Sugar, skimmed milk dispute unresolved

  • 2003-12-04
  • Baltic Business News
TALLINN - The European Commission has stopped paying sugar import subsidies to new member countries, including Estonia, in an effort to harmonize price differences between agricultural products of current members and acceding states.

The decision to stop paying subsidies to producers who export sugar to new member states is one of the transitional measures used by the European Union.
"The objective is to remove excess sugar from the market, to avoid speculations with commodities and unfair competition," said Kalle Nolvak of the Ministry of Agriculture.
The Aripaev daily reported in November that the EU may fine Estonia up to 1 billion kroons (64.5 million euros) for allowing wholesalers to stockpile food staples such as sugar whose prices are expected to rise with accession next May.
For Estonia, reserves of sugar and milk powder leave it vulnerable to fines.
Andres Oopkaup, deputy chancellor in charge of food and trade at the Ministry of Agriculture, said that a fine of 500 million kroons was quite likely, while Agriculture Minister Tiit Tammsaar said that Estonia needed a political decision to resolve the situation.
The EU may subtract the fines from the aid funds, which have already been included in next year's state budget.
Henrik Hololei, one of the key figures in EU talks and head of the state-sponsored EU integration office, said that there might be no fines.
"This amounts to journalistic exaggeration," he said. "I have not seen any figures. It is possible that at the other end concessions might be made but not on sugar and milk powder," Hololei added.
Over the past few months, imports of sugar, vegetables and dairy products to Estonia have increased dramatically. Compared with the end of September of last year, imports of skimmed milk powder increased more than tenfold - from 687 tons to 7,744 tons.
Fearing a spike in prices, importers have taken to stockpiling, both to satisfy domestic demand and possibly to take advantage of the common market come next May, when they will be able to export, for example, cheap Ukrainian sugar to Germany or England and thus make a windfall.