Leaving a bitter taste? The EU Sugar Regime
CHAPTER 1: introduction
Our inquiry
1. The Committee last reported on the EU Sugar
Regime in 2005 when it conducted an inquiry into the planned 2006
reform of the regime. In this report we consider the progress
of that reform and the future of the sugar sector in the context
of the Common Agricultural Policy (CAP) reform package currently
being considered in Brussels.[1]
2006 reform of the EU Sugar Regime
2. The EU is the world's biggest producer of
beet sugar and the principal importer of raw cane sugar for refining.[2]
The sugar market in the EU is subject to a number of measures
which are overseen by the Commission, such as production quotas,
a reference price and market management instruments. These are
discussed in more detail in Chapters 2 and 3 of this report.
3. The EU Sugar Regime underwent significant
reform in 2006 in order to align it with the principles of the
reformed CAP and to comply with international obligations. The
reform sought to ensure the competitiveness of the EU sugar industry;
to stabilise the markets and guarantee the availability of supplies;
to contribute to providing a fair standard of living for the agricultural
community (via instruments put in place to mitigate the social
and economic impact on the agricultural communities in the regions
affected); and to maintain preferential access for producers in
the African, Caribbean and Pacific Group of States (ACP) and Least
Developed Countries (LDC) to the high value EU market.
4. To this end, reform measures included a reduction
in EU production quotas by 6 million tonnes by September 2010
(the total EU production quota for sugar currently stands at 13.3
million tonnes)[3] designed
to preserve the market balance and eliminate inefficient capacity;
gradual reductions in the prices per tonne of sugar and sugar
beet; a temporary restructuring fund principally providing restructuring
aid and diversification aid to the beet industry and transitional
aid to full time refiners; and transitional assistance to affected
ACP countries through Accompanying Measures.
5. The EU's support to its sugar regime should
be seen in a global context whereby all major sugar producing
countries have implemented support mechanisms for their domestic
industries designed to protect them against the volatility of
world sugar markets. All of the major producers except Australia,
for example, apply tariffs on imports and most apply some form
of domestic market control.[4]
The future of support is closely linked to the ongoing Doha Round
world trade discussions.
Our last report
6. In 2005, the Committee welcomed the reform
as a necessary step but regretted that more extensive proposals
had not been pursued—in particular, the Committee recommended
the removal of production quotas, describing the requirement to
leave the new regime unchanged until 2014 as "inappropriate".
Commission proposals
7. Following the European Court of Auditors'
report in 2010 on the progress of the 2006 sugar reform,[5]
which concluded that the Commission should propose further adjustments
of internal production and remove the constraints in the quota
system, the Commission included a number of measures relevant
to the sugar sector in its package of proposals for reform of
the Common Agricultural Policy, introduced in October 2011 (see
Box 1).[6]
BOX 1
CAP Reform—sugar proposals
- Production quotas and other market management
measures due to end by 30 September 2015;
- Conferred powers for the Commission to adopt
detailed provisions in respect of governing agreements between
sugar undertakings (sugar processors and refiners) and sugar beet
growers; and
- Retention on a permanent basis of the €350
per hectare payment to Finnish sugar beet growers to address the
particular geographical and climatic conditions which adversely
affect the sector in that country.
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What we consider in this report
8. In light of the Commission's proposals in
the context of CAP reform, we thought it timely to conduct a short
inquiry to review the progress of the 2006 reform and to consider
the future of the sugar sector beyond 2015. Throughout our short
inquiry we have concentrated on four key issues which are the
focus of this report:
- the abolition of production quotas and other
market management measures by 2015;
- the governance of Interprofessional Agreements
between sugar undertakings and sugar beet growers;
- the extent to which EU price reduction has been
passed on to consumers; and
- the impact on third country producers and potential
mitigation that may be required.
9. The members of the Agriculture, Fisheries,
Environment and Energy Sub-Committee, which conducted this inquiry,
are listed in Appendix 1. Those who gave evidence to us are listed
in Appendix 2. We are grateful to all of them. It should be noted
that our evidence has largely been drawn from UK witnesses and
our conclusions and recommendations should therefore be viewed
in this light.
10. We make this report to the House for debate.
1 COM (2011) 625 Proposal for a Regulation of the European
Parliament and Council establishing rules for direct payments
to farmers under support schemes within the framework of the CAP;
COM (2011) 626 Proposal for a Regulation
of the European Parliament and Council establishing a Common Organisation
of the Markets in Agricultural Products;
COM (2011) 627 Proposal for a Regulation
of the European Parliament and Council on support for rural development
by the EAFRD; and
COM (2011) 628 Proposal for a Regulation
of the European Parliament and Council on the financing, management
and monitoring of the CAP. Back
2
http://ec.europa.eu/agriculture/sugar/index_en.htm Back
3
ibid. Back
4
Support Measures in the Sugar Sector around the World, CEFS (Comité
Européen des Fabricants de Sucre), November 2011 Back
5
European Court of Auditors, Special Report No. 6/2010: Has the
reform of the sugar market achieved its main objectives? Back
6
COM (2011) 626 final/2 Proposal for a Regulation of the European
Parliament and of the Council
establishing a common organisation
of the markets in agricultural products (Single CMO Regulation) Back
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