More than 35,000 jobs could be lost from the EU's sugar industry and around 40 processing plants closed as a result of sharp cuts in guaranteed prices for farmers and millers put forward by the European commission yesterday.
Senior officials said the 40% price cuts, designed to reduce output, cut the €1.24bn (£825m) support system and stop illegal dumping on world markets, could force 7,500 beet farmers and 29,000 industrial workers out of the industry. Up to 60,000 associated jobs could also go.
The plans came under immediate attack from French farmers, Irish producers and sugar beet processors, including AB Foods, owners of British Sugar, which said earnings could suffer a £10m hit in 2006-07, rising to £40m a year thereafter.
Other producers, including Europe's biggest, Südzucker of Germany, attacked the proposed 39% cut in prices for white sugar and 42% for beet as "far too high and unnecessary". But British confectioners' trade body the Biscuit, Cake, Chocolate and Confectionery Association, welcomed them.
Mariann Fischer Boel, agriculture commissioner, said the EU sugar regime had been untouched for 40 years and inflated prices to three times their level on the world market.
"I could sit on my hands and do nothing and sugar production in Europe would suffer a long and painful death," she said. "This is going to hurt in some parts of Europe and I would like to make the pain as short as possible."
Several countries, including Italy, Ireland, Greece and Portugal, could be forced out of the industry which could be concentrated in the hands of half a dozen big processors, the commission calculates.
CIUS, the European sugar users' body, said the reforms would strengthen national quasi-monopolies such as British Sugar, whose market share could double to 15%. But senior commission officials said anti-trust and other mechanisms would be used to ensure genuine competition.
The price cuts, in two stages, are designed to reduce EU sugar production to 12.2m tonnes a year out of an annual consumption of 16.2m tonnes and stop the illegal dumping of 5.2m tonnes.
They will be cushioned by compensation for farmers offering 60% of their delivery rights - in effect production quotas with a limited price guarantee. There will also be a restructuring fund for plants, worth up to €6bn over four years. Both will be financed by a levy on consumers and users.
Senior officials admitted the price cuts could force some developing countries to close their industries and would reduce the income of 18 African, Caribbean and Pacific countries enjoying preferential access by up to €300m a year.
They insisted that imports from these countries, now about 1.3m tonnes, could rise to between 2.2m and 3.5m tonnes a year and would continue to fetch higher prices than on the world market.
