Sugar market reform a bitter pill

An “EU sugar crisis”, headlines Dziennik Gazeta Prawna. Compared with last year, prices are up 30-40 percent and all that, argues the business daily, because of EU-imposed production quotas, natural disasters internationally and poorer than usual crops. EU sugar market reform, launched in 2006, provided for reducing the guaranteed minimum price by 36 percent and closing down loss-making factories. As a result, the EU’s sugar output started falling, to 16.25 million tons in 2009/2010, down from 17.35 million tons in the previous year. Poland produced 1.43 million tons of sugar last year but, under the EU limit, can use only 1.405 million tons of that and export the rest outside the EU. Yet this quota is not enough to meet growing domestic demand, which means more and more sugar has to be imported from outside the EU. However, the commodity is in short supply on international markets too because of weaker crops caused by natural disasters. “A rise in sugar prices is inevitable”, warns the daily, heralding a wave of bankruptcies among bakers and sugar companies, whose businesses are nearing the “profitability threshold”.