Südzucker appreciates improvement of sugar market regime by EU Council of Ministers of Agriculture

With immediate effect, the EU Council Ministers of Agriculture has agreed upon the amendment to the sugar market regime in its conference on 26th of September. The main target is to increase the attractiveness to renounce sugar quota to the restructuring fund that has been implemented in 2006 by the Commission. A sustainable market equilibrium within the EU sugar market should be achieved through voluntary quota renouncement of 6 million tonnes of sugar. So far, a total amount of only 2.2 million tonnes of sugar quota have been renounced within the sugar marketing years 2006/07 and 2007/08.

The EU proposal, dated 7th of May 2007, has been largely confirmed. In a nutshell, taking into account a quota renouncement by 31st of January 2007, on the one hand yesterday's decision contains an increase in compensation for farmers, on the other hand in case of respective quota renouncements it implies a partial omission of restructuring levy for sugar marketing year 2007/08.

Südzucker appreciates the decision of the Council of Ministers, though it is the first time that the more competitive European regions will be affected. The improvements mark an important and promising incentive for further voluntary quota renouncements.

This valuable contribution of the European sugar industry to stabilise the sugar market does only lead to the aspired target, if the EU follows a responsible policy about preferential imports and future WTO obligations do not burden the EU sugar beet cultivation further.

In the run-up to the decision and in light of the new terms, all large sugar manufacturer in the EU have signalled their preparedness to exercise the option to renounce quota for sugar marketing year 2008/09. The reason is that quota renouncements in limited size offer an economic background against unavoidable, uncompensated quota cuts in 2010. In the next days, Südzucker is going to enter - like suggested by the EU Commission - consultations with its farmers about quota renouncements in the respective countries.