Memorandum submitted by WWF-UK
EXECUTIVE SUMMARY
WWF welcomes the opportunity to contribute to
this Environment, Food and Rural Affairs committee inquiry. WWF
have long called for changes in EU sugar policies to end export
dumping, to improve market access for poor countries and to improve
environmental management. Whilst WWF welcomes the commitment to
reform the sugar regime, we have serious concerns about the European
Commission's 22 June proposals. Europe has a unique opportunity
to create a more just and sustainable global sugar market but
without changes to the current proposals, that chance could be
missed.
The distortion of the EU sugar regime on world
markets harms people and nature across the world. European over-production
damages the environment in the EU as well as depressing the world
price for sugar. Along with restricted access to the EU for developing
countries and unfair competition from dumped sugar, this results
in lower earnings for sugar exports. In developing countries this
translates into lower environmental and social standards.
There must be genuine cuts in European production
and an end to all the hidden, in-direct and complex subsidies,
refunds and grants that will continue to allow the European industry
to compete unfairly with developing countries and cause environmental
damage in Europe. Europe needs to import at least twice as much
sugar from developing countries as it does now. The EU must extend
meaningful help to both traditional "sugar protocol"
importers, and non-sugar protocol least developed countries (LDCs).
Specific recommendations
— There must be a review of these reforms
in 2010.
— Total EU production must be cut to
c 12 million tonnes a year.
— Quota cuts should be based on environmental
criteria.
— No additional quota should be created.
— All market management tools should
be reviewed to ensure there is no cross-subsidising of production,
use or export.
— The Single Farm Payment should not
over-compensate beet farmers; it should be modulated and must
include tougher environmental standards.
— Budget savings must be re-directed
to the development budget aimed at helping developing countries
adjust to reform.
— There should be no public support
for bioethanol in the EU.
— Europe should open its markets fully
to sugar imports from LDCs now rather than only in 2009.
— The EU should seek to implement the
price cut over a longer time period to allow LDCs to adjust.
— Europe should offer significantly
more assistance to the 18 ACP countries that are exporting to
the EU now, recommending a target of
500 million a year.
— Europe should offer adjustment help
to non-Sugar Protocol LDCs.
1. INTRODUCTION
1.1 WWF have long called for changes in
EU sugar policies to end export dumping, to improve market access
for poor countries and to improve environmental management. Whilst
WWF welcomes the commitment to reform the EU sugar regime, we
have serious concerns about the European Commission's 22 June
proposals. Europe has a unique opportunity to create a more just
and sustainable global sugar market but without changes to the
current proposals, that chance could be missed.
1.2 Firstly, the EU must guarantee an end
to the negative impacts the sugar regime has on the world by reducing
its production significantly and ending the dumping of European
sugar. Secondly, Europe needs to increase the import of sugar
from developing countries and invest substantial resources in
improving the environmental, social and economic sustainability
of the sugar sector in those countries. Unfortunately there is
no guarantee that the first of these will happen and there is
little evidence that the EU is willing to do the second.
1.3 The EU produces some 20 million tonnes
of sugar a year yet consumes only 16 million tonnes. It imports
2 million tonnes and regularly exports 5-6 million tonnes. The
EU sugar market is heavily distorted and as a consequence distorts
world markets. This distortion harms people and nature across
the world. As an international environmental organisation WWF
is concerned about the negative impacts of policies such as the
EU sugar regime on sustainability globally.
1.4 Europe over-produces sugar, stifles
demand for imports and directly and indirectly subsidises the
dumping of sugar on world markets at below the true costs of production.
As a result developing countries, in particular, face depressed
world prices, restrictions on their access to the EU market and
unfair competition in third countries.
1.5 In Europe the environmental consequences
of over-production result from the high level of soil erosion,
pesticide and water use associated with beet cultivation particularly
when grown in inappropriate regions. The nature of the sugar regime,
the high guaranteed price and the allocation of quotas across
the EU, means that sugar beet is unsustainably irrigated in a
number of Mediterranean river-basins.
