APPENDIX 1
ANALYSIS OF
"EFFECTIVE" PRICE
CUT FOR
UK BEET
The Commission have used an indicative, weighted
average for the EU15 of €43.63/t as the Minimum Beet Price.
This figure is theoretical and fails to take account of the differing
proportions of B quota in the Member States or the deficit area
premium paid to those member states producing less than national
consumption requirements. The "final" EU price of €25.05/t
beet fails to consider either the Production Charge or the possible
"flexibility clause".
1st year
Cut in Minimum Beet Price from €43.63 to
€32.86 represents a reduction of 24.7%. The UK however, due
to a proportionally smaller B quota and the deficit area premium
of €1.90/t beet, begins with a weighted average (theoretical)
Minimum Beet Price of €47.00.
A cut to €32.86 in the first year therefore
represents a reduction by 30.1% to UK growers. Coupled with the
provision for a further 10% reduction in the Minimum Beet Price
if the market price falls below the reference price, this could
effectively leave EU growers with a Minimum Beet Price in 2006-07
of €29.57. This would represent a cut of 37.1% to UK growers
in the first year alone.
2nd year
Cut in Minimum Beet Price from €32.86 to
€25.05. This represents a 2nd year cut of 23.8% for all EU
growers. This represents an overall price reduction of 42.6% if
we use the €43.63/t reference price used by the Commission.
For the UK however, incorporating both our proportionally smaller
B quota and deficit area premium (ie a theoretical weighted Minimum
Beet Price of €47.00), this represents an overall cut of
46.7%.
If the Production Charge of €12/t sugar
(to be introduced in 2007-08) is indeed shared 50/50 with growers,
as Article 16 makes provision for, this equates to an additional
reduction of €0.78/t in the Minimum Beet Price. This will
result in a Minimum Beet Price of €24.27.
If the Minimum Beet Price is reduced still further
by 10% in a marketing year when the market price falls below the
reference price, this would leave the Minimum Beet Price at €21.84/t.
This equates to £15.07/t beet and represents an overall cut
of 49.9% from the Commission's reference price (€43.63) and
an overall cut of 53.5% for the UK.
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