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Oxfam Dumps Sugar On The WSSD

Oxfam Dumps Sugar On The WSSD

EU sugar scam destroys African farmers’ livelihoods

Johannesburg 29 August 2002 Today the international development agency Oxfam dumped 9000 sachets of subsidised European sugar in cafes and restaurants around Sandton, Johannesburg, site of the World Summit on Sustainable Development – to mirror the dumping of thousands of tonnes of cheap sugar in Africa under Europe’s agricultural subsidies systems.

Oxfam’s specially-printed 2.5-gram sachets read:

“100% pure EU sugar – Less sweet than it tastes! Made in Europe, Dumped in Africa. Warning: Devastating to African Farmers. Contains: Hidden subsidies (70%), artificial prices (30%)”.

The sachets carry the Oxfam “Make Trade Fair” logo with a South African phone number for further information.

“We’re showing how European consumers and taxpayers are paying to destroy livelihoods in some of the world’s poorest countries,” said Oxfam trade policy adviser Penny Fowler.

“It’s especially relevant here at a summit which should be producing an action plan to defeat poverty. We’re on the doorstep of Southern African countries facing famine. One of them, Mozambique, has seen its sugar farmers denied a route out of poverty because they are locked out of European markets by these policies. The loss of income amounts to nearly three-quarters of annual EU aid.” (see below)

48,000 small-scale South African farmers suffer as well. Imports of cheap, subsidised EU sugar, in the form of sweets, has cost the processing industry in South Africa $150m and several thousand jobs.

In a new report - the Great EU Sugar Scam - on the Common Agricultural Policy (CAP) sugar regime, Oxfam documents the devastating impact of subsidised over-production on poor countries. The regime ensures big profits for Europe's sugar processors and large farmers while undermining opportunities for people in the developing world to work their way out of poverty.

Quotas and tariffs set Europe’s sugar prices at almost three times the world market price. High guaranteed prices result in huge surpluses each year that are dumped overseas with hefty subsidies depressing world prices and pushing other exporters out of third markets. Despite being one of the world’s highest cost producers of sugar, the EU is the world’s biggest exporter of white sugar, accounting for 40% of world exports in 2001.

More cost effective sugar producers from outside the EU – including those from some of the world’s poorest countries - are prevented from joining the lucrative ‘Sugar Club’ as a hefty 140% tariff is imposed on imports into the EU. At the same time, the World Bank and IMF have been pressurizing developing countries to cut their own sugar import tariffs.

EU consumers and tax-payers foot the bill for this Great EU Sugar Scam to the tune of 1.6 billion euros or $1.57 billion per year.

Mozambique – where almost three quarters of the rural population live in extreme poverty - is one of the lowest cost producers of sugar in the world. As a result of being almost totally blocked out of the EU’s sugar market, Mozambique lost the chance to earn an estimated 108 million euros ($106 m) by 2004 in sales – almost three quarters of the EU’s annual development aid to Mozambique of 150 million euros ($136 million). At the same time, Mozambique has come under considerable pressure from the World Bank and IMF to lift its sugar import tariffs.

No agricultural sector is in more need of radical reform than the sugar industry but it has not been included in the European Commission’s latest reform proposals. While awaiting full reform of the sugar sector, Oxfam is calling for an immediate 25 per cent cut in EU sugar quota production. All EU sugar dumping must stop and there must be full and immediate access for imports from the least developed countries.

At the World Summit on Sustainable Development, Oxfam is calling on world leaders to end unfair trade policies by:

 Stopping the dumping of highly subsided agricultural products on developing countries
 Removing trade barriers for exports from the poorest countries
 Allowing developing countries to liberalise markets at their own pace.

Ends

At World Summit on Sustainable Development: Alex Renton, Oxfam International on +27 (0) 82 858 1517 or +66 1 7 33 5952 arenton@oxfam.org.uk
South African media: Shehnilla Mohamed, Oxfam Great Britain, +27 (0) 82 798 0127
South African Sugar Association: Jennifer Crawford +27 (0) 31 508 7034; +27 (0)82 651 0291. Roshnee Pillay +27 (0) 31 508 7031; + (0) 82 654 1531

Note to editors
 Oxfam Briefing Paper 27: The Great EU Sugar Scam - How Europe’s sugar regime is devastating livelihoods in the developing world.
 Oxfam’s sugar sachets at the WSSD contain pure British sugar, from farmers guaranteed a price of at least Euros €632 at a time when world market price is just €184 (mid 2002).
 Full text on sachets: “100% pure EU sugar – Less sweet than it tastes!” On the reverse: “Made in Europe, Dumped in Africa. Warning: Devastating to African Farmers.” Contains: Hidden subsidies (70%), artificial prices (30%) (brought to you by EU consumers and taxpayers for US$1billion a year)”.
HOW EUROPE IS DESTROYING
SUGAR PROSPECTS IN SOUTH AFRICA

South Africa produces around 2.6 million tonnes of sugar each year and consumes just 1.3 million so has 1.4 million for exports.

