Environment, Food and Rural Affairs Committee

Session 2005-06

17 November 2005


17 November 2005

UK GOVERNMENT MUST STAND FIRM ON SUGAR PRICE CUTS, SAYS INQUIRY

The Commons Committee on the Environment, Food and Rural Affairs is today urging the Government not to give in to pressure from other EU members to dilute sugar price cuts, as part of the reform of Europe's Common Agricultural Policy or CAP.

The Committee says that pushing through lower minimum sugar prices for the European market will drive out the less efficient producers and rebalance the market. The Committee is concerned, however, that price cuts could unfairly affect British producers if they were applied to the whole, new "unified quota".  The UK Government must push for changes to these proposals so that "deficit" countries like the UK (which rely on imports to meet consumption) do not suffer from an effectively sharper price cut than their "surplus" counterparts.

From the consumers' point of view, the competition authorities should ensure that any drop in the cost of producing sugar is actually passed on to British shoppers.

The UK's sugar beet industry has relatively high efficiency, and any final deal must allow it to capitalise on that. Although sugar beet production in the UK has benefits for the environment and biodiversity, these should be encouraged by environmental stewardship schemes under the CAP, rather than by spending public money on propping up its outdated elements.

Similarly, the cane refining industry may be disadvantaged by the proposed pricing changes and the Committee is sympathetic to the idea of retaining some form of refining aid. Furthermore, the EU Commission's package of assistance for the African, Caribbean and Pacific countries wishing to withdraw from cane sugar production is not enough.

The Government must also hold to its position of unlinking the amount farmers get in direct payments from sugar production, since a coupled system only distorts the market. Sugar growers should be able to benefit when prices go higher than the agreed minimum.

Michael Jack, Chairman of the Committee, said:

"Whilst no one disagrees with the need for a reformed sugar regime, our report highlights the need for the Government to argue the 'British case' in spite of its role as President of the EU. Some of the Commission's proposals on the new pricing regime impact unfairly on Britain's farmers and this must be corrected. Equally the structure and operation of the future sugar market must ensure that sugar users benefit from the lower prices heralded by the new system. The Government must ensure that Britain's natural advantage as a sugar beet producer is not lost in the final outcome of the negotiations."

NOTES FOR EDITORS

1. For more information or to arrange bids for the Chairman of the EFRA Committee, Rt Hon Michael Jack MP, please call Jessica Bridges Palmer on 07841 737 349.

2. The report follows an inquiry into reform of the EU's sugar regime conducted in October 2005. The inquiry was announced in our press notice of 26 July 2005 (available on our website), following the publication of the European Commission's draft legislative proposals for reform of the EU sugar regime (http://www.europa.eu.int/comm/agriculture/capreform/sugar/prop_en.pdf).

3. The UK, which currently holds the Presidency of the EU, has declared its ambition of reaching agreement on the Commission's proposals at the Agriculture Council on 22-24 November. The UK Government has stated that such an agreement would put the EU in a better position to contribute to the World Trade Organisation Ministerial meeting, which starts in Hong Kong on 13 December 2005.

4. The Committee received written evidence from a number of interested parties. It took oral evidence from: Tate & Lyle Sugars Europe, the UK Industrial Sugar Users Group, the Dutch Beet Growers' Federation, the National Farmers' Union, British Sugar plc and Lord Bach (Minister for Sustainable Farming and Food). Uncorrected transcripts of these evidence sessions can be found on the Committee's website. The Committee also benefited from informal meetings with Ms Joan Noble, an independent consultant on sugar issues, and Mr Lars Hoelgaard, Deputy Director-General of the European Commission's Agriculture and Rural Development Directorate General.