Selwyn Parker: EU's Cutting of Sugar Subsidies Aids Australia
It took 40 years of pressure from Australia, among other nations, to make the European Union agree to cut massive subsidies to its sugar industry.
But it finally happened with last week's agreement by EU agriculture ministers to end a system which has feather-bedded the sector at the expense of other major sugar-producing nations, at least since the 1960s.
The decision, which was all but forced by a World Trade Organisation that had run out of patience, means that Queensland cane farmers and refiners will have a better chance of competing with EU producers in the coming years.
And there's no going back. The EU agreement is set in stone for a decade and cannot be reviewed.
In a nutshell it means the guaranteed price for white sugar as it leaves the factory -- the benchmark price -- will be cut by 36 per cent over four years, starting with a 20 per cent drop in 2006.
And "intervention" in the EU market -- a euphemism for the purchase and stockpiling of substantial surpluses -- must end within four years.
The result is that by the end of the decade, the internal price of EU sugar will have fallen to double the world market price rather than treble the price, as it is now. EU production also will decline steadily as uneconomic producers are assisted out of the industry.
Because the EU is the world's second-biggest exporter of sugar -- after Brazil, but just before Australia, the fall in output ultimately should translate into higher prices on world markets.
For Queensland's sugar lobby group, Canegrowers, it's the light at the end of what has been a long tunnel.
"It means that Australian producers are going to be far more competitive," general manager Ian Ballantyne says, predicting a fall in European production of 2 per cent a year.
But it finally happened with last week's agreement by EU agriculture ministers to end a system which has feather-bedded the sector at the expense of other major sugar-producing nations, at least since the 1960s.
The decision, which was all but forced by a World Trade Organisation that had run out of patience, means that Queensland cane farmers and refiners will have a better chance of competing with EU producers in the coming years.
And there's no going back. The EU agreement is set in stone for a decade and cannot be reviewed.
In a nutshell it means the guaranteed price for white sugar as it leaves the factory -- the benchmark price -- will be cut by 36 per cent over four years, starting with a 20 per cent drop in 2006.
And "intervention" in the EU market -- a euphemism for the purchase and stockpiling of substantial surpluses -- must end within four years.
The result is that by the end of the decade, the internal price of EU sugar will have fallen to double the world market price rather than treble the price, as it is now. EU production also will decline steadily as uneconomic producers are assisted out of the industry.
Because the EU is the world's second-biggest exporter of sugar -- after Brazil, but just before Australia, the fall in output ultimately should translate into higher prices on world markets.
For Queensland's sugar lobby group, Canegrowers, it's the light at the end of what has been a long tunnel.
"It means that Australian producers are going to be far more competitive," general manager Ian Ballantyne says, predicting a fall in European production of 2 per cent a year.