Select Committee on Environment, Food and Rural Affairs Written Evidence

Memorandum submitted by FARM (O35)

  FARM, the independent voice of farmers, was set up in November 2002 by a group of working farmers and professional campaigners with the stated aim of bringing farmers, consumers and environmentalists together to fight for a viable and sustainable future for UK farming.

  FARM brings unique attributes to issues affecting agriculture by combining the practical knowledge and input of working farmers with the specialist expertise of environmental campaigners.

  This submission has been researched and produced for FARM by Peter Lundgren, an arable farmer and sugar beet grower and John Turner, mixed farmer (organic) whose crops include sugar beet.


  FARM has carefully considered the context within which the sugar sector reforms are placed. We have identified the specific areas within the current regime that we feel have attracted justified criticism and we have considered ways of targeting these to ensure that the benefit is delivered where most needed. We have also recognised the value of sugar beet as a crop for UK agriculture and we suggest that the proposals that we have drawn up will ensure that this crop remains viable for UK growers and continues to be an important part of our domestic food economy.

  The principal points within our submission to the Environment, Food and Rural Affairs Committee fall under the following sub-headings:

    —  Opening the EU sugar market to the LDCs.

    —  Competent authority to ensure international trade delivers the intended benefits.

    —  A new governing body for the UK sugar industry.

    —  Elected growers representatives.

    —  The establishment of a Sustainable Food and Farming Research Council.

    —  The dissolution of the BBRO (British Beet Research Organisation)

    —  The need to conduct a full impact assessment before considering further reform.


  1.  FARM supports, in principle, the opening of the EU sugar markets to LDCs, along with the existing ACP countries. However, access to the EU market must be demonstrated to be of financial and social value to the LDCs/ACPs, and the value importance of the EU/UK sugar industry must be given equal recognition.

  2.  FARM believes that clear, measurable targets are needed for the development of trade with LDCs. These should afford the greatest degree of self-determination and empowerment for the representatives of those countries to respond to opportunities within food and farming that are of greatest benefit to their people.

  3.  Prior to any further reform of the sugar regime, we feel that it is imperative to commission a comprehensive assessment of both the benefits and shortcomings of the present sugar beet sector within UK and EU farming to establish a clear understanding of the value of the UK and EU sugar industry as it currently stands. This should include economic, environmental, social aspects together with health and dietary factors and ensure that any regime changes implemented would be targeted and proportional.

  4.  FARM is calling for a planned period of transition allowing time for growers and processors, both in the EU and the LDCs, to restructure their businesses in response to the changes resulting from the reform process.


  5.  There is a clear need for a competent independent authority to establish targets that link the future production of sugar within the EU to consumption targets and to oversee the fixed quota import system as proposed by the LDCs.

  6.  This independent body would ensure that imports of sugar are proportional and benefit the international trade of LDCs. Their remit would also be to ensure that such trade formed part of a diverse range of sustainable agriculture within those countries and did not override the requirements of their indigenous and established patterns of farming. The Commission could support this authority by ensuring that sugar imports were subject to the aspirations and principles of "free trade" produce.


  7.  FARM is not calling for the abolition of the monopoly processor and the breaking up of the processing industry.

  8.  The sugar beet processing industry is arguably too small and too capital-intensive for the cost effective processing of sugar beet by more than one processor. Reforms of the sugar regime will inevitably lead to lower farmgate prices and reduced production quotas. Without strong representation growers' incomes will be at risk from a powerful monopoly processor, which will, itself be under pressure from its shareholders to maintain profitability. Therefore FARM believes that the processor monopoly should remain but that the monopoly processor's influence on the future policy and direction of the industry should be moderated by the creation of a new governing body where all stakeholders have an input.

  9.  FARM believes that the process of reform to the EU sugar regime further strengthens the need for radical reform of the UK sugar beet industry itself.

  10.  Currently, a relatively closed group of representatives drawn from the monopoly processor and NFU-appointed growers' representatives oversee the development of the sugar industry. The resulting lack of representation from wider interests means that the monopoly processor has a disproportionate influence over the growers and all aspects of the industry. We consider it a substantial failing of the current governing structure that the UK sugar beet industry has hitherto failed to respond to the demands of aid agencies, NGOs and the Commission for reform of the EU sugar regime and that it has failed to anticipate the requirements of a reformed sugar industry.

