40% sugar price cut proposal fear
European Commission studies have shown that sugar production is most vulnerable in Greece, Ireland and Italy - even as the Commission prepares price cut proposals which could condemn sugar companies in these countries.
Agriculture Commissioner Franz Fischler said last week: "A cut in EU production and probably also in prices seems to me unavoidable."
In July, thousands of sugar workers and farmers across the Union will learn how much Fischler, due to leave office at the end of October, wants to reduce EU internal sugar prices, when to do it and how much compensation will be on offer.
But it will be up to Fischler's successor to take his July proposals and find common ground among 25 governments on reforming the EU's last key farm regime to survive virtually untouched since its launch in the late 1960s.
Maintaining the sugar status quo or completely liberalising the sugar regime (which keeps internal EU sugar prices at more than three times the international price) are no longer seen as options.
Instead, a price-cut proposal is expected in July, aimed at mollifying EU critics such as Australia, Brazil and Thailand, which have together filed a suit against EU sugar policy at the World Trade Organisation (WTO), on which a ruling is expected in September.
The Commission says that the deeper the price cut, the more countries will see their sugar industries forced to close. Its own analysis suggests a possible cut of up to 40% which would leave France as Europe's only producer.
Even a small price cut could devastate sugar production in Greece, Ireland and Italy. Next to suffer would be Spain, Finland, Latvia, Lithuania, Portugal, Slovakia and Slovenia.
Member states will be slow to get involved in negotiations and reveal their hands until the result of the WTO dispute against the EU is known.
Several states, led by top producer France, have played down the need for reform before mid-2006, when the current regime is due to expire.
