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Price of sugar is going to -slowly – to decline from 2017

The price of sugar in our country and the rest of the European Union from 2017 is likely to decline. At least, that is what the sugar processing industry hopes after the sugar market in 2017 liberalised.

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The sugar market is strongly influenced by the Common market Organisation (CMO) for sugar in the European Union, which include production quotas, minimum guaranteed prices and a restrictive trade policy with export subsidies and importbarrières uses.

In 2006, a reform was implemented, with a reduction of the guaranteed minimum price for sugar beet. In 2017, the sugar market will be fully liberalised: the production quotas and minimum prices for beet growers to be abolished. “That means that the European prices better reflect the world market price,” says Peter Van Herreweghe, general advisor of the price observatory, a study carried out for the Belgian sugar market. The prices on the world market are already several years lower than the prices in the EU.

“We find that the profitability of beet growers is dependent on the received beet price. It is no coincidence that after the reform of the CMO in 2006, with a reduction of the minimum price for sugar beet, the number of beet growers is greatly decreased in our country. Also the liberalisation of the sugar market in 2017, which, among other things, the minimum price for sugar beet disappears altogether, it will in periods of oversupply undoubtedly have a negative impact on the profitability of beet growers,” says Van Herreweghe.

Belgian consumers, who by the way think the beginning of next year, their start to be able to store it for the effort: an analysis shows that the into price transmission for “table sugar” in Belgium, asymmetrical expires. That means that when the European price of sugar increases, on average, an immediate and relatively strong impact on the Belgian consumer price for sugar, while a price decrease is less intense and with a delay of more than a year is followed.

In numbers: “An increase in price of the European price of sugar by 10 percent in the long-term impact of 4.1 percent on the Belgian consumer price for sugar, while a price decrease of the European sugar price by 10 percent leads to a decrease of the Belgian consumer price for sugar of only 2.2 percent”.

In Belgium, there are two sugar producers active: Tiense Suikerraffinaderij and Iscal Sugar.

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