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We welcome the Commission's approach to reform of the EU sugar regime, which centres on price reductions, as this is an essential element in bringing the European sugar market into balance. Setting the price low enough to drive out the inefficient producers, but high enough for the most efficient to prosper, is the critical balance that will define the success of the reforms.
It seems certain that pressure will be applied in the negotiations, from other Member States, to dilute the price cuts significantly. The UK Government's negotiating position must be to support the Commission in minimising any such dilution.
Given the highly competitive climate in which manufacturing operates, and the pressure which the large retailers can bring to bear on their suppliers, it is likely that consumers will benefit from some degree of sugar price reduction in the medium to longer term.
Direct payments to sugar beet growers must be fully decoupled from production, in order to minimise market distortion. The UK Government should strongly oppose any attempt to introduce the option of partial decoupling into a compromise package.
We are concerned about the unfair impact on the UK of applying the proposed price cut to the new unified quota. The UK Government should negotiate for a change in the proposals, so that the UK's industry is adequately recognised in the compensation package.
The UK Government should ensure that the final reform package allows the UK's sugar beet industry to exploit its position of relatively high efficiency. No distortions should be allowed into a compromise deal that could discriminate against the UK beet sector.
We recognise the benefits in terms of biodiversity provided by beet growing in the UK. But these benefits should be secured, and funded, through targeted agri-environmental programmes under the CAP.
The Government must negotiate to ensure equitable terms of competition between the cane and beet sectors in the UK. The cane sector is unduly disadvantaged by the proposals as they currently stand and we are sympathetic to the suggestion of retaining some form of refining aid.
The UK Government should support the maximum possible increase in the level of assistance for the ACP countries, both in 2006 and in the subsequent years covered by the Commission's Action Plan.
In its role as President, the UK Government should use all its efforts to achieve agreement on a sugar reform package. The EU should not miss this opportunity for reform.
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