Sugar

Oral Answers to Questions — Environment, Food and Rural Affairs – in the House of Commons at 11:30 am on 13 January 2005.

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Photo of Mr George Foulkes Mr George Foulkes Labour/Co-operative, Carrick, Cumnock and Doon Valley 11:30, 13 January 2005

What representations she has received regarding discussions with the European Union concerning changes to the African, Caribbean and Pacific sugar regime.

Photo of Margaret Beckett Margaret Beckett The Secretary of State for Environment, Food and Rural Affairs

My ministerial colleagues and I have received a number of representations on behalf of ACP countries highlighting concerns about the possible consequences of EU sugar reform for their industries.

Photo of Mr George Foulkes Mr George Foulkes Labour/Co-operative, Carrick, Cumnock and Doon Valley

I urge my right hon. Friend to fight like a tiger in Europe against the sudden price drop proposed for Caribbean sugar, which will cause havoc to many small islands' fragile economies and perhaps turn them on to growing illicit crops, with a consequent effect on security and law and order, not only in the Caribbean—particularly Jamaica—but on our own streets.

Photo of Margaret Beckett Margaret Beckett The Secretary of State for Environment, Food and Rural Affairs

I understand the seriousness of my right hon. Friend's point. I assure him that the British Government attach great importance to the need for transitional measures to mitigate the impact of sugar reform on existing preferential suppliers as a group, and particularly the ACP. However, I am sure that he accepts that the existing regime, which is due to expire in 2006 anyway, and has the effect of keeping the price of sugar three times above world levels, is not sustainable in the long term.

Photo of Douglas Hogg Douglas Hogg Conservative, Sleaford and North Hykeham

The right hon. Lady referred to changes to the existing regime. I am sure that she would acknowledge that those changes could have a serious impact on the future of UK sugar producers. Will she have urgent talks with the Chancellor designed to reduce the duty on the relevant biofuels so as to make the production of alternative fuels more attractive?

Photo of Margaret Beckett Margaret Beckett The Secretary of State for Environment, Food and Rural Affairs

The House may wish to be reminded that although we cannot have a detailed assessment of the likely impact of changes in the regime until we see the more detailed regulations, we have published on our Department's website an independent study carried out by Cambridge university and the Royal Agricultural College examining the possible impact of a range of options in the field of reform. It is unquestionably true that this would lead to changes in every member state. It is also true that some of those changes could reduce production levels, again in every member state.

I entirely take the right hon. and learned Gentleman's point about biofuels, but he will know that there is much discussion between our Department, the Department for Transport and the Treasury about this issue, and there is no unwillingness on the part of the Treasury to do what can be done to stimulate the market for biofuels. There is, however, reluctance to take steps that might not stimulate British production but draw in imports. Only on that matter is there any dispute, and we continue to keep it under review.

Photo of James Paice James Paice Shadow Minister (Environment, Food and Rural Affairs)

The Secretary of State is right that the current regime is not only due to expire but needs reform. She is also right to refer to the implications for our traditional cane suppliers from the African, Caribbean and Pacific countries and the need for structural help to face the changes. I am sure that she agrees that there will be price reductions—we do not know the extent of them—and quota cuts. What is the Government's attitude to the Commission's current proposals, which may alter, to change the whole system of quota cuts so that Britain would take a much greater hit than we would sustain if the current mechanism for cutting quotas remained unchanged? Will she resist the Commission's proposals to change the mechanism for cutting quotas?

Photo of Margaret Beckett Margaret Beckett The Secretary of State for Environment, Food and Rural Affairs

I am afraid that I do not entirely share the hon. Gentleman's view. It is and always has been the Government's purpose to defend British interests as vigorously as we can, and we have a good track record of doing that. However, there is something to be said for the Commission's general approach. It is too early to predict the Commission's further detailed proposals because, as hon. Members know, the Commission has understandably said that further sets of proposals are unlikely until the EU's appeal against the World Trade Organisation case has been heard.

The Commission's existing proposals will have an impact on every member state. The independent review suggests that the likely scenarios would lead to reduced production of sugar beet here, but that the impact would be significantly lessened if growers restructured and/or reduced their costs. A range of measures might mitigate the impact on the British industry. The hon. Gentleman can rest assured that we will do our utmost to achieve the best long-term outcome for the British industry.