Caribbean sugar faces bitter future if EC adopts sugar quotas abolition proposal – expert

A recent decision by the European Commission to abolish all quotas on the domestic production of sugar in ACP member states by 2015 could negatively impact the sugar industry in the Caribbean region.

Columnist David Jessop noted in the Sunday Stabroek on November 20 that the proposal by the European Commission to make significant changes to the European Union’s Common Agricultural Policy, will, if adopted, negatively impact the Caribbean region as well as the nations under the umbrella of the African, Caribbean and Pacific (ACP) group. If accepted the proposal would take effect from 2015.

Efforts by this newspaper to obtain a comment from the Agriculture Ministry in recent weeks were futile.

Jessop said that the proposal is mainly intended for mostly beet sugar produced in Europe, but it also covers sugar cane. The EC’s Agricultural Directorate made the announcement in October.

The columnist, whose pieces appear weekly under the rubric ‘The view from Europe,’ stated that the decision which forms part of Europe’s planned long-term approach to agricultural reform will have the effect of radically altering the nature of the European market for ACP sugar, and will have potentially dire consequences for the European-dependent nations of the Caribbean region whose governments may have hoped to compete in a market where future production is managed.

The Caribbean region is the only segment of the ACP grouping that has signed a full Economic Partnership Agreement (EPA) with Europe, and that after 2009 Caribbean sugar entering the EU was not subject to any quota,  allowing the region unlimited access at the minimum price for ACP sugar in that market.

Minimum guaranteed prices, he wrote, are being reduced up to September 2012 and after that  prices will be determined by the market. What is being proposed, he explained, dents the expectations which the Caribbean region was given back in 2009, that in signing the EPA with Europe, it would have received unlimited market access in a managed market.

He went on to observe that the proposal also damages the hopes of other ACP suppliers and sugar producers in the Least Developed Countries (LDC) who had inked earlier agreements with Europe on arrangements similar to those contained in the EPA.

According to Jessop, Guyana’s Ambassador to Brussels, Patrick Gomes noted that for the Caribbean, which has ratified and implemented the conditions of the EPA, the changes are tantamount to a “unilateral modification of a treaty.“ The Ambassador was reported as saying that the ACP does not have the luxury of the EU system which enables farmers to receive subsidies to convert their land to environmental or other uses when the market is oversupplied.

Gomes in an interview with Europe’s Technical Centre for Agricultural and Rural Co-operation ACP-EU (CTA) in Brussels recently described the proposal as premature. He added that it will create unpredictability and instability.

He said that the importance of sugar needed to be emphasized, going on to say, “It‘s not a commodity for trading, it‘s primarily a driver in sustainable rural development, poverty eradication and also earning foreign exchange, so we see it as not being … conducive for our long term sustainable development interests.“

Gomes said that a longer period of time was needed, “precisely to utilize what has come about after the drastic cut of 36% in the sugar price in 2005… we‘re now about adjusting to that, adjusting to improve our competiveness, adjusting to diversify and adjusting also to ensure that the social mitigation, the social dislocation that come about from such a severe cut is not too negative in our rural sectors.“

He said that the adjustment is being facilitated by the European Commission in what he described as the “accounting measures for sugar protocol countries and that was roughly $1.2B spread from 2006 to 2013 within the current financial framework.“

He said that the investment needed time to bear fruit and that “sugar is not a crop which you can view within an annual basis once its in the ground.“ Capital investment for the factory, processing of the commodity and additional work relating to cultivation and processing, he explained, utilizes a time from of 7-10 years in which beneficial returns are sought.

“We feel this is a premature move,“ Gomes noted, adding that he was cautiously optimistic that the 2015 timeframe would be extended by another 5 years. He said that he believes those countries which sit on the ACP that are supportive of the extensions to 2020 should envision their concerns for their rural communities as well as rural development.

“We are… hoping we will be meeting with member states to explain our case; the 5 yr difference is not going to be horrendously disadvantageous to Europe in any way,” Gomes said, adding that, “we want to see the reform  but the market‘s management still needs to have the quotas until at least 2020.“

As regards the reforms taking place in ACP countries, Gomes used Guyana as an example He said the government has made massive investments utilizing its own revenue to develop enhanced processing facilities and with the assistance of the EU, the government has been able to process direct consumption sugar (packaged). He said, “this would mean we are looking at value addition in addition to the raw sugar.“

In the conclusion to his column, Jessop wrote that the proposal’s damaging effect on sugar exports from the Caribbean region suggests that Europe, in its attempt to solve its internal market difficulties, “is prepared to set aside its professed commitment to development in favour of a taking a market oriented approach which resolves its problems, seemingly at the expense of others.“

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