South African sugar sector wary about EU reforms

29 Jun, 2004

South African sugar producers were sceptical on Monday of suggestions that EU reforms will increase their access to world markets, saying current sweeping proposals were unlikely to be accepted.
Analysts said last week that plans for a radical overhaul of the EU's heavily-subsidised sugar regime could see Brazil, South Africa and Dubai elbow into European markets in the Middle East, Asia and Africa with their high-quality product.
South Africa exports about half of some 2.5 million tonnes of sugar it produces every year.
The South African Sugar Association (SASA) has been critical of the United States and the EU for protective farming subsidies which it says drive down international prices.
SASA chairman Rodger Stewart said the reforms were unlikely to be implemented in their current form.
The subsidies had "distorted" world sugar prices and could only be called a success if they reduced supply and revived sagging prices, he said.
"You must understand, these proposals are going to have to gain acceptance from the newly extended EU, both at bureaucratic and political level. So, at the moment, these proposals have no standing at all. Whether it's going to be implemented, I don't know, in its current form," Stewart told Reuters.
"We believe it is unlikely to lead to increased exports."
Huge EU subsidies allow its sugar producers to export to the detriment of low-cost producers, despite prices three times higher than the rest of the world.
Under the proposed reform, which will need approval by the EU Commission and member states, EU sugar prices will be cut by around 40 percent while doing away with its safety-net intervention system.
It also suggests merging national quotas and eventually reducing volume by 2.8 million tonnes from its current 17.4 million tonnes.
Subsidised EU sugar exports would drop to 400,000 tonnes from the current 2.4 million under the proposals, which would take effect next July - one year before the present sugar regime is due to expire.

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