The EU Sugar Policy and the Sugar Sector of Mozambique

Abstract: This paper discusses the European Union sugar policy and its impact on the sugar industry in Mozambique. The paper examines the importance of sugar to Mozambique, the foreign investments, export and trade, the rural sector, employment and what effect the EBA initiative has had and will have in the country. The European Union has presented a new reform proposal that will be effective in 2006.The proposal will cut sugar prices with 39percent.How will this affect Mozambique in 2006? Will the country stand to lose or gain from the reform? The paper presents an analysis of the likely effects of the reform and whether the EU reform is in coherence with the aid policy towards Mozambique, both in the short run and in the long run. Our results imply incoherence between the EU reform and the development goals for Mozambique in the short run.