EU agriculture ministers agreed a radical reform of sugar support in Brussels on Thursday (24 November), aiming to bring the regime in line with the rest of the CAP and reduce surplus production to help meet WTO commitments.

The details of the package are as follows:

  • A 36% sugar price cut over four years beginning in 2006/07, (-20% in year one, -25% in year two, -30% in year three and -36% in year four)
  • Compensation to growers at an average of 64.2% of the price cut. Inclusion of this aid in the Single Farm Payment, linking it to environmental and land management standards
  • In those countries giving up at least half of their quota, an additional coupled payment of 30% of the income loss to continuing growers for a maximum of five years, plus possible limited national aid
  • Extension of the sugar quota system until 2014/15, with no review clause
  • Merging of ‘A’ and ‘B’ quota into a single production quota
  • Sugar for the chemical and pharmaceutical industries and for the production of bio-ethanol will be excluded from production quotas
  • Intervention phased out over four years, and replacement of the intervention price by a reference price
  • Introduction of a private storage system as a safety net in case the market price falls below the reference price
  • Voluntary restructuring scheme, lasting four years, for EU sugar factories (and isoglucose and inulin syrup producers), consisting of a payment to encourage factory closure and the renunciation of quota
  • This payment will be €730/t in years one and two, falling to €625/t in year three, and €520/t in year four
  • At least 10% (or €73/t) of this fund to be used to compensate beet producers affected by factory closure
  • An additional diversification fund for Member States where quota is reduced by a minimum amount, which increases the more quota is renounced
  • Both these payments to be financed by a levy on holders of quota (sugar factories), lasting three years
  • Sugar beet to qualify for set-aside payments when grown as a non-food crop and also to be eligible for the energy crop aid of €45/ha
  • To maintain production in the current “C” sugar producing countries, an additional 1.1m tonnes to be available for a charge of €730/t
  • An aid package of €40m for African, Caribbean and Pacific countries in 2006/07, to help offset the effects of lower EU prices on their preferential access arrangements