Examination of Witness (Questions 131-139)
MR WUBBO
WAGE
24 OCTOBER 2005
Chairman: Good afternoon, ladies and
gentlemen, welcome to the second evidence session of the Committee's
inquiry into the European Union's sugar beet regime. I am delighted
to welcome Mr Wubbo Wage, the Board Member from the Dutch Beet
Growers' Federation, who has very kindly come to talk to us to
give us a perspective on this problem from, shall we say, the
other side, the southern end of the North Sea or the top end of
the Channel, whichever way you care to look at it. I am particularly
grateful because, Mr Wage, I gather you have had quite a lot of
travelling to do in the last 48 hours, and thank you very much
for travelling again to be with us today and also for being brave
enough to represent non-UK growers' interests before the Committee.
Some of your fellow European colleagues were perhaps a little
more reluctant to come, so we are particularly grateful to you
for coming. I am going to ask my colleague, James Duddridge, if
he would be kind enough to put the first question to you.
Q131 James Duddridge: I
am interested in your overall reaction to the draft legislative
proposals and particularly whether you see them as an improvement
on the initial consultation document of July last year.
Mr Wage: First of all, it is a
pleasure for us to be here in London. The UK has a very important
position in the second part of this year especially for sugar.
I am a practical farmer and as such it is my duty to be here in
this meeting and put our approach about the new sugar regime.
First of all, I would like to say that we have a Sugar Platform
in the Netherlands. We are working together with our industry
and sugar beet growers, so we have a platform and until now we
have the same attitude and the same sound to the outside. We had
an invitation from our Minister of Agriculture, "There is
a lot of comment about the proposals from Brussels, do you have
a better plan?" We have written a better plan, where it is
placed for the least developed countries, where it is placed for
more labour, and we propose a lower price cut for sugar and for
beet, because the proposals from Mrs Fischer Boel is really a
disaster for the best areas of European beet growers and also
for our industry. Our approach is for a price cut for sugar of
about 16 to 18%, and for beet of about 20 to 25%. Our approach
is also to stop directly the subsidised exports; we will stop
subsidised exports. We are in favour of the restructuring fund,
we think it is a very good thing. The period of our new sugar
regime must be at least eight years and we have got this in this
proposal and we think it is very important. Furthermore, we want
no reference price but we want an intervention price. All products
from Common Market organisations in Brussels have an intervention
price and we also want an intervention price. We had a lot of
contact with ACP and LDC countries and also with Oxfam and Novib[1]
and NGO organisations, and finally we made a conclusion that it
was a better way for the least developed countries and for the
ACP countries to ask for a quota system and for a price guarantee.
Why do we have an LDC agreement? To help the poorest in the world
and if we would like to help the poorest in the world we must
guarantee some price. Based on a world market, they do not have
a position and our Parliament and our minds are in that direction
and, as I said, together with the NGOs, together with Oxfam, together
with Novib, we have made a good proposal. Our Parliament underlines
totally this opinion. Our Government is still a little bit on
the other side but Parliament is controlling the Government. Furthermore,
we want compensation for at least 80% and we want a safeguard
clause, because the proposal now means in 2008-09 we have a market
that exists that is totally uncontrolled and it can destroy the
whole sugar system, the sugar industry, the sugar beet growers
in Europe. We do not know if two million tonnes or four million
tonnes are going and we have to wait to see what will the restructuring
regime bring in the next three or four years. It is not clear
if we take enough quotas out of the business. Furthermore, after
the loss of our panel and the argument of the panel for cross-subsidisation,
we think with these lower prices that these arguments are gone,
and why is it not allowed for Europe to export sugar to the developed
markets? Other countries all over the world have higher domestic
prices than the world market prices, so why is it not allowed
for Europe? Furthermore, we think we must avoid SWAPs[2],
which is really a risk in African countries, because you never
know where the sugar has been produced. That is shortly our approach
and our vision for the new sugar regime starting next year.
Q132 Chairman: Have you had any discussions
with colleague organisations who represent farming interests in
other parts of Europe about your view on this regime? I am interested
in your comments about what I call the politics of the change,
because the French may well take a different view from the one
you put forward. Have you had any of those discussions?
Mr Wage: Yes. We sent our plan,
the better future plan for the sugar market, all around Europe,
and many people and many organisations underline more or less
our view; more or less. So people, many from the sector, say,
"Why do we have to stop subsidised exports? We are self-financing."
