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Last Updated: Thursday, 24 November 2005, 20:58 GMT
EU agrees cut in sugar subsidies
Sugar farmer in Honduras
Sugar farming is a vital business in many of the world's poorer nations
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.

I know I'll be in a much better position for the [WTO trade] negotiations in December
EU Agriculture Commissioner Mariann Fischer Boel

EU farmers wishing to abandon growing sugar beet will now be offered compensation amounting to 64.2% of revenues lost due to the price cuts.

The agreements follow three days of marathon talks.

At present, the EU pays about 1.5bn euros ($1.8bn, 1bn) annually to support the sugar sector.

Former colonies

Change was demanded of the EU after the WTO ruled earlier this year that its existing 40-year-old guaranteed pricing system was illegal.

Sugar production

The WTO's judgement followed a formal complaint from Australia, Brazil and Thailand.

These three countries will now benefit from a reduction in subsidised European sugar on the global marketplace, along with other smaller, and poorer, sugar producing countries in the developing world.

However, not all sugar exporting nations are happy at the changes.

Some 18 sugar producing former European colonies with special access to EU markets will also now be affected by the guaranteed price cut, such as Mauritius, Barbados and Fiji.

These so-called ACP countries (African, Caribbean and Pacific) have warned that their sugar cane growers will be less able to cope with the changes than European farmers.

Some of the sharpest criticism of the deal has come from the Caribbean where sugar producers have traditionally won a big share of the market in Europe.

Dr Ian McDonald chief executive of the Caribbean Sugar Association told the BBC that the cuts in the European sugar price were "outrageous" and a betrayal of the sugar farmers in the ACP group.

'Sacrificed'

Oxfam has also called the EU's agreement a "betrayal", claiming it does not go far enough in helping sugar farmers in developing industries, at the same time as offering insufficient compensation for affected ACP members.

Graph showing main sugar imports

"Developing countries have been sacrificed in order for Europe to reach a deal," said Luis Marago, head of Oxfam International in Brussels.

Oxfam points to the fact that under the new deal, Europe will be able to restrict imports from the Least Developed Countries if they increase their exports to the EU by more than 25% each year.

EU Agriculture Commissioner Mariann Fischer Boel said the new sugar agreement "complies completely" with WTO rules.

She said it will make her life a lot easier at next month's WTO ministerial conference in Hong Kong.

"I know I'll be in a much better position for the negotiations in December," she said.

Caribbean sugar producers said they will also be in Hong Kong in December to put their case to the WTO.




SEE ALSO:
Sugar producers see crisis ahead
24 Nov 05 |  Business
Q&A: Sugar subsidies
19 Sep 05 |  Business
EU sugar reform splits exporters
22 Jun 05 |  Business
Sugar sector 'must reform or die'
22 Jun 05 |  Business


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