The European Commission today proposed reforms to the Common Market Organization for sugar, which has remained largely unchanged for the past 40 years. The changes are designed to bring the sugar regime in-line with other European Union programs and encourage producers to grow sugar where is it sustainable.
"There is no alternative to a profound reform," says Mariann Fischer Boel, EU Commissioner for Agriculture and Rural Development. "The easy option would be to sit on my hands. But that would mean a slow and painful death for the European sugar sector."
Sugar is a sticking point in world trade negotiations for not only the EU but also the United States. As countries participate in liberalized trade with fewer price supports, it EU's proposed reform will encourage less competitive producers to leave the sector and cope with the restructuring agricultural system.
Gary Blumenthal, president and CEO of ag trade think tank World Perspectives, explains that for a long time the U.S. sugar producers have hid behind EU sugar programs. If the EU changes sugar programs by cutting prices and quotas, that rationale is gone for U.S. producers, he says.
Fischer Boel explains that in order to make EU sugar producers have a competitive future, the EU must take action now to prepare for the challenges ahead. "The changes will enhance the competitiveness and market-orientation of the European Union sugar sector, guarantee it a viable long-term future and strengthen the EU's negotiating position in the current round of world trade talks," a statement from Boel's office says.
African, Caribbean and Pacific countries, which traditionally export sugar to the EU. will benefit from an assistance program, also adopted by the Commission today. The Commission reform proposals include a two-step cut totaling 39% in the price for white sugar and compensation to farmers for 60% of the price cut through a decoupled payment.
The decoupled payment would be linked to the respect of environmental and land management standards and added to the Single Farm Payment; a voluntary restructuring scheme lasting four years to encourage less competitive producers to leave the sector and end government intervention. The ACP assistance plan will earmark ‚¬ 40 million for 2006 and pave the way for further assistance. The Commission hopes for a political agreement on the proposals at the Agriculture Council in November.
Commissioner for Development and Humanitarian Aid, Louis Michel, highlights: "We fully understand that the EU sugar reform is a serious challenge for many of our ACP partners. The proposed assistance scheme will help them to secure a smooth transition, in the framework of a local strategy for sustainable development."