EU: Sugar Set To Decline
22 April 2008 New EU policies are expected to cause a reduction in sugar production in 2008/09 following stable production over the past two seasons, concludes a report by the US Dept. of Agriculture’s Foreign Agriculture Service (USDA-FAS).
Total sugar production (from sugarbeets and sugarcane) for the EU-27 remained stable at around 17.7 million metric tons (MMT) between 2006/07 and 2007/08, but is forecast to decline by over 5% to 16.8 MMT in next season.
In September 2007, EU agriculture Ministers changed the EU’s restructuring scheme to reduce EU sugar production to sustainable levels. The main changes were:
- The percentages of aid given to growers and machinery contractors are fixed at 10%, but growers who renounce quota receive an additional payment.
- Retroactive payments are foreseen to avoid penalizing those who have already given up their quotas.
- Beet growers may apply directly for aid from the restructuring fund up to a certain limit.
- Companies that renounce a certain amount of their quota in 2008/09 will be exempted from paying the restructuring levy on the part of their quota which was subject to preventive withdrawal in 2007/08.
- A two-step application for renouncing quota for 2008/09 was introduced, where the first step has to correspond to the preventive withdrawal decided in March in order to be able to participate in the second step. The European Commission informs companies after the first step to what extent they risk an uncompensated cut in 2010 if they do not participate in the second step.
The sugar sector as a whole should give up 1.16 MMT of quota in 2010. This figure is based on withdrawals made to so far under the revised sugar restructuring fund. Of the targeted withdrawal of 6 MMT of sugar from the market, so far 4.84 MMT have been withdrawn.
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