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The impact of the European Union sugar reform on the beet processing sector

Sergey Gudoshnikov1

The sugar sector was reformed in 2006 along the lines of the 2003 Common Agricultural Policy (CAP) reform, with reductions in administered prices partially compensated by decoupled payments. The public intervention system was also gradually replaced by private storage, the quota system simplified and payments were made to producers and companies who renounced their quotas. This resulted in major reductions in the area under beet production, with five countries completely abandoning sugar beet production. The number of growers decreased sharply but yields increased. The restructuring programme became successful after incentives were raised: it resulted in about 5.5 million tonnes of production quotas being renounced and a decrease in the number of sugar factories between 2005 and 2009. This has led to greater efficiency in the sector. Domestic market development had significant impacts on trade and the world market: The European Union became the world's leading net importer, EU exports declined and world market prices increased. As a result, the cost of export refunds decreased.

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