|
The geographical spread and split
of crop acreage may shift over time. Breeders then need to adapt
their programmes to a different environment by introducing new
characteristics in the varieties. Marketeers have to open up and
develop new markets, who tend to buy their seeds from renowned
seed companies. But for sugar beet the story is a very different
one, as this product can be replaced by sugar cane.
Reform
For the last forty years the
sugar production in Europe has been heavily subsidised. In
November 2005, however, the European Union agriculture ministers
formally adopted a new sugar regime. The sugar price in the EU
was three times higher than the world market level and some cane
producing countries no longer accepted the subsidised exports
from EU countries. The WTO panel ruled that this export
subsidies were not in line with international trade rules. As a
consequence, EU initiated a reform of its sugar regime and
included sugar beet in the CAP reforms of 2003 and 2004.
The key to the reform is a 36
percent cut in the guaranteed minimum sugar price and a
restructuring fund to encourage uncompetitive sugar producers to
leave the industry. It will provide a financial incentive to
close down sugar factories, convert them to other uses and
retrain workers. Besides farmers will be compensated by direct
payments, linked to the fulfilment of strict environmental and
land management criteria.
The way this is done varies by
country, but it is expected to be at an average of 64% of loss
of revenue from growing sugar beets. The EU will further
stimulate farmers to diversify to other products. Countries
which give up more than half of their production quota will be
entitled to pay an additional coupled payment of 30 percent of
the income loss for a temporary period of five years.
|
“The new EU
sugar reform
will have a huge impact
on the seed industry.
It means a loss of business of over 25%
in the EU market
in the next four years” |
Huge impact
According to the commissioner of
agricultural issues, Mariann Fischer-Boel, the EU sugar
production is expected to fall by between 6 and 7 million
tonnes. “The new sugar reform will have a huge impact on the
seed industry. It means a loss of business of over 25% in the EU
market within the next four years”, predicts Philippe Rousseau,
crop manager sugar beet of Syngenta Seeds. “Of course we have
anticipated and restructured our activity”, he states. For seed
companies he sees two solutions to cope with the loss. “You
either chose cost savings or you try to strengthen your
position. Cost savings would mean that breeding new improved
varieties would come to a stand still. Syngenta has chosen a
different path. We maintain our R&D investments in order to keep
on developing innovative new varieties.”
The expected loss in the European
Union might be offset by growing markets such as Eastern Europe,
Turkey, Iran and NAFTA. “But besides we test sugar beet growing
in the subtropical and tropical countries. Although they have
no tradition in sugar beet growing, sugar beet can complement or
substitute cane. The crop has very attractive characteristics,
which could be profitable to farmers in tropical areas. Beets
need for instance far less water than cane and have a good
tolerance to saline soils. That makes it an interesting crop for
countries where water is the limiting factor. Ten years ago
Syngenta has set up breeding programmes to create varieties for
tropical areas.”
Mr. Rousseau names other
advantages. “Another benefit of sugar beet is that it only takes
six months to grow. That makes it a good rotation crop.”
Breeding for the tropics means of course a whole new challenge.
“We have to look for resistances and tolerances to diseases that
do not occur in cooler climates. But of course our core markets
remain the Europe and NAFTA.”
Strengths
The beet sugar industry developed
a unique expertise which will be key to ensure the development
of new uses for sugar beet, Mr. Rousseau claims. “Next to food
industry needs, sugar is also used in pharmaceutical and
chemical industries with strict requirements of traceability. In
addition, the EU bio-fuel policy is a clear possibility to
develop the utilisation of beet for producing bio ethanol. With
a continuously increasing worldwide sugar consumption and
decreasing arable land, we remain convinced that beet sugar
industry keeps a positive future. The recent development of
sugar price on the world market is a clear sign.” |
