FOLLOWING THE EUROPEAN UNION

Sugar price reform will lead to ruin, warn poorest countries

By Stephen Castle in Brussels
Published: 23 November 2005

Some of the world's poorer nations have said they face ruin over reform of the EU's multibillion-euro sugar subsidies, despite new concessions offered by the European Commission.

Europe's agriculture ministers were deadlocked last night over far-reaching plans to slash the guaranteed price paid for sugar by 39 per cent. Poor countries that rely on preferential access to European markets said that late concessions from the European Commission to phase in changes would help EU producers rather than them.

The row illustrated the complexity of efforts to reform Europe's farm policy, demonstrating how liberalising global trade can produce economic losers in the Third World and Europe.

Largely unchanged since the 1960s, the EU's sugar sector is one of the last unreformed vestiges of Europe's Common Agricultural Policy and is widely criticised for distorting world trade. Sugar has remained notorious since the EU's price support safety net encouraged a host of countries to enter the market to tap subsidies.

Only four of the EU's 25 states produce no sugar and about 320,000 farmers are involved in growing sugar beet, which is subsidised to the tune of €1.7bn (£1.2bn) each year. Most of this goes on supporting a price nearly three times that on the world market, and on ensuring the EU is also a net exporter of sugar, selling about five million tons outside the bloc, as opposed to its 1.9 million tons of imports.

While those exports hit producers of cane sugar in the Third World, the EU also props up the industries in its former colonies. Many of the so-called African, Caribbean and Pacific group of nations have based much of their economies on preferential access to European markets.

The European agriculture commissioner, Mariann Fischer Boel, yesterday outlined her ambition to see prices fall by 39 per cent, but proposed the measures should be phased in over a four-year period starting in 2006 - rather than the two years originally suggested.

But EU countries including Italy, Spain and Ireland demanded a longer phase-in and more aid for refineries and farmers who will lose their production quotas. Greece, Portugal, Slovenia, Hungary, Lithuania and Latvia demanded further concessions, arguing the reform would destroy their sugar beet sectors, and threatened to block a deal.

A compensation package of about €7.5bn is on offer for farmers and other industry companies to get out of the sector.

Riyad Insanally, Guyana's senior trade adviser on sugar, said Ms Fischer Boel's concessions would help beet producers in Europe rather than cane growers in the Third World. He argued that an immediate cut in subsidies for refining would hit cane producers, since processed beet does not undergo refinement.

He said: "It is going to be awful in Guyana, we are talking about a country of 750,000 people with an income of $1,000 (£580) per head. We face a massive 39 per cent cut, which makes our production commercially unviable. We are asking for a much more gradual cut over a longer period."

In Guyana, sugar supports the social infrastructure of the rural economy, enabling education and health clinics to exist. ACP countries say they stand to lose €300m a year in export earnings and want €100m in financial assistance in 2006 and €500m per annum thereafter to adapt and diversify.

The current EU offer is €40m for 2006 - though countries such as non-ACP sugar-producing nations including Ethiopia and Sudan will receive nothing. Arvin Boolell, Agriculture Minister of Mauritius, warned of the "human tragedy the reform proposals will cause in our countries".

Maltese crisis as migrant tide engulfs the West [/size

By Anne Penketh in Valletta
Published: 25 November 2005

In the playground of the disused school building Ibrahim Ali now calls home, surrounded by wire netting, he is talking about the four-month journey that brought him to Malta in search of a livelihood after fleeing civil war in Somalia.

"I can't say too much because it makes me cry," he said. "There were 28 of us on the small boat that we hired in Libya. I had to pay more than €1,000 (£680). We spent six days in rough seas with no food. Three people died." His voice trails off. "Can you help me?"

The people who can help 25-year old Mr Ali, and the 400 other illegal economic migrants from Africa in the camp who have ended up by accident on this tiny Mediterranean island, will be meeting in Malta, a few miles away at the five-star Golden Sands hotel for three days from today. The closed-door meeting of Commonwealth leaders from 53 countries should provide a unique forum for the rich countries, which have become the destination of the migrants and asylum-seekers from the developing world, to hold a meaningful dialogue with the poorer countries which are losing their most talented human resources.

