Memorandum submitted by Delitzsch UK
1. We are pleased that a new enquiry
has been announced following the publication of the European Commission
proposals on 22 June 2005.
2. As a major supplier of sugar beet seed
in UK, it is our belief that if the proposals are implemented
in their current form, many sugar beet growers could not economically
grow the crop, resulting in industry rationalisation with job
losses in all sectors, including our own business.
TIMESCALE
3. The industry's drive for efficiency has
meant high levels of investment in new technology. The two-year
timescale for implementation does not take into account the effect
this will have financially. A much longer transition period is
essential, whatever level of cuts are finally agreed, allowing
a return on this investment.
CONSUMER BENEFIT
4. The effect on the consumer is likely
to follow the pattern of events between 1996 and 2000. During
this time, due to Green £ exchange rates, the value of sugar
beet was reduced by around 25%. As consumers, it was noted that
this reduction was never reflected in the price of goods containing
sugar. To the contrary, the cost of confectionery continued to
rise. The benefit of any reduction in price will be increased
profitability for the food manufacturers. The proposals should
be binding upon the manufacturers of foodstuffs to reduce prices
to the consumer.
IMPLICATIONS FOR
AGRICULTURE
5. The proposals will have more than one
implication for agriculture. As mentioned earlier, many growers
will not be able to economically grow the crop resulting in significant
changes to farming enterprises. Sugar beet is for many growers
the only crop on the farm which makes any profit.
6. Without sugar beet, the farm labour force
would be reduced, as farms would have to grow more combinable
crops. The opportunity for employment in remote farming locations
is low and this would further affect the viability of the rural
economy.
7. Combinable crops rely, in part, on their
yields from following a break crop, such as sugar beet. Without
this aspect in a rotation, yields and returns will diminish further,
again reducing the viability of farming enterprises.
8. At present there are few large-scale
alternative crops to sugar beet. Those that do offer similar benefits
are often still being developed for UK conditions or are only
required in limited volumes.
9. The use of sugar beet as feedstock for
the production of Bio Ethanol would provide the rotational benefits
but it is still in the development stage in this country and requires
government legislation to create the necessary end market for
the product. Having missed its renewable energy target for 2005
and with a 5% target set for 2010 this is an opportunity which,
could not only help meet that agenda but also support a beleaguered
agriculture, reduce greenhouse gas emissions and assist in rural
sustainability. This should be in addition to a viable beet sugar
industry to make the most efficient use of the existing industry
infrastructure.
10. Growing nothing is only sustainable
where soil conditions permit and would be a further cost to the
enterprise.
11. Any reduction in the area of sugar beet
will also reduce the ability of arable farms to provide the habitat
necessary for wildlife that depend on bare land during the winter
and early spring.
COMPENSATION
12. Firstly, to ensure fair competition
across the EU, the compensation policy must be dictated by the
Commission, with all countries applying the same rules.
13. Secondly, because of the magnitude of
the proposed cuts, any compensation must be paid directly to sugar
beet growers.
QUOTA ARRANGEMENTS
14. The retention of a quota system is biased
against the UK as it only produces as much sugar as it needs.
15. The objective must be to legislate for
the most efficient production base in EU. If quotas are to remain,
the cross-national border transfer of quota must be permitted
to operate in conjunction with the Voluntary Restructuring Scheme.
IMPACT ON
UK PROCESSORS
16. The current proposals would inevitably
result in further rationalisation for the beet sugar processor
with the inevitable negative impact on income and profitability.
This would reduce the base for the most efficient production of
sugar and the efficient production of new products such as bio
fuels and feed stocks for other industries in the future.
17. The proposals mitigate more against
UK than many countries. If we were not a member of the EU we would
be judged as a model country by WTO through not exporting quota
sugar and through the arrangement permitting the import of half
our sugar consumption from the African and Caribbean countries.
18. While fully supporting the need for
some reform, the aim must be to ensure the long term survival
of a sustainable UK industry to provide security of supply, a
reduction in food miles, stability in rural areas and the protection
of the environment.
Delitzsch UK
September 2005
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