Latvian sugar mills ponder cost of closure

  • 2005-07-06
  • From wire reports
RIGA - A European Commission official said that Latvia's sugar producers could receive approximately 48.2 million euros in compensation from the EU if they decided to close next year when the union's sugar industry reform program goes into effect.

Andrew Rasbash, head of the European Commission's representation in Latvia, told the press that under commission proposals for industry reform compensation would be 730 euros per ton of production quota 's if they decided to cease business next year.

By contrast, if a decision to close is made in 2007 or 2008, compensation would be 625 euros per ton.

The quota for Latvian sugar producers is 66,000 tons.

Rasbash explained that in order to receive compensation, sugar producers would have to give up the quota voluntarily, cease production, dismantle equipment and provide staff with jobs.

He added that the compensation system had not yet been fully worked out. Likewise, it was also not known whether all EU members would support the proposal.

The European Commission representative said that Latvia currently made 0.38 percent of all sugar produced in the EU and is one of the countries where the industry's development remains unclear, whether it is needed at all. "The commission thinks that if sugar production continued here, with time it would shrink considerably anyway," said Rasbash.

The EC proposed reform, which will take effect once approved by EU agriculture ministers and the European Parliament, calls for slashing sugar purchase prices by 39 percent over two years starting July 2006.

Latvia's two sugar producers and sugar beet farmers are strongly opposed to the reform program, saying that they had invested too much money in developing and upgrading their trade.

There are two sugar mills in Latvia 's Liepajas Cukurfabrika and Jelgavas Cukurfabrika (Jelgava Sugar Mill) 's that together have invested 14.7 million lats in development over the last five years. At present about 600 farms in Latvia grow sugar beets. Total investments by farmers since 2000 has reached 6 million lats (8.34 million euros).