EU: UNICA hits back at European sugar and ethanol industries for misinformation

Published: 07/06/2017, 5:41:56 PM

UNICA has written a letter to the four European sugar and ethanol industry associations, as well as the European Parliament, European Commission and European Council along with members of the press to strongly contest what it says is a misinformation campaign against Brazilian sugar and ethanol producers, reports Sugaronline.

In the press release published Monday, the European sugar and ethanol industries represented by CIBE, CEFS, ePure and EFFAT allege that the Brazilian government subsidises its domestic sugar industry by US$1.8 billion annually and ethanol is therefore cross-subsidised because most mills can switch between sugar and ethanol production.

The industries are concerned about Brazil's requests for more European market access as part of the ongoing trade negotiations between the EU and Mercosur will provide unfair competition in the European market.

UNICA's letter, however, outlines how the subsidies claimed by the industry associations is in no way accurate, and instead was at most EUR703,760 (US$803,196) in 2016 due to low interest loans provided to the industry for replanting sugarcane and storing ethanol during the inter-harvest season.

The letter goes on to explain that north-northeast sugar producers are supported in part by the government but since it is one of the poorest regions in the country, it is development aid rather than a production subsidy. What's more, the region accounts for less than 10% of domestic production, UNICA says.

"The Commission itself wrote in its EU agricultural outlook prospect for the ‘EU agricultural markets and income 2016-2026' that most post-quota imports will come under the duty-free agreements as the CXL duty (quota hold by Brazil) of EUR98/tonne will be challenging for most exporters. Imports are expected to be below 2 million tonnes annually. So the Commission expects sugar from Brazil to be out of the EU market after the sugar reform enters into force," the letter said.

Regarding cross-subsidies, UNICA also dismisses the claim as mills can only switch 10% of their crush between sugar and ethanol. "Ethanol production is currently reducing margins for mills," the letter said.