We are glad that UK charity, Oxfam has reaffirmed its position over EU sugar reforms as reported in our October 8 edition. In fact its position is very much in line with the view of the African, Caribbean and Pacific (ACP) grouping that any cuts in prices or production must be weighted towards European farmers whose Common Agricultural Policy ends up dumping subsidised sugar on the world market at the expense of the world's poorest countries.
The basic facts are this: Guyana and other sugar producing countries are on the verge of seeing sharp cuts in prices - by no less than 37% over three years - that they receive in European markets. The reason, according to the European Union, is that WTO has ruled that Europe must stop dumping sugar on the Least Developed Countries (LDC) amounting to five million tonnes per year.
The European Union has also decided unilaterally that those same LDCs should be allowed to export unlimited amounts of sugar into Europe under the Everything But Arms agreement.
If the cuts go through - and there is still a lot of uncertainty given the strong European farm lobby - this would be a case, as one observer put it, of the poor paying for the poorest. Regionally, five Caribbean countries - Barbados, Belize, Jamaica, St Kitts and Trinidad - are in serious jeopardy. Guyana is pencilled in as having a chance of surviving but only with what a study undertaken by consultancy LMC International and commissioned by the UK's Department for International Development (DFID), called significant restructuring. That is already going on but their observation that each mill should be profitable in every market into which it sells has been rejected since 2000.
Still in this report they repeat that, "A condition of the World Bank support package that is currently being provided to the industry is that each milling estate must be viable on a marginal cost basis...The Demerara estates, which have significantly higher production costs, will remain open until 2006, at which time they will have to demonstrate their viability or face closure." That could mean 8000 employees thrown out of work.
The concept has few takers locally, because they do not see the be-all and end-all of the industry as maximising profits. To lay-off 8000 workers would have a devastating impact on numerous villages in one area of the country. As we have seen in Linden, such mass lay-offs can breed a vicious cycle of despair and emigration. And as the Linden Economic Advancement Programme has shown, it is tremendously difficult to get aid programmes in place and on time.
Of course the EU will consider assistance, be it trade-based or aid-based, to the affected countries but none of the suggestions in the report could address the fundamental question of how to employ large numbers of people in what is essentially a profitable industry. Medical transcription and call centres or crafts for tourists are not going to do it.
There is no equivalent industry to sugar in any European country most of which are highly diversified and have strong social safety nets.
Total agricultural employment as a percentage of total jobs is only around 2% to 4% for most EU economies. Agriculture in France makes up 3% of the GDP, in the United Kingdom 1.7%. For Guyana, sugar alone makes up 18% of the GDP and employs 7.5% of the workforce in direct labour.
It is clear the robust economies of Europe can easily withstand some beet farmers going out of business or simply switching to other production, while the effects will be far more severe for regional sugar producers.
The ACP issued a press release after meeting in Brussels a few weeks ago which talked more of compensation than of challenging the basis for the cuts. Are they being premature? After all, the talks in the Caribbean decided that to talk of compensation would be to signal that the grouping would accept the proposals in some form or other. The argument should still be made that it is Europe, the rich, who must help the poorest but without hurting the poor.