So there are little differences but a lower price cut, market
regulation, safeguard compensation and so on are underlined especially
by most countries. France think they are strong and perhaps they
are the strongest and are not totally on our side, but Belgium,
Germany, Austria, Sweden, all the countries' growers' organisations
and also the industries are more or less interested in this way
of thinking. There are differences but one thing is important
for one country and another thing is important for another country.
But one thing must be clear, the proposal from Mrs Fischer Boel
is at a level that from our point of view the whole European sugar
sector is at risk.
Q133 Chairman: On a point of information,
I gather you have something like 5,700 sugar beet growers in the
Netherlands?
Mr Wage: Yes.[3]
Q134 Chairman: Do I get the impression
that a number of these farmers are quite small in the scale of
their operation?
Mr Wage: Yes. Every year 5% of
the farmers go out of business and inside this figure which you
have mentioned are also farmers who deliver to companies, to private
companies and to co-operatives, so it could be we have less growers
but we try to increase the area per farmer. We know we have a
quota system and the quotas have high value in our part of Europe
and that is also a barrier to increase the area, but in the future
we will increase the hectares per farmer; that is absolutely necessary.
On the other side, we have done in the last years a lot of cost
reduction. At the weekend I saw my annual financial report and
then you see that we grow sugar beet for the last 20 years for
the same money. Only by doing things better are we still in business.
We have tried to optimalise production and so on and so on. In
the future, there will be a lower profit and we will lose in a
very fast time many, many growers.
Q135 Chairman: Are these growers
mixed farmers? They do other things than just grow sugar beet?
Mr Wage: Most arable farmers in
the Netherlands grow sugar beet. There are several mixed farmers
who 20 years ago went in the direction of dairy farming and arable
farming, so 80% are arable farmers and sugar beet is a very important
crop for the income. Between 12 and 18% of our area on the farm
is sugar beet but the income is representing about 25 to 32% of
our income, so it is a very important crop for the income and
that is also the reason that we are very concerned about these
proposals.
Q136 Mr Williams: You have talked
about bearing down on your costs of production and Dutch beet
growers are seen as relatively efficient in Europe although probably
the French growers are seen to be the most efficient. Would you
agree with that and perhaps you could tell us why the French producers
are more efficient?
Mr Wage: French growers are very
efficient because they have a yield of about 12, 13 tonnes per
hectare, the highest in Europe. Perhaps the cost of land is a
little bit lower in France. The climate conditions are perhaps
the best in Europe. But we also try to reduce costs and we have
started at this moment a programme of cost reduction and our farmers
are saying to us, "What are you saying about energy? An increase
of energy last year reduced all alternatives to reduce cost."
So we are looking to the contractors, "Can you harvest more
with your engines? Can we work together with using fertilisers
and herbicides" and so on. It is a continuing programme of
minimising inputs. That is the way of agriculture in this decade.
We do not have a correction for inflation and so on, we have to
do things cheaper and better, that is our way of life in agriculture.
Q137 Mr Williams: I know. Would you
think the relative efficiency of French beet growers is anything
to do with farm structure and farm size in France or are the size
of beet production units about the same?
Mr Wage: It is very difficult
to say. The French know they are in first place in Europe but
they have also their cost increases. I will mention one thing,
there is the takeover by the French growers of their industry,
so perhaps it is also a little bit outside of the French. Their
yield is the highest in Europe after Switzerland, which is the
best area for sugar beet growing. I think the investment that
the French growers have made in the last four or five years is
also very difficult for them. I will say the French in the first
year did not get any money from their yields to keep the factories
in French ownership.
Q138 Mr Williams: Given your relative
efficiency and the fact that 5% of your growers are going out
of business every year, what effect will the proposed reduction
in sugar price have on your industry and will it survive?
Mr Wage: The effect on the industry?
Q139 Mr Williams: No, on the beet
growers.
Mr Wage: That is very difficult
to say. Farmers stop production but, on the other side, we have
a quota system and we have to take over the quota, and when you
take over the quota the first two or three years it has no influence
on your income—you use your equipment better and it is an
investment for the long-term. So we are thinking how we can reduce
the quota costs but the quota costs in our area are very high,
ridiculously high.
1 Oxfam Netherlands. Back
2
SWAPs (or triangular trading) is where Least Developed Countries
(LDCs) can buy sugar on the world market, exchange this for locally
produced sugar and then export the local sugar to the EU. Back
3
Note by witness: There are 15,700 beet growers in the
Netherlands. Back
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