Memorandum submitted by British Beet Research
Organisation
This response relates to European Commission
document, COM (2005) 263 final, presented on 22 June 2005. It
addresses specifically the bullet points listed in Press Notice
number 3 published by the EFRA Committee on 26 July 2005.
EXECUTIVE SUMMARY
The British Beet Research Organisation is concerned
that adoption of the proposed reforms of the EU Sugar Regime will
undermine not only its research capability and, consequentially,
the technical progress and competitiveness of the UK beet sugar
industry, but also the environmental enhancement that could be
derived from optimising the area of sugar beet grown in arable
rotations. Disbenefits could be minimised if the following points
are taken into consideration:
— The cut in the price paid to the
grower for sugar beet must be sufficient to remove inefficient
production but not so severe as to undermine the competitiveness
of the UK. As the volume of BBRO research is directly related
to the tonnage of processed beet, the BBRO accepts that associated
reductions in area sown and tonnage processed will retard its
output of improved, environmentally sound and safe techniques.
— The possibility of using out-of-quota
sugar for biofuel, and the attendant qualification of such beet
for set-aside and energy-crop aid is welcomed as a step towards
the combined production of beet for sugar and beet for energy
in common arable rotations.
— It is vital for the competitiveness
of the UK that decoupling arrangements should offer the best possible
advantage to sugar beet growers and should be the same in all
member states.
— The opportunity to buy back 83,000
tonnes of quota is welcomed but further transferability of quota
between member states according to ability to produce the crop
and domestic requirements would be fairer, and more sustainable
within the Union in the long term.
1. THE BBRO
The British Beet Research Organisation (BBRO)
is a private not-for-profit company owned equally by the British
Sugar (the processor of home-grown sugar beet) and by growers
through the agency of the National Farmers Union. It is financed
by a levy of 12 pence charged to the grower for each adjusted
tonne of sugar beet processed, matched by an equal amount from
British Sugar. To the present, this levy has raised, on average,
£2.16 million per annum from an average national crop yield
of about 9 million tonnes, to be spent at research centres on
a balanced programme of strategic research, nearer-market technical
development and technology transfer. Over 96% of the levy income
is spent on research and technology transfer projects. Implementation
of the Commission's proposals will force production down to a
level nearer quota, reducing probable income to about £1.8
million. The industry is self-sufficient in its research programme,
there being no public expenditure on specific sugar beet research
programmes and only negligible expenditure on non-crop-specific
research relevant to sugar beet. Through the BBRO levy, the UK
has become one of the most efficient producers of sugar and sugar
beet in the EU. A recent DEFRA report confirmed the value of sugar
beet as a break crop and highlighted the success of the research
programme in reducing all inputs to the crop, with consequent
benefits for biodiversity and wild life. Sugar beet is acknowledged
also to have the best environmental credentials of any UK arable
crop, having reduced its pesticide and fertiliser inputs by 60%
and 30% respectively within the last 25 years[10]
and being advantageous to wild species, particularly farmland
birds[11].
The BBRO research programme is the foundation of technological
progress for sugar beet production in the UK. We are concerned
therefore that reforms of the EU sugar regime should not be allowed
to reduce our growers' profitability to a point that forces significant
reduction in the area sown to sugar beet, with consequent negation
of the economic and environmental advantages derived from our
research programme and diminution of the volume of research upon
which future advantage depends.
2. EXTENT AND
TIMESCALE OF
PRICE REDUCTIONS
In spite of the fact that price reductions,
through their effects on beet area, will affect the BBRO research
capability, the BBRO believes that it is essential for future
stability across the EU after regime reform, that the price reduction
is sufficient to stimulate the most inefficient beet production
to cease, enabling transfer of production to the more efficient.
The proposed reduction in the minimum price for sugar beet, from
43.63 to 25.05 EUR/t by 2007-08 represents a 43% cut in the price
paid to the grower. The proposed production charge and possible
"flexibility clause" could result in an even greater
cut; possibly even too great. Growers have, hitherto, sown some
excess area as insurance against a poor season and the associated
risk of failure to achieve quota. This is, of course, inefficient
and, as returns diminish, growers will be unable to incur the
expense of sowing and managing the excess area. However, the BBRO
believes that a large proportion of UK growers can remain competitive
at a reduced price and, consequently, is funding research to assist
our growers in determining more accurately the area each needs
to sow. The BBRO accepts that, in this scenario, and as an objective
of the reformed Sugar Regime, the tonnage of processed beet is
likely to fall nearer to that required to produce sugar quota
but the BBRO makes it known that the negative impact on its research
output, most of which is environmentally as well as economically
desirable, could be significant. For this reason we welcome the
opportunity for the UK to acquire additional quota as allowed
under article 8 of the draft regulation (see paragraph 6), or
if home-grown sugar is used for approved non-food purposes (see
paragraph 4).
