Sugar reform was vital and overdue, says EU

By Anthony Fletcher

- Last updated on GMT

Related tags Mariann fischer boel International trade

Commissioner Mariann Fischer Boel explains why the formal adoption
this week of the EU sugar reforms was vital, and why it doesn't
mean the end for Europe's sugar industry.

"I am absolutely delighted that the Council has taken the courageous decision to back these long-overdue reforms,"​ said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development.

"The measures may appear tough, but there is no alternative. Thanks to these reforms, the EU sugar sector can look to the future with confidence. And we have sufficient funds available to help those who have to leave the sector to find alternative sources of income."

The reform, which will come into force on 1 July, will bring a system that has remained largely unchanged for almost 40 years into line with the rest of the reformed Common Agricultural Policy.

The key to the reform is a 36 percent cut in the guaranteed minimum sugar price, generous compensation for farmers and, crucially, a Restructuring Fund as a carrot to encourage uncompetitive sugar producers to leave the industry.

Boel said that the previous regime had become untenable. The sugar price was three times world market levels.

The EU's export system had been ruled contrary to international trade rules. But under the new sugar regime, the EU will open its market completely to imports from the world's 49 poorest countries from 2009.

The EU argues that by making these changes now, the reform ensures that funds are available to ease the painful restructuring of the sector that is an absolute must, and to compensate farmers. The deal offers the sector long-term certainty. Boel said it would not cost a single cent extra in public money.

EU production is expected to fall by between 6 and 7 million tonnes. This will bring it down to a sustainable level - at a sustainable price - allowing domestic needs to be met from European production and imports from the EU's African Caribbean and Pacific partner countries and the Least Developed Countries.

EU exports will fall dramatically, allowing the EU to respect its WTO commitments.

Boel said that sugar will continue to be produced where it makes the most sense, with farmers generously compensated for the income loss caused by the price cut. Their direct payments will be incorporated in the Single farm Payment and linked to the fulfilment of strict environmental and land management criteria.

In the less competitive areas, there will be a financial incentive to close down sugar factories, convert them to other uses and retrain workers. Farmers will be able to diversify to other products.

The EU will remain an attractive market for many developing country exporters, said Boel. For those who will struggle in the new environment, financial assistance will be available to help them modernise, adjust or diversify.

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