Europe's beet farmers may soon get more incentive to sell back unused EU production quotas and stop a build-up in sugar stocks, part of a bid to kickstart the bloc's policy reform, the European Commission said today.
Already, the EU plans to remove 2 million tonnes of sugar from the market this year after sugar industries opted not to use an EU-funded quota buyback scheme to nearly the extent that had been foreseen by the Commission, the EU's executive arm.
Both beet processors and growers qualify for the cash.
That scheme, known as the restructuring fund, was agreed as part of the tortuous 2005 reform negotiations and aims to cushion the pain for less competitive operations that want to leave the sector due to phased steep cuts in EU support prices.
For the first year of the reform, which started in July 2006, industries sold nearly 1.5 million tonnes of quota at a rate of 730 euros ($993.5) per tonne, much more than expected.
In the second year, where the same rate applies - it falls in 2008/09 and again in 2009/10 - quota surrender was far lower at 700,000 tonnes. The figures include isoglucose and inulin.
At present, EU countries may alter the percentages of Brussels cash for the scheme between processors and growers. Since sugar factories are unsure how much compensation they will get, they have been reluctant to sell back their quotas.
Now, the percentage of aid to be given to growers and machinery contractors will be fixed at 10 percent, with a top-up to growers of 237.50 euros per tonne of renounced quota for 2008/09.
That will be payable retroactively, to avoid penalising those who have already given up their quotas.
Growers will also be allowed to apply for the aid directly, up to 10 per cent of a factory's production quota, instead of basing themselves on decisions of beet processors, as now.
The Commission's aim is to encourage more production quota to be surrendered and ease the EU's supply-heavy market.
"We need to reduce our sugar output dramatically if we are to give the sector in Europe a sustainable future," EU Agriculture Commission Mariann Fischer Boel said in a statement.
"The restructuring fund is a key element of our reform, offering financial incentives to factories which can't compete at the lower price introduced by the reform. Regrettably, it hasn't proved as attractive as we had hoped," she said.
The Commission believes that the changes proposed should allow the renunciation of about 3.8 million tonnes of sugar quota in addition to the 2.2 million tonnes given up so far.