Old news is good news, ministry seems to argue

The Ministry for Rural Affairs and the Environment said yesterday the fine of almost €1 million imposed on Malta by the European Commission for the overstocking of sugar "was not news" because it was known to the authorities as far back as April last year and was reported by the two English language dailies on April 21, last year.

"What has happened since then was that the member states involved had the possibility to destroy or otherwise dispose of any excess sugar determined then, which option was not taken up by Malta, as it was not considered as being a worthwhile option," the ministry said.

The report on the fine referred to by the ministry was carried in three dailies on the front page yesterday, including The Times, following a European Commission announcement the previous day of the fines meted out to five EU states over sugar hoarding.

In the story published in The Times on April 21, last year, Malta's Permanent Representative to the EU, Richard Cachia Caruana, was asked about the penalty Malta might have to pay and said the final decision had to be taken by the Commission at the end of the following month. The figure of nearly €1 million was not mentioned at the time.

The item in question was entitled Malta Avoids EU Sugar-hoarding Penalty. The introduction ran thus: "Malta is expected to avoid paying a hefty penalty, running into millions of euros, that had been envisaged by the European Commission under a regulation designed to prevent speculative sugar hoarding in the run-up to EU membership".

The ministry said yesterday that the original amount proposed for Malta in September 2004 as being excess sugar stock was of 20,400 tonnes, which would have meant a payment in the region of €11 million and over.

"The government, through the Permanent Representation in Brussels, subsequently embarked on an intensive programme of meetings and discussions in which the various aspects of this issue were tackled, resulting in the figure being revised and lowered by about 90 per cent. The final amount determined in April 2005, which is the amount being referred to today, means a payment of about Lm400,000," it said.

The ministry said that due to the high price differential between EU sugar and world market sugar, the government, prior to accession, had negotiated in the treaty a subsidy scheme for the importation of sugar intended to phase in the increase in price gradually, while also giving time for the EU sugar reform to kick in. The reform was expected (and subsequently did) lower EU sugar prices to more rational levels.

"These subsidies meant that for 2004 and 2005, sugar prices in Malta would remain the same, effectively meaning that there was no incentive for any Maltese company to stockpile sugar for speculative reasons.

"The sugar price in 2004 did remain the same, therefore any sugar that was sold in Malta post accession, and that originated from any stocks, was sold at normal prices, and no 'killings' were made. No subsidies from the state aid provided for in the treaty were paid to these amounts either, meaning that money budgeted for state aid on sugar was saved, while consumers paid the same amount for sugar as before accession," it said.

The ministry said there was no importation of sugar carried out in the first three months post accession, a period that, taking into account normal consumption patterns for Malta, should have seen an importation of between 3,000 and 4,000 tonnes.

"The subsidy payable to importers would have been slightly more than the payment being requested by the Commission, meaning that when one does the arithmetic, the money saved in subsidies payable on the importation that was not effected due to the stocking amply balances out the payment to be made to the Commission."

"Again, one must stress that this whole issue is not at all a new one, since the government, through articles carried by local newspapers in which the Permanent Representative had explained the matter in its entirety, had made the facts public more than a year and a half ago, precisely on April 21, 2005," the ministry insisted.