Brussels, 24/11/2005 (Agence Europe) - After three days of difficult negotiations, the Agriculture Ministers of the Member States of the EU arrived on Thursday afternoon in Brussels at a consensus on an ambitious reform of the common organisation of the market (COM) for sugar. The compromise, which should be confirmed by a formal political agreement of the Council after the adoption of the opinion of the European Parliament (expected in January 2006), envisages a reduction of 36% in the price of sugar, staggered over four years. Producers of sugar-beet will receive compensation to the tune of 64.2% of their losses. The ministers are also planning a mechanism to control imports into Europe of sugar from less developed countries (LDCs) participating in the initiative “Everything but arms” (which includes, from 2009, entry into the EU without customs duties for sugar from those countries). The three Member States which indicated their intention of voting against the text are Poland, Latvia and Greece, who are unable to justify politically the partial or complete disappearance of this sector.
At her press conference, President of the Council Margaret Beckett welcomed this “historic moment” for a “radical” reform of the sector, which in her view demonstrates that “the Council can take difficult decisions and assume its responsibilities”. The Agriculture Commissioner Mariann Fischer Boel declared that after these difficult discussions, she now understood why the sector had not been reformed for 40 years. She acknowledged the “sacrifices” made by several Member States, particularly “Ireland”. She said that the EU could fully respect the verdict of the WTO panel on sugar, which had condemned the European scheme of export subsidies. She also considers herself to be “better armed than before” to “confront” the negotiations in the WTO on trade liberalisation in December in Hong-Kong.
Sugar prices: the agreement envisages a reduction in the reference price of sugar of 36%, staggered over four years from July 2006/07 (to reach 400 euros per tonne in 2009/10). The Commission initially proposed a reduction of 39% in two campaigns. The fusion of quotas A and B and taking account of the production of sugar C (possibility of repurchase for one million tonnes) are confirmed.
Market measures: to respond to market fluctuations over the first years of implementation of the reform, the compromise envisages maintaining (for four years) an intervention mechanism (fixed at 80% of the reference price up to a limit of 600 000 tonnes of sugar per year).
Isoglucose and refining: an extra quota of isoglucose and inulin syrup (60 000 tonnes in Italy, 8 000 tonnes in Lithuania and 35 000 tonnes in Sweden) is planned up to 2009/10. The contribution to the restructuring funds from the isoglucose industry will be reduced by half. The refining industry in EU countries could benefit from a specific restructuring fund of 150 million euros.
External aspects: the management of the European market will be facilitated by improved import controls. The Commission is committed to “automatically” opening up the measures safeguarding the Community market in the case of increases of more than 25%, from one year to the next, of imports from third countries which are beneficiaries of the “Everything but arms” initiative. The new rules will enable EU countries' export capacities offered by the WTO to be increased.
Restructuring funds: the agreement confirms the creation of a restructuring fund which will accompany the winding-down of activities of certain production units. The industry's contribution to this plan is set at 126.4 euros per tonne in 2006/07, 173.8 euros in 2007/08 and 113.3 euros/t in 2008/09. The sum of restructuring aid is 730 euros/t in 2006/07, the same in 2007/08, 625 euros in 2008/09 and 520 euros in 2009/10. In the course of the negotiation, this fund was added to by several provisions aiming to respond to the difficulties encountered by many Member States (including Italy and Spain) in the regions most affected by the reform. Hence extra financial aid was agreed for producers and regions to facilitate industrial reconversion.
Regional diversification measures: an extra sum equal to 15% of the restructuring aid could be used fo r diversification measures in the regions most affected by the reform (109.5 euros/t in 2006/07 and 2007/08, 93.8 euros/t in 2008/09 and 78 euros/t in 2009/10). For the Member States where the restructuring of the sector will be particularly far-reaching, this diversification aid will be increased to 50% if the =national quota is reduced by more than 50% and less than 75%. The aid will go up to 75% if the quota is reduced by more than 75% and less than 100%. If the quota is reduced by 100%, the aid will be the same.
Compensation for producers: beet producers will be compensated to the tune of 64.2% of losses, through aid decoupled from production. The compromise envisages, over a transitional period of five years, coupled aid with the possibility (linked to production levels) for beet producers who continue production in a country engaged in a large reduction of its sugar quota: when the country has reduced its quota by more than 50%, it will be possible to grant extra aid financed by the EU agricultural budget corresponding to a maximum of 30% of revenue lost (64.2% of this already being covered by the decoupled payment). The Member State could also grant temporary national aid to achieve compensation of 100%.