Memorandum submitted by the Canadian Sugar
Beet Producers' Association Inc. (O30)
We make this submission to the United Kingdom
House of Commons Environment, Food & Rural Affairs Committee
because we are directly affected by the operation of the European
Union sugar regime. Its subsidised exports pose a threat of material
injury to us. The main purpose of our submission is, however,
to show that sustainable sugar beet production can occur under
the option of complete liberalisation put forward as a choice
by the Commission. In this scenario European sugar beet production
would go through considerable adjustments. Yet it is only by dealing
with the difficult agricultural commodities that the Doha Round
of the WTO will succeed. Sugar is one of those commodities.
1. The Canadian Sugar Beet Producers' Association
Inc. (CSBPA Inc.) consists solely of farmer members who produce
and market sugar beet under a sugar regime which is almost completely
liberalised. Therefore, we believe we are submitting comments
to the House of Commons Environment, Food & Rural Affairs
Committee that reflect the actual experience of farmers who have
had to exist for almost 80 years producing under the conditions
contemplated in the third scenario proposed by the Commission:
a complete liberalisation of the current [European Union] regime.
2. Domestic sugar beet production for refining
in Canada occurs only in the Province of Alberta. There is also
sugar beet production in the Province of Ontario; however, these
beets are delivered to a co-operative processor in the State of
Michigan and the sugar produced remains in the United States under
the American sugar programme. Comments in this paper relate to
the industry in the Province of Alberta. The farmers in Ontario
are not members of CSBPA Inc.
3. About 250 farms in the Province of Alberta
annually produce between 11,000 to 15,000 hectares of beet. Sugar
beet has been grown in this Province since 1923 on a continuing
basis. Experiments in beet processing started earlier than this
though. In 1903 the Knight Sugar Company commenced operation in
our region but the factory closed permanently before the Great
4. The Canadian prairies are ideally situated
for beet cultivation. This fact was reflected during World War
II when beet production also commenced in the Province of Manitoba
to our east. The beet factory in Winnipeg, Province of Manitoba,
closed permanently after processing the 1996 crop because its
primary market disappeared when the United States brought in a
restrictive Tariff Rate Quota with its implementation of the WTO
Agreement. The majority of the Winnipeg facility's production
of refined sugar was destined for the American market. This protectionist
move by the Americans resulted in the disappearance of beet production
in the Province of Manitoba.
5. Sugar refined from beet production in
the Province of Alberta supplies just under 10% of Canadian consumption.
In recent years sugar production from beet has ranged from 51-114,000
6. The United States imposed a 10,300 tonne,
raw value Tariff Rate Quota on Canadian origin refined sugar during
WTO implementation. Only beet sugar refined in our factory qualifies
for export. This US TRQ is far below historical access before
7. Sugar was not included in either the
CanadaUS Free Trade Agreement nor for Canada in the North
American Free Trade Agreement, reflecting the protectionist stance
of the American government respecting the competitive threat posed
by the efficient Canadian sugar refining industry.
8. The maximum tariff in Canada for refined
sugar is CDN $30.86 per tonne or approximately 8% at present values.
The raw sugar tariff is 0%. About 90% of the Canadian market is
served by imported raw or refined sugar.
9. Antidumping and countervailing duties
exist on dumped or subsidised refined sugar from the United States
and some members of the European Union.
10. The Canadian sugar market reflects the
world price of raw sugar plus freight and related costs and margins.
11. The Environment, Food and Rural Affairs
Committee has Terms of Reference to "consider the options
for the forthcoming reform of the EU sugar regime, and make recommendations
about the position of the United Kingdom in negotiations about
the stance the European Union should adopt over the reform".
12. The three options put out by the Commission
An extension of the present regime
A reduction in the European Union
A complete liberalisation of the
13. CSBPA Inc advocates the last option,
complete liberalisation of the current regime.
14. The Canadian sugar beet industry is
located in the Province of Alberta where it is the most cost competitive
and furthest removed from tide water and competing cane sugar
refineries. Beet has been in production without interruption since
1923, except for 1985 when production did not happen because of
a contract dispute between farmers and the processor. A comparative
advantage exists because of transportation costs versus competing
sugar suppliers and an infrastructure to service the prairie region
15. "Canada is the sole sugar-producing
country in which domestic sugar prices have long been aligned
closely to world market prices." 15 Since the 1995 crop,
when farmers voted unanimously to have the federal and Province
of Alberta governments withdraw commodity-specific price support
for sugar beet, production has been on an entirely decoupled basis.
16. Production of beet initially rose after
price support was abandoned. In 1995 there were 13,724 hectares
of beet planted. This rose to 18,102 hectares in 1999 after a
50% capacity expansion of the sugar beet factory. By the 2003
crop, seeded hectares dropped to 11,263. It is expected planted
hectares will recover to about 13,000 for 2004.
17. During the last 10 years of sugar beet
price support in Alberta, the program funded by one-third premium
contributions from the federal and provincial governments and
the farmer provided a sharply decreasing level of revenue to the
farmer, as Table 1 demonstrates.
DEFICIENCY PAYMENT PER TONNE OF BEET DELIVERED,
1986-95 (CDN $)
18. A crop insurance program to protect farmers against
weather hazards continues. This program is jointly funded by government
and sugar beet farmer premiums. As a low risk crop, pay-outs on
crop insurance policies are less than premium payments in most
years. The plan runs at a substantial premium surplus.
19. Hectares devoted to sugar beet declined from 2000-02
because of engineering problems in the expanded sugar beet factory,
drought or the threat of drought in two seasons, and cold weather
in another one. These factors worked to reduce yield or beet quality,
thereby lowering revenue substantially, as well as farmer morale.
20. Despite the disappointments of recent years due to
a number of causes, in 2003 all factors combined to produce a
reasonable quality sugar beet crop at a tonnage per hectare about
10% above the expected yield.
21. Sugar beet production is expected to continue in
the longer term in Canada. This is because of the commercial terms
of the contract between the farmer and the processor.
22. The crop is grown in a four year rotation with grains,
dry beans, sweet corn, potatoes, and forages being common alternatives
in the three other years of the rotation. None of the other crops
in the rotation have crop-specific price support.
23. Cross subsidisation due to government support programs
is not a factor in sugar beet farming in the Province of Alberta.
24. Only one family of sugar beet farmers in the Province
of Alberta is also involved in producing a product under the Canadian
system of supply management.
25. Export of Tariff Rate Quota refined sugar to the
United States is not supported by export subsidies.
26. Sustainable sugar beet production is possible under
a policy of complete liberalisation. Production will, however,
be adjusted to an area where comparative advantage exists.
27. The world sugar market is unsustainable because of
restricted market access, distorting domestic support schemes,
and export subsidies. Developed and developing countries without
domestic support schemes or export subsidies are materially injured
by the present state of the market.
28. Special and differential treatment will need to be
afforded to certain sugar-producing countries during a transitional
phase because of the huge distortions in the international sugar
market. The topic of sugar should be made a special priority going
into the Hongkong Ministerial of the WTO similarly to the way
cotton was given attention at the Cancun Ministerial. By focusing
on commodities most affected by trade impacts, the WTO may actually
develop practical means of defining special and differential treatment.
29. Only the WTO can fully deal with the problems facing
sugar. Regional and bilateral efforts may bite away at the edges
but the full package addressing market access, trade-distorting
domestic support, and export subsidies is possible only at the
26 March 2004