2205 final report.pdf - Agra CEAS Consulting

IMPACT OF THE EU SUGAR REGIME ON BCCCA MEMBER COMPANIES
2. Overview of the current EU sugar regime
The Common Market Organisation (CMO) in the sugar sector was set up in 1968 aiming to ensure a
fair income to European Union (EU) producers and self-sufficiency of the EU market. Since then it
has received very few modifications and it is the only sector that has so far stayed out of the 1992
Common Agriculture Policy (CAP) reform process, which have essentially increased EU producers’
and processors’ competitiveness by introducing institutional price cuts and compensating for these by
means of direct income payments.
Currently the CMO for sugar is governed by Council Regulation (EC) No 1260/2001 2 . Its main
features are institutional price arrangements, production control and arrangements for trade with
third countries. A brief description of the CMO for sugar is provided below 3 :
• Institutional price arrangements. Intervention is conceived as a ‘safety net’ guaranteeing a
minimum price for sugar and is a mechanism available to the industry all year round. The
intervention price at which intervention agencies are obliged to buy-in eligible sugar offered to
them has been frozen since 1993/94 at €631.90 per tonne for white sugar and €523.70 per tonne
for raw sugar. Import duties and the restriction of available quantities by means of production
quotas, which are the other tools of the CMO, keep market prices above the level of
intervention. Although this tool was used in the early years of the CMO, its subsequent use has
been limited; until 2005, there had been no sales into intervention since 1986.
The minimum price for sugar beet is the price at which sugar manufacturers are required to buy
beet from growers. This price guarantee applies only to specific quantities (quotas) of sugar per
EU Member State. It has been set by the Council at €46.72 per tonne for the A-beet used to
produce A-quota sugar and €32.42 per tonne for the B-beet used to produce B-quota sugar.
The present prices, unchanged since the 1993/94 marketing year, are in force up to the end of
2005/2006. The EU prices are guaranteed only for production within quota.
• Production control. Production control by means of production quotas is fixed by country and
by company. There are two types of quota: A and B. The major difference between A and B
quota sugar is the level of the levies. Production quotas (A and B) were set to distribute the
production of sugar amongst the Member States and keep the overall production within certain
limits. They were fixed at the level of Member State and refer only to the maximum quantity of
sugar eligible for price support (intervention purchases). Member States are free to produce
more, but that surplus production has to be sold outside the EU. Thus the purpose of the quota
system was three-fold, namely:
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to limit the total quantity of sugar that could potentially be brought in the EU sugar market;
2
Published in the Official Journal L178, 30 June 2001
3
For a more detailed description of the CMO for sugar, see http://europa.eu.int/comm/agriculture/markets/sugar/reports/descri_en.pdf
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