European cereal starch industry group the Association des Amidonneries de Céréales (AAC) says alarm is mounting among Europe’s cereal starch sweetener producers in response to the council of ministers compromise on sugar reform.

The AAC said in a statement that it was disappointed the council couldn’t improve their condition and that it has serious consequences for the long-term future of their industry.

The AAC said there were major concerns for the viable future of its members. Despite their attempts to explain the economics of the industry, arguments on the total impact of the reform on the cereal starch sweeteners have been ignored.

“While we appreciate the modest improvements compared with the original proposal, such as a 50% reduction to the restructuring levy and the granting of 75% of the restructuring aid, in the event they abandoned isoglucose production quotas and the impact remains very serious indeed, said AAC managing director, Lorenza Squarci.

“The profitability of the industry will be severely reduced and thereby its ability to invest in R&D and develop European green chemistry based on cereal starch applications,” she said. “The isoglucose production increase of 300,000 tonnes will not be enough to allow us to cope with the competitive impact of expected sugar price cuts nor for the losses we will bear in our other cereal starch sweeteners in the food and non-food sector. It is insufficient to build up economies of scale and only corresponds to one fourth of the volume we asked. This increase was particularly important; taking into account our production might be submitted to a possible flat rate cut at the end of the restructuring period.”

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“We are disappointed that the reform does not make a serious move towards the liberalisation of isoglucose quotas which would have given all starch producers the possibility to diversify their sweetener production and whilst the minimum sugar beet price will decrease, cereal prices will not change,” she said.

The AAC have two main requests where they seek to avoid unfair competition: That sugar produced from ‘out of quota’ beet (for which the minimum price will not be paid) is not permitted to replace glucose sales to the fermentation industry and that aid for regional diversification is not granted for investment in new capacity in the starch sector, where overcapacity will already result from the impact of the reform.

The long-term viability of the industry will also require access to raw materials at competitive prices.

The AAC will be asking the European Commission to take appropriate and necessary actions in the framework of the cereals common market organisation.