FOR IMMEDIATE RELEASE: August 3, 2015
CONTACT: Phillip Hayes, 202-271-5734 (cell)
From the International Sweetener Symposium:
SANTA ANA PUEBLO, N.M.—The European Union is in the midst of overhauling its sugar program, and when the transition is complete, sugar growers will receive $665 million a year in subsidy checks. That’s according to a new paper about announced policy reforms by Patrick Chatenay, a sugar policy expert from the UK-based company ProSunergy.
New changes will take hold in October 2017. They come on the heels of a major 2006 policy shift that was announced after the World Trade Organization ruled that Europe’s old subsidy system violated international trade rules. The 2006 reform reduced domestic marketing quotas and price guarantees and ultimately led to the closure of 83 sugar mills and the loss of 120,000 jobs.
EU officials hope to prevent further job loss and industry contraction when it completely abolishes the old program by offering farmers direct payments to cushion the blow. But Chatenay, who released his study today at the 32nd International Sweetener Symposium, believes the new program will lead to increased European sugar production.
“By 2019, estimated total annual decoupled and coupled payments directed to sugar beet and sugarcane amount to US$665 million and add 1.5 to 2 million metric tons to EU sugar production,” he wrote. “That represents approximately 10 percent of EU output.”
Chatenay said this could further depress global sugar prices, explaining that because “the EU may well return to being a significant net exporter, this support can negatively affect world market prices and other exporting countries.”
European growers will also benefit from continued high tariffs that block sugar from most exporters and restrictions on genetically engineered crops. “The EU sugar market is not, and will not be, completely open to imports,” Chatenay noted.
While U.S. sugar farmers have some support through tariffs and operating loans, they do not receive government subsidy checks and believe the EU model gives it an unfair advantage.
“Europe may be making reforms, but significant subsidies will remain and the EU will continue to distort the global market,” said Jack Roney, an economist with the American Sugar Alliance.
U.S. producers are pushing a global Zero-for-Zero sugar policy where all subsidies and trade-distorting policies will be rolled back so the global price of sugar better reflects production costs.
For more information, visit www.sugaralliance.org.