July 30, 2021

Agriculture is positioned in “sugar war” and argues that the VAT increase will have a limited impact




After several days of silence, the Minister of Agriculture Luis Planas had to pronounce on one of the latest controversies, regarding the fiscal increases contemplated in the General State Budget Project (PGE). Specifically, on the increase in VAT on sugary and sweetened beverages from 10% to 21% with the aim of raising 400 million euros, the majority next year. In the Senate, Planas argued that this measure will have a very limited impact in the sugar sector and, specifically, on beet producers. Just the opposite version offered by the sector, which from the processing industry to the beet growers, signed days ago a joint manifesto against with the support of the Junta de Castilla y León, as well as dozens of city councils in this community.

Before the senators, Planas explained that Spain produces a year 500,000 tons of sugar and imports 1.2 million tons. Of all this, adds the minister, only between 0.2% and 0.4% (between 2,600 and 5,400 tons) is destined for sugary drinks and, for all the above, he assured that there is no correlation between consumption changes sugary drinks and the price of beets.

Similarly, the minister reaffirmed his support for the beet sector and announced that he would support the continuity of aid coupled to the beet sector in the new CAP (Common Agricultural Policy) 2021 – 2027 that these days is being retouched in Brussels. For which, it hopes to have the support of the autonomous communities and the processing industry.

Front versus rise

Another totally opposite point of view is transmitted from the sector, which calls for the elimination of this rise, and they launch several reasons for this: A report from the Price Waterhouse Cooper’s consultancy, at the request of the employers’ association Spanish Federation of Food and Beverage Industries (FIAB), Aecoc, ACES, Anged, Asedas, Hospitality of Spain, Restoration Brands and Promarca, estimates that they would be in danger 6,156 jobs in Spain (including that of 4,000 farmers that cultivate some 30,000 hectares of sugar beet), and would mean a drop in turnover of up to 370 million euros. In this sense, they point out that households with the lowest income and rural areas would be the most affected. It would be about 4.7 million households with the lowest economic level, which according to the aforementioned study, would support 22% of the projected collection.

From the sector, they have recalled that Spain is in deficit and consumes 1,300,000 tons of sugar. They have also added that the beet finished its restructuring in 2017 with the end of production quotas and that this could be the great opportunity for a sector with strong weight in Castilla y Léon and Andalusia. In the first, 70% of the beet cultivation in Spain is located and four of the five sugar processing plants in the country are based: Olmedo, La Bañeza, Toro and Miranda del Ebro. They employ 1,200 people directly and indirectly 1,500 more. The fifth plant is in Jerez de la Frontera (Cádiz). The first four belong to Azucarera Española and the other is owned by the Acor cooperative.

From the opposition, the popular spokesperson in the Agriculture Commission Milagros Marcos warns that this increase will also affect fruits, juices or dairy products and does not hesitate to describe it as a “tax against middle classes”.

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