European trade deal concerns sugar beet farmers

Published online: Mar 02, 2014
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Alberta sugarbeet growers object to parts of the proposed Comprehensive Economic and Trade Agreement between Canada and the European Union because of fears it could erode their industry.

The trade deal would label any sugar refined in Canada as Canadian product and would eliminate existing tariffs on sugar between the two trading partners.

However, Canada’s two refiners, Lantic and Redpath, often buy cane sugar from other countries and then process, refine and package it as Canadian sugar.

“We are firmly of the belief that foreign sourced sugar disguised as Canadian is not beneficial to Alberta and does nothing to stabilize rural development,” Alberta Sugarbeet Growers (ASBG) president Rob Boras said in his annual report to members.

Canada produces eight to 10 percent of domestic sugar requirements, all by way of sugar beets.

“Without a domestic policy on what levels of sugar needs to be Canadian grown and produced, there will continue to be an erosion of Canadian grown, harvested and refined sugar, and that doesn’t look to change in the foreseeable future.”

Boras said the organization is uncomfortable objecting to CETA because the trade agreement is expected to benefit the beef, pork and grain sectors.

CETA is still an agreement in principle and is not expected to be finalized until 2016 at the earliest.

Errol Holkai, international trade consultant with the Canadian Federation of Agriculture, said CETA’s benefits to the sugar beet industry are not yet clear.

“Can sugar beet producers take advantage of what the Canadian government negotiated with the European Union?” Holkai told the ASBG annual meeting by teleconference Feb. 12.

“Well, I think there’s a lot of questions that need to be discussed about this possibility,” he said.

ASBG is a CFA member.

The agreement says that raw Canadian sugar exported to the EU must be “wholly produced from Canadian sugarbeets, so any raw sugar going to the EU, in terms of tariff elimination, has to be from Canadian sugarbeets,” said Holkai.

In terms of refined sugar, he said the EU has agreed to increase the limit of allowable sugar that has not been grown, harvested or refined in Canada.

That opens the door for Canadian refiners to buy sugar from other countries, process it and sell it as Canadian product.

Holkai said tariffs will also be eliminated on sugar-containing products from Canada, though a tariff rate quota will apply.

As well, virtually all Canadian sugarbeets are genetically modified to be glyphosate resistant.

The EU has approved the type of GM sugarbeet grown in Alberta, but Holkai said European consumers’ reservations about GM products might reduce demand for Canadian sugar or sugar-containing products.

Transportation is another hurdle, given that the EU is 14,500 kilometres away from Alberta.

“Is it economically feasible to transport sugar this distance, or will transportation costs … eat up any advantage Canada may have had with the elimination of the European tariff?” Holkai said.

However, costs per unit are lower in sugar-containing products, which could increase demand for Canadian sourced sugar.

As for the Trans-Pacific Partnership, Holkai said the United States, also a member of the TPP, is unlikely to increase Canada’s 10,000 tonne sugar quota.