1.6 Outside of Europe, in addition to the
negative impact caused by the distortion of world sugar trade
on earnings, poverty alleviation and labour conditions in some
developing countries, there are also significant environmental
consequences. Where sugar is grown irresponsibly valuable habitat
is lost, water is overused, soil eroded and degraded and land,
air and water are polluted by pesticides, fertilisers from sugar
fields as well as by smoke and waste products from sugar mills.
In some regions inefficient irrigation of sugar means that unnecessarily
large amounts of water are used. In others, water becomes polluted
with silt or chemicals.
1.7 Better management practices are widely
available. These practices address many of the environmental impacts,
so that sugar can be grown in ways that are good for nature. If
production is well managed, cane can help prevent soil erosion
and wildlife can co-exist in well-managed plantations. Unfortunately,
due to the depressed nature of the world market and unfair competition
from subsidised sugar exports, the sugar industry in many countries
is unable to invest in these practices.
2. REFORMS MUST
END EUROPEAN
OVER-PRODUCTION,
ENVIRONMENTAL DAMAGE
AND DUMPING
2.1 WWF welcomes the reforms as a first
step towards ending the over-production and dumping of European
sugar. However we need assurances that the voluntary and market
led measures designed to cut production will work. There is some
question as to whether they will when efforts to restructure are
combined with very generous compensation, expanded quota and new
payments for renewables (bioethenol) from beet.
2.2 Particular concerns are that:
— European farmers will be compensated
for 60% of the price cut in the form of a Single Farm Payments—a
total of
1.54 billion a year. There is some indication that
this will over-compensate producers for price falls which in reality
may be lower than predicted.
— In addition private storage and withdrawal
subsidies will still be paid in cases of low market prices.
— Production refunds will continue
to be paid to high sugar using industries, such as confectionery
and pharmaceuticals.
— 1.3 million tonnes of extra sugar
and sweetener quota is being created and over-production is being
further legitimised by continuing to `turn a blind eye' to sugar
for chemical and alcohol uses.
2.3 All this amounts to a very generous
offer of compensation and continuing support to the European sugar
industry which has already benefited massively from 40 years of
market management. It is likely to continue to encourage over-production
in the European Union which must not be allowed to occur. These
reforms will need to be monitored carefully to make sure that
EU over-production and dumping ends and whether the voluntary
restructuring alone is sufficient.
2.4 Continued over-production will perpetuate
the harm done to wildlife in Europe.
2.5 Unsustainable irrigation: Excessive
water usage for irrigation is the single most important environmental
impact from sugar beet in Europe, particularly in Mediterranean
regions. However, as climate changes, this is becoming an issue
increasingly in northern Europe as well. The high guaranteed price
for European sugar has meant that irrigation of beet, even in
highly unsustainable situations, has been a profitable option
for producers. The allocation of sugar production quotas across
the EU has meant that irrigation persists where it would not otherwise.
2.6 WWF would like to see an end to unsustainable
irrigation of beet and any other crop within the EU.
2.7 WWF wants environmental criteria, rather
than market decisions alone, to play a part in decisions to give
up quota production as is the case in the reform of the olive
oil regime. The EU Water Framework Directive is introducing a
system of river basin planning and this should be used to determine
whether irrigation within a particular river is environmentally
damaging or not.
2.8 Whilst environmental cross-compliance
(environmental standards which the farmer has to meet before they
get their payment) will be introduced to the single farm payment
for beet producers, it does not currently include any obligations
linked to sustainable water use or to the Water Framework Directive.
Therefore, it is unlikely to address issues like irrigation where
sugar production continues or, where decisions are made to shift
into alternative crops. Although a larger question than sugar
reform alone WWF wants to see the Water Framework Directive incorporated
into the cross-compliance system within the CAP.
2.9 Tackling unsustainable irrigation also
requires special investments. WWF would like to see restructuring
aid targeted at areas where sugar has environmental problems—for
example in southern Member States.
