Latvia, Estonia differ on sugar

RIGA - Prior to leaving for the European Union agricultural ministers' meeting devoted to the sugar industry, Latvian Agriculture Minister Martins Roze said that Latvia would not support the European Commission's plan to drastically alter the EU's sugar subsidization system scheduled for 2005.

Roze said Latvia would suggest launching the reform in 2006 or 2007, implementing it gradually in two phases spread over 10 years, while at the same time providing 100 percent compensation of the lost income for sugar-beet growers.
Latvia was also going to support retaining an intervention mechanism with a gradual reduction of price to take account of all interests involved in the sector.
A different implementation of the reform in new and old EU members would also ensure a more stable balance between the states, eliminate unequal competition and ensure more efficient planning of the common sugar market organization costs, Roze explained.

Latvia would also vote against the third version of reform offered by the EC, which would involve implementation of market liberalization measures. This, Roze said, would lead to the death of the country's sugar industry if unlimited amounts of cheap sugar were imported.
Latvia has two sugar factories, one in Liepaja and the other in Jelgava. Before accession to the EU, only Latvian-made sugar was permitted in the country, while imports were subject to licensing. After accession, Latvia had to open its sugar market to other EU producers, and the country's two sugar factories have already felt a dramatic fall in sales volumes.
The EU's agricultural meeting was expected to agree upon two levels of sugar reform - one for older EU members and one for newer ones. Historically, the EU has tenaciously protected the interests of separate farmers and sugar producers, the result of which has been a twofold gap between the price of sugar on the world market and in the EU.
Under a proposal by EC Agriculture Commissioner Franz Fischler, the secured prices and quotas for sugar would be reduced by one-third starting next July.
Eve Maadvere, head of the department for processing industry and trade at the Estonian Ministry of Agriculture, said that according to rough estimates, one kilogram of sugar would cost a little over 10 kroons (0.64 euro) in Estonia after the reform, provided that retailers keep their margins sensible.
"This is how it looks in theory; however, because life has shown that the trade sector can add very large markups to the price, which really don't seem to be justified," Maadvere said.
Estonia, unlike Latvia, has no sugar refiners, and previously government officials have said that it wouldn't be a problem for the country to back full liberalization of the sugar market.
In Lithuania, officials said they intended to ask the EC to extend the timeframe for implementing the reform and not to reduce the country's national sugar production quota.
"This reform is not good for our farmers," Rimantas Krasuckis, a senior official at the Lithuanian Agriculture Ministry, told the Baltic News Service last week. "We are currently preparing a letter to the European Commission, in which we are asking it to extend the implementation period of the reform to at least eight years."
As the official added, "Lithuania already produces as much sugar as it consumes. Therefore, we are going to ask not to lower out national sugar production quota."
There are four sugar refineries in Lithuania, of which three are owned by Denmark's Danisco Sugar and one by Arvi Cukrus, a local company.