EU Council approval seals fate of beet industry
Instead, the UK’s Agriculture Minister, Margaret Beckett declared, after speaking to each Minister, that a qualified majority was achievable in early 2006.
The European Commission will now start preparing the legal text. Only when that has been finalised, and the European Parliament has given its opinion in January 2006, can the Council adopt the sugar regime in its final form.
Germany, the UK, Sweden, Denmark, the Czech Republic and France all fully supported the proposals on the table last week (A €130 million per annum special arrangement for France’s overseas territories helped to swing their crucial vote).
Other EU nations acquiesced, having struck deals in overnight trilateral meetings. Phasing in the reform over four years from 2006, and allowing farmers to sell back production quota in exchange for compensation, were the concessions which bought off enough countries to get agreement.
In the end only Poland and Greece disagreed, with the former wanting a 10-year transition period and the latter a smaller price cut in Year One. Latvia and Denmark were also unhappy with the agreement.
The conclusion of negotiations left a number of issues on the table.
In Ireland, farmers want a meeting with the Taoiseach and Agriculture Minister Mary Coughlan to clarify compensation to beet growers, and IFA sources also said they are no longer sure if social partnership is working for them after what they view as a disastrous deal.
IFA Sugar Beet Chairman Jim O’Regan called on Agriculture Minister Coughlan to use her powers to pay all of Ireland’s €145m of structured compensation to farmers.
He warned that the Minister expects farmers to grow beet over the next two years at below the cost of production in order to qualify for compensation.
“Growers would only grow beet for a margin, and Greencore would have to substantially increase the premium it currently pays to make up the shortfall in the EU price if production was to continue next year,” he said.
The guaranteed price for white sugar will be cut by 36%, beginning with 20% in 2006/07, going to 25% in Year Two, 30% in Year Three and 36% in Year Four.
Farmers will be compensated for, on average, 64.2% of the price cut, through a decoupled payment added to the Single Farm Payment. Countries which give up more than half of their sugar quota can pay an additional coupled payment to farmers of 30% of their income loss for a temporary period of five years, plus possible limited national aid.
A four year restructuring fund will provide incentives for less competitive EU processors to leave the industry; compensate for social and environmental impacts of factory closures; and aid the worst affected regions to develop new business. The restructuring payment will be €730 per tonne of sugar in years one and two, falling to €625 in year three, and €520 in the final year. There will be the possibility to use some of this to compensate beet producers affected by the closure of factories.
Sugar beet should qualify for set-aside payments, if grown as a non-food crop, and can also qualify for the energy crop aid of €45 per hectare. To maintain a certain production in the current “C” sugar producing countries, an additional amount of 1.1m tonnes will be made available against a one-off payment corresponding to the amount of restructuring aid per tonne in the first year.
The new EU regime will be valid until 2014/15. There is no review clause.
For Ireland, Minister Coughlan said sugar beet growers will receive compensation of €121 million over the next seven years in direct, decoupled payments, and a once-off €44 million if sugar beet production ceases in Ireland. She said the additional aid for any restructuring of the Irish industry totals €145 million, and farmers, machinery contractors and employees will all have to be taken into account in any restructuring plan.
Across Europe, farmers have called for clarification of the complex deal agreed in Brussels. “It is important that rules are set now for transitional periods, so that growers know quickly what to hold on to”, said a spokesperson for COPA, the EU farmer organisations grouping.
Many farmers and processors are expected to go out of business in Italy, Ireland, Portugal, Spain, Greece and Finland (although Italian agriculture minister Gianni Alemmano said that Italy would not lose a single job).
“We think it will be difficult for our farmers to sell at this price. If you decrease the price, only the most competitive people can stay in business,” said a spokesperson for COPA. German sugar producers said the restructuring fund would allow cultivation to continue, but French farmers said the deal was “regrettable.”
