A House of Commons select committee report on reform of the EU sugar regime has been welcomed by a sugar users lobby group demanding action at next week's council of ministers meeting.
The environment, food and rural affairs committee proposed yesterday that an investigation into competition and prices in the sugar market should be initiated in order to ensure that users and consumers get the best deal.
The sugar regime has been barely changed since it was established in 1968, unlike other parts of the CAP, and many believe that reform is long overdue.
"The current system harms UK competitiveness and costs jobs," said Richard Laming, spokesperson for the UK Industrial Sugar Users Group (UKISUG).
"16,000 jobs have been lost in the confectionery sector in the last five years. We desperately need reform."
UKISUG claims that the current system restricts the supply of sugar in the EU and inflates its price, increases the cost to British consumers by some £600 million each year and harms the competitiveness of European industrial users of sugar.
In addition, the UK quota is divided between only two suppliers, with no incentive to compete with each other. As a result, sugar is 10 per cent more expensive in the UK compared with mainland Europe, according to UKISUG.
"Because the price is fixed by law, companies cannot increase their market share by being good companies," Laming told FoodNavigator.com. "As a result the price tends to creep up. We need a regime that includes some commercial discipline."
Laming is keen to stress that it is the structure of the current system that leads to market distorting prices and practices.
"The argument at the moment is not about the detail but about making a substantive political point. The mindset we need to have is that the sugar regime is not just about those that grow and process sugar - it should also take into account the entire manufacturing chain."
UKISUG says that the annual cost of the sugar regime to UK consumers tops £630 million, and that the annual cost of the sugar regime to the EU budget is £750 million. "The CAP (Common Agricultural Policy) was designed around farmers and primary processors," said Laming. "This is a concern, the competitive health of sugar users should also be a concern."
With agricultural ministers due to meet next week however, Laming is hopeful that an agreement can be reached that is in the interests of the whole supply chain.
"The sugar regime has gone unreformed for too long," said Laming. "EFRA committee is quite right to call for change. Let's hope that Margaret Beckett (UK minister for agriculture) can win the arguments next week in the Council of Ministers."
UKISUG represents major industrial users of sugar in the UK, which together employ 80,000 people and turn over £15 billion in consumer sales per annum.
Manufacturers using sugar in processed products account for about 70 per cent of usage in the UK or nearly 1.2 million tonnes. Industrial users, says UKISUG, are therefore major stakeholders in the sugar regime.
Proposals for reform of the EU sugar regime were published by the European Commission on 22 June 2005. These were designed to bring it into line with other already reformed CAP sectors, as well as helping to meet the EU's existing WTO obligations and providing a platform for further progress on the Doha Round at the Hong Kong WTO Ministerial in December.
The proposals would involve a substantial narrowing of the gap between EU and world prices and a voluntary restructuring scheme to reduce EU production and improve competitiveness.