’s GDP, and it is projected to decline substantially according to EC proposals.

• Additional support may also granted to sugar beet farmers who are facing difficulties in the form of voluntary coupled support (VCS). The amount of VCS granted to the sugar sector between 2015 and 2017 amounted to 0.4% of total CAP spending (0.0016% of GDP).

• Private storage aid may be granted in case of a severe market disturbance. Private storage aid has never been used in the EU sugar sector.

• Collective bargaining is allowed between sugar beet processors and sugar beet farmers, strengthening the position of beet growers who naturally face local monopsonies.

• The EU grants duty-free and quota-free access to the EU market to developing countries under the "Everything But Arms" (EBA) agreement and Economic Partnership Agreements (EPAs) with the African Caribbean and Pacific (ACP) countries.

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Location of sugar factories

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▪ Sugar beet processing factories are concentrated in the northern European plain.

▪ Cane sugar refineries are found in the deficit areas of the EU.

▪ Starch and sweetener (isoglucose) factories are located where maize grows well.

EU sugar production

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▪ Production quotas were abolished at the end of the EU sugar regime in 2017.

▪ The end of the regime also saw the abolition of minimum beet prices, compulsory carry-forward provisions, export subsidies, quota limitations on isoglucose and much other such legislative machinery besides.

▪ The WTO limit on export subsidies was judged inapplicable in October 2017.

▪ The EU sugar regime is now much more open to market forces and to developing new markets.

Our domestic sugar market

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Source: European Commission

▪ Since October 2017, EU domestic prices have traded between import and export parity, that is apparently driven by world market prices.

▪ Prices in “Region 3” of the EU (i.e. southern and eastern Europe) are higher than the EU average, probably reflecting transport costs from surplus to deficit regions of the EU.

▪ Around a quarter of EU sugar is traded between Member States within the Single Market.

EU sugar in the global market

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▪ In 2017/18, the EU became a net exporter of sugar, however, the the external trade balance may move towards balance in 2019/20?

▪ Nevertheless, the principal exporting Member States from northern Europe are expected to continue exporting to the world market, whilst the net importing “deficit” Member States can arbitrage EU and 3rd country sources.

Source: Eurostat

Preferential imports

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• The EU has preferential trading arrangements for sugar with Least Developed Countries (LDC), African, Caribbean and Pacific (ACP) countries providing for duty-free/quota-free terms of trade.

• The EU has concluded Free Trade Agreements with tariff rate quotas for sugar with Central America, South Africa (SACU), the West Balkans, Ukraine, Moldova, Colombia and Peru.

• Under the WTO Uruguay Round the EU is committed to importing around 700kt of sugar from Australia, Brazil, Cuba and Erga Omnes.

• The EU is currently (re-)negotiating new FTAs with Mercosur, Mexico, New Zealand, India and others.

• Before quotas were abolished in 2017, the EU imported between 2.3 and 3.1m tonnes per annum of sugar in the natural state, however, total imports in 2017/18 (Oct/Sep) are estimated around 1.3m tonnes.

• Imports of Direct Consumption cane sugar in 2017/18 have increased owing to imports of sugar for refining in small non-traditional refineries, including organic sugar.

Sugar-containing products

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• Large industrial sugar users employ more than 700,000 people directly in 15,000 companies.

• Large industrials purchase around 70% of all sugar in the EU and are thus a vital part of the sugar supply chain.

• The EU imports around €1.9 billion and exports around €8.4 billion of sugar confectionery, chocolate and fine bakery wares per annum.

• Both imports and exports of sugar containing foods are increasing year-on-year.

Source: Caobisco

Food safety, quality, sustainability and corporate social responsibility

• The EU Common Agricultural Policy integrates protection of the environment and climate change mitigation through rules and obligations to ensure a level playing field at EU level, and also by means of financial incentives and voluntary encouragements (e.g. the CAP “greening” of direct payments).

• Industry initiatives such as the EU Beet Sugar Sustainability Partnership enhance and strengthen the system by ensuring adoption and sustainability practices in beet cultivation, sugar processing, social responsibility and dialogue with stakeholders.

• Industry initiatives such as Bonsucro (in the cane sector) and Sedex work to achieve a sector with thriving producer communities and resilient, assured supply chains, compliance with labour rights, workers’ health & safety, the environment and business ethics.

• Food quality and food safety are similarly legislated for at EU level, and non-profit industry compliance programmes such as FSSC (which incorporates HACCP and ISO 22000) strengthen compliance and global acceptance by companies worldwide.

• ICUMSA is concerned with analytical methods for the sugar industry. ICUMSA methods are recognised by authorities such as the Codex Alimentarius Commission, the International Organanization of Legal Metrology (OIML) and the EU.

• The RSA and SAL provides its Members with Rules and Regulations providing contract terms for the international sugar trade and high quality arbitration services for dispute resolution.

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Potential of the Iranian market

• Exports of EU white sugar are reliable, competitively priced, of high quality and are available consistently throughout the year in containers, in break bulk or in dedicated b/i/b/o vessels.

• EU products such as confectionery, chocolate or fine bakery wares are high value-added products exported world-wide. 10% of what we produce in the EU is exported outside the EU. Branded products are highly appreciated for their European savoir-faire.

• The Iranian market reflects a good market access opportunity for EU sugar and sugar-containing products that are highly valued by consumers in international markets.

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EU sugar ports of export

EU trade with Iran in confectionery, chocolate and fine bakery wares 2015 to 2017 (Source: Eurostat)

Sugar trade representatives

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• The Sugar Beet Seed Institute of Iran https://www.sbsi.irexchanges scientific knowledge with the International Institute of Sugar Beet Research www.iirb.org.

• We would warmly welcome the development of further links between EU and Iranian sugar trade representatives!

Some sources of further info.

• European Sugar Market Observatory• https://ec.europa.eu/agriculture/market-

observatory/sugar_en

• Sugar Industry magazine and Dr Barten’s “little blue book”

• http://www.sugarindustry.info

• European sugar analysts and consultants such as:

• F. O. Licht GmbH• https://agribusinessintelligence.informa.com

• LMC International• https://www.lmc.co.uk/Sugar_and_Sweeteners

• Sugaronline • http://www.sugaronline.com

• European sugar traders: see a list of ASSUC members at:

• http://www.assuc.eu/membership/assuc-members/

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ممنون

Thank you

Julian Pricejulianprice.com Ltd

62, South End, Bassingbourn, Cambridgeshire, SG8 5NL, UKRegistered in England and Wales; Company Number: 11233087

European Transparency Register identification number: 066549432608-52Email: julian@julianprice.comTelephone: +44 1763 243699

Mobile: +44 7768 908347

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