Mariann Fischer Boel, the European Union's agriculture commissioner, will formally propose today the first substantial reduction in the EU's sugar price support mechanism since its introduction in 1968.
Ms Fischer Boel is expected to recommend a 39 per cent cut in the sugar price guaranteed by the EU, combined with a compensation scheme for unprofitable sugar producers who may be forced to halt production because of the price drop.
The proposal will also come under scrutiny outside the EU, since a drop in European production is meant to reduce EU dumping of sugar on the world market, following a successful challenge to the current EU sugar regime by Brazil, Australia and Thailand.
The commissioner's proposals - which have been well flagged - to tackle one of the bastions of EU farm support is certain to land her in hot water with member states and trigger fierce resistance from countries that have less efficient sugar producers and are most vulnerable - in particular the Republic, Italy, Greece and Portugal.
Brussels argues that developing nations enjoying preferential trade agreements with the EU will benefit from an expected increase in EU sugar imports from two million tonnes to 3.9 million tonnes, especially countries due to get duty-free access for their exports.
However, producers in the African, Caribbean and Pacific (ACP) group of countries claim the reform is a unilateral breach of the EU's long-standing and preferential Sugar Protocol and could devastate ACP economies that have become reliant on the EU's generous sugar pricing. - (Financial Times Service)