3. EXTENT TO
WHICH THE
PROPOSED REDUCTIONS
IN PRICE
WILL BE
TRANSMITTED TO
THE CONSUMER
BBRO has no remit for such market analysis but
experience suggests that it is unlikely that the ultimate consumer
will find the prices of sugar-containing foods any cheaper on
the supermarket shelves.
4. IMPLICATIONS
FOR UK AGRICULTURE,
PARTICULARLY LAND
USE
The expansion of winter cereals and oilseeds
since the 1970s has been a major cause of the decline in populations
of some birds, mammals and arable plant species. Sugar beet is
a valuable spring break from winter cropping: over-wintering sugar
beet or beet aftermaths provide food and cover for many animals
over the winter, affecting 800,00 hectares of arable rotations.
These environmental advantages will diminish in proportion to
the shrinkage in area of sugar beet associated with regime reforms.
Consequently, we applaud the Commission's proposal to allow above-quota
sugar to be used for the production of biofuels, and we welcome
the attendant qualification of sugar beet for set aside payments
and energy crop aid when grown for this purpose. This will encourage
the combination of sugar production and energy cropping, resulting
in some retention of the crop in arable rotations and contributing
to Defra policies to encourage the expansion of spring crops for
the benefit of landscapes and biodiversity.
5. PROPOSED ARRANGEMENTS
FOR COMPENSATING
EU PRODUCERS
The BBRO welcomes the proposal to compensate
sugar beet growers to soften, at least for a period, the harsh
effects of loss of crop-income. We also approve the decoupling
of compensation from production, making it subject to cross-compliance
conditions within the Single Payment Scheme; any form of coupling
will hinder the objective to achieve a more efficient and competitive
EU industry by encouraging less efficient growers to remain in
production. However, we would urge HMG to devise a scheme based
on a historical reference period in which compensation is paid
exclusively to sugar beet growers. At the moment, the proposals
allow undesirable flexibility in the implementation of decoupled
arrangements: some member states will award compensation specifically
to beet growers; other member states will award the compensation
regionally to all farmers. Those growers subject to the latter
arrangement (and experience from the last round of CAP reform
suggests that HMG would prefer this for UK growers) will be at
a disadvantage relative to growers in member states employing
the former. Whatever the arrangements finally prove to be, it
is vital for competitiveness that they are the same for all member
states.
6. CHANGES TO
THE QUOTA
ARRANGEMENTS
Though easily capable of supplying its domestic
markets from home production, the UK has long maintained only
50% self-sufficiency in sugar production through its historic
relationship with ACP countries. Consequently, the UK does not
contribute to the EU surplus and, whilst continuing to accept
a fair share of obligation to the ACP and LD Countries, ought
to receive the benefit of some redistribution of quota. The opportunity
for the UK to buy back 83,000 tonnes of sugar quota is welcomed
as a step towards redistribution but should go further. It is
disappointing that the Commission is not seriously addressing
the current imbalance of production capability and consumption
between the member states. The UK has climatic advantages giving
a long growing season and enabling protracted harvest campaigns
which could give us an edge over some competitors, if we were
allowed to capitalise on those advantages. There is no doubt that
it is more efficient throughout the Union to have sugar produced
in those regions where it does best, and a regime in which Member
States, through quotas, are barred from self-sufficiency wherever
that is possible, cannot be sustainable.
7. POTENTIAL
IMPACT ON
UK-BASED SUGAR
BEET PROCESSORS,
CANE REFINERS
AND THEIR
INDUSTRIES
The long-term consequences of the proposed Sugar
Regime on UK sugar beet processors and refiners are best analysed
by those companies. As far as the BBRO is concerned, without the
non-food uses and redistribution of quota mentioned above, the
impact is likely to be a continued reduction in research capability
and a consequent erosion of the competitiveness of our beet sugar
industry, along with its environmental benefits, relative to other
Member States.
British Beet Research Organisation
September 2005
10 June 2002. Sugar Beet and the Environment in the
UK. Report by the United Kingdom in accordance with Article 47(3)
of Council Regulation 1260/2001 on the environmental situation
of agricultural production in the sugar sector. Arable Crops Division,
Defra, London SW1A 2HH. Back
11
Harry Huyton. No U-turn over RSPB sugar policy. Farmers Guardian,
August 12, 2005. Back
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