Voluntary coupled European support for sugar beet should be more targeted
Research by Wageningen Economic Research shows that voluntarily supported sugar beet in ten EU member states can also compete well with the alternative crops in those countries without this support. This support is known as Voluntary Coupled Support (VCS) and can be made available to growers of sugar beet. VCS, however, affects competition between member states and has a negative effect on countries that do not implement the support. Although this EU support is legal, it is necessary to look at its effects and whether the distribution of these funds is legitimate, with a particular focus on whether they are in accordance with the spirit of the EU-regulation.
Following negotiations in 2013 under the Common Agricultural Policy (CAP), 2015 was the launch year for the voluntary coupled support, including the VCS aimed at the cultivation of sugar beet. Since 2015, ten EU member states have benefited from the scheme, with eleven benefiting in 2017. These eleven MSs of the Union are: Poland, Czech Republic, Italy, Spain, Romania, Croatia, Slovakia, Hungary, Finland, Lithuania (since 2017) and Greece. This support leads to a higher supply of sugar beet in the EU and therefore a lower price for sugar beet. The VCS provides an effective price subsidy ranging from approximately 5 to 50% of the price paid by the sugar industry concerned.
VCS is intended to stimulate the cultivation of sugar beet in regions in which it is likely to disappear, with negative consequences for farmers and the local economy. However, the coupled support is now applied in a country-wide manner and mainly offers support to farmers who would have grown sugar beet even without the support. The VCS payments essentially mean these farmers grow even more sugar beet. This further disrupts a market that has been shaken by the impact of the abolition of the sugar quota on 30 September 2017, such as a large production volume and price effects. On balance, VCS increases the production of sugar beet in the EU by 1.3%, while the sugar beet price decreases by 4.5% compared to a scenario without VCS. Based on the results of the study, it is recommended to limit the award of VCS to areas in countries in which this is truly necessary. This will prevent unfair competition and uphold the good relationships between EU countries.
The report also looked at the competitiveness of sugar beet compared to rapeseed and cereals, the most common alternative arable crops. The standard output of sugar beet per hectare appears to be at least 700 EUR/hectare higher than that of cereals and at least 600 EUR/hectare higher than rapeseed. If there is voluntary coupled support, these differences are even greater: 1,000 EUR/hectare or more in most cases. This shows that the support is not necessary to strengthen the competitiveness of sugar beet compared to alternative crops.