The European Union has finally put an end to nearly 50-years of quotas on sugar prices. Despite the seemingly good news, the measure is overshadowed by the fact that the EU not only maintains large tariffs on sugar imports, it also recently announced that it will probably continue backdoor-protectionism regardless.

50 Years of Market Distortion 

Sugar quotas actually have a long history in Europe. Introduced as early as 1968, sugar quotas were instituted to protect European sugar farmers from low prices by setting them considerably above the market price.

In the 1990s the EU decided on a similar solution and substituted the union’s support price for sugar and instituted a direct payment to the farmers. It intended to gain more “market orientation” of sugar producers on the continent. But more “market-oriented” or not, the consumer, after both support prices and large subsidies, still has absolutely no idea what the real price of sugar is.

The end of the EU’s sugar policy came in sight after a negative WTO ruling on a complaint filed by Australia. The WTO agreed that EU import rules for sugar were unfairly giving advantages to local producers.

For consumers, the end of these government quotas is good news. Sugar producers will have to compete with imports from EU free trade partners from all over the world, which will increase choice and price competition in the marketplace.

As to whether or not the prices will fall, this has yet to be seen. In any way, lower prices will incentivize the sugar industry to demand renewed financial help from governments, which is something they already effectively lobbied for.

But this interference in agriculture by the government is nothing new for the EU.

It Started with Milk

In 1960, the EU’s European Common Agricultural Policy was introduced. This policy, better known under its acronym CAP, organizes the continent’s agricultural subsidies (which in themselves are bad enough) and other programs regulating the industry.