Penny Fowler: Winners and losers: how our taxes stop the poor making a living

Few people are aware that their taxes and the high prices they pay for sugar in the shops are financing a system that harms poor farmers in developing countries. Yet that is the reality.

The subsidies mean Europe, one of the highest-cost sugar producers, has become one of the world's leading sugar exporters. We are paying European farmers to produce more sugar than we consume and dumping the subsidised surpluses overseas. This undercuts sugar farmers in poor countries, many of whom can produce sugar at low prices.

At the same time, producers in Africa face severe restrictions when they try to export their sugar to Europe. The 49 poorest countries are allowed to sell only the equivalent of three days' European sugar consumption to Europe each year.

The winners are big farmers and corporate sugar-producing companies such as British Sugar. They reap super-profits under a regime that denies vulnerable people a chance to escape poverty.

Europe is in the process of reforming its sugar policies. Our leaders must ensure the reforms help poor countries. However, a leaked version of the reform proposals suggest that there will be a deep and rapid price cut. This will damage the potential of poor countries to secure the investment they need to build up their sugar industries or to diversify into other sectors.

A group of developing countries, known as the African, Caribbean and Pacific (ACP) countries, have benefited from selling limited quantities of sugar to Europe at high prices. Some are high-cost producers and will lose out. The EU has a responsibility to provide adequate time and financial support for adjustment.

At the same time, there is no guarantee that the proposed reforms will end European over-production and export dumping. The G8 Summit next month provides an opportunity for European citizens to call on their leaders to make EU agriculture and trade policies fair. They could make a start with sugar.

Penny Fowler is a trade policy adviser for Oxfam