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Troubled times ahead for Belize’s sugar industry as EU lifts quotas for beet sugar

Posted: Tuesday, March 21, 2017. 9:03 a.m. CST.

By BBN Staff: The sugar industry in Belize and the greater Caribbean, may face massive declines in revenue as the European Union, the largest importer of Caribbean sugar, prepares to change its sugar regime.

In October this year, the EU will lift the limitations it had imposed on beet sugar production, which will offer European consumers a more local and cheaper alternative than importing cane sugar from its former African, Caribbean and Pacific (ACP) colonies like Belize. 

Belize, along with nine other ACP countries, make up roughly half of the EU’s sugar exports. These former colonies have benefited from  quota- and duty-free access for 1.6 million metric tons of mostly raw-sugar shipments to the EU in 2015-16, alone. 

However, EU sugar importers will have a more soft effective option  as the market becomes saturated with beet sugar, and experts say that it will cause a continued reduction in demand for imported cane sugar.

David Jessop, regional advisor for trade and investment in the Caribbean, predicted dark times ahead for the Caribbean sugar industry, in an interview with Bloomberg earlier this month. 

“Within a decade or so, I can see the EU market for raw sugar from the Caribbean being all but a matter of history.” Jessop said. “The challenge from the Caribbean perspective is what they can do, if anything, to ensure the future of their industry.”

To add to the industry’s problems, sugar prices in the EU have been declining, reducing the revenue flow to  sugar exporting countries such as Belize. 

According to the European Commission’s late 2015 report, ‘EU Agricultural Outlook 2015-2025’,  sugar prices in the the EU are expected to decline to match the “already low” world prices. The outlook also said that the decline in prices would reduce the incentive for trading partners to the EU.

In the beginning of 2017, sugar was the main driver for Belize’s economy with its first export revenue increasing after several consecutive quarters of decline.

According to the Statistical Institute of Belize’s External Trade Bulletin, revenues from bulk exports of sugar increased by $10.1 million dollar, from $1.8 million in January 2016 to $11.9 million in January 2017.

The European Union is a major importer of Belize’s sugar, importing just under 45,000 tons or an estimated 40% of Belize’s annual sugar production. Belize’s sugar exports to the EU currently benefit from quota and tariff protections that the EU has maintained for decades. This ensures that sugar imported from ACP countries like Belize have traditionally benefitted from higher prices for bulk sugar.

This recent decision by the EU parliament creates a major challenge for Belize’s sugar industry, and puts its future in great jeopardy.

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