The firm said it would be forced to consider closing plants, such as its Silvertown site in London, if tariffs on imported sugar cane continued to inflate its price. The tariffs mean the firm cannot source enough cane sugar at a reasonable price to meet the site capacity, a spokesman told FoodManufacture.co.uk.
Consequently Silvertown is running at less than two-thirds of its 1.1Mt a year capacity. Sugar cane is now processed in a single shift instead of the all-day, every-day operation that the site was planned to deliver.
“All we’re asking for is a level playing field,” said the spokesman. “If sugar beet producers can bring a product to market that is without tariff then it is logical that the rest of the allocation should be allowed to be brought to market without tariff – if the EU is serious about its commitment to food security.”
A quota covering about 80% of Europe’s sugar requirements is assigned to domestic beet producers on which no tariff is paid, the spokesman said. The remainder is given to cane refiners who can import sugar cane tariff-free from emerging countries. But poor weather has affected crops in these locations and there has not been enough cane to fulfil demand, the spokesman added.
Instead of allowing a tariff-free top-up from the world market, the European Commission (EC) gave about 500Mt of the cane quota to beet producers and auctioned the remainder to those cane refiners that would pay the most tariff, claimed the spokesman.
There have been three auctions this year and in the last, only about 14,000t of sugar was secured by Tate & Lyle, which is now part of the American Sugar Refinery group. That was not enough to fulfil the firm’s requirement, he said. Also the rate of tariff increased after each auction, he added.
Plans to abolish quotas were set out earlier this month in the EC’s proposals to reform the Common Agricultural Policy. The spokesman said that the plan would result in cheaper sugar for manufacturers but would destroy cane refining in Europe.
“This means another commercial advantage would be handed to beet producers. With our existing tariff costs we would struggle to compete at all,” said the spokesman.
But a spokesman for the European Parliament (EP) emphasised that the reforms put forward were only proposals. A final decision would not be made until mid-2012 at the earliest, he said.
The EP spokesman told FoodManufacture.co.uk that: “Many MEPs [Members of the European Parliament] and council ministers are not happy with the proposals. I’m not sure if the quotas would be ended.”
Reflecting big disagreement among Member States, the EP would want to hold public discussions with key stakeholders and study the full impact of abolishing quotas, he added.