Bloomberg News

EU Sugar Users Seek Bigger Supplies on Sweetener Shortage

March 15, 2012

The Committee of European Sugar Users, representing companies including Kraft Foods Inc. and Nestle SA (NESN), has asked the European Union to boost sugar supplies after shortages disrupted food manufacturing.

The group wants the European Commission, the bloc’s regulatory arm, to allow local producers to sell an additional 600,000 metric tons of the sweetener in the domestic market. It also urged the regulator to authorize imports of 1 million tons. Imports and local sales should be done at zero duty to “avoid inflationary impact,” the Brussels-based group said in a statement e-mailed today and sent to the commission on March 2.

“Supply tightness has led to unforeseen shortages in the European food manufacturing sector, causing disruptions in factories such as temporary closures, line stoppages and transfer of production outside the EU,” the sugar users said.

The group also wants stocks at the end of season to total 3.5 million tons, or 20 percent of consumption, according to the statement. Further measures to boost sugar supplies will also be needed in the seasons to 2015, the committee said.

“A low stock-to-use ratio increases supply insecurity, price volatility and speculation,” the group said. “The European sugar market has been experiencing this for a number of years.”

While sugar has slid 31 percent in New York from a 30-year high of 36.08 cents a pound in February last year, prices in the EU reached the highest level since at least 2006 in January, figures on the European Commission’s website show. The average price reached 683 euros ($889) a metric ton that month, according to the data.

Import Tenders

The EU may allow more imports and more sales by domestic producers when the bloc’s Sugar Management Committee meets on April 12, a person with direct knowledge of the proposals said yesterday. Additional imports would probably be done through tenders, said the person, who declined to be identified because the plans haven’t been publicly announced.

EU rules limit the amount of sugar local producers can supply to the domestic market, and any surplus must be exported or put to non-food use. Imports usually incur a duty of 339 euros a ton, according to Roger Waite, a spokesman for the European Commission.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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