Fuente: © European Union
http://europa.eu.int

EU: Mariann Fischer Boel Member of the European Commission responsible for Agriculture and Rural Development - The future of the sugar industry in Europe

Seminar "Sugar and Seed – future perspectives" organised by DANISCO

/noticias.info/ Copenhagen, 8th May 2008

[Ladies and gentlemen],

It's a great pleasure to join you today.

It's a particular pleasure because, at a time when the media are working themselves into a frenzy about certain agricultural topics, the sugar sector is quietly getting on with its business and is even being overlooked.

Cereal prices are rising, and so the cereals sector is getting attention. (I should add that, in real terms, cereal prices have actually halved since 1975, but let’s not get into that debate now!) Oilseed prices are likewise rising, so the oilseed sector is getting attention. But in the current commodity price boom, sugar prices are not rising – and no-one chooses to say anything about this. That’s life!

But don’t think for one minute that you have been out of my thoughts over the last couple of months or years.

To some extent, since we agreed the sugar reform package in 2005 (and the actual Council Regulation in 2006), I have had to take a less prominent role in the sector’s affairs. In terms of reform, we had launched the ship, and I had to let others sail it. Nevertheless, I have been watching its progress closely – and of course I’ve helped with the steering a little from time to time.

Many elements of the reform package were ambitious – not least the intention to restructure the sector by encouraging the renunciation of 6 million tonnes of sugar production quota.

I'm fully aware that beet growers and sugar producers have made enormous efforts to use the restructuring fund positively – especially in some Member Sates.

In general, thanks to these efforts, restructuring has moved along harmoniously, though not necessarily at an even pace.

For the most part, growers and producers have come to agreements between themselves to ensure that growers going out of business receive fair compensation. This was very much the intention behind the restructuring fund.

Unfortunately, there are Member States – one of them "not very far from here”, so to speak – where the system has not worked so smoothly, which has caused considerable irritation in the sector.

Some have tried to point the finger of blame at me. I must suggest to those people that they check their facts and rethink their opinion.

It was always clear that producers and growers would have to organise the renunciation of quota in some way. When discussing with growers who should continue beet deliveries and who should not, producers were always free to give precedence to certain growers – provided that they did so on the basis of objective criteria.

The Commission said clearly that it would not interfere with such arrangements unless this was absolutely necessary, because in most cases the arrangements would be adequately covered by national and sectoral rules.

And indeed, in most Member States, this approach has worked very well. It was fundamentally sound.

If there are countries where it has worked less well, I strongly suggest that the focus must now be on implementing the rest of the reform process more smoothly – not on looking for scapegoats.

In any case, as I say, overall the restructuring process has gone very well, especially since the changes to the process that we agreed last year.

5.65 million tonnes of quota have now been given up. This leaves us just 350 000 tonnes short of our target of 6 million tonnes.

This is a resounding success that will leave the sector leaner and fitter for the future.

And the signs for the future are good.

Our market is well balanced. Opening and closing stocks for the coming marketing year should be stable and low: around 3.4 million tonnes, down from 4.2 million tonnes in October 2007.

And balancing the market at a lower price than in the past is already making the sector more competitive.

In this situation, I’m not proposing any new policy measures specific to the sugar sector within the Health Check of the Common Agricultural Policy (CAP), which is now in progress.

The Health Check is intended to make sure that the CAP is working as well and as simply as it can - in a European Union of 27 Member States and in the wider world as it is now. The Health Check must also help us to face up to developing challenges – such as fighting and adapting to climate change, and managing water better.

Much of what will be in the proposals to be adopted by the Commission on 20 May will be relevant to beet growers – for example, with regard to the Single Payment Scheme, and with regard to how we will encourage the development of bioenergy production.

However, as we are already getting our sugar sector into shape for the future through the reforms agreed in 2005, the sector does not need specific proposals in the Health Check.

Nevertheless, we can’t afford to be complacent. The sector must continue to improve. The European Union’s agri-food sector as a whole must continue to raise its game in a globalised world – with the right policy support – and the sugar sector is no exception.

In particular, since there has now been a considerable concentration of production, we must be vigilant to make sure that sugar distribution is working as it should.

We must also, as quickly as possible, solve an internal issue which has been an irritation in the sugar sector for far too long. I’m talking about the ongoing friction between the sugar industry on one side, and the chemical and fermenting industries on the other side.

Year after year, these industries fail to agree supply contracts which are satisfactory to both sides. Year after year, I and my staff then get telephone calls asking us to clear up the mess. This has got to stop. If the two sides don’t put their house in order, I will do it for them very soon.

If I had to impose a solution, a very likely approach would be to set up a permanent tariff rate quota (TRQ) of 400 000 tonnes of sugar for the chemical and fermenting industries. This corresponds to half of their needs.

