Why is everyone talking about 2017? Because from October 2017, regulation that has limited production and sale of beet sugar and isoglucose (high fructose corn syrup) in Belize’s traditional export market, the EU, will be lifted. These quotas have contributed to high sugar prices in the EU for decades –at times up to double the global market price. Cane sugar producing countries like Belize have been able to benefit from this preferential market. But come 2017 all that will end.
European beet farmers don’t have to ship their sugar half way around the world. They produce it very efficiently right next door to their market. This makes it cheaper. Without quotas regulating production, they will be able to flood the EU market with cheaper sugar. This will bring sugar prices tumbling, likely settling at around world market prices.
While Belize and other ACP producers will still be able to export sugar duty free to Europe post-2017, under the terms of their preferential access agreements, in reality the benefit will greatly diminish as lower prices will drive down revenue by some 20 – 30% from current levels. A recent EU study on the potential impact of these changes outlined that the level of cane sugar imported into the EU post 2017 would drop substantially, and only the most efficient and competitive producers would remain viable.
To survive and remain competitive, by then, Belize will have had to reduce the cost of its sugar production substantially, through greater efficiency and improved cane quality. Thankfully, Belize is the most competitive Caribbean producer, with production costs on the lower end of the scale. But there is still a long way to go.
The challenge of 2017 is not something any one sector of the industry can overcome on its own. There is no magic wand to make the problem disappear. But if the industry works together to a common agenda to improve its competitiveness, and the Government and development partners play their part too, the Belizean sugar industry can remain profitable beyond 2017.
This is the most important issue we face today, and there is no time to lose coming together to meet the challenge. BSI and BSCFA Directors recognized this need at a recent meeting in Orange Walk, where both agreed to co-operate together to design a strategic plan to prepare for the future.
So while the “2017” mood music is not be the music we want to hear, it is music we must face – together, united, and confident that with clear and committed industry leadership and a strategic plan we can meet the challenge of 2017 and beyond. The sugar industry of Belize depends on it. The question for all industry stakeholders is, quite simply, are you prepared to play your part?