EU Sugar after 2015: consequences of the new regulations ELISABETH - - PowerPoint PPT Presentation

INTERNATIONAL CONFEDERATION OF EUROPEAN BEET GROWERS

ELISABETH LACOSTE – CIBE General Secretary

EU Sugar after 2015: consequences of the new regulations

ISO Seminar, London, 26-27 November 2013

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CIBE today

ISO Seminar, London, 26-27 November 2013

Founded in 1927

• 23 MEMBERS (regional or national beet

growers’ associations)

• 150 000 growers from 19 EU countries

producing sugar beet

• + growers from 2 non EU

countries (Switzerland and Turkey)  A strong expertise based on a great diversity

CIBE’s mission

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to represent and defend sugar beet growers’ interests at European and international level, official representation and lobby before the European Commission, the European Parliament, the Council and other institutions to monitor and analyse the management of the Common Market Organisation and its regulations to promote the sustainability of sugar beet growing (technical progress, environmental issues, good agricultural practices, interprofessional relations etc.) to provide expertise on the European sugar beet economy (statistics, annual reports and surveys)

Table of contents

• 1. The new European picture: the results of the legislative co-

decision process on CAP and on the sugar regime

• 2. The competitiveness of EU sugar beet
• 3. The EU market outlook and growers’ perspectives after 2017

ISO Seminar, London, 26-27 November 2013

Table of Contents

1- The new European picture: the results of the legislative co- decision process on CAP and on the sugar regime

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Lithuania Nov- Dec 2013

Finalization and formal adoption in 1st reading of regulations on CAP Implementati

• n in EU MSs

with some transitional arrangements as from 1st January 2014

26 June 2013

Political Agreement

• n CAP

including post-2015 sugar regime

Ireland 19 March 2013 April- May 2013 13 March 2013

EP’s mandate

• n CAP 2014-

2020 and on new Single CMO including post-2015 sugar regime Agri Council mandate on CAP 2014- 2020 and on new Single CMO including post-2015 sugar regime Trilogue discussions EP- Council - Commission

Cyprus 8 February 2013

EU Council agreement

• n EU budget

2014-2020 including CAP budget

Denmark 21 June 2012

EP Agri Committee report on new Single CMO including post-2015 sugar regime voted in Committee in December 2012

Poland 12 October 2011

Commission’s legislative proposal on CAP 2014- 2020 including post-2015 sugar regime + Start of Agri Council discussions

Hungary 23 June 2011

EP Agri Committee initiative report on CAP 2020 including post-2015 sugar regime

ISO Seminar, London, 26-27 November 2013

The EU co-decision legislative process on CAP reform: a long journey!

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The CAP Reform as from 1st January 2014: a financial issue and a complex toolbox

• A political agreement on EU Budget (MFF) 2014-2020 to reduce the CAP 2014-2020

budget compared to 2007-2013 period (by 8% for Pillar 1 and 13% for Pillar 2)

• A political agreement between 28 MSs on a package of 4 legislative texts with some

improvement of the original Commission proposals : 1. Pillar 1: Direct support scheme(s)  a reduction and a strong reallocation of support as well as more obligations/burdens for many farmers (“greening”) and more complexity!

• 2. Pillar 2: Rural Development Scheme

+ 15% flexibility between Pillar 1 and 2 (and in certain MSs up to 25% from Pillar 2 to 1)  Toolbox/Flexibilities given to MSs: Impacts in and between MSs??

• 3. Rules on the Financing of the CAP

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• 4. Single Common Market Organisation (Single CMO) includes provisions related to

market measures Objectives

• Simplification
• Completed market orientation: end of milk quotas, end of sugar quotas, end
• f wine plantation rights, market management measures reduced to safety

nets in the event of severe crisis

• Improved farmers’ cooperation, in particular in certain sectors / improved

functioning of food supply chain (but to be confirmed by implementation)

The CAP Reform as from 1st January 2014: sugar included in a large package

The Single CMO and the sugar regime as from 1st January 2014 : drastic with very short adaptation period for EU growers

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Up to 30th September 2017

• Prolongation of the current sugar regime (but end of

sugar reference price)

• Sugar quota and current sugar market provisions

extended (incl. temporary measures)

As from 1st October 2017

• End of the sugar quota system  liberalisation of

sugar and isoglucose supply

• End of all sugar market provisions, including end of

minimum beet price

• Maintenance of contractual framework
• Maintenance of preferential access

ISO Seminar, London, 26-27 November 2013

Very short! Uncertain times! Opportunities and challenges

The sugar regime in the post-quota period from 1st October 2017: Results 1

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• Very short time of adaptation/transition period : only 3 further beet campaigns under

the quota system : 2014/15, 2015/16, 2016/17

• Sowing decisions for the 2017/18 beet campaign, the 1st one under the new regime, at

the latest in summer/autumn 2016, i.e. in less than 3 years

• Interprofessional agreement between growers and beet processors under the new

scheme to be negotiated before autumn 2016 at the latest Key decisions will be taken by the sector before 2017! With possibly some new developments before 2017! On what basis, what strategy in a fluctuating short and medium-term context?

