EU sugar plan reveals aid revamp

SUPPORT FOR EU sugar producers should be revamped along the lines of last year‘s CAP reform, with price and quota cuts partially offset by direct aid to growers, according to draft plans circulating in Brussels.

The document, which is expected to form the basis of formal commission proposals later in the year, says the support system is becoming an anomaly when the rest of the CAP is now more market-oriented.

Building on one of the ideas put forward in an earlier options paper, the leaked communication calls for substantial cuts in both quotas and prices.

Specifically, it suggests A and B quotas should be merged and the combined EU sugar tonnage reduced from 17.4m tonnes to 14.6m tonnes over four years.

The C quota mechanism, where surplus sugar is sold at world prices, will remain.

The commission also recommends an end to sugar intervention and the introduction of a new, but lower, “reference price”.

This will be used as the trigger level for a new private storage aid scheme and will form the basis of the minimum beet price for growers.

Cuts of 25% and 37% are planned for 2005 and 2007, bringing the beet price down to just €27.4/t (£18/t).

To soften the blow, compensation is provided, covering about 60% of growers‘ losses.

The paper is expected to be sent to EU farm ministers and the European parliament in mid-July for comment.