Estonian sugar stocks ruled 'excessive' by Brussels

  • 2005-06-01
  • Staff and wire reports
TALLINN - The European Commission's sugar committee on May 26 ruled that Estonia possessed 91,464 tons of "excessive" sugar stocks as of May 1, 2004 when the country joined the European Union, a decision that will likely result in a major fine on the country.

In assessing the stocks as "excessive," the committee threw out Estonia's arguments that a large part of the excess sugar had been accumulated by individuals, and not companies, on widespread fears that EU membership would spark higher prices for food staples.

The commission is expected to announce its decision about the size of the penalty for the excessive sugar stocks this week, while Estonia's leadership said it would litigate over any fine that the commission comes up with.

"The blame for a possible penalty definitely doesn't lie with the Estonian state," Prime Minister Andrus Ansip told Estonian Radio on May 27. "It was subsidized European sugar that was exported to us, so with any penalty Estonia will effectively have to pay subsidies to European sugar beet growers," he said.

Provided that the final size of the overstock is deemed at approximately 91,000 tons, the penalty will amount to approximately 715 million kroons (45.8 million euros), payable over 2006 's 2009.

Ansip said it was not realistic to substantially reduce the extra stocks through reprocessing or export, so the only real option was to litigate. Turning that much sugar into feed for bees would supply the country with feed for the next 10 years and require large costs for storage, he said.

He also dismissed the prospect of selling the sugar on the world market as an "inappropriate adventure" for the country to embark on.

The Ministry of Agriculture said it was helping prepare a lawsuit to the European Court of Justice to contest the inclusion of sugar stocked by private individuals in the overall stocks deemed as excessive. The Foreign Ministry will head preparation efforts and reportedly has two months to file it.

Still, any penalty for excessive stocks will have to be paid regardless of an appeal. Should Estonia eventually win, part of the penalty will be paid back, according to reports.

As far as the private sector, Estonian companies that possessed excessive stocks of sugar have until Nov. 30 to remove it from the market. If they fail to do so, they will have to pay a fine for excessive stocks, which the state in turn can use to pay its bill to the European Commission.

So far Estonia has ordered 27 businesses to pay a penalty for excessive sugar stocks. Seventeen businesses 's those that account for the bulk of the excess 's have contested the order in court.

Meanwhile, the commission last week decided not to penalize Latvia for accumulating excess sugar in the run-up to EU accession and will allow the Baltic state to use the surplus sugar for purposes such as bee-keeping or production of bioethanol or cattle feed.

The Latvian Agriculture Ministry said it would soon produce a detailed plan how to get rid of the surplus sugar stocks by the Nov. 30 deadline. "We are certain that Latvia will dispose of excess sugar stocks by the deadline specified by the European Commission, and our experts are working on all possible options," said Agriculture Minister Martins Roze.

He said that by July 1 the ministry in cooperation with the State Revenue Service planned to find those companies that had accumulated excess sugar stocks prior to accession. The minister said that the companies would have to withdraw the excess sugar from the market so that Latvia could prove to the commission by Feb. 28, 2006 that it had gotten rid of all surplus sugar.