The European Union should authorize zero-duty supplies of sugar after shortages disrupted food manufacturing, said an industry group representing companies including Nestle SA.

The bloc may let local producers sell a further 250,000 metric tons of the sweetener in the domestic market at a reduced duty, according to Karolina Kottova, a spokeswoman for the European Commission, the EU’s executive arm. It also plans to accelerate import tenders by about a month, she said April 2. Imports under the tenders also carry a lower duty. T38C6SNHBVEQ

“We are against any kind of tariff or duty, as it creates inflationary pressure in the market,” Muriel Korter, secretary general of the Brussels-based Committee of European Sugar Users, said by phone today.

While sugar fell 15 percent in New York trading over the past year, prices averaged 683 euros ($892) a ton in Europe in January, according to data on the commission’s website. That was the highest level since at least July 2006, it showed.

The committee said by e-mail it was “disappointed that the European Commission intends to apply high levies and tariffs that will support unjustified inflationary pressure on the market and penalize sugar users.”
Sugar Shortage

The EU faces a sugar shortage even as global supplies are set to outpace demand by 7.7 million tons in the 2011-12 season started in October, according to London-based Czarnikow Group Ltd., which traded sugar in more than 90 countries last year.

The bloc has sought to reduce sugar production since the World Trade Organization said in 2005 it was disrupting global markets by exporting subsidized output. The EU has spent about 5.2 billion euros since 2006 to shrink the industry.

EU rules limit the amount of sugar local producers can supply to the domestic market. Any surplus must be exported or put to non-food use. Imports from countries that have no preferential agreements with the bloc usually incur a duty of 339 euros a ton.

The curbs are “creating an artificial shortage and pushing up prices,” the Association of the German Confectionery Industry said in a statement in February.

source: bloomberg

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