A fall in the sugar export prices was expected. It was even thought that the decrease could be of 42%. Yet the European Commission (EC)?s announcement of a fall of 39% has had a strong impact on the sugar industry in Mauritius and all other African Caribbean Pacific (ACP) countries. Not only is this decrease high but it will range over four years only.

Such a reform means that the price Mauritius is selling its sugar on the EU market will go from 523 euros now to 319 euros in 2009-2010. The first fall will be effective as from 1st July 2006 and the next a year later.

The minister of Agriculture, Nando Bodha, has expressed his strong disappointment about the announcement made by European commissioner, Marianne Fishler-Boel. ?Such a decrease is unacceptable and unbearable. We can lower our production costs and we have already started a restructuring plan. But, for the industry to remain viable, the price proposed to us should be higher than our production costs after restructuring.?

ACP countries are just as disappointed by the EU proposal, which ?would have a crippling effect on the economies of ACP countries traditionally supplying sugar to the EU under the provisions and guarantees of the ACP-EU Sugar Protocol. In addition to price cuts, the proposal would also impose new marketing restrictions on ACP suppliers, against the spirit and letter of the Sugar Protocol.?

Mauritius and its partners in the ACP group, knew perfectly well that the sugar reform was inevitable. However, they thought the commission would understand the difficulties they have to face with a drastic decrease and would take all this into account when making their final proposal.

<B>No step backward</B>

The only hope now lies in the Commission?s legal department. It is in November that the bill will be introduced to the commission; this suggests that the bill might be amended before it is adopted. But the commission has never taken a step backwards in this sugar reform. Why should it change the way it has dealt with the issue so far? In any case, the EU cabinet will examine the proposal on 18th July; this first meeting should be followed by many others.

The secretary general of the Chamber of Agriculture, Jean-Noël Humbert, has expressed his dismay at the news. ?The commission wants to go too far too quickly. If the bill is presented as it is, it will have a dramatic impact on the sugar industry and the people depending on this sector of the economy.?

Small planters will be the first affected. In this context, they have already shown their anxiety. Many have the feeling that they will soon see their jobs disappear.

Jean-Noël Humbert has also taken a stand over the EU financial compensation to ACP countries. In fact, all sugar producers for the EU ? including the European beet sugar producers ? have complained about the proposal. Except that the same beet sugar producers will benefit from a compensation corresponding to 60% of the price decrease, which means the drop will be of 16% only. As for ACP countries, the EC plans to give only 40 million euros to the whole group, which Jean-Noël Humbert finds unfair.

In a press release, ACP countries ?urge the EU member states to agree to considerably less drastic price cuts that would be gradually phased-in over a period of eight years as from 2008 along with accompanying measures to support the restructuring and modernization of ACP sugar industries. The ACP preference is for putting the focus on maintaining sustainable development through trade rather than creating another aid mechanism.?

France has already shown that it is sceptical about Marianne Fischer-Boel?s proposal? This could well help ACP countries in their battle!