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Sugar: more compensation for restructuring

To avoid an arbitrary reduction of quotas which would penalize various stakeholders in the European sugar industry, the restructuring regime must be improved, says the EP Agriculture Committee.

Two consultative reports adopted near-unanimously on Monday evening are set to provide Parliament's response to the European Commission's plans for speeding up reform of the sugar sector. The reform launched in 2006, which was meant to restore the balance to the European sugar market by cutting prices and production, has not produced all the desired effects.

The restructuring regime, intended to give financial incentives to the less competitive producers to leave this sector, has only led to the withdrawal of 2.2 million tons (Mt) from the market in the first two years.  The target is a reduction of 6 Mt by 2010. In May 2007, the Commission unveiled a package of proposals seeking to make this regime more attractive to encourage producers to give up around 3.8 Mt in quotas.

If this goal is not reached in 2010, it wishes to apply a linear reduction to the Member States' quotas. The Agriculture Committee, while supporting the Commission's objectives, adopted a number of amendments designed chiefly to increase the compensation to producers and to the regions. MEPs voted on the two reports by Katerina Batzeli (PES, EL) under the consultation procedure.

Optimizing the restructuring regime
To encourage greater abandonment of quotas, MEPs call for firms to have the option of restructuring in two stages: those which have already renounced quotas should be able - once the forecasts for 2008/2009 have been published - to increase their applications for renunciation by 30 April 2008. As another way of encouraging producers to withdraw from production more quickly, MEPs suggest increasing the restructuring aid introduced in 2006 to €625 instead of €218.75 for 2008/09. The committee also stresses the need for undertakings to devise business development plans to diversify revenue and employment.  It adds that restructuring plans must be prepared in consultation with growers and that the growers must be informed about their future before the sowing period.

Special cases: small growers and bioethanol
Under the Commission proposal, beet growers will be able to take the initiative to renounce quotas up to 10% of the undertaking's quota. MEPs believe that in this context priority must be given to small-scale growers so that they can renounce on favorable terms the right to transport beet. The committee also calls for 100% compensation in the case of firms which partially dismantle their production facilities provided they shift towards bioethanol production.  Until now, the aid granted for partial dismantling was 35%.

Boosting aid for producers and regions
MEPs repeated one of the amendments adopted at the time of the 2006 reform (Fruteau report) which called for growers to receive 50% of the aid paid under the restructuring fund. The Commission, in its latest proposal, seeks to set the figure at 10%. In the first two years of the reform this same could vary from Member State to Member State provided it is not less than 10%. The committee wants to increase from €237.5 to €260 per ton of quota renounced the additional aid to beet growers - which the Commission proposes to grant for 2008/09 and retroactively for growers who have already abandoned production over the two years of the reform. They also call for aid for diversification paid to the regions affected by restructuring to be kept at the current level of €109.5 per ton of quota for sugar renounced up to 2009/10 (the regulation adopted in 2006 provides for this aid to fall to €93.80 in 2008/09 and €78 in 2009/10).

Linear reduction of quotas in two stages
If a linear reduction of national quotas is needed in 2010, the Agriculture Committee believes this too should be carried out in two stages.  The first stage should concern only member states or undertakings which, for 2008/09, would not have made a voluntary renunciation or would have renounced less than 13.5% of their quota.  In a second stage, the formula proposed by the Commission would be used.  The Agriculture Committee also proposes taking into account any renunciations made by Member States and undertakings when calculating the final reduction.

Withdrawal from the market
Given the full implementation and entry into force from 2010 of the "Everything But Arms" initiative (which will allow developing countries to export sugar duty-free to the EU), MEPs believe it is essential to extend up to 2015 the application of the scheme allowing preventive withdrawal of a part of production if there is a surplus on the European market.

In addition, the committee wants the Commission to take any decision on withdrawals for 2008/09 by 4 February 2008 (instead of 16 March, as in other years) so that beet growers can act accordingly before the sowing season. Parliament's plenary will vote on Ms Batzeli's two reports in Strasbourg in late September. The Council of Ministers, which has the final say, should adopt its common position shortly afterwards. (EP Press)