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EC Criticises Sugar Growers Slow to Cut Back

  • November 22nd, 2006
  • Posted by 7thmin

fischer-boel-reduced.jpgThe European Commission has berated less economic sugar producers for not getting out of production in a short enough time, under a schedule for reducing overall production.

Its Agriculture Commissioner, Mariann Fischer Boel, said:

“Sugar producers who are not competitive should get out now for their own benefit as well as for the overall balance of the market – that is the logic of our reform.

“The Commission is not going to bail out the industry.

“In collaboration with Member States, the sugar industry needs to take its responsibility to facilitate the restructuring process.

“If the restructuring scheme fails, the consequences are clear to everybody – there will be no other funds to facilitate the restructuring of the sugar industry and we will have to apply a linear cut in quotas by 2010.”

Producers who were expected to renounce production quotas, have not done so at levels projected in the EC restructuring plan, despite large compensatory payments available if they do.

A key element of the plan, which came into force last July, was a restructuring fund financed by producers, with a long term aim of making their industry more competitive.

It aims to take out about 6 million tonnes of quota to balance the market after a four-year transition period.

For the first year, about 1.5 million tonnes of quota have been renounced.

The European Commission says that intentions to give up quota for the following year, 2007-08, have to be announced by early December – to allow adequate time for consultations with all interested parties.

However the figure so far is just 0.7 million tonnes, judged to be far below what was intended for the scheme to succeed.

The Commission says that unless that figure increases, there will be a surplus of 4.5-million tones of sugar – making up a quarter of the quota for that year.

Each tonne of quota renounced is being compensated at the rate of EU 730 (A$1218; Dcerates) per tonne; it will go down to 625 in 2008/09, then 520 for the final year .

The Commission said sugar enterprises unable to produce at around EU 400 per tonne should take advantage of the restructuring aid this year, at the top rate.

The restructuring fund, set to wind up after the four-year period is over, is sourced by payments from sugar, isoglucose and inulin producers according to their production quota; and the amount of restructuring aid varies according to the degree of dismantling of production facilities.