A trade relations expert says it is quite possible that in less than 10 years Caribbean raw sugar will cease to enter the European Union (EU).
This was the dire prognosis of columnist David Jessop writing in the last edition of the Sunday Stabroek and spells further trouble for the struggling Guyana industry.
Jessop, who has written extensively on Caribbean-EU trade ties pointed to ongoing discussions in Europe to terminate, earlier than expected, the preferentially-priced quota that regional producers have enjoyed since 1975.
Jessop said that news of the likely end of the EU market for regional sugar first emerged in a European Commission report entitled ‘Prospects for Agricultural Markets and Income in the EU 2012-2022.’ This document assessed the future of Europe’s own agricultural regimes, to which the fortunes of sugar from African, Caribbean and Pacific (ACP) countries are linked. Jessop said that the report confirmed that the planned expiry of EU sugar quotas in 2015 would lead to a reduction in the price in the European market for sugar. This would then make the EU market less attractive to the ACP and other higher cost exporters. He added that the report made it clear there would be a fall in European imports from an estimated 3.5 million tonnes in 2012 to 1.5 million tonnes in 2022 and projected that Europe would then move to self-sufficiency, possibly even becoming a net exporter.
“The inescapable conclusion of this for the ACP, which currently exports some 2.3 million tonnes of sugar a year to Europe, was that it is likely that its market in Europe would become negligible. Worse, it was also recognised that as competition from low cost sugar producing nations increased, as a result of the access gained to the EU market under recently negotiated free trade agreements and other special arrangements, the Caribbean would cease to have a place in the EU market”, Jessop wrote.
He said that since the report’s publication last December, Caribbean ambassadors and governments have been “fighting a valiant rearguard action to try to influence the debate on when quotas for EU sugar should come to an end.” He said their expectation has been that by doing so they will enable completion of European Commission-funded programmes aimed at restructuring and enhancing competitiveness, before the quota comes to an end.
Jessop noted that since the report’s release, the three European institutions which formulate and implement policy have been trying to decide the final cut-off date. He said that the European Commission wants to keep the 2015 deadline to end the arrangement while the European Council which groups all twenty-seven of Europe’s member states, wants it lengthened to 2017 while the European Parliament has suggested that the deadline be 2020. He said that the likely outcome is a compromise of all quotas ending in 2017-18.
Jessop said that the matter is largely driven by European concerns over the cost of its own beet regime. He added that it has also created problems for the cane sugar refiners in Europe who usually handle ACP sugar.
Pointing out that the decision takes Europe one step further in its disengagement from the Caribbean, Jessop said that the region, along with other ACP sugar producing nations, have made the point that Europe is once again setting aside its commitments in the Cotonou Convention and the EU-Cariforum Economic Partnership Agreement.
He said that in private, Caribbean ambassadors are even more scathing. They content that an agreement with the EU is “now scarcely worth the paper it is printed on, if the absence of coherence in EU policy weakens, to the point of destruction, the longstanding partnership that previously bound Europe and its former colonies together.”
Jessop posited: “What these latest developments make clear is that within twenty years, barring unforeseen circumstance, the European market for raw sugar from the Caribbean will most likely be all but a matter of history. This is not say that sugar production in the Caribbean will cease, but that what is left of the industry will be very different, reoriented, and a part of a broader cane-based sector.”
While he said that the Caribbean has taken a long time to come to grips with the changes in Europe and the impact on the industry, he said in recent years there have been bright spots. This is unlike Guyana which is in the throes of a sugar crisis and is barely producing enough to meet its EU quota and local demand.
He noted that Jamaica is exporting to new markets and will meet all of its local requirements for raw sugar in the present crop year. In the Dominican Republic, production is anticipated to be 10 per cent higher and the industry is expected to meet EU targets while satisfying domestic demand and a US quota.
Belize, he said, is also upping production, meeting US, EU and domestic markets demand and planning an 82 per cent expansion in production. Barbados is working on a sugar sector that aims to use cane to support national and regional markets, for use as biomass and to support its rum industry and high value products.
The latest concern over the quota came after 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 would have meant that the ACP allotment would continue up to then.
In December last year, Guyana’s Foreign Minister Carolyn Rodrigues-Birkett had said the ending of EU sugar quotas and increased duty-free imports from October 2015 will have a “devastating” impact on ACP 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.