HC Deb 22 December 1981 vol 15 cc362-3W
Mr. Hicks

asked the Minister of Agriculture, Fisheries and Food why he has refused to agree to the European Commission's proposal that the guaranteed price for raw sugar imported into the European Community from the African, Caribbean and Pacific countries during 1981–82 should be increased by 8½ per cent. compared with 1980–81.

Mr. Peter Walker

The guaranteed price is the price at which the Community itself would purchase ACP sugar if there were no commercial purchaser. Actual prices are negotiated between the sellers and Community refiners, and may exceed the guaranteed price.

The Council of Ministers agreed earlier this year that the intervention prices for Community-produced raw and white sugar, which determine the market prices for these sugars within the Community, should increase by 7½ and 8½ per cent. respectively. The Council also agreed that the guaranteed price for raw ACP sugar should increase by 7½ per cent. The effect of this was to widen the margin available to the refiners, of whom Tate and Lyle is the most important, between the cost of raw sugar and the selling price of refined sugar.

The volume of United Kingdom sugar refining has fallen in recent years and several refineries have closed, the most recent closure being the Liverpool refinery earlier this year. An increase in the margin is desirable to guard against further contraction in the industry. Further reductions in capacity would be contrary to the interests of the ACP countries themselves.

I regard the 7½ per cent. increase offered to the ACP countries as reasonable. It is the largest increase since the arrangements were introduced and produces a price some £50 per tonne above the current world price. It is 1 per cent. more than the increase in the guaranteed return to Community sugar beet growers and processors, which in net terms is 6½ per cent., since the increase of 8½ per cent. in the white sugar intervention price was partly offset by the introduction of a co-responsibility levy of 2 per cent.

Even so, I have made it clear that I can agree to the 8½ per cent. increase for which the ACP countries have asked, provided the refiners are compensated for the resulting reduction in their margins. The Commission has proposed compensation through the abolition of the storage levy and refund scheme for ACP sugar, which involves Tate and Lyle in making a net contribution to Community funds. The scheme, which is alleged to ensure even marketing of ACP sugar, is not needed for this purpose and its abolition would involve no cost to Community funds. I can accept this compromise, but other member States have so far been unwilling to accept the Commission's proposals.

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