New Europe sugar prices 'devastating' for Caribbean

Caribbean sugar producers lambasted an EU proposal yesterday to slash guaranteed sugar prices by 39%, saying the change will devastate their fragile economies.

Caribbean sugar producing countries could lose more than $100m (€82.6m) a year due to the cuts, said Ian McDonald, the director of the Sugar Association of the Caribbean, which represents sugar companies throughout the region.

“This is a colossal amount for small and fragile economies,” McDonald said. “This is a serious matter.”

The European Commission’s proposal followed a successful challenge to the subsidy system at the World Trade Organisation by Australia, Brazil and Thailand. The WTO ruled in April that the EU’s system of subsidies to guarantee high prices for European sugar producers was illegal.

The sytem also grants preferential treatment to sugar producers to poor nations in Africa and the Caribbean.

“It’s going to be devastating,” said Jamaican Agriculture Minister Roger Clarke. “We have to be super-efficient to survive.

EU Agriculture Commissioner Mariann Fischer Boel insisted there was “no alternative to a profound reform”, saying failure to change would lead to a “slow and painful death” for the European industry.

McDonald said Caribbean producers would lobby hard to prevent EU governments and the EU Parliament from approving the proposal.

His association has also vowed to challenge the cuts at the International Court of Justice. Caribbean producers are calling for smaller cuts and more time to adapt to the changes.

The Commission hopes the changes will be approved by the 25 governments at a meeting of farm ministers in November. The Commission offered $48m (€39.6m) in compensation to 18 poor sugar-exporting nations next year, a proposal the aid group Oxfam called inadequate.

Under the Commission’s proposals, the cuts will be introduced in stages taking the guaranteed price from the current level of $764.1 (€631) per metric tonne to $466.1 (€384.80) by the 2009/2010 season.

The Caribbean exports about 325,000 tonnes of sugar – about half its total annual production – to the EU under a special scheme that pays them more than five times the world market price.