Example – political constraints on EU sugar

Generic product activity or name
Sugar in EU.

Synonyms

Quotas on sugar.

Context and background
The EU is the world’s leading producer of beet sugar. The European sugar market is regulated by production quotas as well as regulations on price and trade of sugar in the EU sugar policy (EU 2016). The quota management will end as of 30 September 2017 but the example here is based on the current situation in the EU.

Presentation of example
The production of sugar in EU is under a strict quota management. Meaning that there is a total EU production quota (13.5 million tonnes of sugar), which is then divided between the Member States. If a country produces in excess of the quota this is known as “out-of-quota” sugar. This fraction of sugar can be exported out of EU 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 (DG agri (2015).

The production amount is also regulated by pre-growth seasonal forecasting and ”preventive” withdrawal of quotas to allow growers to down-regulate their sowing. Similarly in case of shortages, measures are taken to increase production. So all in all the production volume within EU is constant.

This means that EU sugar production cannot be the marginal production in cases were you investigate a change in demand for sugar, since this production is held at status quo by the regulation. The marginal production would then be the cane sugar cane production outside the EU.

The above considerations are relevant for changes in demand within the period up to 30 September 2017. When the decision to be supported has consequences that go beyond this date, it is relevant to consider how the future production system (i.e. after 30 September 2017) will be affected by a change in demand. 

Information sources used
The DG agri website was found to be very informative on this subject.

References
EU (2006). COUNCIL REGULATION (EC) No 318/2006 of 20 February 2006 on the common organisation of the markets in the sugar sector
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006R0318&from=EN

DG agri (2015). Sugar. http://ec.europa.eu/agriculture/sugar/index_en.htm (accessed 31. August 2015)

Author of this example
Bo Weidema

Date
2015-08-31  

How to reference this
Weidema B P (2014), Example –political constraints on EU sugar. Version: 2015-08-31 www.consequential-lca.org