The same price cuts, but with a longer phase-in and a more generous outgoers’ scheme are the main components of a new compromise sugar reform, tabled by the UK presidency in Brussels on Tuesday (22 November).
As EU farm ministers gathered for a marathon three-day session, Council president Margaret Beckett warned that failure to get a deal this week would carry “heavy consequences”.
“If we do not make sufficient progress, we risk not only major market disturbance and new trade complications, but also the loss of opportunity to provide adequate financial adjustment for all those affected,” she said.
The new compromise repeats the call for a 39% sugar price cut. But instead of implementing it over two years, the paper suggests cuts of 20%, 27.5%, 35% and 39% over four years.
This more gradual transition would have two important consequences.
It would soften the blow for African, Caribbean and Pacific countries and the Least Developed Countries, who fear that their current preferential access is being eroded by price cuts.
It would also generate more funds from processor levies, to go into the outgoers’ or “restructuring” fund – seen as essential to encourage factory closures in less efficient member states.
With extra funds, this will now pay factories €730/t in 2006/07 and 2007/08 in return for quitting production and surrendering their quota. They will also have more time to devise and submit their exit strategies.
The new paper also calls for 10% of these funds to be paid to growers and contractors affected by closures, as compensation for making specialist equipment redundant.
The compromise also offers to keep intervention purchasing as a safety net for the four year transition, though this will only take 400,000t a year of white sugar at 75% of the new reference price.
“Such a provision would add a welcome element of certainty for the sector during a period when we cannot exclude the possibility of some price turbulence,” said agriculture commissioner Mariann Fischer Boel.
The commissioner added that the EU would make full use of the 1.273m tonnes of subsidised exports allowed by the World Trade Organisation.
A senior UK official said that the success of the new package would depend on the uptake of the restructuring scheme and the level of sugar imports into the EU.
If this proved insufficient at cutting surpluses, the EU could always fall back on compulsory quota cuts. “This is something the member states have said they do not want.”
Getting agreement is still going to be a hard graft, he warned. Agriculture ministers will debate the new proposal this afternoon, then go into a series of tri-lateral meetings with the UK presidency and the commission.
A new compromise is expected to emerge on tomorrow afternoon, followed by a push for a final deal through the night on Wednesday.