The sugar regime in the post-quota period from 1st October 2017: Results 2

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• Organisation of the sector remains with contractual framework between growers

and manufacturers but with some adaptations and without previous safeguards and benchmarks for growers

• Fundamental elements of the contracts will remain collectively negotiated
• Growers and processors will have to agree together the new basis of the

contracts

• Determination and bargaining strength of growers will be key
• Strong and fair partnership between growers and processors will remain essential

2- The competitiveness of EU sugar beet

A constant gain in the EU sugar yield…

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7 8 9 10 11 12 13 14

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Source: CIBE

Evolution of the average sugar yield in the EU-15 and the EU-27 (t. sugar /ha)

ISO Seminar, London, 26-27 November 2013

• Result of constant

investments in R&D, breeding and improvement/diffusion of good agricultural practices

• No other choice for all

growers and their seed partners than to continue this trend

• High environmental

sustainability of EU beet

• CIBE-CEFS-EFFAT

sustainability partnership launched in October 2013

...with a constant gain in efficiency...

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sugar bought 1977: 8.1 t/ha Nitrogen 2010 : 101 t/ha sugar bought 2011: 15 t/ha

60 80 100 120 140 160 180 200

6,00 7,00 8,00 9,00 10,00 11,00 12,00 13,00 14,00 15,00 16,00

Sugar t/ha Nitrogen Kg/ha

Sources: CGB (1977-1996), ITB (1997-2011)

Evolution of N-fertilizer use and sugar yield since 1977 in France

…how to maintain this trend? The future competitiveness of the EU sugar sector

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Main factors of competitiveness Potential gains Beet variety / breeding techniques ++ Global warming + Agricultural practices + Land price

• Labour costs

. Industrial costs campaign length processing capacity .  + .  + Energy costs

• Environmental costs
• Logistics

.  + Trading .  + Exchange rate ????

• EU

beet growers in the forefront of competitiveness challenges

3- The EU market outlook and EU growers’ perspectives after 2017

From a net importer: the challenges of EU-FTAS negotiations…

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• Concluded:

₋ Ukraine, Georgia, Moldova ₋ Singapore ₋ Colombia - Peru ₋ Central America ₋ = + 266 000 t sugar as such ₋ Canada

• Under negotiations:

₋ South Africa ₋ US ₋ Thailand ₋ Other ASEAN (Vietnam) ₋ India ₋ Japan ₋ Mercosur (Brazil) ₋ = ?

• EU future imports:

₋ More sources for preferential imports  ACP/LDC erosion of preferences ₋ Pressure of new FTAs on the EU market ₋ Attractiveness of EU market vs. US and world markets will shape future EU imports

• Market access concessions through

bilateral FTAs jeopardize EU market balance!

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2006 Reform Mt %

ISO Seminar, London, 26-27 November 2013

…to a net exporter? EU exports increase essential for EU market balance in the future

• EU future exports dependent
• n:
• EU market balance
• competitiveness with

third competitors (a reduced difference between most competitive EU countries and Brazil)

• world sugar prices
• global demand
• management of the

volatility

In % of world market In Mt

The EU beet sugar supply chain

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• A highly concentrated sugar industry: the first 7 EU sugar companies hold around 85 % of

the EU quota and EU production; the first 6 EU sugar companies represent 93% of the current out-of-quota production of which 60% dedicated to food an non-food domestic market

• The EU sugar cooperatives represent 70% of EU production but “only” 45% of EU growers

are “members” of a cooperative

• An asymmetric transmission of sugar prices along the supply chain: sugar users do not

transfer sugar price decrease to consumers

• EU sugar companies are diversified and have different strategies:

₋ In raw cane sugar refining ₋ In isoglucose and other sweeteners production ₋ In bioenergy production (bioethanol, biogas) ₋ In other food products (fruits)

EU beet growers‘ perspectives: before 30 September 2017: a progressively moving context

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• EU sugar market balance stability and EU market prices under pressure:
• from new FTAs
• from EU sugar industry’s early decisions
• Possible further consolidation of the EU sugar industry (incl. raw cane

sugar refining) – corporate alliances

• Renegotiation of interprofessional agreements between beet growers’
• rganisations and undertakings: indispensable fair partnership

EU beet growers‘ perspectives: after 1st October 2017: a volatile and uncertain context

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Challenges Opportunities Variables

Increased competition Liberalisation of EU domestic market Cereal and alternative crop prices vs. Beet prices Liberalisation of EU sugar production Liberalisation of EU export Sugar world market prices Evolution of EU competitiveness Liberalisation of EU isoglucose production High sustainability of EU beet Isoglucose prices Pressure of FTAs Possible decrease of preferential imports Evolution of ACP/LDCs and other preferential partners competitiveness Increased domestic market volatility Strong Contractual framework Management of volatility Increased domestic instability Increase of global demand Consumption growth in Asia, Africa, Middle East Further consolidation of EU sugar industry – corporate alliances Investments in bio-economy Growth of non-food uses/renewable energy/bioproducts

EU beet growers‘ perspectives

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• Big challenges ahead for EU beet growers who will implement the new CAP

and manage their beet area/production in a new context!

• Reversing the consequences of the 2006 reform will be challenging!
• EU beet growers ready to accept challenges and to share risks and bad

years at the condition to be in capacity as well to share opportunities and good years!

• EU beet = one of the most sustainable crop of our regions!

www.cibe-europe.eu Tel: +32 2 504 60 90 – Fax: +32 2 504 60 99

INTERNATIONAL CONFEDERATION OF EUROPEAN BEET GROWERS

Thank you for your attention!