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Tereos, AB Sugar Are Best Placed for Reforms, Rabobank Says

October 25, 2011

(Updates with starch sweeteners in seventh paragraph.)

Oct. 25 (Bloomberg) -- AB Sugar, Tereos and Suedzucker AG are among the companies “best positioned” to face deregulation of the European Union sugar market, Rabobank International said.

The European Commission, the EU’s executive arm, wants to abolish limits on domestic sugar production following a shortage of the sweetener in the bloc this year. Sugar quotas would expire on Sept. 30, 2015, under the commission’s proposals.

“Efficient producers of beet sugar located in regions which have advantageous climatic conditions for growing sugar beets and which enjoy economies of scale will be best-placed to thrive,” Rabobank analyst Gorjan Nikolik, based in Utrecht, Netherlands, wrote in an e-mailed report.

Having expertise in sourcing and refining sugar from countries with preferential access to the EU market, and from top producer Brazil, may be advantageous in the face of deregulation, Nikolik wrote.

AB Sugar, part of London-based Associated British Foods Plc, is the only EU producer that has large operations in a number of African countries, some of which have preferential access to the EU market, Nikolik wrote. Tereos is the only EU supplier with operations in Brazil, while Mannheim, Germany- based Suedzucker has an exclusive supply agreement with Mauritius, a major preferential supplier to the bloc, he added.

Cosun Holding NV of the Netherlands is also ready for reforms because it’s the most-efficient beet producer in Europe, with an average yield of 13.7 metric tons of white sugar from one hectare (2.47 acres) in 2009-10, Nikolik said by phone today.

Starch sweeteners such as high-fructose corn syrup from corn may be used more if sugar quotas are eliminated, according to Rabobank. Starch sweeteners represent about 5 percent of the EU sugar market compared with 45 percent in the U.S., according to the bank.

The EU’s reforms may start between September 2015 and 2020 and could take as long as five years to implement, Rabobank said. Preferential suppliers to the EU market may ultimately suffer from external competition, with less efficient producing countries potentially being excluded from the EU market, the bank said.

A group of countries in Africa and the Caribbean and Pacific regions, known as ACP, as well some least developed nations, have preferential access to the EU sugar market because they don’t have to pay import tariffs.

--Editors: John Deane, Claudia Carpenter

To contact the reporter on this story: Isis Almeida in London at

To contact the editor responsible for this story: Claudia Carpenter at

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