  11.  FARM recommends that a new body be created with responsibility for policy and direction. This body should be representative of all those with an interest of the sugar industry with members drawn from consumer organisations, aid agencies, environmental organisations, as well as growers and processors representatives.

  12.  FARM also proposes that the responsibility of the current levy bodies (the BBRO) should be incorporated within one overarching body—a Sustainable Food and Farming Research Council. We have proposed this initiative to address the current failure of individual levy bodies and research councils sectors to provide a coherent, holistic approach, which will equip farmers to meet the challenges facing food and farming. We also believe that the "sectoral" approach currently adopted leads to a fragmented approach where some areas of research are duplicated and others fail due to them falling outside the immediate remit of any particular levy body. We acknowledge that the recent Applied Research Forum is intended to address the issue of coordinating efforts between the levy bodies, but we believe that whilst each retains their own specific area of interest and funding, the underlying problems will remain.


  13.  The growers' representatives are currently appointed from within the NFU sugar beet committee to the post. Some past chairs of the NFU sugar beet committee have been appointed to positions within British Sugar. FARM believes that this close relationship between monopoly producer and monopoly (un-elected) growers' representative has failed to provide accountable representation on the part of growers and that the longer-term interests of the industry have thus been compromised.

  14.  FARM is calling for growers' representatives to be elected from amongst their number through a transparent and democratic process. This would ensure the interests of farmers are represented as well as those of the NFU sugar beet committee. It would also provide access to some form of accountability to those growers who are not members of the NFU (of which there are an increasing number).


  15.  In order to equip farmers with the skills and technology to meet the challenges of a changing food and farming sector, we believe that it is important to establish a program of research and development that is able to deliver practical, applied science. Given the substantial amounts of both public and levy funding that goes into food and farming research at present, there is relatively little being delivered that is of practical value to farmers or indeed of relevance to developing the market for sugar.

  16.  There appears to be a prevailing culture that is content to judge the value of research in terms of papers published or patents applied. In practical terms, these are of limited value unless they can be translated into commercial tools that contribute towards the efficiency of production methods, reducing the environmental impact of agriculture or enhancing the market.

  17.  In order to deliver the baseline assessment of the value of the UK/EU sugar beet industry, FARM believes that funding must be directed into research that investigates and quantifies the contribution to the rural economy and the environmental costs and benefits of sugar beet production.

  18.  In addition, there is a need for authoritative research into the possible methods of opening the EU sugar market and the implications to EU sugar industry and LDCs of further access to the EU sugar market by LDCs and other favoured suppliers. This would include research into the implications of full liberalisation of the world sugar market on growers, the environment and rural economies in developed, developing and less developed countries.

  19.  In order to inform future negotiations about reform, there is also a clear need for research into the viability of UK and EU sugar production with particular emphasis on the impact of price and quota reduction on the viability of sugar beet growers and the monopoly processor.

  20.  Finally, we would support the call for research into methods of viable and sustainable sugar beet production in the UK, which looks objectively at all cultural and agronomic aspects.


  21.  The BBRO is funded by a compulsory levy on growers for every ton of sugar beet processed, along with matched funding from British Sugar, the monopoly processor. Representatives from, or those with interests in, the supply and processing chain dominate the BBRO. The BBRO has poured disproportionate amounts of growers' levy funds into relatively narrow areas of production research, which have been shown to have questionable benefits. For example, the recent decision to concentrate funding into transgenic HT research at a time when there were clear indications that both consumer and the food chain had rejected the technology.

  22.  The BBRO has favoured research with "added benefits" for the supply chain and has failed to adequately fund research into the sustainable production of sugar beet that benefits not just the grower but also the environment and the rural economy. Clearly the interpretation of challenges and preferred solutions is currently a highly subjective one and something that would undoubtedly benefit from a wider appraisal of the various opportunities.


  23.  FARM has welcomed the process of reform of the EU sugar regime, but we are concerned that there is a danger of the review failing to fully appreciate those aspects of the existing regime that are working well and are of value. The sugar regime is one of a very few examples of the Common Agricultural Policy working in its declared intention to provide growers with a fair return for their labour and capital investment—at least from a domestic perspective.

