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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