March 10, 2005

Dramatic consequences of EU sugar reform, warns Oxfam

The British based charity Oxfam intends to impress upon European leaders that changes made to the European Union's sugar regime could have dramatic consequences - for good or for bad - on poverty in Mozambique and other third world sugar producers. The honorary president of Oxfam International, the former Irish President Mary Robinson, said that the current proposals of the European Commission, involving a very sharp cut in the guaranteed price offered to sugar producers, are "not helpful for the next few years of the developing and processing of sugar in Mozambique".
Robinson has been on a three day visit to Mozambique, during which she toured the sugar plantation and mill at Xinavane in Maputo province, and spoke to leaders of the peasant association who sell their cane to the factory. "I saw how positive sugar production is for communities", Robinson said. "The peasant farmers explained to us how important sugar is to them as a cash crop. I was struck by how hard they work and how worried they are about the price". She pledged that Oxfam would impress upon European parliamentarians and governments that reform of the EU sugar regime "should address the needs of Mozambique and other developing countries". EU policy makers, she added, should understand "the link between what they do on trade and development in Mozambique. In the EU there is a tendency to separate trade and development issues. But it's perfectly clear from our visit that the trade decisions taken will impact either very positively or very negatively on development and on poverty".
The director of Mozambique's National Sugar Institute, Arnaldo Ribeiro, explained that the domestic market cannot absorb all of Mozambique's sugar production. The domestic market consumes about 150.000 tonnes of sugar a year, but in 2004 the four functioning Mozambican sugar companies produced 210.000 tonnes. The best prices available currently are those paid by the EU, but Mozambique's quota for the EU, Ribeiro said, is only 7- 8,000 tonnes a year. Much of the remaining Mozambican sugar has to be sold on the world market, where the enormous distortions caused by agricultural subsidies means that sugar prices "are often lower than the costs of production, even for the most efficient producers".
The Mozambican sugar companies currently employ about 26.000 people - which means that around 100.000 Mozambican citizens are directly dependent on the sugar industry. But employment could be expanded in the companies now operating, and the two that are still paralysed (at Luabo and Buzi in the centre of the country) could be revived, creating another 20.000 jobs - but only if there was a guaranteed market for the extra sugar produced. According to Ribeiro, Buzi and Luabo had already been privatised - but the new owners would not rehabilitate them and produce sugar without a guarantee that they could sell it at a reasonable price. Mozambique and other Least Developed Countries "are trying to influence the European Commission and European public opinion so that the reforms do not take on this drastic form", said Ribeiro. "We want a reform that is pro-development". He was convinced that Mozambique could be among the ten most competitive sugar producers in the world, selling sugar at 220 US dollars a tonne FOB - but that required improvements in Mozambican ports and in the road and rail infrastructure. "We need time to do this", said Ribeiro. "We want the EU to give us at least another eight years". (Agencia de Informacao de Mocambique, Maputo)

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