Wageningen UR . report
'EU beet subsidy is unfair competition'
The voluntary coupled support (VCS) that 11 European Member States grant to sugar beet cultivation creates unfair competition. That conclusion makes Wageningen Economic Research (WUR) after researching this support. Even without subsidy, beet cultivation is profitable compared to cereal crops.
For the German association of sugar producers: Verein der Zuckerindustrie (VDZ), Wageningen Economic Research research to voluntary coupled support. It creates unfair competition with Member States where growers have to stand on their own two feet. The European support is legal, but the question is whether the distribution of the subsidy funds is legitimate.
5-50
percent
Up to 50% subsidized
From 2015, it is possible under the Common Agricultural Policy (CAP) to provide financial support for the cultivation of sugar beet. About 10 Member States make use of this. As a result, the cultivation of beets increases, causing prices to fall. WUR's research shows that the subsidy varies from 5% to 50% of the price paid by the sugar industry.
The VCS was created to stimulate cultivation in regions where it is in danger of disappearing. This has negative consequences for the local economy. In practice, the scheme is applied nationally. It thus offers support to farmers who would otherwise also grow beets. The scheme actually stimulates the cultivation of more sugar beet, which disrupts the market. On balance, European production will increase by 1,3% as a result of the support and the price will be 4,5% lower, compared to a scenario without the intervention of subsidy funds.
The WUR advises to limit the granting of VCS to areas where this is necessary. This is how unfair competition should be prevented. A balance comparison shows that beets are competitive with wheat and rapeseed even without support. Including support, beets now often yield a benefit of more than €1.000 per hectare. Without support, that is €600 to €700 per hectare.
Substantial subsidy amounts
Poland has by far the most amount of VCS, but has the largest beet acreage. This concerns €81 million, which amounts to €502 subsidy per hectare. That is €6 to €8,30 per tonne. Romania and Italy, the number 2 and 3 in the list, have a lower subsidy amount of €18 million and €17 million. The aid per hectare is also at a high to very high level at €784 and €442 per hectare. Romania even takes the cake. From every tonne of beets, €15 to €17,60 comes from Brussels. Italy has the highest bare beet price at €44 per tonne. In Poland, for example, it is €28,60.
A high hectare allowance for beets does not by definition mean that arable farmers earn a lot from the cultivation. Beet processors simply adjust their contract prices to the subsidy level. They pocket the profit from beet cultivation. There wrote we already talked about last week.
Niels van der Boom
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