Sugar beet growers will start next season facing substantially lower prices, a new direct payments scheme and the possibility of factory closures.

Those are the main tenets of a new EU sugar regime, which was still being negotiated in Brussels as Farmers Weekly went to press on Wednesday (23 November).

With the final session of talks due to get under way on Thursday morning, it was clear that the main points of contention among EU ministers were the depth of the price cuts and the level of compensation on offer to growers.

An earlier compromise paper from the UK presidency had sought to keep the price cut for raw sugar at 39%, but to phase it in over four years rather than two.

It made no change to the level of compensation on offer.

The longer phase-in would have two main effects, said DEFRA secretary Margaret Beckett.

It would soften the blow to the African, Caribbean and Pacific countries which fear that their preferential access is being eroded.

And it would generate more funds for the restructuring scheme – seen as essential to encourage factory closures in less efficient countries.

The compromise also suggested that the maximum restructuring payment should be available for two years rather than one before it starts to reduce, giving factories more opportunity to draw up their exit plans.

British Sugar said that it has no plans to shut down any of its six remaining factories and might be interested in expanding production under the new regime.

But NFU sugar beet chairman Mike Blacker was concerned that, by giving processors in other countries two years instead of one at the full rate of restructuring payment, total EU production would fall too slowly.

“I can understand the need to give factories more time to draw up their plans, but I fear it will slow down restructuring and the EU will still end up with surplus production,” he said.

The consequence would be annual quota cuts as the EU is only allowed to export 1.27m tonnes of subsidised sugar under World Trade Organisation rules and needs to cut output by over 4m tonnes to achieve this.

Mr Blacker welcomed other parts of the package, including the offer to guarantee farmers a share of the restructuring fund in the event of factory closures and the introduction of a safeguard if imports get out of hand.

philip.clarke@rbi.co.uk

For the latest developments on the sugar regime, visit www.fwi.co.uk