Select Committee on Environment, Food and Rural Affairs Written Evidence

Memorandum submitted by Cadbury Schweppes (O66)


  1.  Cadbury Schweppes supports the submission made by our trade body, the Biscuit, Cake, Chocolate and Confectionery Association, which makes the following points about the options for reform of the EU Sugar Regime:


    The current regime is unsustainable and anomalous. It leads to an EU price almost three times higher than the world price (the UK price is higher still), which is driving British jobs overseas.


    Option 1—no change—is a misnomer, since change is inevitable. But to attempt to maintain the current regime would seriously damage British (including agricultural and processing) interests.


    Although there are attractions to Option 3, and this should ultimately be the objective, it is not realistic to imagine that this can be achieved at present. There are also concerns over the unpredictability of the implications of rapid change and the risk of some EU governments introducing protectionist measures. It is also more attractive to larger companies than to SMEs.


    We therefore support Option 2, believing this to be in the best interests of British consumers, farmers and industry, and the economy generally.


    However, there must be a clear timetable with a start date as soon as possible, and the transition period should extend for no more than five years.


    Quotas should, as proposed, become tradeable, and should be increased until they gradually become meaningless.


    Any compensation necessary for UK beet growers should be by means of decoupled direct aid.


  2.  Cadbury Schweppes is the largest confectionery company headquartered in the EU, and as such is a major user of sugar, purchasing over 200,000 tonnes per annum in Europe. In fact, in several markets in the EU, including the UK, Cadbury Schweppes is one of the largest users of sugar. We are therefore directly affected by the EU Common Agricultural Policy and regulations for the supply of sugar, which mean that at present we often have to pay three times as much for sugar as our global competitors.

  3.  Cadbury Schweppes would therefore like to take this opportunity to illustrate the impact of the current regime and the need for reform (as proposed in Option 2) with some examples from our own business' experience.

    (a)  We have experience of purchasing sugar in many different markets and in our experience the absolute price of UK sugar is higher than in many other European markets.

    (b)  Furthermore we have also seen a trend of rising UK sugar prices against other European markets where prices fall as well as rise. For example, over the past couple of years French pricing has reduced, due to some limited competition, whereas the UK sugar price has increased each year despite fluctuations in currency and improvements in efficiency.

    (c)  EU enlargement will also draw attention to the detrimental effect of the regime on companies such as Cadbury Schweppes as it will highlight the increased prices companies have to pay for sugar in the EU market. For example, on the date that Poland accedes to the EU, Cadbury Wedel, our Polish operating company will have to purchase sugar at substantially increased prices.


  4.  Cadbury Schweppes is in favour of complete liberalisation of the sugar regime, the Commission's third option, but recognises the need for a transition period to allow for market participants, and particularly farmers, to adjust to the new regime.

  5.  Accordingly, Cadbury Schweppes would like to see the Commission's intermediate option, Option 2, carried forward, but with a maximum transition period of five years.

1 April 2004

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