Lobbyists face EU sugar reform struggle

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Related tags: European union

EU Agriculture Commissioner Mariann Fischer Boel has dealt a blow
to sugar reform lobbyists across Europe and developing countries by
voicing her opposition to special arrangements for different states
when proposals are adopted later this year, reports Chris
Mercer.

Addressing the EU Parliament in Strasbourg, Fischer Boel said she thought all member states should take equal responsibility for implementing reform: "In my opinion a special arrangement would just be against our restructuring objective and our principle of an equal treatment for all member states."

And there was also a warning for all member states that any half-baked reform would likely require more changes in the near future, only causing further disruption.

"I am therefore convinced that the proposed 33 per cent price cut and a 2.8 million quota cut is a necessary minimum to achieve an effective reform, balance the market and respect our international obligations,"​ said Fischer Boel.

The news comes as a blow to various lobbyists from a number of EU member states, including the UK, Ireland and some Eastern European countries, who have been pushing for greater variation in quota reductions and a more gradual price reduction.

For example, the UK's National Farmers' Union (NFU) recently released a policy statement arguing there should be no cut to the UK's production quota at all because Britain is one of the most efficient industries; only producing 50 per cent of domestic consumption and importing the rest from poorer African, Caribbean and Pacific (ACP) countries.

An NFU spokesperson told www.BakeryAndSnacks.com​ that it was too early to predict concrete effects on the UK industry but that current Commission proposals to achieve reforms within three years might not give producers time to adjust. He added that the proposed price cuts were also too drastic, though some price lowering was necessary.

The EU Parliament had asked for a more detailed impact assessment of reforms, yet Fischer Boel said that further studies would only delay decisions that must be taken: "I am convinced that more studies will not provide us with facts that we do not already know."

She repeated the Commission's determination to get a political agreement on sugar reform by November this year, in time for the scheduled World Trade Organisation meeting in December.

But pressure is growing on the Commission to amend its existing proposals, notably from the 16 ACP countries who are tied into the EU sugar regime through the Sugar Protocol. This means any reduction in the EU price paid to domestic European sugar producers likewise reduces the price received by the ACP quota holders for their exports to the EU market.

Paul Ryberg, counsel to the Mauritius Sugar Syndicate, said current proposals may mean 300,000 job losses, equating to about half the workforce, and a €568.8 million loss in export revenues for the ACP group.

"There is a serious risk of fundamental and perhaps irreparable injury to the majority of the ACP sugar countries,"​ said Ryberg who added that only one third of the ACP countries could expect to survive and perhaps expand their industries. Others, such as the Ivory Coast, Jamaica and the Congo faced ruin or at best serious competitive problems.

Ironically, the EU's Everything But Arms initiative, to be launched in 2009, is intended to build up third world countries such as these by allowing duty-free exports into the Union.

ACP criticisms of the proposed sugar reform may therefore add to the pressure for a change in the final plan, although Fischer Boel said yesterday that the EU was aware of the strain on ACP countries.

"We have also clearly indicated that we stand prepared to accompany this process, on the basis of an action plan the Commission presented on 24 January,"​ she said, though Ryberg was sceptical about the amount of EU support ACP countries would receive.

However, Fischer Boel has consistently called for a bold and swift reform, and yesterday re-iterated plans for growers in member states to receive compensation, which is currently set to be a sum equal to 60 per cent of the reduction of the institutional sugar price.

Under existing plans, designed by Boel's predecessor Franz Fischler, minimum sugar beet prices would be cut by about a third, from €43.6 per ton to €27.4, in two steps over three years, and the total EU production quota would come down by 2.8 million tons to 14.6 million by 2008/9.

The EU produces between 19 and 20 million tons of sugar every year, accounting for 14 per cent of world sugar production. EU sugar is currently three times more expensive than that produced in developing countries.

Last year the Commission defied the World Trade Organisation by refusing to end member states' subsidies, on the basis that EU sugar production would collapse in the face of cheaper imports from the southern hemisphere, namely Brazil, which is now the world's biggest exporter.

Related topics: Commodities, Cocoa & Sugar

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