The TRQ would always be in place, but to be used it would have to be triggered on a yearly basis by market conditions. For example, it would not be appropriate to use it in years when preventive withdrawal was on the cards.

For the sugar industry, we would allow exports of out-of-quota sugar at a level of 700 000 tonnes in order to balance the extra imports.

These exports would of course be without export refunds. But they would need to be counted against our WTO limits on subsidised exports because of the cross-subsidisation.

I believe this solution could work. But it would involve importing extra sugar at world market prices and exporting extra sugar at world market prices. Surely, direct agreement between sugar suppliers and sugar users would be a much more efficient approach? I leave that thought with you!

Another specific issue of interest is the conclusion of Economic Partnership Agreements with African, Caribbean and Pacific (ACP) countries.

As you know, under these agreements, we are moving towards quota-free, duty-free sugar imports from all 76 of these countries, governed by a safeguard clause which will limit the potential imports involved to about 3.5 million tonnes per year until 2015. (Bear in mind that a large part of this potential is already covered by the Everything But Arms Agreement, because many of the ACP countries are also Least Developed Countries).

The essential point to understand is that these imports have been taken into account in our sugar sector reform. Even if they occur at the full level, they should not destabilise our market.

A point of more significant uncertainty is how sugar will be treated if we get an agreement in the Doha Round of WTO trade talks.

Rumours are swirling around Geneva and elsewhere that sugar could be treated as a sensitive product.

Let me be clear: no decision has been taken on this yet.

Much depends on what is agreed in Geneva with regard to the Special Safeguard Clause. If sugar is covered by an efficient Special Safeguard Clause, there would not be a strong case for making sugar a sensitive product.

If these things don’t happen, we would have to consider declaring sugar a sensitive product. Of course, this would happen only after consultation with the European sugar sector.

I’m sure you know what principles we have provisionally agreed with our trading partners about sensitive products. The basic tariff for a sensitive product receives a smaller cut than the tariffs for a non-sensitive product in the same band. But on the other hand, an extra TRQ is opened for the sensitive products.

Without going into the technical details: according to the cut we make to the basic sugar tariff - which can be between one-third and two-thirds less than the cut for non-sensitive products - we would be looking at a sugar TRQ of between 485 000 tonnes and 675 000 tonnes.

Such a TRQ was not taken into account in our reform of the sugar sector. When we put this reform together, we didn’t think sugar would be a sensitive product in any Doha Round agreement. So we would have to take further steps to keep our market in balance.

I have made a clear commitment to this balance for the period of implementation of the sugar reform, which ends in marketing year 2014/2015. And I intend to honour that commitment.

Therefore, if sugar became a sensitive product, it might be necessary to re-establish export refunds for quota sugar to balance the extra imports. This will work until the end of 2013, because, as you know, within the Doha Round we have provisionally agreed to phase out export refunds by the end of 2013. I don’t think this would leave us with a problem in 2014, but beyond then, new measures might be necessary.

If we now turn aside from the Doha Round, what does the future seem to hold?

There's no reason to expect any great drama in terms of European sugar prices.

Under the terms of the reform package, we have to keep the European price close to the reference price topped up with a reasonable margin. And even if the world sugar price were to increase significantly, this would be unlikely to have a heavy impact on the European market.

Nor do I think that there need be any anxiety about the agreed opening-up of raw-sugar refining in the European Union from 2009/2010. On the contrary, it will be good news. It will be good news for sugar factories, because it will enable them to improve their margins.

For this reason, it will also be good news for beet growers. A factory which is staying in profit is a factory which will stay in business and will keep taking beet deliveries.

Moving into refining will be one possible avenue of diversification at a time when diversification will be more important. Other options include producing bio-ethanol, and serving the chemical and fermenting industries.

The sugar producers which find the right blend of activities will be among the most successful.

With regard to beet production: of course, this sector has already made great strides forward with time. Beet has seen much more impressive yield increases than cereals over the last 40 years. Continued investment in research and innovation should help to keep up this momentum.

Let's come back to policy for a moment.

The next occasion for discussing the future of our sugar policy will be the CAP reform 2013. I think it’s very unlikely that the sugar sector will be able to sit out this debate, and in any case I don’t think that this would be a good thing - because the sector needs predictability about the future of sugar production in Europe beyond 2014/2015.

My advice would be: assume that you will be affected, and make your voice heard.

Let me conclude.

Overall, the sugar sector has worked hard to make a success of the ongoing reforms. The ship is moving in the right direction, at a good speed. We do have to keep looking ahead, because we never know exactly what the water and weather conditions will be like over the horizon. But we can also allow ourselves to glance back for a moment. And when we do so, I think we can be pleased with the distance that we have already covered.

Let’s keep the ship sailing on a good line!

Thank you. notas_de_prensa_archivo