Brussels, 16/11/2010 (Agence Europe) - On Wednesday 10 November, the European Court of Auditors published a highly critical report on the reform of the sugar market in 2006. It says that “the reform process did not fully ensure the future competitiveness of the EU sugar industry. Accordingly, it is likely that the prevailing external pressures will continue to weigh heavily on the EU sugar sector”.
The main features of the reform were: - reduction in production quotas by 6 million tonnes, around 30 % of total quota production; - gradual reductions in the prices per tonne of sugar and sugar beet, the latter reductions being partly compensated by direct payments to growers; - a temporary restructuring fund, financed through a contribution paid by producers on their quota totalling €6.2 billion and funding principally restructuring aid (€4.7 billion), diversification aid (€0,7 billion) and transitional aid to full time refiners (€0,2 billion).
In terms of the competitiveness of the sector, the Court is critical of the fact that competitive firms gave up their quotas when the initial aim was to propose measures to encourage the least competitive sugar producers to abandon their quotas. The Court also recommended that “the European Commission propose measures to remove the rigidities and constraints in the current quota system which adversely affect the competitiveness of growers and producers”.
As to the objective of stabilising the market and guaranteeing the availability of sugar supplies, the Court noted “the increasing risk of displacement” due to the opening up of imports from EBA (Everything But Arms) beneficiary countries. Furthermore, the Court draws attention to the risk that downward movements in sugar price are not passed on to consumers.
As to whether the specific instruments were successful in addressing and alleviating adaptation problems arising from reform, the Court noted that, overall, it is not yet possible to draw conclusions on the extent to which the instruments put in place have mitigated the significant direct and indirect social and economic impact on the agricultural community in the regions affected. As a result of the reform, some 80 factories closed. “The Commission and the member states have given inadequate attention to monitoring the direct social impact of the production facility dismantlement,” the Court added. It also highlighted delays in the implementation of the diversification measures intended to develop alternatives to sugar production as well as in the compliance with environmental obligations. (L.C./transl.rt)