The European Union (EU) has the merit of not having given the African and Caribbean and Pacific (ACP) countries illusions about the sugar price review. The college of commisioners has confirmed the commissioner of Agriculture Franz Fischler?s proposal of a 37% gradual drop in sugar prices as from July 2005 over four years. It is a hard blow after nearly 30 years of preferential treatment and juicy revenues that have helped boost the country?s development.

There is no need for a lenthy mourning of what had been written on the wall for some time. Every cloud has a silver lining. The time has come for the private and public sectors to get together and roll up their sleeves to plan a comprehensive policy of diversification and financial investment.

As far as Mauritius is concerned, the change in EU policy will impact on the big producers first. The only way out is to reduce production costs while investing massively in field mechanisation and irrigation, factory modernisation and centralisation. This only involves some Rs 3 billion by 2008. The other involves a coherent policy for the electricity plants to be built that would need another investment of Rs 3 billion.

Big factories like Belle Vue Mauricia, FUEL or Deep-River-Beau Champ have already invested millions in modernisation. They are deeply in debt and, with revenues one-third lower, they may experience difficulties. Small planters, for whom sugar cane is often a second activity, may suffer less. They have less running overheads ? 50% less than big firms.

The ones most at risk are probably the ?middle planters?: sugar cane is their first activity and they have more overheads and less financial means than big firms. They could give in to the price pressure and leave the sector, which could cause havoc as they represent 40% of all producers.

Lowering production costs is thus an urgent issue. Sugar planters and other industry workers were aware of that even before the announcement of the reform. Pravind Jugnauth, who met them last week, was satisfied that ?unions and planters are conscious of the threat to the country with the reform of the sugar protocol.? However, this does not make things easier. ?With such a decrease, the situation of the sugar producers will become unbearable,? says the general secretary of the Mauritius Chamber of agriculture, Jean-Noël Humbert.

Despite the intensive lobbying campaign in Europe and the meeting of ACP countries with EU commissioners last week, nothing could be done to avoid the issue. It had been on the agenda for some time but ACP countries thought perhaps they were protected by the EU commitment to the Cotonou Convention.

However, the EU has its own commitments and does not feel it has betrayed its ACP partners: the latter will keep their import preferences and an attractive export market. There is also financial aid for specific measures but ?this is still vague for the moment.?

As EU commissioner for Trade, Danuta Hubner, made it clear when she was in Mauritius last week - ACP countries have to express their needs, which the EU will consider. They are not the only victims of this price reform. It threatens European beet sugar producers to the same extent and the latter will not get full compensation for it.

Mauritius is a land of cyclones and rainbows. It has faced other predicaments and has never given in to discouragement. Sugar specialist Jean-Claude Autrey from MSIRI and economist Kailash Ruhee from De Chazal Du Mee are already looking ahead. Both believe strongly that there is a future for sugarcane. Many new avenues are there for the taking: apart from electricity from bagasse, sugar cane can be used for the production of ethanol, the green fuel, alcohol, biodegradable plastics, as well as pharmaceutical and chemical products.

What is needed is further research ? we have the right competence and infrastructure for it ? the proper use of the compensation and aid programmes included in the EU reform and, last but not least, sensible decision-making in the country?s interest. This will be yet another proof of the resilience Mauritius has always shown in the face of antagonistic circumstances.

Mauritius is a land of cyclones and rainbows. It has faced other predicaments and has never been discouraged. Specialists and economists are already looking ahead.