Sugar starts tasting bitter

From Wednesday, October 1, 2008, the reference price of sugar in the EU is going to decrease by 48 Euros per tonne and by a further 113 Euros per ton from October 2009, that is at the same time next year. This will give a cumulative price reduction of 161 Euros per ton over a period of just one year.

At current exchange rate, which is about Rs 42 for one Euro, the drop in earnings on future producer price will turn around Rs 6,700 per ton of sugar.

“The need for us now is to earnestly complete our preparedness facing the implementation of the Economic Partnership Agreement between the EU and the ACP countries but also to be able to tap the new opportunities offered by the future market,” Cyril Mayer, outgoing president of the Mauritius Sugar Syndicate said at the annual general meeting on Tuesday.

Hansraj Ruhee, former vice-president, has been elected the new president of the MSS.

The price on the EU market is now determined by a Reference Price, which will undergo a cumulative reduction of 36% by October 1, 2009 compared with the guaranteed price under the previous regime. The ACP guaranteed price will be replaced by a minimum price when theSugar Protocol will be terminated in September 2009.

“With the implementation of the new regime, the implications are dramatic with Mauritius market no longer guaranteed at the 491,000 tons, and as global financial crisis will increase costs. Planters are already experiencing massive increases in the cost of fuel, fertilisers and chemicals and there are distress signals from the farming community which should be urgently addressed, if not they could lead to a major crisis in the sugar industry,” the MSS past president said.

Other major challenges mentioned by Cyril Mayer are institutional framework such as a cess of Rs 635 million and the elimination of subsidy on the sale of sugar on the local market.

He also expressed his confidence in the future strategic orientation of the industry with massive investments in two major sugar refineries at a cost of Rs 2.0 billion.

In a speech read by a Senior Executive of the ministry, the Minister of Agro Industry, Satish Faugoo,said that “the action of Government is two fold: that is maintaining to the maximum extent possible, our preference margin in the context of international trade negotiations and ensuring that Mauritius becomes a long term competitive supplier to the EU market.”

source:defimedia