Sweet news for Guyana sugar…EU quota extended for five more years

The European Parliament’s agriculture committee on January 23rd , 2013 voted to maintain until 2020 the European Union’s national beet sugar production quotas which means that the dedicated allotment for sugar from Guyana and other ACP countries will continue up to that period instead of ending in 2015 as originally envisaged.

Extension of the quota had been lobbied for by Guyana and other members of the African, Caribbean and Pacific (ACP) group of countries. The ending of the quotas was  to be the last step in EU reforms of its sugar market which began in 2006 and saw the repudiation of the longstanding sugar protocol with the ACP and  a phased 36% cutting of the price paid by the EU for sugar. Guyana and other countries had argued that the ending of the quotas would create instability in the market and devastate sugar producing countries. The EU is the main market for Guyana’s sugar and the US$110M investment in the Skeldon sugar factory had been premised on the maintenance of this market.

sugarMaintenance of the quota to 2020 is essentially as a result of the European Parliament Committee on Agriculture and Rural Development preserving the EU’s system of strict national sugar production quotas and minimum prices for sugar beet. Reuters reported that the committee move would delay the lifting of the annual  limit on EU sugar exports set under a World Trade Organization agreement at 1.35 million tonnes.

Reacting to the news, Chairman of the ACP sugar subcommittee and Guyana’s Ambassador to the EU, PI Gomes told the Caribbean Media Corporation that it was a positive development but that there is still a long way to go.

In December last year,  Guyana’s Foreign Affairs Minister Carolyn Rodrigues-Birkett  had warned that the ending of EU sugar quotas and increased duty-free imports from October 2015 would have a “devastating” impact on ACP sugar-producing countries.

“Most studies conducted so far point to the fact that the abolition of the EU quotas will result in market volatility and uncertainty resulting inter alia from the link between domestic prices and world market prices,” she said, according to a press release from the Ministry of Foreign Affairs.

Rodrigues-Birkett was at the time reporting to the ACP Ministerial Council on the deliberations of the 4th ACP Ministerial Committee on Sugar held in Equatorial Guinea earlier that week.

“The European Commission’s own impact study predicts a 45% fall in prices compared to the market prices reported in September 2012. Another study concludes that ACP countries stand to lose 850 million Euros over the period 2019/2020,” she said. “Such a situation could jeopardise ACP countries’ efforts and investments to render their industries more competitive and call into question the coherence of EU policies in the fields of agriculture, trade and development,” she said. “Indeed, most if not all ACP countries would be unable to supply the EU market if prices were to fall to such low levels,” she added.

According to the statement, the ministers agreed that it was important to establish that the traditional supply needs remain at 2.5 million tonnes and that measures such as an appropriate tariff be maintained to protect the value of ACP preferential access. It was also agreed to oppose calls for an increase in the current EU quotas.

The ministers mandated the Sugar Sub-Committee scale up its discussions with the EU Parliament and Council.

Guyana’s sugar production has fallen dismally in recent years and a series of factors has been cited including weather and poor worker turnout.

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