Press Release: Sugar reform: Council backs improved sugar restructuring scheme

European Union agriculture ministers have backed changes to the sugar restructuring scheme which will make it more effective and thus reduce 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 was renounced during the first two years of the scheme than anticipated and changes therefore had to be made to make it more attractive. The main changes agreed 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. Retroactive payments are foreseen, to avoid penalising those who have already given up their quotas. A new element is that beet growers may 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. A two step application for renouncing quota for 2008/09 is introduced, where the first step (deadline 31 January 2008) as a minimum has to correspond to the preventive withdrawal decided in March 2007 in order to be able to participate in the second step (deadline 31 March 2008). The Commission will let companies know after the first step to what extent they risk an uncompensated cut in 2010 if they do not participate in the second step. The Commission believes that the changes 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 will make compulsory quota cuts. The level of these cuts will vary depending on how much quota each Member State had renounced under the restructuring scheme.