1. Marie-Christine Ribera, CEFS Director-General European Committee of Sugar Manufacturers SECTORAL SOCIAL DIALOGUE COMMITTEE FOR THE SUGAR INDUSTRY PLENARY SESSION 28 February 2011

2. 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 2

3. 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 third Exports cuts from 6-8 MT to 1 MT Doubling of imports 3

4. 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 scheme EU quotas reduced by nearly 6 million tonnes 5 countries have completely closed their sugar industry 6 additional countries have lost over 40 % of their national quotas  Major driver to reduce costs, increase efficiency and rationalise across EU industry 4

5. I. Industry Response to the Reform  Factory rationalisation: 147 factories closed since 2000 in EU (-60%) 80 factories closed since 2006 Only 106 remaining in 2010 out of 251 in 2000 More than 20,000 direct jobs lost  Fundamental changes in refining operations: No longer restricted to a small number of historic refiners New refineries being built Beet factories encouraged to “co-refine” 5

6. 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

7. II. EU Market Balance: 2010/2011 Exceptional higher world market prices - White sugar London N. 5 on 9 th February: 761$ = 558€/t; EU average at November 2010 487 €/t, on 28 th 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

8. 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

9. 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).

10. 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

11. III. Special Report (6/2010) of the EU Court of Auditors: “Has the reform of the sugar market achieved its main objectives”?

12.  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

13. 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.

14. 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.

15. 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

16. CEFS PRIORITIES IV. CAP POST-2013 CEFS PRIORITIES 1- Imports management policy 2- EU supply management 3- Freedom to export 3- Freedom to export 4- EU sugar beet contracts 4- EU sugar beet contracts 5- CAP budget contribution

17. Thank you for your attention CEFS Avenue de Tervueren, 182 1150 Bruxelles Visit our website: www.cefs.org 17