European Union negotiators in free trade talks with Australia are, despite a sugar shortage in Europe, offering such low import quotas for the sweetener they are not commercially viable to ship, industry sources said.
EU sugar prices have doubled in two years, contributing to rampant food price inflation, thanks in part to stringent environmental rules shrinking local production. That has left buyers reliant on imports that are mostly subject to duties.
The EU has since 2018 been negotiating a trade deal with Australia, a major producer of sugar and other agricultural commodities.
Tarriff-Free Imports
The bloc has proposed to allow around 15,000-20,000 metric tonnes of tariff-free raw sugar imports from Australia a year, two sources familiar with the negotiations in Australia and Europe said.
But a typical bulk shipping carrier loads around 40,000 tonnes of sugar, and it is not commercially viable to ship much less, people in the industry said.
Because of that, the EU offer is "pointless, absolutely pointless", said a sugar industry executive in Australia.
A spokesperson for Australia's trade ministry declined to comment on the size of proposed quotas, saying "we don't conduct negotiations or negotiating positions in public".
A European Commission spokesperson also declined to comment, but said the bloc was "working hard to forge an agreement that unlocks opportunities for European and Australian farmers and consumers".
In Europe, groups representing sugar farmers have lobbied against a large quota. The International Confederation of European Beet Growers (CIBE) told Reuters it was opposed to any access for Australian sugar.
Its director Elisabeth Lacoste said the local market had already seen a huge influx of sugar from Ukraine in the 2022/23 October-to-September season after the EU suspended limits on imports from the country.
However, European confectionery industry association Caobisco said it was asking the EU to allow 100,000 metric tonnes of duty-free Australian raw sugar imports in the first year of a trade deal.
Meaningful Access
Trade talks between the EU and Australia stalled in July, with Canberra saying Brussels was not offering enough market access for its agricultural products, but resumed last month.
Australian sugar industry association Canegrowers said it wanted commercially meaningful access and that a recent UK-Australia trade deal was a good example of the scale of quotas desired.
Britain – a much smaller market than the EU – agreed to allow 80,000 tonnes of tariff-free raw sugar imports from Australia in the first year and 20,000 tonnes more each year until tariffs are eliminated in 2031.
The first duty-free shipment of Australian sugar in 50 years arrived in London last month. The ship carried 33,000 tonnes.
Trade minister Don Farrell told Reuters, "To conclude a deal, Australia needs new commercially meaningful agricultural access for a range of products, including sugar, into European markets."
European Commission President Ursula von der Leyen said last month that the EU should seek to complete its free trade deal with Australia, and others with Mexico and South American bloc Mercosur, by the end of the year.