2.10 Possible wildlife benefits from beet:
In some cases sugar beet offers environmental benefits to wildlife,
as is the case for a number of UK farms. Where this is the case,
WWF believes that these should be delivered through cross-compliance
requiring crop rotations beneficial to wildlife and/or targeted
agri-environmental schemes rather than through a system of price
support.
2.11 Bioethanol: WWF is not convinced of
the desirability of investing in the production of bioethanol
for renewable transport fuel from beet in the EU. The carbon gains
from beet derived alcohol is not as favourable as the use of agricultural
or forestry biomass for direct heat and power production, or even
bioethanol derived from sugar cane. The option to include sugar
beet in the existing limited budget and area of crops attracting
EU support for renewables poses the danger of swamping the scheme
and distorting the future growth of the sector due to the existing
capacity to grow sugar beet. In addition, as with any intensively
produced crop, WWF is concerned at the biodiversity, pollution
and habitat impacts of large scale beet production whether for
sugar or alcohol.
2.12 Reform recommendations within the EU
— Duration of the sugar regime without
review until 2014-15:
A review of the regime at the mid-term will be
needed to ensure that it is having the desired effect of reducing
production, environmental damage and exports.
The overall level of production needs to be matched
more closely to EU consumption minus current and desirable imports
of some 4-5 million tonnes a year, ie at something like 12 million
tonnes. The current proposals will not achieve this. European
producers must not be able to produce over quota.
— The need for compulsory quota reductions:
WWF is disappointed that there is no managed
quota cut proposed now. There must be a strong commitment from
the EU to the use of compulsory cuts if the voluntary restructuring
scheme fails to operate as expected.
WWF advocates the use of managed quota cuts specifically
tied to environmental criteria such as the impacts of beet on
freshwater to ensure a smaller and more environmentally rational
level of production within the EU.
— The creation of additional sugar
and sweetener quota:
WWF strongly disagrees with the creation of a
further 1 million tonnes of sugar quota and 300,000 tonnes of
isoglucose quota in order to maintain, what has been deemed by
the WTO to be illegal, over-production in certain Member States.
— The retention of market management
tools:
It is the whole package of market management
tools within the sugar regime that, in sum, enables the European
industry to dump sugar on the world market and reduces the potential
demand for cane imports from developing countries. There must
be a substantial reform which removes these indirect drivers of
over-production which in turn lead to damage done to the rest
of the world.
— The proposed Single Payment Scheme:
WWF accepts the principle of compensation for
beet growers for the price cut. However we have a number of concerns
that need to be addressed:
— Compensation should be of a similar
level as currently received by other arable producers. There is
no justification on public benefit grounds for beet growers to
receive substantially more payments to meet cross-compliance standards
than other farmers.
— Savings resulting from these
reforms must be shifted to the development budget of the EU aimed
at strengthening the contribution sugar makes to the environment
and poverty alleviation in developing countries.
— Restructuring aid, within the
EU, should be targeted at areas where beet has had severe environmental
consequences—such as through unsustainable irrigation in
southern Member States.
— As is the case with existing
Single Farm Payments the sugar payments must be modulated to fund
rural development measures under the CAP.
— Where wildlife benefits can be
attributed to beet they should be delivered through the use of
cross-compliance standards for things like crop rotation and the
retention of winter cover and/or targeted agri-environment schemes
aimed at creating valuable habitat and food for wildlife.
— The proposed renewables payments:
WWF does not support investment in the use of
sugar beet for biofuels. The small existing area limit and support
budget would be better spent on supporting the production of woody
biomass for energy production.
3. REFORMS MUST
OFFER HELP
TO DEVELOPING
COUNTRIES
3.1 Many of the world's poorest countries
have the potential to maintain or develop sustainable sugar industries,
which could benefit the environment and help alleviate poverty.
The impact of regime reform on developing countries is closely
linked to internal changes within the EU, and cannot be considered
separately.
3.2 The proposals from the European Commission
singularly fail to address the need to ensure that sugar contributes
to environmental improvement and poverty alleviation in developing
countries. This must be addressed urgently.
