$1b sugar deal with EU

[posted 19 May 2008]

The Fiji Sugar Corporation Ltd has entered into a long-term agreement on the supply of raw sugar for preferential import into the European Union (EU) market with its traditional buyer, Tate & Lyle.

The contract for the supply of up to 300,000 tonnes of sugar per annum will run until 30th September 2015 and will be worth over F$1 billion (€425 million) to the Fiji sugar industry.

Expressing his appreciation on the conclusion of the negotiations, Finance and Sugar Minister, Mahendra Chaudhry underlined the well established and strong commercial links between Tate & Lyle and the FSC.

He stressed that the challenges arising from fundamental changes under the reform of the EU Sugar Regime and the trading arrangements under the EPAs required the sugar industry to seek long term commercial arrangements which would contribute positively to the continued viability and sustainability of the industry.

Mr. Chaudhry added that the current sugar industry reforms and the on-going mill upgrade programme would ensure that Fiji was able to take full advantage of the additional market access opportunities for sugar in the EU as well as benefit under its long term contract with Tate & Lyle.

“The new agreement contains stringent requirements in terms of quality and shipment schedules and can only be realized with the full and active participation of all concerned,” said Mr. Chaudhry .

“The onus is now on all industry stakeholders to actively play their respective roles in enabling us to honour FSC’s full commitments under the agreement,” he said.

“The EU preferential price is expected to remain attractive, despite reductions totalling 36% by 2009, provided we are able to achieve efficiency and productivity gains, both in the field and the factory,” Mr. Chaudhry said.

Tate & Lyle and FSC have had long-term supply agreements since 1975 which marked the inception of the ACP-EU Sugar Protocol. The Protocol will be superseded from 1st October 2009 by the Economic Partnership Agreements (EPAs) between the European Union and ACP States.

Tate & Lyle is the largest refiner of cane sugar in the EU and has refineries in London and Lisbon. It is also a leading trader in molasses and world market sugars.