  24.  There is a clear risk that the process of reform could damage areas of the sugar beet growing and processing chain that are later recognised to have significant attributes. Therefore, before further reform is contemplated, we believe that there should be a comprehensive assessment of the value and attributes of the UK sugar sector. At present, this baseline assessment does not appear to have been carried out and we believe this is an oversight that should be addressed as a matter of priority.

29 March 2004

Annex 1


    —  To create a viable sustainable UK sugar industry that is matched to market requirements.

    —  An industry that can move towards a profitable future without the need for public subsidy.

    —  To stop the dumping of EU sugar onto world markets at prices that do not reflect the cost of production and transport.

    —  To allow the international trade of sugar and ensure that the LDCs have access to the EU market.

    —  To ensure that implications of reform of the EU sugar regime is fully understood and allowing time for growers, both in the EU and LDCs, to respond to changes in markets and demand.

    —  To ensure that farm gate prices for both EU produced and imported sugar reflect the true cost of production and ensure that growers whether in the EU or LDCs get a fair return for their labour and investment.

    —  To address the relationship between food and health, where sugar within the diet can significantly influence dental and general health.


  1.  Within the EU Commission Staff Working Paper, "Reform of the EU sugar policy", section 5.4, "Summary of impact assessment", draws up a comprehensive list of advantages and drawbacks for each of the options put forward. FARM generally agrees with assessment of the advantages and drawbacks of the various options within the constraints of the options available.

  2.  Of the options suggested by the Commission, FARM considers that Option 1 is clearly the best of the options proposed, although there are points that we suggest would need clarification.

Option 1.  An extension of the present regime beyond 2006

    "This would consist of keeping intact the current regime, based on flexible quotas and price intervention. The EU market would be open to import quantities, according to the various international commitments already agreed or to be agreed in the future. Custom duties, internal prices and production quotas would be reduced. The Extended Impact Assessment also addressed the impact of a request by the Everything But Arms (EBA) countries to implement that agreement through a fixed quota system."

"Flexible quotas"

  3.  Although often perceived as interfering with free market mechanisms, flexible quotas are potentially the most efficient means of production control and FARM suggests that quota should be directly linked to national and EU consumption. There are clear "off balance sheet" benefits such as reducing food miles and enhancing national food security by maintaining a domestic, localised sugar production capacity.

"The EU would be open to import quantities"

  4.  We suggest that these should be targeted, rather than general agreements, and could be used to ensure that production is encouraged within sustainable systems and to ensure that it is the countries and growers themselves rather than Trans National Corporations (TNC) benefiting. The allocation and removal of EU import trade quota could be linked to a number of compliance criteria with environmental and social benefits, such as sustainable farming methods, human rights, democratic regimes etc.

"Custom duties, internal prices and production quotas would be reduced"

  5.  Realistically, we feel that this is a challenge that UK farmers are going to have to face throughout the process of reform. FARM is concerned that as price reductions force growers out of business quota will be redistributed to those able to produce at the lowest cost rather than those producing for the greatest benefit, and again, control will benefit Trans National Corporations operating in areas that are not subject to the costs associated with maintaining strict environmental, labour and social objectives rather than the specific countries that these reforms are intended to benefit.

  6.  From reading the EU Commission's Working Paper, it is difficult not to be left with the impression that the some consider the EU sugar industry as expendable and that the EU sugar regime could be used as a bargaining counter within WTO negotiations with little regard for the impact of such actions on growers, the environment, the rural economy and rural communities.

  7.  With respect to the other options offered for consideration by the EU Commission, FARM does not believe that they take proper cognisance of the true impact that liberalisation would have on the world sugar market. They also fail to reflect the impact of producing at world market prices on sugar producers in the EU, the LDCs, and ACPs. Indeed it is most likely that the reforms will fail to meet any of the objectives of the reform and will fail to be of advantage to any of the intended beneficiaries

  8.  FARM is of the opinion that without clearly stated aims and objectives, the proposed reforms could easily fail to deliver reforms that reflect the needs of EU and LDC sugar growers for a stable, sustainable system of production. Not only will the economic viability of farming businesses suffer further erosion but also these reforms will fail to benefit the consumer, will lead to further degradation of the environment and lead to further rural deprivation unless clear targets are established and adhered to throughout the process of reform.


March 2004

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