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Oxfam: EU Sugar Subsidies Starve the Poor

British development organization Oxfam has slammed the European Union, saying its generous subsidies for sugar benefit large EU firms to the detriment of developing countries.

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Germany's Südzucker is one of the firms in Oxfam's crosshairs

EU taxpayers shell out €819 million ($976 million) in subsidies to overproducing European sugar companies each year, while the EU dumps sugar on poor countries and locks them out of the lucrative EU sugar market, Oxfam wrote in a study released Wednesday.

The report criticized the current EU sugar policy, which boosts sugar output by keeping consumers prices high and heavily subsidizing exports. Three European companies alone, France's Beghin Say, Germany's Südzucker and Britain's Tate and Lyle, receive more than half of EU sugar export subsidies each year -- €201 million, €236 million and €158 million respectively, Oxfam said.

"The regime maintains a system of corporate welfare, paid for by EU taxpayers, with the human costs absorbed by developing countries," the report said.

High prices guaranteed

The EU guarantees its sugar companies a minimum price two to three times the world market price. Farmers are paid the world market price for sugar produced beyond EU quotas. Then the EU sugar companies dump their surpluses in poor countries, undercutting local sugar firms and depriving farmers of making a living, Oxfam said.

Medizinischer Unterricht im Dschungel von Ecuador

In addition, high tariffs keep producers from cheaply importing sugar into the EU to compete with European companies. The EU's "Everything But Arms" policy allows the "least developed countries" (LCDs) duty-free access to EU markets, but it limits the amounts. Thus, the 49 LCDs were only allowed to sell the equivalent of three days of the EU's needs each year," Oxfam wrote. Mozambique, Malawi and Ethiopia were deprived of $238 million in potential earnings since 2001, the NGO said.

Reforms necessary

Oxfam has called for reforms to the EU's policies to put an end to dumping, reduce EU production and improve LCDs' access to the EU market at fair prices.

A European Commission spokesman told the Associated Press the executive was committed to reform but that Oxfam's proposals appeared unworkable. "Oxfam slogans will not suffice to solve problems that are much more complex," Gregor Kreuzhuber said, adding that European sugar exports are shrinking while those of competitors like Brazil are increasing.

Franz Fischler

European Union Commissioner for Agriculture Franz Fischler

EU agriculture commissioner Franz Fischler (photo) said last month that reforming the sugar policies was unavoidable. He mentioned as main factors for changing the regime internal criticism the absence of competition, high domestic prices, rigid quotas and a lack of market orientation among sugar producers.

Executives from the sugar firm Tate and Lyle accused Oxfam of presenting a distorted picture, according to the BBC.

The World Trade Organization is set to review a complaint about the EU's sugar policies lodged by the governments of Brazil, Australia and Thailand. Oxfam estimated that the EU policies cost Brazil €414 million in potential earnings in 2002.

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