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.
EXECUTIVE SUMMARY
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.
OPENING THE
EU SUGAR MARKET
TO THE
LDCS
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.
COMPETENT AUTHORITY
TO ENSURE
INTERNATIONAL TRADE
DELIVERS THE
INTENDED BENEFITS
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.
A NEW GOVERNING
BODY FOR
THE UK SUGAR
INDUSTRY
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.
ELECTED GROWERS
REPRESENTATIVES
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).
THE ESTABLISHMENT
OF A
SUSTAINABLE FOOD
AND FARMING
RESEARCH COUNCIL
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.
DISSOLUTION OF
THE BBRO (BRITISH
BEET RESEARCH
ORGANISATION)
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.
THE NEED
TO CONDUCT
A FULL
IMPACT ASSESSMENT
BEFORE CONSIDERING
FURTHER REFORM
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
FARM'S SUGGESTED
OBJECTIVES FOR
THE REFORM
PROCESS
— 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.
THE OPTIONS
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.
FARM
March 2004
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