Consistent Community Policy for the Sugar Sector

In 2005, the EU Council and the European Parliament adopted a major reform of the common market organization for sugar. They set a goal to reduce EU quotas production by 6 million tonnes, representing a third of the common production of sugar subject to quotas. According to the latest figures available, the restructuring regime in the sugar sector has made it possible to abolish 5.8 million tonnes of sugar quotas over four marketing years, which represents 97% of the target.

In four years, 75 factories closed and 10,000 direct & approximately 50,000 indirect jobs have been lost. The last marketing years have been particularly painful for the sugar workers who witnessed the dismantlement of a successful industry and the destruction of workplaces in areas where job opportunities are but a few. Six countries, namely Bulgaria, Ireland, Latvia, Lithuania, Portugal and Slovenia even definitively ended the production of sugar. After having been the leader on the world market as white sugar exporter, the European Union will be from 2009 onwards the second biggest sugar importer after Russia.

Although the sugar sector is undergoing a painful restructuring process, troubled times for the sugar workers seem not to be over yet. Increasing sugar imports from third countries are jeopardising the reform of the sugar regime itself.

A number of political agreements are currently being negotiated by the European Community, such as free trade agreements with certain regions or countries (e.g. EPAs) and the multilateral commercial WTO agreement. In the negotiations of the Economic Partnership Agreements (EPAs), the Commission and third countries might agree on an objective exceeding Community requirements by over 50%. Massive quantities of imports may be expected also within the context of the negotiations in course at the WTO. If the present proposals were to be ratified, this would reduce the entire reform of the sugar regime to nothing, for the agreed volume of imports could not be absorbed by the European domestic market and implying a supplementary reduction in production quotas. EFFAT warns the European institutions on the inconsistency of the proposed terms of a multilateral WTO agreement with regard to the reform criteria of the CMO for sugar.

Furthermore, any changes in the rules for the allocation of imported raw sugar are giving the biggest companies a prominent role in organising the allocation of cane sugar in Europe to the detriment to smaller players, forcing them to close down.

The stakeholders of the sugar sector respected their initial commitments. It is now up to the Commission and the decision-makers in the Council and the Parliament to hold their word and consolidates the restructured EU sugar market in the multilateral or bilateral trade negotiations and certainly not to finish it off.

EFFAT calls also its Member organisations to contact their national governments and raise the needs:

· for fairness and consistency for sugar producers and workers in the current round of Doha talks;

· to back the current investment plans in the sugar industry, made in response to the sugar reform;

· to maintain the “Special Safeguard Clause" for sugar to protect the industry from world market volatility;

· to guarantee valuable trade benefits for the Least Developed Countries and the ACP Sugar Protocol Countries.

Volatility of prices of raw material makes it difficult for the sugar industry to find enough sugar beets. In Hungary, in 2008, only half of the quotas have been delivered. Farmers are interested in producing other crops, which are more profitable. Moreover, farmers are facing higher prices for the inputs, machinery and oil. In this already difficult context, the provisions of the 2006 Regulation foreseeing that single payment for beet growers would stop after 5 years in the countries which abandoned more than 50 % of their quota may cause a shortage in the supply of sugar beet in Italy, in 2011, Slovakia, Hungary & Belgium in 2012 and Greece in 2013.

At the same time, though more than 40% of the sugar factories already closed in a four-year time, EFFAT is afraid that other closures might take place in very near future along with announced and possible mergers: Nordzucker acquired the sugar division of Danisco, British sugar is currently taking over the one of Ebro Puleva. These mergers, and the upcoming ones, will keep on putting pressure on sugar workers.

All these parameters explain why the European social partners agreed to start a joint action on ways for the improvement of employees’ employability, based on the identification and evaluation of existing good practices in the sugar sector and in other industry. Considering the huge efforts made to anticipate changes and manage the restructuring process in a socially responsible way, EFFAT demands the European Commission to undertake an independent assessment of the agreements concluded when sugar companies closed their plants. This study has to be conducted in consultation with the European social partners and should focus at least the following issues:

• the overall implementation of the sugar reform;
• the social consequences for the workers, the farmers within Europe and for the ACP countries;
• the use of the restructuring fund;
• the diversification measures

It is necessary for the European Commission to give a strong signal strengthening that the future of the sugar industry in Europe, to guarantee with positive measures the production of sugar beet in Europe, a sine qua non condition for the presence of a European sugar industry.

The European Commission should also better support the European sugar sector and help all the stakeholders to get a clearer perspective for after 2013. It is also important that, eventually, EFFAT calls upon the Commission to do its utmost to invest in sustainable renewable energies, notably by promoting a mix of different energies and not focus on a single type. There already are bioethanol production factories in Europe representing workplaces mainly in rural areas where employment opportunities are scarce, but the current generation of bioethanol is not always sustainable: its production is today damaging agriculture and environment in the third world and driving up food prices as well as leading to social unrest worldwide and jeopardizing the global food supply. Therefore, we urgently need sustainable criteria on a global scale for the use of all renewable energies.

Brussels, 9th March 2009