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Last Updated: Thursday, 24 June, 2004, 16:13 GMT 17:13 UK
Europe plans sugar subsidy cuts
A young worker on a sugar cane plantation in El Salvador
The system favours large agri-businesses over small farmers
The European Union is planning a major shakeup of sugar subsidies to answer charges that they hurt poor countries.

The plans will curtail subsidies and guaranteed prices, factors which campaigners say allow European farmers to undercut poorer competitors.

The result, a spokesman said, could be to cut exports by a third as well as opening up space for imports to Europe.

But some poorer producers now exporting to Europe could suffer, and the EU's sugar firms are likely to resist.

Germany's Suedzucker, the biggest sugar refiner in Europe, warned that farm and refinery closures may well be the result.

Sugar was the only remaining sector where there had been no change for 30 years
European Commission spokesman
"Such proposals will make it of critical importance to produce in the best beet areas of Europe," a spokesman told Reuters.

Shares in European sugar producers fell on Thursday.

WTO case

The Commission declined to detail the scale of the cuts, saying they were likely to change before the plan went before the Commission on 14 July.

But officials and documents quoted in newspaper and news agencies set the cuts at:

  • Quotas down from 17.4 million tonnes a year to 14.6 million tonnes
  • Subsidised exports down from 2.4 million tonnes a year to 400,000 tonnes
  • Guaranteed prices cut by 30-40%.

    Part of the impetus for the change is a World Trade Organisation case brought by developing countries led by Brazil, whose sugar cane industry is challenging the generous handouts given to European sugar beet farmers.

    European agriculture commissioner Franz Fischler
    Fischler may anger both pressure groups and farming interests
    The Commission, however, played down this factor, a spokesman preferring to set the reform in the context of 18 months of changes to the Common Agricultural Policy.

    "Sugar was the only remaining sector where there had been no change for 30 years," he said.

    'Not far enough'

    But pressure from non-governmental organisations also played a part.

    Among other groups, Oxfam has called for an end to guaranteed prices for European sugar producers, saying EU taxpayers are in effect giving a billion dollars a year in subsidies.

    The charity claims a few large firms are profiting by selling sugar to European consumers at three times the world price - while undercutting producers from poorer countries in the export market.

    "The proposed reform package will not end the dumping of sugar which destroys poor people's livelihoods," said Phil Bloomer, head of Oxfam's Make Trade Fair campaign.

    "Worse still, it will not increase developing countries' access to the European market, but will in fact cut the price they receive for their current modest exports to Europe."

    The overall 2.8 million tonne quota cut would create little space for fresh imports, Oxfam said, advocating a cut of 5.2 million tonnes instead.

    And the proposed system could favour large-scale agribusiness over small farmers, the group warned.

    Survey sparks farmer subsidy row
    24 Jan 04  |  England

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