EU Sugar Regime (EUC Report)

My Lords, I very much welcome the report, which I found fascinating reading. My noble friend Lord Renton of Mount Harry suggested that it might be a way of looking at other agricultural products in the developing world as in competition with the developed world. I am not certain about that. As far as I know, sugar is the only example of a completely undifferentiated consumer product—when the housewife buys a bag of sugar, it says on the label whether it is cane or beet sugar, but if it did not she would not know. They are two completely different plant species of different origins. One works extremely well in certain tropical and semi-tropical conditions and the other works in temperate conditions. I do not believe that there is another example. If we take vegetable oils, of which many are available across the world, nevertheless each remains pretty distinct. Olive oil is not like palm oil and rapeseed oil is not like soybean oil. They have distinct characteristics which are retained, although they too can be used for biofuels. Indeed, it is that aspect of the sugar market and sugar production on which I want to concentrate; particularly the ACP part. Six of the countries in the list are Commonwealth countries which have populations of between 1 million—Guyana has under 1 million—and 3 million and per capita incomes of between $1,000 and $4,000 against our $25,000. They produce about 1 million tonnes out of the 1.3 million tonnes included in the report. Because of my Commonwealth Development Corporation background I am familiar with five of the six countries. I have never been to Guyana but I feel I know it because the Guyanese used to come regularly to explain to us. I see that the committee took evidence from Mr Barry Newton, who was an excellent colleague of ours in CDC. We had many joint endeavours with Booker Tate and he knows Guyana like the back of his hand. The sugar protocol goes back a long way: it has its roots in imperial preference. Those of us of a certain age remember that there was not any sugar in the war, or very little—and there was not a lot of beet or beet sugar. It is a post-Second World War industry to a great extent. There was some but not much. It has needed reform for a long time. The point I wanted to make was that, if I remember rightly, it was the European farmers who originally jumped in on the back of the imperial preference protocols and the price became equal—my noble friend Lord Plumb will know the history much better than I—because the European industry saw an opportunity to say, ““We deserve equality with the price being given to the cane sugar producers coming under imperial preference, or Lomé, or subsequently Cotonou””. We should remember that. We should also remember that this is primarily a UK issue. If we read the list of ACP countries, the 1.3 million tonnes come largely from Commonwealth members and countries with strong connections with this country to whom, at one or another time, we have been very grateful. We must add in the fact that the population of Mauritius is very largely ethnically Indian, because of sugar; the population of Fiji is very largely ethnically Indian, because of sugar; and the population of Natal is very largely Indian, because of sugar. There is a tremendous history. I do not want to go back to the 17th century barons in the Caribbean, but there is a tremendous history here. The UK is more bound up with that history that many of the other countries in Europe. In fact, that history is not really of tremendous interest to, for example, either Germany or Poland, which are big producers of beet sugar. The French are the largest producers and, again, their interests are historically somewhat different from ours. What is the size of the problem? My noble friend Lord Renton said that it was 19 million tonnes, rather than 18 million tonnes, so I shall say the same. It will reduce to 10 or 11 million tonnes. That is what the commissioner promised in evidence. That must be compared with 1.3 million tonnes coming from the ACP countries. Even if European production reduces as far as it is hoped, the issue of the 1.3 million tonnes does not seem all that difficult to solve in principle. I shall come back to that. As for European production, 6 million tonnes of exports will cease—or is it 5 million tonnes, because I think that there was a hint that there would still be 1 million tonnes of export. Presumably, 2 million tonnes will be brought in, because we shall have a sugar deficit instead of a surplus. Then, the question becomes: what will happen to the world price? I remember well when it was six cents a pound—when we worked in pounds and US cents. The ACP price was 26 cents. Such disparities have gone on for a long time. It is a matter of great regret that that nettle was not grasped a long time ago. I remember making representations to what was then the ODA from CDC asking whether it was not time that someone did something about that, because all sorts of distortions were being built in that would be very expensive to sort out. My point is: do we know what is going to happen to the world price? No, we have no idea. There is the looming ghost of Brazil, which may do something dreadful, perhaps, but various assurances have been made to the committee that that will not be allowed to happen. The Brazilians have been cross-subsidising their sugar production with ethanol. To my knowledge, they have been making ethanol for their motor cars for more than 20 years, and very funny noises those cars make when they go up their steep hills. In evidence, the Commissioner said that 8 million tonnes is definitely coming off and that it was not an option to do nothing. There was a sort of sideways suggestion that tourism might be some sort of solution for some of the members of the ACP. Historically, when we considered the sugar market years ago, we were more worried about Cuba than Brazil. At the time, Cuba was exporting between 8 million and 9 million tonnes of sugar a year; it is now down to 4 million. So these things do change. In many ways, the most telling comment of the evidence-taking session came from Mr Lars Hoelgaard, who said,"““we do not have a perfect allocation of resources . . . in practice you will always have distortions””." I suppose that that is just a description of agriculture, is it not? That is one of the reasons why pure market forces do not quite do when it comes to agricultural production and trade. The evidence given by DfID was a very straight bat, but I got the impression that it was not really DfID’s problem; it was something to do with Brussels and the Commission, and someone else was going to sort it out. Anyway, as Lady Kinnock told us, no one has any money in their budget at the moment for the ACP countries. I therefore came to the conclusion that the regime was ready to do whatever it felt it had to do to European farmers and European processors, but it was not ready to do whatever it was going to do about the ACP countries. I hope that it will not simply be left to Brussels. It is a bit unkind to be asking the Minister to take this on because, after all, I would have thought that his colleague in DfID would have the most knowledge of what is going on in these small ACP countries and what could easily be done about it. It is not easy for them to find alternatives. None of them is likely to become a Switzerland or a Singapore. However, there is a disparity and there are differences, which the report points out. I hope that Her Majesty’s Government make a real effort to work out, protocol country by protocol country, what the issues are, what can be done, and how the transition to this long-overdue reformed market can be best handled to the maximum advantage of countries such as Swaziland, Fiji, Guyana, Jamaica and the others in the list.