Brussels, 25/04/2007 (Agence Europe) - On Wednesday 2 May, the European Commission is expected to adopt proposals by EU Agriculture Commissioner Mariann Fischer Boel to provide greater incentives for sugar farmers and the sugar industry to implement the sugar industry restructuring plans, introduced in the 2006 reform of the common organisation of the EU sugar market. The proposed changes, which member states would have to adopt by October 2007, aim to take out about 3.8 million tonnes of quota by 2008/2010, in addition to the 2.2 million tonnes withdrawn from the market over the two previous years (2006/2007 and 2007/2008). A key element of the sugar reform is to take out a total of 6 million tonnes of sugar quota from the EU.
The European Commission is suggesting amendments to two regulations, a 2006 regulation on the revised sugar market to improve aid for sugar beet farmers, and a regulation on the temporary restructuring system for the sugar industry to compensate companies which have already reduced their production quotas by at least 13.5%.
Additional payments for sugar beet farmers. The Commission is suggesting that 10% of the total aid should go to sugar beet farmers and machine subcontractors. In exchange, planters could get extra aid of around €237 per tonne of quota renounced. The extra funding would be paid retroactively to avoid penalising growers and enterprises that took part in 2006/2007 and 2007/2008.
Sugar beet growers will be given the possibility of taking the initiative for renouncing quotas themselves, under certain conditions to avoid jeopardizing the survival of factories they work with (no more than 10% of the company's quota should be renounced). The Commission explains that if the restructuring aim has not been reached at the end of the restructuring period (2010), it will issue compulsory quota reductions. It adds that any compulsory cuts in quotas will reflect each member state's success in reducing their national quota under the current restructuring programme.
Changing the sugar withdrawal scheme. Measures have been put forward to introduce a 'threshold system' for withdrawals, replacing the current system to cut the amount of sugar grown under quota. The thresholds will be calculated for each company by multiplying the quota by a coefficient taking account of expected market trends in the marketing year in question. By the end of the restructuring period (2009-2010), the European Commission foresees a first decision to be allowed before sowing takes place, possibly completed by a further withdrawal in October based on updated data; and to take account of member states that have participated in the restructuring regime, the threshold should be adapted in proportion to the quota renounced.
Besides a price cut of 36% and the payment of decoupled aid to farmers, a key element of the 2006 sugar reform was the establishment of a restructuring fund financed by sugar producers to assist the restructuring process needed to make the industry more competitive. In the first year of application, about 1.5 million tonnes of quota were renounced under the restructuring scheme (in 2006/2007) at the highly attractive price of €730 a tonne (see EUROPE 9380 for details of quota reductions per country over the first two years). In the second year (2007/2008), producers only renounced about 0.7 million tonnes of sugar, well below the target of 5 million tonnes and despite the price remaining at €730 a tonne. Restructuring aid will fall to €625 per tonne in 2008/2009 and €520 per tonne in 2009/2010 (the fourth and final year). Sugar companies unable to produce at around €400 per tonne should take advantage of the restructuring aid, explains the Commission. (lc)