ECONOMY

Sugar company chief says EU proposal will ‘devastate’ sector

The European Union’s drastic sugar policy reform will have devastating effects for Greek sugar producers and farmers, driving many out of business, the head of Hellenic Sugar Industry (EBZ) said yesterday. «This reform proposal, much harsher than what we expected, will have effects that will be crippling and devastating to our industry,» EBZ Chairman Christos Koskinas told Reuters in an interview. Greece has sown about 105,000 acres this year compared to 80,000 in 2004 and expects production to rise to about 290,000 tons, up from 250,000 last year. Domestic annual consumption is about 320,000 tons. «This reform basically means the cost of production for a ton of sugar that is now around 710-720 euros will stay the same, but the sale price will drop dramatically,» Koskinas said. On Wednesday, the European Commission unveiled the overhaul of a sugar policy that has inflated EU prices to three times the global average and come under fire for years for distorting world trade. EU Agriculture Commissioner Mariann Fischer Boel said on Wednesday: «This is going to hurt, that’s obvious, in some parts of Europe. I want to make this pain as short as possible,» she told a news conference. «Even if it’s tough, it is what is needed.» Fischer Boel’s plan calls for sharp cuts to minimum prices and production quotas – slashing the EU’s white sugar support price by 39 percent and the minimum beet price by 42 percent. Both cuts would run over two years, starting in 2006-07. «Thirty-nine percent is just too much. We were not expecting something so drastic over just two years,» Koskinas said. «We were expecting a more realistic transition period, maybe stretching over four years with an annual support price reduction of four or five percent,» he said. EBZ operates five plants in northern and central Greece and owns two more in Serbia-Montenegro. Sugar firms struggling with sharply lower revenues that wish to leave the sector will be able to sell their annual production quotas to Brussels under a generous four-year buyback scheme. The plan will now be discussed by EU ministers, aiming to reach a deal in November. The Commission has singled out four countries whose sugar industries may disappear – Greece, Ireland, Italy and Portugal – as growing beet would become less profitable than other crops like cereals and oil seeds. «Of course it will drive sugar farmers out of business because it makes beet farming unattractive,» he said. Greece currently has some 20,000 sugar farmers.