European Commission Welcomes Success of EU Sugar Reform as Restructuring Process Concludes

The 2006-2009 scheme for the restructuring of the European sugar industry resulted in the renunciation of 5.8 million tonnes of quota, very close to the initial objective of 6 million tonnes.

At the end of this 4-year process, a key element of the 2006 sugar reform, EU quota for sugar and isoglucose has been lowered to 14 million tonnes (of which 13.3 million tonnes for sugar). EU sugar production is now concentrated in 18 Member States (as opposed to 23 before the reform) which enjoy favourable agronomic conditions, and nearly 70 percent of production is in 7 Member States with the highest sugar yields. Domestic prices are showing a downward trend consistent with the objective of the reform to achieve a sustainable and competitive EU sugar sector.

"I am pleased to say that the sugar reform has been a success," said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development. "This was one of the centrepieces of my current mandate and it's gratifying that we are so close to our ambitious target. Our sugar sector was in desperate need of reform. More sustainable production and prices promise a competitive future for our producers."

Background on the sugar reform

In February 2006, EU agriculture ministers formally adopted a radical reform of the EU sugar sector. This brought a system which had remained largely unchanged for almost 40 years into line with the rest of the reformed Common Agricultural Policy. The key to the reform was a 36 percent cut in the guaranteed minimum sugar price (from €631.9/tonne in 2006/2007 to €404.4/tonne from 2009/2010), compensation for farmers and a Restructuring Fund, financed by sugar producers, to encourage uncompetitive sugar producers to leave the industry.

In the context of the financial and economic crisis, the Commission decided on 13 February to allow Member States to advance the payment of 100 percent of the 2008/2009 restructuring aid to June 2009. Several Member States already announced that they will use this possibility to alleviate the financial strain encountered by sugar companies.

No need for 'preventive withdrawal' at present

Last March and October, the Commission concluded that the fundamentals of the EU sugar market were sufficiently healthy and that there was no need to impose an obligatory withdrawal of sugar for the current marketing year 2008/09. An early assessment for the next marketing year (2009/2010), leads Commissioner Fischer Boel to the conclusion that a preventive withdrawal is not necessary on this occasion either. This assessment is based on very provisional estimates, notably for imports. It will be reviewed in October on the basis of updated estimates for beet and sugar production and for imports.

In February 2010, the situation will again be reviewed to see whether there is a need for "preventive withdrawal" for the marketing year 2010/2011 or a "final cut" i.e. a further reduction of quota.

source: flex-foods