Brussels, 23/02/2007 (Agence Europe) - As the European Commission announced a month ago, the EU will have to “freeze” some of its sugar production during the 2007-2008 marketing year to reduce market surpluses, which cost the Community budget a great deal in storage expenditure and could cause a significant fall in the price of the product (see EUROPE 9354). On Thursday 22 February, the management committee accepted the European Commission proposal to order the preventive withdrawal of 13.5% of the sugar quota, equivalent to 2.012 million tones in the EU, particularly in France, Germany and Poland. This sugar will have to be sold as non-quota sugar to the sugar or isoglucose industries (for the production of bioethanol or chemical products). The Commission will have to formally adopt the new regulation, which will come into force three days after its publication in the Official Journal. That will be just in time, before the full beetroot planting season, to allow producers and manufacturers to plan production for 2007.
The European Commission has been careful to ensure that this preventive withdrawal measure would be successful. Currently, the procedure does not prevent overproduction, but can only withdraw sugar already produced from the market. To encourage producers to reduce production, the Commission has provided an “escape clause” from withdrawal: sugar producers who voluntarily reduce their production by 13.5% under quota will not be subject to withdrawal. This would be a kind of compensation for their efforts in helping reduce the surplus on the EU market. In the same way, the Commission has favoured member states which, like Italy, Greece and Spain, have played a full part in the plan for restructuring the sector as provided for by the reform.
For marketing year 2007-2008, the preventive withdrawal has been set at 13.5%, some 2.012 million tonnes (t) from 19 member states, including 556,000t from France, 493,000t from Germany , 239,000t from Poland, 165,000t from the United Kingdom, 118,00 t from the Netherlands and 116,000t from Belgium. Romania, although very unhappy, will also have to withdraw 13.5%, or 14,700t, of its production. Under the exemptions provided for, the 13.5% does not apply to the quantities produced in those member states where the national sugar quota has been reduced by more than 50% form 1 July 2006 by virtue of the restructuring programme (renunciation of quotas). This affects Italy, Greece, Ireland, Latvia, Portugal and Slovenia. The Commission has also agreed to reduce proportionally the withdrawal threshold for those member states which have given up a part (between 10 and 50%) of their quotas. The level for Spain, therefore, has been reduced from 13.5% to 10.53%, and five other member states have seen reductions (10.26% withdrawal from Sweden, 7.29% from the Czech Republic, 6.21% from Hungary, 4.32% from Slovakia and 3.24% from Finland). For those member states where the quota reduction has been less than 50%, the withdrawal figure will be reduced proportionally to their reduction of quota under the terms of Article 3 of regulation (EC) No 320/2006.
The regulation also provides for a similar 13.5% reduction in refining sector supplies for white sugar production. Supplies have been set at a maximum of 2.1 million tonnes: 976,223t for the United Kingdom, 308,488t for Portugal, 285,135t for Romania, 256,582t for France and 171,917t for Bulgaria.
Improving the operation of the Restructuring Fund
If the provisional withdrawal were to prove insufficient to balance supply and demand, the Commission would, with effect from October, move to a linear removal of quotas as a whole. In addition, the staff of Agriculture Commissioner Mariann Fischer Boel have confirmed that they wish to improve the operation of the restructuring programme deriving from the 2005 reform and which has not hitherto had the hoped-for results. The Restructuring Fund provides a Community allowance to EU producers who agree to give up some or all of their sugar quotas. Up to 31 January deadline (for receipt of requests for aid under this programme), quota renunciations recorded were 676,000t for the 2007-2008 marketing year (plus 5,000t of isoglucose in Spain), less than last year (1.149 million tonnes). This is what is making the Commission fear there will be too great a supply of sugar in 2007. It estimates that the surplus could be almost 4 million tonnes of sugar and isoglucose. (lc)