May 22, 2015
Sugaronline | http://goo.gl/Pl1P84
African producers are showing growing unease over the forthcoming liberalisation of European Union sugar regulations, which they believe could effectively shut some of them out of a key export market, according to Togo-based bank Ecobank, reports Agrimoney.
The end of production quotas will, in boosting the EU's own output cut its need for imports by "over 40%", Ecobank said. And what the bloc does import may not come from African export.
The EU allows a duty-free import quota of 3.5m tonnes from the so-called ACP countries, which includes most of sub-Saharan Africa, along with Caribbean and Pacific Island nations such as Jamaica.
"Given their high production costs, African sugar producers will be unable to compete with low cost producers Brazil and India, effectively shutting them out of the EU market," Ecobank said.
Sugar producers in eastern and southern Africa are "voicing concerns" over the EU reforms.
Indeed, the knock-on effects of the revamp may deal them a further blow, in redirecting to African markets sugar supplies which would have historically been destined for the EU.
The shake-up could cause "a structural glut as producers shift their EU exports onto the regional market", the bank said.
The European reforms appear likely to affect in particular Mauritius, Africa's top sugar exporter to the EU, followed by Swaziland, Mozambique, Zimbabwe and Malawi.
However, "the most vulnerable country in this process is Kenya", Ecobank said, noting that the country will be obliged to open up its sugar market in 2017, making it a likely target for exports redirected from the EU.
Still, some countries may see some upside from the EU shake-up.
"Efficient producers in Sudan, Zambia and Uganda could expand their share" of EU sugar imports.
And South African sugar giants Illovo and Tongaat Hulett "could benefit", in terms of being able to exploit their continent-wide network.