Farm chief plans to help reform-hit sugar growers

By David Cronin

Date: 16/06/05

Sugar producers in both Europe and developing countries are to be offered compensation for the losses incurred by the reform of the EU's sugar regime to be proposed by the European Commission next week (22 June).

Mariann Fischer Boel, the commissioner for agriculture, insists that the cuts in the guaranteed price for sugar must be deeper than those sought by her predecessor Franz Fischler last year. She has recommended that the support price should be reduced by 39% - from €632 to €385.50 per tonne - within a two year period, 6% more than recommended by Fischler.

She is also suggesting that €896 million should be made available from the EU budget in 2006-07 and €1.5 billion in 2007-08 to sugar beet growers affected by the reform. These sums would make up for about 60% of income loss. Payments would range from €278m for Germany and €269m for mainland France in 2007-08 to €1m for the Azores.

Louis Michel, the commissioner for development and humanitarian affairs, is also to present a plan for aiding African and Caribbean countries which fear that the price cuts will result in major job losses for their sugar industries.

The plan is to earmark €300m to sugar-reliant countries in the African, Caribbean and Pacific (ACP) bloc, €200m less than what a study by the UK government identified as necessary to cushion the blow from reform. It will also include suggestions about helping those countries modernise their industries with new technologies, promoting alternative uses for cane and boosting access to finance for small- and medium-sized firms.

The Commission is hoping that EU governments will approve the reform measures in November, increasing the chances of a deal on global trade at a Hong Kong meeting of the World Trade Organization the following month.

Yet Fischer Boel acknowledged that her task would prove arduous. Ten EU states have already protested strongly against the more modest overhaul suggested by Franz Fischler. These include Italy, Spain, Finland, Ireland, Greece and Hungary.

Among the developing countries wanting less severe cuts, introduced over a longer period, are Ethiopia, Mozambique, Guyana, Jamaica, Fiji and Mauritius. José Chilengue, director of the Sugar Producers' Association of Mozambique, has warned that his country will have nothing but "HIV, malaria and poverty" unless it is allowed more time to strengthen its industry.

Fischer Boel has argued that the reform is necessary because the 'Everything But Arms' (EBA) scheme will allow sugar producers in the world's poorest nations unfettered access to the EU's markets from 2009.

Jean-Claude Tyack from Mauritius, chairman of the ACP London Sugar Group, alleged that there was a "hidden motive" to the reform - to prevent them from putting their industries on a more competitive footing before the EBA provisions come into effect. "We feel the reform is too soon, too deep and too quick," he said. "It will be very destructive to our industries."

But Europe's sugar industry has complained that the EBA scheme will turn into a boon to better-off developing countries, particularly Brazil. EBA, it says, allows countries to import sugar from the world market to satisfy domestic demand and then export their home-produced sugar to the EU.

"EBA is an open door to the European market for Brazilian sugar," said Jean-Louis Barjol from the committee of European sugar manufacturers. "This will result in a collapse of the European market."

Anticipation to discussions at the EU's Agriculture and Fisheries Council on 21-22 June 2005 on the reform of the EU's market regime for sugar. Proposals presented by the European Commissioner for Agriculture and Rural Development, Mariann Fischer Boel, suggested massive price cuts accompanied by financial compensation to sugar beet growers affected by the reform, both in Europe and developing countries.

European Commission: DG Agriculture and Rural Development: Agricultural markets: Sugar http://ec.europa.eu/comm/agriculture/markets/sugar/index_en.htm

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