Controversial plans by the European Commission to reform the sugar industry face a first major test today, as EU farm ministers meet to debate them in Brussels with sugar growers protesting in the streets.
The reforms became necessary after the World Trade Organization (WTO) declared the EU policies -- which date back to 1968 -- illegal, based on a complaint from Australia, Brazil and Thailand.
Under current rules, the EU offers a guaranteed price for sugar that is paid for, in effect, by consumers, with Brussels buying from producers at about three times the average world market price.
PHOTO: AFP
The European Commission's plan is to cut the guaranteed price by 39 percent over two years from 2007 and offer a voluntary compensation scheme for producers forced out of business by the price cut.
But the reform is likely to hit the sugar sector in 18 African, Caribbean and Pacific (ACP) countries, which also benefit from the preferred price system.
They claim they will lose some 400 million euros (US$480 million) a year if the measures are adopted.
It is out of the question that the EU agriculture ministers, meeting in informal council today, will give the green light to the reform plans.
"There is a blocking minority of eight states. But eight out of 25 is quite a good start for an ambitious program," an official said.
The commission says it is hoping to get the go-ahead in November.
The eight -- Estonia, Finland, Greece, Italy, Ireland, Lithuania, Portugal and Spain -- fear that the reform will see their sugar beet farms disappear, giving the advantage to more competitive states like France and Germany.
The commission is offering to compensate producers 60 percent of their losses incurred by the drop in the guaranteed price, but it does not hide that it is trying to get rid of the poorer performers.
"We are well placed to help producers and farmers who would like to leave the sector in an orderly and socially acceptable manner," EU agriculture commissioner Mariann Fischer Boel said last month.
At an EU level, she has justified the plan by saying that the sugar sector needs to be brought into line with reforms made to the Common Agricultural Policy (CAP), the bloc's costly farm subsidy system, in 2003 and last year.
"We need a reform which gives a better fit between the sugar sector and the rest of the CAP," she said.
While the commission is offering 40 million euros to help ACP producers, the reform plans will mean far more in losses.
In Brussels, some 5,000 producers are expected to demonstrate to call for guarantees for their future. They claim some 120,000 of the bloc's 320,000 growers will disappear in the next two to three years.
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