By Philip Clarke

 Europe editor A SPECIAL RESTRUCTURING fund is emerging as the most likely mechanism for moving quota from one region of the EU to another after sugar regime reform later this year.

 Addressing the European parliament in Strasbourg last week, EU farm commissioner Mariann Fischer Boel insisted some form of transfer was necessary to deliver efficiency gains.

 “Quota transfers could facilitate production moving to regions where conditions are best,” she told the parliament. “At the same time, it could provide regions that are not competitive with an opportunity to give up their quota and invest the proceeds in alternative activities.”

 But Mrs Fischer Boel said she was mindful of Euro-MPs” concerns that cross-border quota movement would threaten the most vulnerable producers and was happy to consider alternatives to an open market. “I have been particularly interested in the idea of making the transfer subject to some degree of control by member states and farmers, and the setting up of a specific fund. I am exploring these ideas.”

quota surrender

Such a fund could be used to encourage those wishing to leave the industry to surrender their quota to Brussels as a way of “killing off” unwanted production. It could also be used as a means of redistributing quota to the more efficient regions.

 But Mrs Fischer Boel was less receptive to the European parliament”s calls for smaller price and quota cuts.

 In a debate and vote on the impending reforms, several MEPs said these cuts went too far and should be limited to what was required to satisfy the World Trade Organisation. They also rejected the commission”s suggestion of a new “reference price” as a trigger for private storage aid. “The present price support system should be retained as a safety net to prevent a serious unbalancing of the market,” said a spokesman.

minimum cuts

But Mrs Fischer Boel insisted that the 33% price cut and 2.8m-tonne quota reduction on the table were “a necessary minimum to achieve an effective reform, balance the market and respect our international obligations”. She doubted whether income lost at farm level would be as great as the drop in support prices.

She also rejected a call for full compensation, but she did agree with the Euro-MPs that there should be no further tinkering once the reform has been agreed. “I do not intend to include the idea of a mid-term review in the legal proposal (due in early summer).”

philip.clarke@rbi.co.uk