Home Economics Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.
Goals of the European Union sugar reform
The goals of the reform were as follows.
Major features of the reform
On 24 November 2005, EU Ministers of Agriculture reached agreement on the reform
of the sugar regime. The major features of the reform were as follows.
Table 8.1. Evolution of EU reference prices for sugar
The key objectives of the reform were to reduce sugar output by about 6 million tonnes. It was decided not to introduce compulsory quota cuts for EU manufacturers, but to implement a voluntary restructuring scheme. Under the system of voluntary quota renunciation, which was funded by a restructuring levy on production, the least efficient producers were encouraged to exit the industry early on, with the highest level of compensation (EUR 730/tonne) offered in the 2006/07 and 2007/08 seasons. The scheme came into operation on 1 January 2006; however, by the end of January 2007, the deadline for renunciations for 2007/08, less than 2.2 million tonnes had been renounced and the programme appeared to be in trouble. In September 2007, new elements to the restructuring scheme were agreed to by the EU Council of Ministers in order to improve its attractiveness. These included additional payments of EUR 237.50/tonne to farmers who gave up quotas, and fixing the share of the growers and machinery contractors to 10%. A waiving of the restructuring levy was introduced on withdrawal of sugar production during the 2007/08 season if renounced for the 2008/09 season, and a two- stage mechanism was announced for renunciation with producers allowed to submit volumes on 31 January and 31 March 2008.
This revised package substantially improved incentives for producers to renounce production quotas. After the modifications in the rules for quota renunciation were approved in 2009, 3.3 million tonnes of quota were given back for 2008/09 and 0.1 million tonnes for 2009/10. Aggregating the figures shows that there was a decrease of almost 5.217 million tonnes, white value, in the EU's supported sugar production since the sugar market reform came into effect in 2006. The Commission has practically reached its initial goal of reducing sugar production by 6 million tonnes.
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