Sugar price cuts ahead

SIGNIFICANT CUTS in sugar prices and quotas, offset by partial compensation to growers, are contained in new EU proposals for reforming the sector.

In line with earlier leaks, the commission is calling for a massive 33% cut in support prices, taking the theoretical minimum beet price down from £29/t to just £18.20/t in three years.

Public sugar intervention would be replaced by private storage aid.

To realign EU supply with demand in the face of growing imports under the Everything But Arms agreement, quotas will also be cut.

A and B quotas will be merged and their combined tonnage reduced from 17.4m tonnes to 14.5m tonnes over four years.

This should all but end the need for subsidised exports and save the EU over €1bn (£666m), said EU farm commissioner Franz Fischler.

Such is the urgency of the need to reform the sugar regime, the changes should start from July 1, 2005, he told a Brussels press conference.

That is a year before the current regime officially expires.

To lessen the pain for growers, he is suggesting a 60% compensation package.

This could be targeted at sugar growers, or added to a country‘s general pool for single farm payments where these are allocated on a flat rate basis.

Farmers in the 10 new member states will get the full rate of aid from day one, rather than having it phased in over ten years as is the case for other commodities.

To encourage greater efficiency in the EU sugar industry, the proposal also calls for the cross-border transfer of sugar quota.

There may also be a formal restructuring scheme, worth €250/t of sugar processed, to help factories facing closure.

The proposals also deal with the problem posed by the African, Caribbean and Pacific countries which have preferential access under the existing regime.

They will still be able to export 1.3m tonnes of white cane sugar to the EU (mainly the UK), but only at the lower prices.

The commission will produce “tailor-made” policies to help them adapt to the new market conditions.

EU farm ministers will have their first debate on the proposals next week, though it will be at least a year before any decisions emerge.

A noisy demonstration by farm groups outside the commission in Brussels on Wednesday (July 14) gave some hint of the heated battles that lie ahead.