It is a year for birthdays. The agreement on agriculture within the World Trade Organisation was ten years old in January this year. It was devised in the main by the big trading countries, the United States, the European Union and others, but was intended to help developing countries to trade in open markets and develop as Ireland did within the open market of the European Union. I want to address two reasons developing countries are not managing to participate in and benefit from the agreement on agriculture. While it is ten years old, the agreement is still not being implemented. The European Union, one of the big players, is continuing to drag its heels in terms of its commitment given in the agreement.
When it started out, the World Trade Organisation tried to get a level playing pitch with no subsidies and tariffs. These would be dropped to have a level playing pitch for developed and developing countries. However, the European Union has been found wanting. In 2003 it subsidised the six biggest sugar processors by €800 million. The so-called "peace clause" protected the European Union which claimed continually that it was not subsidising and that a peace clause within the agreement on agriculture protected it from challenges. However, this clause ran out last year. Immediately, under challenge, the European Union lost its case and was ruled not alone to be breaking the agreement but to be dumping. We now have reforms in the sugar sector regarding direct payments and the Carlow sugar factory is closing down.
What we need to do is recognise that these events are happening as a result of the World Trade Organisation agreement on agriculture. It is not developing countries that are to blame. Overall, Ireland and the European Union are benefiting greatly from world trade. We must make sacrifices. Trade must work both ways. We made sacrifices regarding the textile and fisheries industries when we initially joined the European Union. We must also make sacrifices when we join open world markets. In agriculture, a commodity such as sugar is one example of where we must make sacrifices.
Let me give an example of the damage we are doing. Ireland's aid to Mozambique amounted to €31 million in 2003. The losses to Mozambique also amounted to €31 million as a result of its inability to trade in the sugar sector because of EU sugar subsidies. That €31 million equates to the total Mozambique Government spend on agriculture and rural development. Ethiopia is another example, to which Ireland's aid amounted to €28 million. It is reckoned that Ethiopia lost €19 million because of its failure to participate in the sugar trade. Again, €19 million equates to the total Ethiopian Government national spend on its HIV-AIDS programmes.
It is not suggested that Irish farmers should bear the brunt of our sacrifices for participating in world trade. There are alternatives. Direct payments, provided they do not subsidise and are completely decoupled, are one. Another which should be investigated and has been studied is biofuels. The 2003 EU biofuel directive requires that by the end of this year 2% of petrol and diesel should be replaced by a renewable fuel. In Ireland the one technical option that is feasible is bioethanol. Carlow sugar factory has most of the plant in place for processing bioethanol which would offer an alternative to sugar beet for farmers.
The second point regarding developing countries' failure to participate and compete brings me back again to Ireland and the European Union. When Ireland joined the European Union, it was the developing country of Europe. It is now the great success story of Europe. What primed Ireland and got it going was Structural Fund moneys and derogations. Derogations were the order of the day for years, while Ireland received enormous amounts of Structural Fund money. However, it was not expected to compete with the powers of Europe when it initially joined the open markets. It was greatly helped by Structural Fund moneys and derogations. This needs to be applied to developing countries also as they badly need infrastructural fund moneys and derogations to allow them to work their way in.
The application of the agreement on agriculture in open markets needs to be questioned. There are thousands of small farmers selling perishable products to a few large multinational buyers. Open markets have not resulted in farmers getting high prices for their products, nor in low food costs for consumers. Sugar is the great example. In Europe we pay three times the price for sugar for which it is being sold on the world market. Those who profit are the processors. An example is British Sugar which gets enormous subsidies and has 25% profits, the highest in the manufacturing sector, not just the agribusiness sector.
The issue of who benefits overall from open market policies in farming needs to be questioned. If it continues, it is reckoned that of the 3.1 billion people living on the land, two billion will be redundant if we continue to move to the efficiencies of modern agribusiness. The same applies to China. If China modernises, it is reckoned that 500 million farmers will be lost from the land. The efficiency of having that number off the land and unemployed does not tie in with overall efficiency.