EU reforms set to wipe out sugar industry

THE cuts in European Union sugar subsidies announced yesterday are likely to end Ireland’s sugar industry and put 3,750 beet growers out of work.

The IFA and Agriculture Minister Mary Coughlan said the reforms would have drastic consequences for beet growers and the country's only surviving sugar factory in Mallow.

Author of the cuts, Agriculture Commissioner Marianne Fisher Boel, will face a harsh reception when she visits Ireland today.

Ms Coughlan said the reforms were "simply not acceptable". She said the proposals were more severe than she had expected and she would fight to change them.

John Dillon, IFA president, said: "The IFA will fight for the survival of the sugar beet, but the cuts proposed will put growers out of business."

However, the battle lines are already drawn. The sugar issue is a clear example of the trade debate which will feature heavily at the G8 summit in Gleneagles, Scotland, next month.

Celebrity campaigners Bono and Bob Geldof and charities such as Oxfam want the EU to end subsidies on certain food products and allow poor African countries trade their way out of debt.

The current system of inflated price guarantees, generous export refunds and high import tariffs for sugar production is the most graphic example of how the Common Agricultural Policy (CAP) distorts trade and makes it impossible for African farmers, such as those in Mozambique, to compete on the international stage.

Michael Bailey, a senior policy adviser at Oxfam, said: "The EU has been caught red-handed providing illegal subsidies to its sugar producers. European sugar policies top the list of trade injustices suffered by Africa and reform is desperately urgent."

The EU Commission's assessment of the impact of the reforms was that "sugar reduction was likely to be drastically reduced or even phased out in Ireland, Greece, Italy and Portugal".

Ireland, with its high production costs, was the most vulnerable, after Italy.

But Ms Fisher Boel was adamant her plans would go ahead. "There is no alternative to a profound reform. The easy option would be to sit on my hands, but that would mean a slow and painful death for the European sugar sector," she said.

Her plan is to cut beet prices by 42% from 2006 to 2008; cut the support price for white sugar by 39%; compensate farmers for 60% of the price cut through a decoupled payment which would be linked to the respect of environmental and land management standards and added to the Single Farm Payment; implement a voluntary restructuring scheme to encourage less competitive producers to leave the sector; and abolish intervention.

The effect will be to reduce the price of sugar to closer to the world price subsidies and quotas keep European prices three times higher.

Prices are expected to be driven down from the current €632 per ton to about €385 a ton. Currently it costs over €500 a ton to produce sugar in Ireland.

Irish farmers get about €42 a ton for beet, but this will be cut to just €25 over the next two years.