EU Commissioner Fischer Boel urges Council to adopt bold and responsible sugar reform

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Ahead of the negotiations starting on Tuesday at the Agriculture Council in Brussels aimed at reaching a political agreement on sugar reform, Commissioner Mariann Fischer Boel said: "It is crucial that we reach a decision next week. The negotiations will be tough, but I urge ministers to be bold. We are continuing our intensive contacts with all Member States to bring as many of them on board as possible. The sugar sector has remained largely unreformed for 40 years. We need reform now to ensure that sugar production has a future in Europe and to give sugar producers both in Europe and in developing countries long-term certainty. There is no alternative to far-reaching reform. If we change now, we do so on our own terms, with money in the pot to ease the pain. If we fail to act, a reform will be forced upon us over which we will have little control, and which will hit the most competitive producers hardest. Any delay will undermine the funding for restructuring and social compensation. The proposals we have made will put EU sugar production on a sustainable long-term footing. We offer generous compensation for farmers, included in the Single Farm Payment. We offer a generous Restructuring Fund to assist those wishing to leave the sector. We will maintain preferences for our suppliers in the developing world and our market will remain an attractive place for them to sell their sugar. And we will also provide financial assistance to help ACP countries adapt to the new situation.

"Farmers and processors need long-term certainty to allow them to invest. The current EU sugar regime expires in July next year. The current system holds EU prices at three times world market levels, which is totally unsustainable. The sugar regime must be brought into line with the rest of the reformed Common Agricultural Policy, including the move away from production-linked subsidies towards the 'de-coupled' Single Farm Payment. The EU has a duty to respect its international commitments. We are committed to tariff and quota-free imports of sugar from the world's 50 poorest countries. And we must come into line with the WTO sugar panel by May next year. Last but not least, an agreement on sugar will strengthen our hand considerably for the WTO Ministerial meeting in Hong Kong next month."

Details of the EU sugar reform proposal:

• A 39 percent price cut over two years beginning in 2006/07 to ensure sustainable market balance.
  
  
• Compensation to farmers at 60% of the price cut. Inclusion of this aid in the Single Farm Payment and linking of payments to respect of environmental and land management standards.
  
  
• Validity of the new regime, including extension of the sugar quota system, until 2014/15. No review clause.
  
  
• Merging of 'A' and 'B' quota into a single production quota.
  
  
• Abolition of the intervention system and the replacement of the intervention price by a reference price.
  
  
• Introduction of a private storage system as a safety net in case the market price falls below the reference price.
  
  
• Voluntary restructuring scheme lasting 4 years for EU sugar factories, and isoglucose and inulin syrup producers, consisting of a high degressive payment to encourage factory closure and the renunciation of quota as well as to cope with the social and environmental impact of the restructuring process.
  
  
• This payment will be 730 euros per tonne in year one, falling to 625 in year two, 520 in year three and 420 in the final year.
  
  
• A top-up payment for beet producers affected by the closure of factories in the first year for which they have delivery rights.
  
  
• Both these payments will be financed by a degressive levy on holders of quota, lasting three years. Only efficient producers can sustain the levy. Hence the need to move rapidly towards a sustainable system.
  
  
• Sugar beet should qualify for set-aside payments when grown as a non-food crop and also be eligible for the energy crop aid of 45 euros/hectare.
  
  
• To maintain a certain production in the current "C" sugar producing countries, an additional amount of 1million tonnes will be made available against a one-off payment corresponding to the amount of restructuring aid per tonne in the first year.
  
  
• Sugar for the chemical and pharmaceutical industries and for the production of bio-ethanol will be excluded from production quotas.
  
  
• Increase of Isoglucose quota of 300,000 tonnes for the existing producer companies phased in over three years with an increase of 100,000 tonnes each year.

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• Sugar reform: EU Commission proposes to improve restructuring scheme (7/5/2007)
• EU Commissioner Fischer Boel on adoption of EU Parliament's sugar reform report  (19/1/2006)
• EU General Affairs Council Conclusions (21/11/2005)
• EU Parliament - Sugar reform: more financial support for ACP countries in 2006 (27/9/2005)
• EU Parliament - Sour reaction to sugar reform at EP hearing  (14/7/2005)
• Sugar Reform will offer EU producers long-term competitive future  (22/6/2005)
• Speech by Commissioner Fischer Boel - Sugar's Role in Development Policy (30/5/2005)
• European Commission regrets attack on EU sugar regime, but will abide by WTO Appellate Body ruling (28/4/2005)