European agriculture ministers formally adopted on Monday a radical reform of the EU sugar sector, which will come into force on July 1, reports the World Bank press review.
EU agriculture ministers reached political agreement in November last year on the reform of the sugar subsidy system, which has remained largely unchanged for almost 40 years.
The package will slash prices guaranteed to EU farmers by 36 percent and make 6,3 billion euros (46,8 milliarder DKR) in aid available to growers and refiners over the four years during which the reform is phased in.
The EU had little choice other than to make broad reforms to its sector regime after the World Trade Organization (WTO) ruled it illegal last year following a complaint from Australia, Brazil and Thailand.
The previous regime had become untenable. The sugar price was three times world market levels. Under the new reform, the commission said the EUs sugar production is expected to fall by between 6 and 7 million tons, which will bring it down to a sustainable level.
This will allow domestic needs to be met from European production and imports from the EUs African Caribbean and Pacific partner countries and the Least Developed Countries, allowing the EU to respect its WTO commitments. The EU will open its market completely to imports from the worlds 49 poorest (LDC)nations from 2009.
Under the new rules, a generous voluntary restructuring scheme will be established to provide incentives for less competitive producers to leave the sector. Intervention buying of surplus production will be phased out after four years.
Additional aid has been built in for those countries which will reduce their output by more than half, or even phase out sugar production completely.
The commission further proposed on Monday to reduce sugar production under quota in the first year of the reform by 2 to 3 million tons to relieve the pressure on the market. It will improve the balance on the sugar market without creating new stocks of sugar, the European Commission said.
Kilde: www.worldbank.org
