Sugar producers take stock of looming losses

  • 2005-06-29
  • Staff and wire reports
RIGA - Latvia's sugar producers and sugar beet growers are calculating the effects of the European Commission's sugar reform proposal, with farmers' projected annual losses amounting to some 4 's 6 million lats (5.7 's 8.5 million euros).

Uldis Caune, head of the Latvian sugar-beet growers association, said that if Latvian sugar beet farmers benefit from a proposed compensation scheme, losses would amount to 4 million lats; without compensation, they would be as high as 6 million.

The European Union announced June 22 plans to slash subsidies to the industry by some 40 percent by 2008. Mariann Fischer Boel, commissioner for agriculture, commented that Europe's sugar industry faced a "slow and painful death" if it did not reform itself. "I am convinced that EU sugar producers have a competitive future but only if we act now and act decisively to prepare them for the challenges ahead," she was quoted as saying.

Currently, sugar producers from EU member states are paid 632 euros per ton of sugar, or about three times the price on the world market. After the reform is implemented, the price will be 385.5 euros per ton. The commission has also proposed to reduce the purchase price of sugar beets from the present 42 euros to 25 euros per ton.

Last year the World Trade Organization ruled that EU subsidies, which amount to some 1.7 billion euros per year, were counter to free trade and therefore illegal.

To lessen the impact of the reform, Brussels is proposing a compensation scheme that will provide farmers with up to 60 percent of the subsidy cut and additional support for those who volunteer to leave the industry altogether.

Still, Latvian farmers are unlikely to accept the offer, Caune said. "Sugar beet growers would like the reform not to be so radical," he said, since "these price cuts for sugar beets are unacceptable."

Valija Zabe, CEO of the Liepajas Cukurfabrika sugar plant, said that in order to ensure the survival of the sugar industry, Latvia's farmers, sugar producers and the Agriculture Ministry had to agree on a united position on Brussels' proposal. She said a working group would be set up in July to seek a solution and agree on a united position that would be sent to the European Commission.