The European Commission has proposed a sweeping reform of the EU's sugar policy that would cut prices by more than one third and abolish the intervention system that helps to support the industry.
The Agriculture Commissioner, Dr Franz Fischler, acknowledged that the reform, which would save the EU hundreds of millions of euros in subsidies, would put thousands of people out of work. He said that radical change was essential, however, not least because of pressure on the EU in World Trade Organisation (WTO) negotiations.
"There is a lack of competition, while consumers and sugar-consuming industries pay over-high prices. And the way we subsidise sugar production has been the subject of fierce criticism, particularly from developing countries," Dr Fischler said.
Under the Commission's proposals, the intervention price for sugar would be replaced by a reference price that would be set one-third lower than the €632 per tonne now guaranteed to producers.
The lower price, which would be phased in over three years from July 2005, would still be twice the level of the prevailing world sugar price.
Sugar beet producers would receive compensation in the form of an annual direct payment, which would be worth €11 million to Irish farmers in 2006, rising to €16 million in 2008.
The Minister for Agriculture, Mr Walsh, is among those who has said he would oppose the proposals when they come before the Council of Agriculture Ministers.
Finland and the Netherlands have also indicated that they oppose the reform plan.
Dr Fischler said that the reforms, the first since the EU's sugar regime was established in 1968, would strengthen the EU's hand in the current round of world trade talks.
"We are serious about our agricultural reforms. The final bastion of an old, conventional agricultural policy is being stormed, the new policy will be much more trade-friendly. I believe that the WTO will receive the message loud and clear and that it will give added impetus to the current Doha round of negotiations on a framework agreement," he said.
Charities campaigning for a better trade deal for developing countries complained, however, that the Commission's proposals would leave in place the EU subsidy system that disadvantages sugar producers in poor countries. Ms Jo Leadbeater, head of Oxfam International's Brussels office, said that a much more radical reform was needed.
"Today's proposal shows that the EU has shut its ears to the needs of developing countries and placed the interests of big farmers and processing companies ahead of everything else. This plan will not end export dumping and will not solve the problem as we see it," she said.
