Investors lost their taste for European sugar companies today as anticipated European Union moves to shake up industry subsidies raised the spectre of big price cuts for the commodity.
The European Commission wants to cut EU sugar prices by more than 40 per cent and scrap the safety-net intervention system to reform the EU's subsidy-laden sugar regime.
Nearly all EU sugar production is from beet rather than cane and the Commission forsees beet growing coming to an end in some areas of the 25-nation bloc.
Greencore, the top sugar supplier in Ireland, shed 1.9 per cent to €3.1, and Dutch food group CSM shed 4 per cent to €19.4.
Suedzucker of Germany, Europe's top sugar refinery, said today the EU proposals may force it to shut refineries.
The EU's sugar regime is due to expire in June 2006 and has changed little since its introduction in 1968, but faces a legal challenge at the World Trade Organization.
Intervention would be scrapped and replaced over three years with a reference price that was 33 per cent lower, the EU draft paper authored by Agriculture Commissioner Mr Franz Fischler said. This should significantly bring down equivalent EU market prices, now more than three times above the world market, officials said.
It is also proposed that national production quotas are gradually merged and the overall amount reduced, while subsidised exports would also be cut sharply.