The European Commission today indicated that it expects to have to withdraw two million tonnes of sugar from the European market in October 2007 under Article 19 of Regulation 318/2006. However, the emergency powers in Article 42 of 318/2006 have been used to derogate from Article 19 for enterprises which reduce their plantings by 13.5 percent, and member States where there has been participation in the voluntary restructuring scheme. Other considerations were raised by member states, but these were deemed to be ‘non-urgent’, including the impact of the withdrawal on the cane refining sector and the possible consequent impact on the EU’s international trade commitments.
  The Commission is expected to make proposals to Agriculture Council for changes to the Council regulations in April. These proposals are expected to cover amendments to the operation of the restructuring scheme, and amendments to Article 19 which may change the basis for future quota cuts.
On 1st January 2007, the European Union enlarged to encompass 27 member states, and the EU sugar regime expanded accordingly. In accordance with the treaties of accession, Bulgaria and Romania were allotted sugar and isoglucose production quotas and “traditional refining needs” (refining quotas). The new member states were also included in the support measures for sugar beet farmers, and the sugar restructuring scheme.
  For the 2006/07 marketing year, transitional measures will apply whereby the provisions on minimum beet prices, inter-professional agreements and quota allocation provided for in Articles 5, 6 and 7 of Regulation (EC) No 318/2006 will not apply. The Commission also spelled out the consequences if the new member states enter the EU with unusually large quantities of sugar in stock.
  During the transitional period, special import arrangements will apply until 30 September 2007; the system which will operate after that remains open to negotiation. During the first nine months of EU membership, Bulgarian and Romanian refiners will be able to capture around €70 million of “quota rent” thanks to the new import arrangements (or approx. €250m until 2009), but during the Agriculture Council meeting on 19/21 December 2006, Bulgaria and Romania issued a joint statement reserving their right to return to the issues concerning the position of full time sugar refiners in Bulgaria and Romania and also the phasing-in of the sugar direct payments in Bulgaria and Romania.
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•  Council Regulation (EC) No 2011/2006
•  Commission Regulation (EC) No 2031/2006
•  Transitional regulation yet to be published in the Official Journal
Mrs Mariann Fischer Boel, European Commissioner for Agriculture and Rural Development, took the initiative at Monday’s EU Agriculture Council meeting to raise the point regarding the EU sugar industry restructuring; the assembled EU agriculture ministers were reported to have taken note.
  “Key to success of our sugar reform is the need to take out 6 million tons of quota via the four year application of the restructuring fund”, Mrs Fisher Boel said, “In the first year of application of the reform, we managed to get out 1.5 million tons of production quota. The quotas applicable by 1 July 2006 were reduced correspondingly. The deadline for the next round of application for participating in the restructuring fund is the 31 January 2007. At this stage it appears that applications only in the order of 700,000 tons are being prepared for the next round in spite of the high restructuring aid 730 €/t applicable also for this round.”
  ”The Commission is not going to bail out the industry”, she added, “The coming weeks will be crucial, where some hard decisions by sugar producers need to be taken.” “In collaboration with Member States, the sugar industry needs to take its responsibility to facilitate the restructuring process. If the restructuring scheme fails, the consequences are clear to everybody – there will be no other funds to facilitate the restructuring of the sugar industry and we will have to apply a linear cut in quotas by 2010.”
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•  Commission press release
•  EU 25 sugar balance sheet
