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Last Updated: Monday, 22 December, 2003, 09:07 GMT
Sugar industry to face market exposure

By Quentin Sommerville
BBC News Europe business reporter in Brussels

Growing sugar cane
The world price for white sugar is about 250 euros a tonne.

Sugar producers in rich countries and their former colonies will have to fight hard in 2004 to continue receiving special treatment from the authorities.

The European Union (EU) is for the first time keen to expose its sugar producers to the harsh forces of the free market.

While in the US, sugar states feel threatened by a proposed free trade agreement with five Central American states.

The removal of agricultural subsidies and other protective measures in Europe and the US is seen as crucial to move global trade talks forward in 2004.

The sugar industry is also targeted due to the impact sugary food and drinks have on health.

Overproduction

Europe supports free trade, but there are some areas where it has what can only be described as something of a blind spot.

Obesity on the rise
The sugar industry impact on health makes it a target for reform.
The way it treats its sugar industry is perhaps the most glaring example of protectionism.

Sugar producers in Europe and its former colonies live in a bubble protected from fluctuations in world prices.

Sweetened by subsidies, sugar beet farmers produce some of the most expensive sugar in the world, and they produce lots of it.

The world price for white sugar is about 250 euros (175) a tonne.

But Europe's producers are paid about 700 euros, with European taxpayers funding the difference.

And those well-paid farmers are making far more sugar than Europe needs; about 3m tonnes too much this year alone.

Free trade

There are historic reasons why the free marketeering EU supports such an expensive and inefficient system.

It largely predates the creation of the Common Market, which started life as an agreement to remove trade barriers for steel and coal trade, and only later evolved into European Union.

Over time, the member states also moved away from the protectionism originally intended to guarantee the prosperity of member states, to become a leading proponent of free trade.

Habit

The sugar agreements were designed to ensure that sweet-toothed member states like France and the United Kingdom never ran short of sugar.

Sugar plantation
The sugar industry is a powerful player on the global scene.
They were also intended to safeguard the livelihood of sugar-producing former colonies, such as Mauritius.

But Europe's sugar habit is coming to an end.

The European Commission says it is time for reform.

It wants all its agriculture duty and quota free by 2009.

If that happens, then at last the European Union will be closer to realising its free market ambitions.

Lobbying

But the sugar industry is a powerful player on the global stage.

In the US, as in Europe, sugar producers are eager to receive special treatment.

Earlier this month, President George W Bush received a letter from three sugar state senators who wanted him to keep sugar out of a proposed Central American Free Trade Agreement (CAFTA).

In the letter, the senators warned that Congress could oppose the free trade agreement with five Central American countries if it was to include "provisions harmful to the sugar industry".


SEE ALSO:
Sugar subsidies squeeze poor
03 Sep 03  |  Africa
WHO attacks US sugar lobby
22 Apr 03  |  Americas


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