Sugar prices are to be cut by 36% over the next four years and a new industry funded restructuring scheme created to help rid the EU of sugar surpluses and meet its WTO commitments.
The deal was reached on Thursday afternoon (24 November) following three days of haggling in Brussels by EU farm ministers and the commission.
President of the agriculture council Margaret Beckett said it was a “historic day” – the first time the sugar support regime had been reformed in 40 years.
EU agriculture commissioner Mariann Fischer Boel concurred that negotiations had been tough. “I now know what it’s like to enter the hornets’ nest,” she told journalists after the meeting.
As well as the price cut – somewhat lower than the 39% the commission and presidency had hoped to achieve – the package will pay sugar beet growers compensation of 64.2%, worth around €11/t (£7.50).
But the cornerstone of the reform, according to Mrs Fischer Boel, is the restructuring fund.
This will be paid for by a levy on continuing processors.
The fund will pay out a basic €730/t in the first two years for factories wishing to quit the industry, with at least €73/t paid to ex-growers.
But to encourage a greater uptake, those countries which surrender more than half their sugar quota will be able to pay out more, either for diversification projects or as additional payments to ex-growers.
This is seen as a major sweetener for Ireland, which is expected to close its sole remaining factory.
Continuing sugar beet growers in countries that give up over half their production may also get a top-up to their compensation.
As well as the basic 60%, they may get another 30% for five years paid for by the EU, plus another national top-up.
Mrs Fischer Boel explained that total compensation could, in some cases, come to over 100% to help growers during what will be a difficult transition period.
Responding to the reform package, NFU president Tim Bennet said he was pleased the uncertainty had now been removed, though the price cuts were severe.
“In the new world, it’s essential British Sugar makes sure everyone gets a fair share of the price to ensure a sustainable future,” he told FWi.
“It is also important to make sure that the restructuring scheme is successful.”
Mrs Fischer Boel said she was confident the package would enable the EU to reduce its export surplus sufficiently to meet the limits imposed by the WTO.
But if not, it still had the tools to do this, hinting at possible quota cuts if surpluses persist.