Among South Africa’s sugar producers are 55,000 small holder farmers – mainly women growing just 1 to 2 hectares each. They are highly dependent on a decent world market price to ensure their livelihoods. But Europe’s subsidised exports are consistently depressing that price, undermining their ability to get out of poverty.

In addition to the farmers, Europe’s policies are also threatening the viability of South Africa’s sweets and chocolates industry.

Europe gives export subsidies not only for its sugar exports but also for the sugar content of its food exports such as sweets, chocolates and soft drinks.

In South Africa, depressed world market prices mean that domestic prices need to be set higher (through import tariffs) in order to help the industry survive. But this means the local sweets and chocolate industry faces higher sugar costs too.

South Africa’s production costs are around half those of Europe. But because Europe gives exports subsidies to the sugar content of sweets and chocolates, European sweets makers get 30% cheaper sugar - putting South Africa’s industry under threat.

One of the biggest sweets and chocolate manufacturer in South Africa is Beacon Sweets (with 30% of the domestic market). As Europe’s artificially cheap imports are increasingly coming into the country, Beacon Sweets is under threat:
 Production fell by 10% 1997-99 and jobs in the factory fell by almost 50% (2,200 to 1,200).
 25% of the product range has been discontinued (especially high sugar content products)

Europe’s policies and the depressed export market are costing South Africa’s sugar industry up to US$150 million a year.

For more information contact:
South African Sugar Association: Jennifer Crawford +27 (0) 31 508 7034; +27 (0)82 651 0291. Roshnee Pillay +27 (0) 31 508 7031; + (0) 82 654 1531

What is the Press saying about Oxfam’s report?

The Guardian (UK)
Sweet Surrender Sugar's test case for the earth summit
Editorial, Monday August 26, 2002

The unspoken truth amid the feast of opinions at the summit on sustainable development in Johannesburg this week will be that the rules of world trade discriminate against the poor and in favour of the rich. It is disturbing enough that a conference for 65,000 delegates is being held in a region on the edge of a famine. But the poverty of Africa is not solely due to incompetence, corruption or conflict - although none of these help. It is also down to the policies of rich nations whose economies are still built like fortresses to keep out produce, goods and services from the developing world.
Oxfam has recently provided evidence of how policies pursued by the European Union in sugar production are skewing the benefits away from the rural poor, especially in southern Africa, in favour of farmers and big business in the west. Sugar grown from beet in Europe costs over 50% more to produce than sugar cultivated from the tropical grass of cane. So when the cost of producing sugar from Europe's soil is the highest in the world, how has the continent managed to sell so much of the commodity abroad? The answer is by blocking cheaper imports with high tariffs and by paying farmers three times the going rate for their produce - an effective subsidy of £1bn a year from European consumers and taxpayers.
Access to European markets is not the only issue here. More than three-quarters of the globe's poor, those who survive on a dollar a day, live in rural areas. The EU's cash sweetener leads to massive overproduction of sugar. This in turn helps to depress prices on the world's markets. So not only can poor countries not export into the EU, but the income they gain from selling sugar has dropped precipitously. The cost to Mozambique, for instance, which gets £85m in EU aid annually, is £60m in the next two years. Ravaged by war and drought, it cannot afford such terms. Meanwhile the winners are companies such as British Sugar, which end up £77m a year to the better.
America, self-styled champion of free trade, also indulges in pernicious protectionism. Its system of price supports and import quotas means poorer nations which produce sugar forgo about £900m in lost export earnings. Rather than cutting subsidies, George Bush is upping support to sugar farmers - which may win votes in southern Florida in upcoming congressional elections but at a cost of the devastation of livelihoods in the southern hemisphere.
Little wonder that rich nations want to keep trade off the agenda in Johannesburg. Why else is Mr Bush staying away and Tony Blair making only a brief appearance? The rich nations have a point when they say the thorny issue of subsidies is best resolved through the Doha round of world trade talks. By next March, these aim to produce a plan to cut handouts in the developed world. But deadlines have already been missed in these talks and, because of intensive lobbying, there is an ever-diminishing chance that meaningful reductions in handouts to farmers will be agreed. The sugar industry has consistently managed to exclude itself from attempts, especially in Europe, to open up markets to poorer nations. A shake-up of the common agricultural policy is unlikely to achieve effective reform either. Johannesburg, where poverty alleviation is a summit goal, is still an ideal place to agree Oxfam's suggestion of cutting European levels of sugar production and allowing imports of agricultural produce from poor countries. The earth summit needs to be remembered for achieving something rather than nothing.

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