EU sugar plan threatens hundreds of manufacturing jobs in Malta

A looming EU decision to suspend duty-free sugar imports is placing hundreds of jobs in Malta’s food processing sector at risk.

The European Commission’s planned suspension of the Inward Processing Relief (IPR) scheme for sugar would strip Maltese manufacturers of their ability to source raw sugar at low, global market prices, forcing them to pay significantly higher EU rates.

While the move is intended to protect mainland European beet farmers, the collateral damage for Malta, which has no domestic sugar production, could be severe.

According to Maltese MEP Peter Agius, among the most impacted will be manufacturers of sugar-based desserts and drinks and also the local tomato industry.

These manufacturers export huge amounts of products such as powder-based sweet drinks and tomato ketchup to non-EU countries, using the EU duty exemption on imported sugar from outside Europe to sell their products at competitive prices in developing world markets.

If the exemption is suspended, manufacturing the products at EU prices will drive the costs up to the extent that they lose their competitive edge with other manufacturers from the Americas and Asia.

The sugar row explained

The issue is essentially a tug-of-war between the EU’s agricultural and industrial sectors.

Currently, the IPR scheme allows companies to import sugar from major global producers like Brazil without paying high EU import duties, provided the final product (such as soda, sweets or canned goods) is exported outside the Union.

This means sugar prices in Europe have plummeted and EU farmers are struggling to stay afloat.

I hope we’ll be able to come to a solution in the coming weeks- MEP Peter Agius

The scheme allows companies to import sugar at zero duty with no quantity limits and European farmers claim this has led to a flood of cheap global sugar that is dumping prices and making EU-grown sugar beet unprofitable.

In response, the European Commission is proposing a temporary, one-year suspension of these tax breaks to force companies to buy European. The Commission hopes this will stabilise domestic prices and save the European sugar beet industry.

But for EU manufacturers – and, especially, the Maltese ones who already grapple with high shipping costs – this would mean a direct hit to their ability to compete with other global manufacturers.

They are warning the decision would massively increase production costs, make finished products uncompetitive against non-EU brands and potentially lead to factory closures and job losses.

Jobs and industry at risk

Agius, who has been lobbying the European Parliament and the Commission on the issue, told Times of Malta that he was contacted by a number of Maltese companies about the planned suspension, pointing out that the impact of the move on the local economy could be widespread.

“It’s clear that this may have an impact on Malta-based companies and hundreds of jobs, which is why we’re trying to find a solution at different levels in Europe,” he said.

“I hope we’ll be able to come to a solution in the coming weeks.”

He said that if the suspension hits the tomato industry, it could significantly disrupt the livelihoods of hundreds of tomato farmers across the islands.

He said companies and industry leaders must be more proactive in reaching out to their MEPs when issues arise and when there’s still enough time to act and mitigate the potential impact.

“That’s why MEPs are there: to work in the interest of Maltese industries in the high echelons of the EU,” he said.