Hungarian sugar beet production and the reform of EU sugar market

Csillag, Péter - Fogarasi, József

Keywords: 25EUR/ton, 30EUR/ton sugar-beet price, proportion of efficient growers, sugar market

In the period before joining the EU the costs and incomes position of domestic sugar-beet production has been improving. Up to the enforcement of reforms further improvements are expected. Examination of the composition and efficiency of domestic growers, expected changes in production costs and the profitability of cultivating potential plant alternatives shows that the 25EUR/ton price proposed by the Commission as from 2007 does not cover the production costs of row materials required by the domestic sugar industry. To ensure the availability sugar-beet row material to the sugar processing industry in appropriate geographic concentrations, the price of sugar-beet should be 20% higher, that is a minimum price of 30EUR/ton would be required.

The Commission requires of the member states to wholly decouple direct support to sugar-beet growers from sugar manufacturing. In contrast the domestic sugar industry is interested in a support construction that would transitionally tie a part of support to the continuation of sugar-beet production.

Taking into account the decline in input costs and the development of technology compared with the 2004 levels about 45% to 50% of domestic producers taking up 1.3 to 1.5 million tons of sugar-beet may be considered sufficiently effective after the reform. Efficient growers may however increase their output to 1.7 to 2.0 million tons following re-organisation providing a sufficiently secure background to a smaller but more effective domestic sugar manufacturing industry.

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