Examination of Witnesses (Questions 120-128)
4 MAY 2004
MR JEAN-CLAUDE
TYACK AND
MR DAVID
CLARK
Q120 Mr Wiggin: To what extent is it
realistic to expect 100% compensation for any price reduction
caused by reform?
Mr Tyack: The "C" word.
I must say that I welcome this question of accompanying measures,
as we call it. To be frank, I have just phoned Botswana, because
the ACP ministers are in Botswana talking about that right now.
I said to my contacts there that I was going to give evidence
to your committee and I wanted guidance on this. Basically what
we should like to say about this is that there will be a loss
of earnings if the price goes down and if the price goes down
for the EU producers, then whatever accompanying measures are
designed for the EU, this could be a criterion for the way of
dealing with us. We also say that there should be an effective
and simple mechanism to safeguard the accruals to the ACP producers.
This is the second criterion as it were. We also say no one-off
payment, as in rum and rice, which has been the experience in
the Caribbean. I do not know very much about it, but I believe
that a lot of what took place in the Caribbean in this context,
like rum, rice or bananas, are not positive precedents which should
be quoted in this connection. We also say that it should not be
EDF funds but FEOGA, or the English equivalent of FEOGA, in other
words not aid but agriculture money to be set aside for these
funds. Another point I should like to make is that we have noticed
that in the Commission's paper there is a reference to the outermost
territories. The chairman of an EU Parliamet committee, Mr Alvino
Cunha, who wrote a report on this question, said that the outermost
territories, in other words the DOMs and other peripheral territories,
are special territories. What applies in terms of CAP reform to
the EU producers should not apply to them, therefore there should
be no decoupling for the Outermost Territories. We are saying
we could perhaps invoke the precedent of the outermost territories.
After all, let us think about it. Let us think about Martinique,
let us think about some British West Indies island and Guadeloupe,
islands like that. There would be some difference obviously, but
not much and we should like this criterion of outermost territories
to apply if the question of compensation ever arises. I should
not use that word.
Q121 Mr Wiggin: To what extent do you
think deductions from the CAP budget, used to compensate ACP producers,
will lead directly to a reduction in support for European farmers?
Mr Tyack: Frankly I cannot see
the connection. May I explain what our position is on this? Our
position is that what the EU producers say is that the equivalent
of 1.6 million tonnes of sugar is exported. The term they use
is "re-exported" and we do not like this term because
it is not true. Our l.6 million tonnes which we export to the
EU market is consumed within the EU market and not exported. What
we say is that if ever there were some kind of saving on this
1.6 million, in other words if export subsidies were no longer
paid on this quantity and became available, then this would provide
funds for accompanying measures for the ACP. Obviously, to answer
your question more directly, I do not know whether, if we do not
use these funds these would be deducted from the sums of money
made available to EU producers within the CAP system.
Mr Clark: What we can say is that
if the EU price is reduced, there would be a saving to the EU
budget, because there would be a decrease or a complete elimination
of the money paid out in export subsidies. It is our case that
that money is there partly because of the arrangements between
the ACP and the EU and the extent to which those are included
in the EU's commitments to the WTO, the Uruguay Round and means
therefore that money properly belongs to the ACP, it does not
belong to the European farmer.
Q122 Mr Wiggin: So why are you insisting
that it comes out of CAP rather than any other funding source?
Mr Clark: It is clear that if
it came out of the European development fund there would be no
new money available to the ACP countries, it would merely come
out of existing programmes.
Q123 Alan Simpson: I just want to switch
across to environmental impact. Perhaps I should just say that
I am not remotely interested in trade liberalisation nor am I
interested in big global monopolies controlling sugar. What I
am interested in is the confusing position I find myself in over
whether this is a desirable trade to be promoting at all. When
the Committee went to Brazil, we saw a great deal about the carbon
sequestration which sugar cane production produces, but there
was no mention about how water-thirsty sugar is as a commodity.
I just want you to talk me through your assessment of the impact
on water supplies in ACP countries which expand sugar production.
Mr Clark: Neither Jean-Claude
nor I are environmental specialists, so you will forgive me for
a fairly broad-brush answer. I should like to make the point first
of all, that there are several environmental benefits from growing
sugar cane relating to prevention of soil erosion, lower use of
insecticides compared with alternative crops which could be grown,
its general advantages in terms of resistance to extreme weather
conditions and its suitability, given the type of soils. To answer
your specific point, in the countries I have visited, water management
is taken extremely seriously. Water is not diverted from other
agricultural products to feed cane plantations; on the contrary
in some of the African countries I am familiar with the need of
cane plantations for water has resulted in the building of extensive
dam systems which have contributed in a very positive way to the
local economy and have prevented severe hardship in times of drought.
