EC MAY OFFER INTERVENTION SUGAR TO LOCAL MARKET Sugar which EC producers plan to sell into intervention may be offered by the European Commission for sale within the Community, broker C. Czarnikow says in its latest sugar review. The Commission will propose to offer the sugar at a very nominal premium of 0.01 European Currency Unit (Ecu) to the intervention price, with detrimental consequences for producers' returns, Czarnikow says. The move is seen as an attempt to persuade the producers to take back the surrendered sugar. The Commission may also take other steps to dissuade producers from their chosen course, such as removing the time limit on storage contracts, which presently means that intervention stocks have to be removed by the end of September, Czarnikow says. There is also the possibility of production quotas being reduced. If the Commission decided to offer the sugar to traders for export, the restitutions would have to be higher than those at recent export tenders, Czarnikow notes. To match the difference between the EC price and the world market price, the extra costs might be as much as 20 Ecus per tonne, it says. The producers might have to repay these costs through production levies and the proposed special elimination levy, Czarnikow says, but it would be several months before any costs could be recovered under EC rules. The primary cause of the plan to sell 775,000 tonnes of sugar into intervention in France is dissatisfaction with the EC export program as the restitution has increasingly failed to bridge the gap between the EC price and the world market price, Czarnikow notes. The French move is thus seen as a form of protest designed to force the Commission's hand. In West Germany, 79,250 tonnes have been tendered for intervention, but Czarnikow says the motive here is to ensure that the 1986/87 price is paid for sugar that was produced in 1986. In addition to a two pct cut in the intervention price, West German producers face a further price reduction in July with a probable revaluation of the "green" mark. Even if the immediate crisis is resolved, the problem is not expected to disappear permanently. It has appeared to traders for some years that the EC's export policy is insufficiently responsive to changing patterns of demand, it says. The weekly tenders should respond to fluctuating demand by increasing or reducing the tonnage awarded, Czarnikow says, suggesting that the Commission might also take steps to cut down the amount of "unnecessary bureaucracy" surrounding the export tender system.