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Sugar Reform will offer EU producers long-term competitive future

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Wednesday, 22 June 2005

Sugar Reform will offer EU producers long-term competitive future

The European Commission today proposed far-reaching reforms to the Common Market Organisation for sugar. The changes will enhance the competitiveness and market-orientation of the European Union sugar sector, guarantee it a viable long-term future and strengthen the EU’s negotiating position in the current round of world trade talks. They will modernise the current system, which has remained largely unchanged for around 40 years. The new system will continue to offer preferential access to Europe’s sugar market for developing countries at an attractive price well above the world market level. African, Caribbean and Pacific countries which traditionally export sugar to the EU will benefit from an assistance programme, also adopted by the Commission today. The Commission reform proposals include a two-step cut totalling 39% in the price for white sugar; compensation to farmers for 60 percent of the price cut through a decoupled payment - which would be linked to the respect of environmental and land management standards and added to the Single Farm Payment; a voluntary restructuring scheme lasting four years to encourage less competitive producers to leave the sector; and the abolition of intervention. The ACP assistance plan will earmark € 40 million for 2006 and pave the way for further assistance. The Commission hopes for a political agreement on the proposals at the Agriculture Council in November.
An assistance scheme for ACP countries

Attention must be given to the needs of developing African, Caribbean and Pacific countries for which Europe has traditionally been a crucial market. Post-reform, Europe will remain an attractive market place for some of the countries which have guaranteed access to the EU market under the Sugar Protocol.

However, the Commission is also proposing an assistance scheme for the African, Caribbean and Pacific countries which traditionally export sugar to the EU. It recognises that the reform is a major challenge not only for EU beet and sugar producers, but also for many ACP suppliers. In order to respond to the diversity of situations of the different countries, the Commission’s assistance scheme proposes to cover a broad range of social, economic and environmental actions.

Under the Sugar Protocol, eighteen ACP countries export sugar to the EU, and may be affected by price reductions on the EU market. The commitment of the Commission to assist them in the adaptation process was integrated in its Communication of July 2004, and expanded in an “Action Plan” produced in January, as a basis for dialogue with the ACP.

The Commission proposes to start implementing the assistance scheme as soon as 2006, as early investments in these countries will maximise their chances of successful adjustment. Since the complexity of restructuring and diversification processes requires a sustained effort, 2006 assistance should be integrated into an eight year scheme. An initial budget of € 40 million has been earmarked for 2006. Ffurther long term assistance will be secured for the period 2007-2013.

Considering the differences between the ACP countries, a broad range of support options is being offered, to be tailored in each country to the needs identified by the stakeholders, and integrated into a long term, comprehensive, sustainable strategy. The types of assistance have been designed with particular attention to the effectiveness of implementation.