The European Union's head office tackled the sticky problem of sugar subsidies Wednesday, proposing price and production cuts to reform a system critics charge hurts farmers in poorer countries and consumers at home.
Calling the current regime antiquated and economically unsustainable, the European Commission said it wanted to cut guaranteed sugar prices in Europe by one-third over two years and reduce production by 2.8 million tons over four years.
Subsidized sugar exports, blamed for driving down world market prices, would be whittled down to 400,000 tons from 2.4 million now.
EU Agriculture Commissioner Franz Fischler conceded the changes would likely result in job losses, squeezing some European farmers and sugar mills as well as former European colonies that currently depend on import preferences at Europe's inflated prices.
"There will be some pressure on the least competitive places and I cannot rule out the possibility that production may stop in certain areas," he said as scores of flag-waving, drum-beating farmers protested noisily behind barbed-wire barricades outside the commission building. One carried a poster of Fischler as the grim reaper.
Yet Fischler argued that 17,000 jobs have already been lost in the industry over the past decade and the number of sugar mills reduced to 135 from 240, indicating that the current system was not working either.
"This reform simply states the unpleasant truth to EU producers and developing countries, namely that artificial sugar prices in the EU, which are three times higher than the world market price, are not economically viable," he said.
He also promised to phase in the changes for African, Caribbean and Pacific countries that currently enjoy preferred access and to propose "tailor-made, EU-funded development programs" this year to help them adjust.
For years, critics have complained that EU's sugar regime allows EU farmers to undercut competitors, glutting world markets and depressing prices while shutting producers in many other countries out of the protected European market.
The charities Oxfam and WWF estimate the program costs the European taxpayer 1.5 billion euros ($1.8 billion) in direct subsidies and 7.5 billion euros ($9 billion) in higher food prices each year.
In a joint statement, they criticized the proposal as insufficient, calling for greater production cuts and an increase in imports, as well as more support for small-scale European farmers and the world's least-developed countries.
"It is a starting point," said Oxfam spokeswoman Amy Barry. "The next step is definitely to address the needs of these even more vulnerable countries."
Fischler also said reform would allow Europe to maintain a "sustainable" level of sugar production while providing compensation to farmers for 60 percent of their income losses and conversion money for factories forced to close.
The measures, which Fischler hopes to take effect July 1, 2005, need to be approved by EU governments.
Fischler said the reform would also give the EU "additional flexibility" in resolving a challenge filed at the World Trade Organization by Australia, Brazil and Thailand, which complain that their sugar is blocked by import tariffs of up to 140 percent.
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Details of reform: http://europa.eu.int/comm/agriculture/capreform/index-en.htmAssociated Press:
