Food industry gives sugar reform a cautious welcome

By Anthony Fletcher

- Last updated on GMT

Related tags: European union, World trade organization

Sugar users in the UK have cautiously welcomed the Council of
Ministers' agreement to lower European sugar prices, but have
demanded a more competitive future marketplace.

"We welcome the prospect of a more realistic price for sugar in the future, but we are disappointed that its introduction has been delayed by up to four years,"​ Richard Laming, spokesperson for the UK Industrial Sugar Users Group told

"We regret that the size of the price cut was reduced at the last minute, leaving the EU price still double the world price. That will cost jobs in Britain."

Details are still emerging, but the initial proposal of a price cut of 39 per cent has been cut to 36 per cent after three days of intense discussions.

The EU argues that such reform will guarantee the sector a viable long-term future, and will strengthen the EU's negotiating position in the current round of world trade talks.

"It will bring a system, which has remained largely unchanged for almost 40 years, into line with the rest of the reformed Common Agricultural Policy,"​ said the Commission in a statement.

However, Laming believes that the reduction was made in order to create more money for compensation for those forced to leave the sugar industry.

"This deal takes the easy way out by simply dumping increased compensation costs on consumers and industrial users,"​ he said.

"These costs will be paid for in the end by higher prices and lost jobs."

Nonetheless, Laming accepts that some degree of compromise was inevitable. "The important thing is that the offer holds out the possibility of a more competitive future,"​ he said. "It doesn't guarantee it though, and a lot more work is still needed."

Ingredients giant Danisco expressed similar sentiments yesterday. It agreed with the main principles of the Council's decision, but expressed a couple of reservations.

"We're very pleased that the reform process is almost at its end now,"​ said executive vice president Mogens Granborg.

"The Commission's initial proposal has been subject to some adjustments in the course of the negotiations, some of which are positive, some more negative.

"For instance, we consider the extended period for implementing the price reduction, which turned out to be a little less than initially proposed, as a sensible solution, whereas we see a risk in extending the period for providing the high-rate restructuring aid in the case of factory closures, as it could lead to an increasing sugar surplus on the market for a longer period."

Laming is adamant that a competitive future sugar market must be created, because even after reform, the EU price will still be double the world price.

"It is wrong that a procedure has been established to reduce the market access open to the world's poorest countries,"​ he said.

"We will oppose any attempts to limit their access to the EU market. This deal ends a chapter but it is not the whole story - the reform process must go on to ensure that the promised benefits actually materialise."

Granborg added: "It's also clear that a number of important details remain unsettled at this late stage of the reform process. We need clarification of the specific terms for exports and imports and for the production of sugar for non-food use."

Based on the Council's decision, the Commission will now start preparing the legal text and the provisions that will be effective in the transition to the new sugar regime. Only when that has been finalised and the European Parliament has given its opinion about the sugar reform in January 2006, can the Council adopt the sugar regime in its final form.

Related topics: Markets

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