Marie-Christine Ribera, CEFS Director-General

European Committee of Sugar Manufacturers

SECTORAL SOCIAL DIALOGUE COMMITTEE SECTORAL SOCIAL DIALOGUE COMMITTEE FOR THE SUGAR INDUSTRYFOR THE SUGAR INDUSTRY

PLENARY SESSION

28 February 2011

OVERVIEW

I. Industry Response to the Sugar Reform

II. The EU Sugar Market 2010/2011

III. The Court of Auditors Special Report

IV. CAP After 2013: CEFS Priorities

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I. EU Sugar Reform Agreement of 2006

Most challenging and radical reform in the history of the Common Market Organisation for sugar:

Sugar reference price cut by 36%Beet price cut over 40%Quota cuts by one thirdExports cuts from 6-8 MT to 1 MTDoubling of imports

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I. Industry Response to the Reform EU Price Cuts: €3 to 4 billion reduction per year

of the bill paid by customers EU Sugar Quotas:

Ambitious restructuring schemeEU quotas reduced by nearly 6 million tonnes5 countries have completely closed their sugar

industry6 additional countries have lost over 40 % of their

national quotas

Major driver to reduce costs, increase efficiency and rationalise across EU industry

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I. Industry Response to the Reform

Factory rationalisation: 147 factories closed since 2000 in EU (-60%) 80 factories closed since 2006Only 106 remaining in 2010 out of 251 in 2000More than 20,000 direct jobs lost

Fundamental changes in refining operations:No longer restricted to a small number of

historic refinersNew refineries being builtBeet factories encouraged to “co-refine”

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II. EU Market Balance: 2010/2011

ACP/LDCs unrestricted exports to the EU EU sugar market influenced by one world

dominant player: Brazil Agriculture: Sugar = Commodity influenced by

climatic conditions

World markets are dominated by Brazil (more than 50% of world exports), influenced by Indian position

EU wants to rely more on imports

II. EU Market Balance: 2010/2011

Exceptional higher world market prices -White sugar London N. 5 on 9th February: 761$ = 558€/t; EU average at November 2010 487 €/t, on 28th Feb., 726$=527€/t- reflecting the world tight situation: World markets on 2 years of shortage. 2010/2011 possible slight surplus??

ACP/LDCs difficulties to export to the EU: EC forecast for 09/10 1,5 mln t.

EU “ordinary” year compared to last year

II. CEFS Position and Actions

In the event of tight supply on the EU sugar market:

Joint CIBE/CEFS Letter of October 2010 to Commissioner Ciolos:

Should the Commission consider it necessary

and market conditions prove it to be so, the EU sugar producers are ready to be part of the solution

II. CEFS Position and Actions

Joint CIBE/CEFS Letter of February 2011:

1. EU sugar production should be given the priority when considering additional import concessions.

2.Commission should not lose sight of the 2011/12 campaign given the tight situation on the world market (new export tranche under 2010/11 EU export commitments at WTO, using 2011/12 sugar production).

II. EU sugar balance: 2010/2011-11/12

Need for anticipating 2011/12 before sowing decisions, i.e. now:

Management Committee of 28.2.2011 crucial for EU sugar balance 2010/2011

EU Commission choices in next weeks and months will be decisive for the EU sugar Balance 2011/2012

III. Special Report (6/2010) of the EU Court of Auditors:

“Has the reform of the sugar market achieved its main objectives”?

Statement of the EUROPEAN COURT OF AUDITORS 10.11.2010*:

“With regard to the competitiveness of the EU sugar industry… the reform process has not fully ensured the future

competitiveness….”

Statement EU COMMISSION 18.11.2010**:

“Several options for the future… to bring about increased efficiency and greater competitiveness for the sector.”

*Source: PRESS RELEASE EUROPEAN COURT OF AUDITORS; Special Report: Has the reform of the sugar market achieved its main objectives?

**Source: COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS; The CAP towards 2020

III. Special Report of the Court of Auditors

Some thoughts on the Report:

CEFS positions recalled: EU imports policy, available tools in case of undersupply, exports above WTO limits,…

Court position: need to get rid of the rigidities and constraints of current quota system.

III. Special Report of the Court of Auditors EU Market Balance:

• Court of Auditors: “EU production covering 85 % of its consumption”“increasing the EU dependence on imports” (§ 81)

• Commission Reply:“the regime incorporates the necessary instruments to deal with hypothetical situations of undersupply of the EU market mainly by converting available out-of-quota sugar into quota sugar.” (§ 58).

• CEFS position: Priority to EU production in comparison to imports. 85% of EU Consumption should be maintained.

III. Report of the Court of Auditors

EU Market Balance: Imports/exports• Court of Auditors: “increase in imports [….] would

have an adverse impact […]further reducing the EU’s sugar production capacity and likely resulting in additional factory closures” (§57)

• Commission Reply: “not all EU sugar exports but only subsidized exports should be kept within the limit imposed by the WTO ruling” (§ 7)

• CEFS position: EU needs to have the same freedom to export as any other trading region in the world

CEFS PRIORITIESIV. CAP POST-2013 CEFS IV. CAP POST-2013 CEFS PRIORITIESPRIORITIES

1- Imports management 1- Imports management policy policy 2- EU supply management2- EU supply management3- 3- Freedom to export Freedom to export 4- EU sugar beet contracts4- EU sugar beet contracts  5- CAP budget contribution5- CAP budget contribution

Thank you for your attentionThank you for your attention

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