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Sugar Changes Not Going Down Well

  • May 11th, 2007
  • Posted by EUEditor

sweets-fats-repl1.jpgThe European Commission has adjusted its plan to reduce state-assisted sugar production, following a slow response from producers, not wanting to cut back.

The EU Agriculture Commissioner, Marian Fischer Boel, said this week (7.5.07) incentives to the industry to give up production quota, and access to guaranteed prices, had not proved attractive enough.

With prices being cut by 36%, and aid to farmers transferred to a scheme not linked to production, the EU has offered the incentives from a special restructuring fund.

However after the first two years of a planned four-year program, withdrawals were well below levels needed to reach the target reduction of six-million tonnes.

The new adjustments offering additional payments to growers and machinery operators will be included in legislation for the restructure, set to go through the European Council and European Parliament by October this year.

The changes are part of a general overhaul, or replacement of the European Common Agricultural Policy (CAP), set to be completed in 2013.

The Commissioner has emphasised that while production-related farm assistance will end, there will still be large-scale support, e.g. for cross compliance with management and environmental standards.

The last reassurances were given out at a recent gathering in Northern Ireland.

“Let me emphasise that I will not be trying to drive farmers off the land after 2011…”, the Commissioner said.

Sugar manufacturers have bee told however they should withdraw from production if unable to keep costs to EU 400 (A$ 650.95; dcerates.com, 10.5.07) per tonne , a standard that would exclude dependence on current levels of subsidy.

Summary statement this week from the European Commission:

The European Commission today proposed changes to the sugar restructuring scheme aimed at making it more effective and thus reducing European Union sugar production to sustainable levels. The restructuring scheme was a key element of the 2006 reform of the Common Market Organisation for sugar, offering producers who would be uncompetitive at the new lower price a financial incentive to leave the sector. Unfortunately, much less quota has been renounced during the first two years of the scheme than anticipated and changes therefore have to be made to make it more attractive. The main changes proposed are that the percentage of the aid given to growers and machinery contractors should be fixed at 10 percent, but growers who renounce quota will get an additional payment, paid retroactively to avoid penalising those who have already given up their quotas. A new element is that beet growers could apply directly for aid from the restructuring fund, up to a certain limit. As an additional incentive for companies to participate, those which renounce a certain amount of their quota in 2008/09 will be exempted from paying the restructuring levy on the part of their quota which was subject to preventive withdrawal in the 2007/2008 marketing year. The Commission believes that the changes proposed should allow the renunciation of about 3.8 million tonnes of sugar quota in addition to the 2.2 million tonnes given up so far. If insufficient quota has been renounced by 2010, the Commission also proposes that the level of compulsory quota cut would vary depending on how much quota each Member State had renounced under the restructuring scheme.

Reference:

European Commission , “Sugar Reform: Commission proposes to improve sugar restructuring scheme”, Brussels, 7.5.07, IP/07/617

Mariann Fischer Boel, EU Agriculture Commissioner, “The future of the CAP: planning starts now”, speech to the Ulster Farmers Union, Belfast, 2.5.07, SPEECH/07/269

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