The sugar industry is facing a bleak future as the accompanying measures by the European Union (EU) will not be as hefty as expected. The proposal of the commission is considered as extremely damaging to Mauritius. Finance minister, Rama Sithanen, and his Agro-industry colleague, Arvin Boolell, have been lobbying since last week to bargain for more financial aid. They were in Sweden yesterday to expose the facts about the importance of sugar in our economy and society.

The EU is reforming its sugar sector with a gradual price cut of 36%, fully effective as from 2009/2010. To assist the penalised sugar-exporting countrieslike Mauritius, it proposes to disburse accompanying measures.

Information from Brussels revealed that the regulations in respect of the accompanying measures carry a ceiling of 15% of the available resources that would be applied to the recipient countries. Thus, in 2006, the Commission has earmarked an amount of 5,82 million euros out of 40 millions for Mauritius, despite the fact that the country?s exports represent 38% of the total ACP exports.

?It is clear that Mauritius would be the worst treated of all Sugar Protocol Countries since it is the only country that has a quota higher than 15%. Mauritius would be unduly penalized as the principle of capping would totally ignore the important multifunctional role of sugar on the island and the continued efforts by its producers to remain substantial and reliable suppliers of quality sugars to the EU and this would be unfair?, the local industry said in a memorandum submitted to EU diplomatic missions in Mauritius.

<B>Facing a devastating shock</B>

The revenue loss for the forthcoming seven years is estimated at Rs 25 billion and the roadmap to reform the industry would necessitate almost the same amount. Things get complicated when the EU commission intends to apply the same measures for the period 2007/2013, during which financial aid is most needed. The local industry rightly stressed that ?The Mauritian economy does not have the economic resilience to withstand such a devastating shock, particularly when the surge in oil prices and the difficulties faced by the textile sector are taken into account?.

Moreover, the economy no longer relies on the sugar sector as its main source of revenue and foreign currency. EU technicians, in their calculations of the Mauritian share, have taken this aspect into account. Even the EU ministers, whom Rama Sithanen and Arvin Boolell have been meeting since last week, have laid much emphasis on this issue.

If the EU cannot disburse the amount needed for the sugar reform, it can do so to diversify the economic base. Minister Rama Sithanen came up with this new argument, quoting the land-based oceanic industry and the seafood hub as such sectors.

Time is an important factor as the Council of ministers, the EU Parliament and the Commission discuss the financial perspectives for 2007/2013 in Brussels. The solidarity of ACP countries on financial aid disbursements would no longer stand. Even EU diplomats believe that Mauritius is ?isolated? on this issue. The 17 other ACP members will forcefully react to any cuts in their share in favour of Mauritius. The local industry, which was banking on a 20 to 25% share of the budget, insists that ?the principle of proportionality should have primacy when establishing the allocation criteria?.

The accompanying measures are quite low compared to what was expected. But does Europe owe us a living? A blatant no! The industry will have to adapt to the new market? or perish.