The European sugar regime is the subject of discussion. According to some, far-reaching deregulation is needed. This would benefit developing countries. 'Not so', argues the report 'Why regulate the market for agricultural products?' from the Landbouw-Economisch Instituut (LEI).

A free market is not only a threat to the existence of the European sugar sector but would also disadvantage many developing countries. Moreover the consumer would no longer be assured of a reliable supply of safe food, because the origin of the available food would no longer be traceable. And finally, nature, the environment and the landscape would come under pressure.

The LEI was commissioned by the Platform on the Future of the Sugar Market  to research the advantages and disadvantages of market regulation in agriculture, and in the sugar market in particular. Market regulation must ensure that consumers have access to an adequate supply of food at reasonable and stable prices.

Under the European sugar regime, sugar-beet growers and sugar producers are allocated production quotas (fixed quantities). Moreover, there are fixed prices for these quantities of sugar and sugar beet. Together with import tariffs, this ensures that sugar supply and demand are in equilibrium in the EU. It also ensures good quality, safe food.

The LEI concluded that this stability is essential to the continuity of the sector. Deregulation in Europe would lead to much lower prices for sugar and sugar beet and to much lower sugar production, and would threaten the continued existence of the sector.

Developing countries
According to the LEI, the idea that developing countries would profit from a free European market without import tariffs is wrong. Many developing countries already export their sugar to the EU tariff-free. They are paid the European sugar price, which is much higher than the price on the world market.

In a free market, the European sugar price would fall drastically and these countries would earn little or nothing on their exports. Moreover, the biggest sugar exporting countries (Brazil, Australia and Thailand), rather than the poorest developing countries, would profit from the liberalised market.

Therefore the Dutch sugar sector supports the retention of a balanced and responsible EU sugar regime. The two key objectives of such a regime must be the continuity of the sugar sector and more concessions for poor developing countries.

Dinteloord, 2 October 2003