EU strikes historic deal to shake up sugar policy

EU Agriculture Ministers struck a landmark deal yesterday to overhaul the bloc's subsidy-laden sugar policy, slashing prices by more than a third and offering generous pay-offs to farmers willing to abandon beet growing.

Their agreement means that the European Union will see its sugar production and exports fall sharply as its 40-year-old regime falls into line with a World Trade Organisation (WTO) ruling that has branded most EU sugar exports as illegal.

EU sugar policy has survived virtually all attempts at reform since its birth in the late 1960s and is often attacked for harming Third World producers as it floods world markets with millions of tonnes of subsidised EU sugar, lowering prices.

"It really is a great day. We managed to get a compromise with very broad support from the Council (of ministers)," EU Agriculture Commissioner Mariann Fischer Boel, author of the reform plan, told a news conference after marathon negotiations. "We have had the usual bargaining, but the outcome seems to be a reasonable one," she said.

"The final decision was a (price) cut of 36 per cent over a four-year period and there will be compensation for farmers of 64.2 per cent."

Although the ministers did not hold a formal vote, diplomats said only Greece, Poland and Latvia voiced disagreement with the general consensus.

During the three days of talks, Fischer Boel ceded ground in a number of technical areas but stuck largely to her guns on the most difficult: the depth of the price cut, which was only diluted slightly from the 39 per cent first proposed.

Many countries, like Italy, Sweden and Austria, won specific concessions for their sugar industries as the commission slowly wore down a group of 11 states opposed to the reform, since their combined voting weight was enough to scupper a deal.