Walsh warns against EU sugar reform proposals

EU Commission proposals to reform the Union's sugar industry would be "devastating" for the Irish sector, the Minister for Agriculture, Mr Walsh, has warned.

Commenting on Agriculture Commissioner Dr Franz Fischler's call for cuts of around 40 per cent in internal prices and the abolition of the intervention system, Mr Walsh said today the proposals posed "a direct threat" to Irish jobs.

He said "in their current form" the proposals put at risk 1,000 jobs in the processing and supply industry as well as to the 3,800 farmers currently growing sugar beet.

Mr Walsh said: "The implication of the proposals on price and quota cuts, even allowing for consumption, would be to make sugar beet growing no longer viable in some Member States".

He said: "The impact assessment conducted earlier by the Commission shows that Ireland is one of the more vulnerable countries to price reductions for sugar and sugar beet."

Minister Walsh said the proposals were not acceptable and he would oppose them when they come before the Council of Agriculture Ministers.

Earlier the EU Commission endorsed plans for a thorough overhaul of EU sugar policy, recommending huge price cuts for a regime barely changed in 35 years and repeatedly attacked for distorting world trade.

The move comes after other reforms of the EU's €43 billion farm support programmes as the bloc has come under pressure in world trade talks. The sugar regime also faces a legal challenge at the World Trade Organisation (WTO).

Quotas for subsidy-eligible output would be merged from two into one, with gradual cuts in overall volume by 2.8 million tonnes from 17.4 million over four years. The reforms would start in July 2005, one year before the current regime expires.

Sugar subsidies cost the EU around €1.7 billion a year, but critics say the true cost of the system is much higher due to the inflated prices charged to consumers based on minimum prices that are more than three times world market levels.

The EU has been under relentless pressure over its sugar policy, with critics accusing the regime of distorting world markets and harming Third World interests. EU subsidies allow producers to export sugar and displace cheaper competitors.

Last year Australia, Brazil and Thailand filed against the EU at the WTO, saying the bloc's sugar subsidies had driven world prices below production costs. Dr Fischler said the reform plan would go some way towards mollifying the EU's critics.

"This proposal gives us additional flexibility in the WTO," he said. "(It) sends a very clear signal to our international partners and developing countries."

Additional reporting by REUTERS