3.3 The European Commission hopes the reforms
will lead to a 4 million tonne drop in quota production and the
end of C production and dumping, which will be necessary to comply
with the recent WTO ruling. That could amount to a total reduction
of 8 million tonnes, which is the amount which WWF estimates is
needed to end dumping and accommodate increased ACP and LDC imports.
However, effective production drops will depend on the success
of the voluntary restructuring. That is, whether the signals to
withdraw from production out-weigh the signals to over-produce
and, if not, whether the European Commission stands by its commitment
to use quota cuts in 2010. As outlined above the EU must do more
to ensure that over-production, market protection against developing
countries and sugar dumping end.
3.4 Beyond that minimum, any genuine pro-development
reform must also result in increased sugar earnings in the poorest
developing countries. Greater earnings in developing countries
will help them raise environmental standards and contribute to
alleviating poverty.
3.5 The greatest threat from these reforms
remains the one posed by the lack of help being extended to developing
countries to invest in the sustainability of their industries.
Without adequate help least developed countries, in particular,
will not be in a position to benefit from increased access to
the European market. Help must be given to ensure that this demand
can be met by sugar produced to high environmental standards in
countries where it can significantly contribute to poverty alleviation.
3.6 Without such help the threat of unsustainable
expansion in LDCs or in countries like Brazil, which is already
geared up to export sugar, poses environmental threats which are
not acceptable. These arguments should not be used to justify
maintaining sugar production within the EU, but towards a better
managed shift to greater imports of sustainably produced sugar
from developing countries.
3.7 A more sustainable world market in sugar
will only come after an end to the unfair competition posed by
EU exports, plus improved access to the EU market and adequate
development support.
3.8 Improved access: The EU should, in the
medium term, be aiming at maintaining the level of imports from
traditional suppliers and greatly expanding imports from LDCs
to between 2-3 million tonnes a year. In reality however Europe
will not fully open its borders to sugar from LDCs until 2009
(when the Everything But Arms agreement is to come into full force)
and by then these countries will face a price 40% lower than their
European counterparts have enjoyed since 1968.
3.9 WWF accepts that a price cut is inevitable
and also that the cut proposed still offers an attractive price
to a number of developing countries. The question is whether those
LDCs are in a strong enough position to reap the benefits of the
reforms. The EU should explore ways in which it can manage the
transition over a longer time period than proposed. This will
give developing countries a period after 2009 at an attractive
price. This should in turn attract investments in the longer-term
sustainability of their industries.
3.10 The EU must also offer assistance to
non-Sugar Protocol LDCs to ensure that they are able to benefit
from improved access to Europe after 2009.
3.11 Better help: Many developing countries
will be negatively affected by EU sugar reforms and they must
be provided with adequate and timely assistance to adjust.
3.12 However traditional ACP suppliers have
been offered minimal compensation compared to EU farmers. They
are being offered two years of slightly higher prices than their
European counterparts to accept these reforms. In terms of adjustment
assistance they are being offered only
40 million in 2006 (and an unspecified amount for
the following seven years) for 18 countries—compared to
the
1.54 billion per year earmarked for Europe's sugar
farmers and
4.2 billion restructuring fund for European sugar
factories.
3.13 Reform recommendations
The EU must do more to ensure that developing
countries are not only able to cope with these reforms, but to
benefit from them. Given the very generous offers of compensation
and restructuring aid to the European industry we believe that
the EU is obliged to think as creatively and generously about
how it can offer similar help to sugar protocol and least developed
country sugar producers and exporters:
— Europe should open its markets fully
to sugar imports from LDCs now rather than only in 2009.
— The EU should seek to implement the
price cut over a longer time period to allow LDCs to adjust.
— Budget savings from the reform should
be channelled into the development budget aimed at helping developing
countries build sustainable sugar sectors. One approach would
be for part of the restructuring levy on the industry to be directed
to development.
— Europe should offer significantly
more assistance to the 18 ACP countries that are exporting to
the EU now, recommending a target of
500 million a year.
— Europe must offer significant levels
of support to the LDCs to raise the environmental and social standards
in their industries.
WWF-UK
September 2005
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