Thousands of nurses, doctors and pharmacists from such Commonwealth countries as Ghana, Uganda, Botswana and Malawi have been poached by the rich Commonwealth states of Britain, Canada, New Zealand and Australia, severely straining the medical services of the African countries struggling with the HIV/Aids pandemic.

Now, the mounting problem of illegal migration is putting a further strain on developing societies as the middle classes rush for the exit as they try to lift their families out of poverty. But yesterday, as foreign ministers debated the summit's draft final communiqué, it looked unlikely that the issue, which has become a pressing problem for the summit's host government, will merit more than a line.

Leaders such as Tony Blair and John Howard of Australia see the migration issue through the prism of terrorism, and, in short, the North-South divide remains a dialogue of the deaf.

As Africans stormed the fringes of "Fortress Europe" - arriving in Spain's Moroccan enclaves, Malta and Sicily - to get a toehold in the EU, the European Union responded in July with "emergency measures" consisting mainly of financial incentives to help Malta, Italy and Libya start joint patrols and early warning systems.

But the measures do not address the root problem causing the mass population shift, and the migrants have continued to risk drowning in ever larger numbers.

For Malta, the smallest EU country which joined only last year, the arrival of 1,600 illegal migrants since the beginning of 2005 has overwhelmed the island's resources and brought a racist backlash against the "Arabs". But Don McKinnon, the Commonwealth secretary general, has said lowering trade barriers is a more effective way of eradicating the poverty that drives people to set sail for distant shores.

That is why he backs the call from the Commonwealth's developing countries in Africa and the Caribbean for the US, EU and Japan to drop the trade barriers and open their markets as part of the trade talks culminating at the World Trade Organisation in Hong Kong next month.

"If they dropped their tariff barriers, you would take 150 million people out of poverty," Mr McKinnon said. "Despite the increases in aid, greater economic opportunity will bring people out of poverty."

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Quote:

Sugar price reform will lead to ruin, warn poorest countries

Quote:

EU agrees cut in sugar subsidies

A reduction in subsidies for Europe's sugar farmers has been agreed by European Union agriculture ministers, officials in Brussels have confirmed.

They have agreed to cut the prices offered to European sugar farmers by 36%, bringing the EU's sugar rules into line with global frameworks.

The changes were demanded by the World Trade Organisation, but EU farmers and sugar firms have warned of job losses.

The EU had been paying Europe's sugar producers three times the world price.

Official complaint

The reform will come into effect in July next year and run until 2015.

It should help sugar producing developing nations, but many former European colonies are to suffer, as they also enjoyed access to the EU subsidies.

A spokeswoman in Brussels said the "deal has been done" on the basis of "a large qualified majority" of the ministers - in other words, by votes allotted according to states' population but weighted in favour of smaller countries.

Full report (BBC)

A reduction in subsidies for Europe's sugar farmers has been agreed by European Union agriculture ministers, officials in Brussels have confirmed.

They have agreed to cut the prices offered to European sugar farmers by 36%, bringing the EU's sugar rules into line with global frameworks.

[...]
A 36 percent price cut over four years beginning in 2006/07 to ensure sustainable market balance, -20 percent in year one, -25 percent in year two, -30 percent in year three and -36 percent in year four.

Compensation to farmers at an average of 64.2 percent of the price cut. Inclusion of this aid in the Single Farm Payment and linking of payments to respect of environmental and land management standards.

In those countries giving up at least 50 percent if their quota, the possibility of an additional coupled payment of 30 percent of the income loss for a maximum of five years, plus possible limited national aid.
[...]
This payment will be 730 euros per tonne in years one and two, falling to 625 in year three, and 520 in the final year.

On world markets, the highest price for white sugar was $324 per tonne, touched in July 2005.

re your remark about the US-sugar price: I suppose, it shows the largest gap the administration's free-trade rhetoric and its protectionist practices.

Also, let's not forget that the final decision on the European reform is still out.

I don't think that the head of states will change what their agriculture ministers already decided. Do you really think so (and if 'yes', why?)?

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