Select Committee on Environment, Food and Rural Affairs Written Evidence


Memorandum submitted by Which?

ABOUT WHICH?

  1.   Which? is an independent, not-for-profit consumer organisation with around 700,000 members and is the largest consumer organisation in Europe. At EU level we are members of BEUC, the Bureau Européen des Unions de Consommateurs. We are entirely independent of government and industry, and are funded through the sale of our Which? range of consumer magazines and books.

SUMMARY

  2.  Reform of the sugar regime is urgently needed for consumers. The current regime penalises consumers through restrictions on competitive imports, the imposition of a levy to fund the export of surplus sugar, and the quota system that limits competition and restricts efficient sugar production.

  3.  The costs of the levy, the market inefficiencies and the restraints on competition are all ultimately met by consumers in the form of higher prices. This is particularly regressive in its effects. European consumers currently suffer all the disadvantages of a protectionist external policy, and none of the advantages that might be expected if there were a competitive internal market in sugar.

  4.  Through the levy, UK consumers of EU-produced sugar in Europe are forced to finance an unethical policy of dumping surplus EU sugar on world market, to the disadvantage of some of the world poorest countries. We therefore welcome moves to reform the regime, although the Commission's proposals fall short of what is required in a number of respects. Our submission to the Committee in March 2004 set out our criticisms of the current sugar regime in some detail and they are not therefore repeated here.

PROPOSED PRICE REDUCTIONS

  5.  Even with the proposed price cuts, EU sugar prices will remain substantially above those on world markets. The benefits for consumers will to some extent be offset by the proposed levies to pay for restructuring.

EXTENT TO WHICH THE PROPOSED PRICE REDUCTIONS WILL BE TRANSMITTED TO CONSUMERS

  6.  In a competitive market, reductions in raw material prices will over time be passed on to consumers. We share the Committee's concern expressed in its 2004 report about the lack of competition in this sector and we support the Committee's call for a full market investigation. We would like to see a firm commitment to the vigorous application of EU competition rules to the processing industry, as part of the eventual agreement on the sugar regime.

  7.  We are concerned that the benefits of price cuts may also be limited by the proposed "disturbance clause" (Article 37). This could be used to undermine the limited moves towards a more competitive market.

PROPOSED MEASURES FOR COMPENSATING EU PRODUCERS

  8.   Which? supports the proposed decoupling, although we would like changes to the EU single payment scheme so that it is focused exclusively on environmental and other objectives and is not related to either acreage or levels of previous payments.

  9.   Which? opposes the proposal that consumers should, through a levy, foot the bill for restructuring a sector that has already received generous support over many years—one that the Commission itself admits is "often better-off than the average taxpayer, to the detriment of other social categories". If it is considered appropriate to provide funds for the restructuring of the processing industry, then it should be done in a transparent and accountable way through public expenditure, and not through a hidden tax on consumers.

  10.  The Commission has long and disingenuously claimed that the sugar regime is self-financing, when the reality is that the costs are met through levies ultimately paid for by consumers. The proposed restructuring levy continues that policy.

  11.  If, however, there is to be a levy to finance the restructuring scheme, then we would want to see alternative sweeteners excluded from it. It is wholly unacceptable to impose, via the levy, the costs of restructuring the sugar industry on those consumers who choose alternative products. It would be the equivalent of a special tax on Toyota and Honda customers to fund the restructuring of Rover.

  12.   Which? is currently looking at the wider issues associated with sweeteners, and our wish to see the removal of economically protectionist measures in this sector should not be regarded as an endorsement of sweeteners generally or specifically in preference to sugar.

CHANGES TO THE QUOTA ARRANGEMENTS

  13.  We regret the decision to retain production quotas. They maintain inefficient production and stifle competition, and their retention will limit the extent to which the benefits of reform are passed on to consumers.

  14.   Which? urges the abolition of anti-competitive restrictions on the production of alternative sweeteners. The policy of propping up uneconomic sugar production by hampering the production of competitive alternatives was never justified, and looks even harder to sustain in a more liberalised sugar market.

Which?

September 2005





 
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