In another country with which I am familiar, Guyana, the whole
cane area is based on low-lying ground which was reclaimed by
the then Dutch administration in the 19th century and the water
usage is totally integrated into cane production in a way which
is beneficial to the community. I have not visited the cane plantations
in Brazil I am afraid, so I do not know what the differences are
between water management in Brazil and in the ACP countries, but
I think the impact of cane on water management is beneficial and
I feel we could probably produce some evidence from experts for
you gentlemen, if that were required.
Chairman: That would be very helpful.
Q124 Alan Simpson: That would be really
helpful because Jean-Claude mentioned earlier that the specific
position of ACP countries was being identified as a vulnerable
group of countries. One of the greatest areas of vulnerability
is in terms of water resources.
Mr Clark: Indeed.
Q125 Alan Simpson: I and the Committee
would really welcome whatever information you have about the appraisals
made.
Mr Clark: Yes, many of the small
islands do have very fragile eco-systems. If it were not for sugar
cane, there would be substantial soil erosion, there would be
a climate change. This has been shown, particularly in the case
of Antigua, where the hinterland, which used to produce sugar
cane, has now reverted to scrub, with consequent negative impacts
on rainfall and negative impacts on tourism for very obvious reasons.
Q126 Chairman: Perhaps a short note about
the environmental benefits and then Mr Simpson's questions around
the availability of water supply would be very helpful.
Mr Clark: Indeed.
Q127 Alan Simpson: The accusation we
were presented with was that the whole nature of this trade is
an effective way in which the rich West countries steal water
from the developing poor; that sugar cane is a water thirsty product
and we ought to have a very serious look at the water economics
of this.
Mr Clark: You will detect that
we are raising an eyebrow at that.
Chairman: Perhaps you would reflect on
that and let us have a note.
Q128 Mr Jack: In paragraph 2.4.2 of your
evidence, you comment on the disappointing failure to find alternative
crops for sugar beet and I quote "The export of a large variety
of fruits and vegetables has failed as such products were not
competitive on the EU market". Why the failure and what work
is being done, if a quantity reduction in sugar production were
to take place, to replace it with other agricultural crops? Or
are you looking at alternative diversifications of the respective
ACP economies should the volume of sugar start to decline?
Mr Tyack: A very interesting question.
Some of us have approached the problem in the following way, in
other words we have a knowledge or competence in growing sugar
cane and one of the first things we should do is to try to use
its by-products, for example. There are many by-products, but
there are two main by-products, molasses on the one hand and bagasse.
Bagasse is the fibrous residue which is left when the cane is
crushed. Let me give you an example. In Mauritius, for example
we have co-generation plants. These are plants which produce electricity
from bagasse during the harvest and from other raw materials like
coal in between the harvests. We call this a form of green energy
because it is obviously renewable and it comes from the cane and
this is extremely valuable in terms of the energy balance sheet.
However, more specifically, we are now producing something like
40% of the electricity for the public grid. So one area of diversification
which can be explored by many of us is this co-generation aspect,
which is producing electricity from bagasse for the public grid.
The other area which can be explored by some, so long as the economics
are right, is ethanol from molasses. I suppose in land-locked
countries where transport costs would be very high and the availability
of oil would be difficult, it would make sense to produce ethanol
from molasses. This is from the sugar plant itself. Some of the
strategies we are putting together are in order to maximise the
benefits of the sugar cane plant, all aspects of the sugar cane
plant. Regarding other areas of diversification, I must say I
have been involved for 30 years in the sugar industry and I have
seen many missions of the FAO, of the World Bank and so on come
to us and spend a fortnight, explore all possibilities, leave
and they usually conclude that it is not just a question of being
able to produce something in the agronomic sense, you have to
produce "something of value", to use Robert Ruark's
novel's title. If you want to produce something of value, you
have to compare it with the advantages of the cane and this means
therefore a good price, reliable marketing, valuable by-products,
environmentally friendly production and so on and so forth. You
try to make a list of all the advantages of sugar, not only the
agricultural crop but also the industrial side, which is very
important in terms of giving skills to the people, engineering
skills as opposed to farming skills. When you consider all these
aspects of the sugar cane, you come to the conclusion that it
very difficult to find alternative crops which can offer the same
advantages in our environment. On top of that, sugar cane resists
cyclones and droughts in an extraordinary way. The most violent
cyclones we have had have resulted in a 30% drop in production
and I am talking now about cyclones of 200 miles per hour or something
like that, real beasts. When you put all these criteria together,
it is very hard to find a crop which will match all these positive
points.
Chairman: Mr Tyack, Mr Clark, thank you
very much indeed. You are going to produce a little note for us
on the environmental benefits and on the need for water resources
for cane sugar. Thank you very much for coming.
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