2205 final report.pdf - Agra CEAS Consulting

IMPACT OF THE EU SUGAR REGIME ON BCCCA MEMBER COMPANIES
• Other stakeholders. A continuation of the ‘status quo’ would also not alleviate many of the
criticisms of the current CMO for sugar, including those resulting from the distortion of
competition between farmers, the sugar processing sector and the rest of the supply chain.
Consequently, EU farmers’ incomes from sugar beet would remain (artificially) higher than
incomes from most other arable crops. For the sugar processing sector, despite lower sugar
prices, margins would continue to be guaranteed by set prices, regardless of actual developments
in production costs. The lower prices would also result in a reduction in the revenue generated
from sugar exports to the EU for ACP countries (Table 5.1), although to a lesser extent than the
other reform options.
For consumers, the cost of sugar (and sugar containing products) would remain high relative to
the other reform options. In contrast, the cost of the CMO for sugar to the Community budget is
expected to fall (Table 5.1), as the expected elimination of production surpluses will result in the
disappearance of subsidised exports of quota sugar 22 .
Finally, ceteris paribus, the expected reduction in sugar beet production is likely to have a positive
effect on the environment (although this will in part depend on the replacement crop and
agronomic conditions). These are likely to include less soil erosion and compaction, reduction of
the unnecessary removal and transportation of soil, less contamination of water by pesticides and
a lower quantity of water used for irrigation in certain regions 23 .
In summary, this reform option maintains a long-term quota scheme thereby making it possible to
continue EU sugar production at a higher level than would otherwise be the case under the reform
options without quotas. However, this would come at a high cost to the industrial sugar using sector
as prices would be maintained at a relatively high level.
22
The cost of subsidised exports caused by preferential imports would continue to be borne by the Community budget.
23
Beet cultivation does however have positive effects on the environment, including keeping certain species of animals in sugar beet
production regions and improving the agronomic quality of soil in the context of crop rotation.
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