EU radically reforms its sugar sector

Canberra, 25 November 2005

EU radically reforms its sugar sector, strengthens hand for Hong Kong

The 25 European Union Agriculture Ministers have reached political agreement overnight on a wide-ranging reform of the sugar sector. The reform will enhance the competitiveness and market-orientation of EU sugar.

The system, which has remained largely unchanged for almost 40 years, will be brought into line with the rest of the EU’s reformed Common Agricultural Policy (CAP).

Detail of the deal

The guaranteed price for white sugar will be cut by 36 percent over four years; farmers will be compensated for, on average, 64.2 percent of the price cut through a decoupled payment - which will be linked to the respect of environmental and land management standards and added to the CAP’s new ‘Single Farm Payment’ (replaces payments linked to production).

Developing countries will continue to enjoy preferential access to the EU market at attractive prices. Those ACP countries which need it will be eligible for an assistance plan worth €40 million in 2006, a package that will pave the way for further assistance.

Commissioner’s comment

EU Commissioner for Agriculture and Rural Development, Mariann Fischer Boel, said she was delighted with the new agreement. “I congratulate ministers for their brave and bold decision to reform a sector that nobody has been able or willing to reform in the past. It has been tough, but common sense has prevailed,” she said.

“Our new policy will be trade friendly, thus strengthening our hand at next month’s WTO Hong Kong Ministerial. Farmers will receive a direct payment largely decoupled from production.”

“From 2009, the world’s poorest countries will have completely free access to our market. The EU will offer our ACP partners financial assistance to adapt to the changes. “

“This agreement will also ensure that we come rapidly into line with the recent WTO panel.”

This ambitious agreement brings the EU sugar sector into line with the CAP reforms of 2003 and 2004. The changes will bolster the competitiveness of the EU sugar industry, improve its market orientation and produce a sustainable market balance in line with the EU’s international commitments.

Europe will remain an attractive market place for developing countries to sell their sugar. The Commission is also proposing an assistance scheme for the African, Caribbean and Pacific (ACP) countries which traditionally export sugar to the EU, initially worth €40 million for the second half of 2006.

ENDS

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