Apr 17 '08

EU "Help" Means Bitter End for Historic Hungarian Sugar Factory

embittered.jpg

If you are unsure of the merits of the European Union's bafflingly complex system of agricultural subsidies, here's a reason to suspect they aren't good enough. Hungarian portal Index.hu is today reporting that a quirk in the EU's sugar subsidy system was apparently the final nail in the coffin of a sugar mill that had been keeping Hungarian kitchens sweet since 1899.

To make a very long and complicated story probably too short, it seems that the parent company of Szerencsi Zrt - which operated the mill in the town of Szerencs - decided to shutter the factory after it was unable to source enough sugar beets to reach a "floor" of production as agreed with the EU, in part because the EU offered Hungarian sugar beet growers a similar sweetner to get out of the beet business. So like the growers, the company is taking several tens of millions of euros - €237.50 for every ton of its 100,000 ton quota) to close up shop.

It was the last Hungarian factory owned by Mátra Cukor Zrt, which itself is a unit of the German Nordzucker. Layoffs will begin the week after next.

Again, there is probably a lot going on in the background here, including the question of whether a factory dating from 1899 could in any circumstances stay competitive in a commodity business like sugar. Still, the thought that bureaucrats are deciding where our bakers get their sugar from does leave something of a sour taste.

2 Comments

Surely also a question of why sugar is being subsidised when obesity, heart disease and diabetes are still on the rise. And more money is then wasted on healthy eating campaigns to counter act the effect of their misplaced agricultural policy.

"Spain, Italy, Ireland, Poland and other EU countries bitterly oppose the changes [to the sugar subsidy], which they fear could slash production and end sugar farming in some European countries altogether.

Big industrial sugar users and consumer groups, are championing changes to the current system, which they say has kept European sugar prices at three times the level of world prices."

No subsidy ≠ no sugar
No subsidy = no "european" sugar

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