Briseles koridoros lemj par mums

ES cukura sektora politikas reformas priekšlikuma ietekmes uz Latviju pirmais ātrais novērtējums

Savos e-dokumentu arhīvos atradu pirmo EK 2004.gada jūnijā publiskoto konkrēto par ES cukura sektora atbalsta politikas reformu. Publicēju to šeit ar saviem nerediģētiem tā laika komentāriem un pirmo ātro ietekmes statisko novērtējumu, ja reforma tiktu īstenota saskaņā ar publiskoto plānu. Un jau 2004.gada jūnijā bija redzams, ka ienākumu zaudējumu apjoms Latvijas cukurbiešu audzētājiem varētu būt vienkārši katastrofāli nepaceļams...

SUGAR REFORM: DG AGRI seeking 2-stage 33% price cut with partial compensation

 (Draft) Proposed cuts in support prices

(in EURO per tonne)      

The EU support price for sugar should be reduced by 20% in 2005/6 and by a further 13.0% in 2007/8, with public intervention abolished and replaced by a system of private storage, according to the draft proposals for sugar reform from DG AGRI which have now entered inter-service consultation with the other Commission DGs and are due to be published on July 14. A similar reduction in the minimum beet price paid to farmers is foreseen, with the introduction of a 2-stage decoupled compensatory area payment (equivalent to 60% of the income loss) which will be integrated into the “Single Farm Payment” and also subject to cross-compliance requirements & modulation.

Another key change is a 2.8 million tonne linear reduction in quotas over 3 years as “A” & “B” quotas are merged and cut to the level of domestic consumption (in order to reduce drastically the dependence on export refunds)

, while also allowing the possibility of cross-border quota transfer.

With the paper conceding that sugar beet production may thereby no longer be economically viable in some regions, the draft proposals also indicate that a form of temporary restructuring aid will be made available for factories that have to close.

Other elements in the Fischler concept include an exemption from quotas for sugar used in the chemical & pharmaceutical industry matched by the elimination of production refunds & refining aids the abolition of the “declassification” mechanism, and continuation of the carryover mechanism (with changes) and “C” sugar.

As regards imports, the reduction in the support price will see a reduction in the import tariff, but the Commission insists that the current preferential arrangements for ACP countries & the Everything But Arms (EBA) agreement must be maintained, proposing also that there should be consultations with ACP countries about possible programmes helping them to adapt to the new conditions.

In budgetary terms, sources claim that the additional costs of the compensatory payment would be (more than) offset by the reduction in spending on export refunds & production refunds and so there would be no need to reduce funding in other CAP sectors in order to fund this reform within the overall CAP spending ceiling.

Domāju, ka ekspertiem varētu būt taisnība, pats neesmu rēķinājis.

It should be noted, however, that a number of modifications to this concept may be made following consultation with the other Commission DGs before it becomes a formal Commission proposal. Commissioner Fischler is expected to present it to Ministers at the July 19 Council, with member states reactions expected at the next formal Council – on Oct. 18 in Luxembourg.

Explaining the “Fischler” approach, senior officials in DG AGRI reconfirm the findings from last September’s report that maintaining the status quo is not a sustainable solution, that a radical liberalisation would risk the long-term viability of sugar beet production in Europe, and hence the “price cut with compensation” approach is the most politically realistic.

Insodoing DG AGRI is hoping to bring sugar into line with most other CAP sectors. Preliminary DG AGRI estimates indicate that overall EU production would drop from 20mt to 17.5mt under this scenario.

The fall in market prices is not expected to have much effect on domestic consumption, however.

While the intention is to be able to adjust the regime at any stage in future without a complete overhaul, e.g. in response to the WTO Panel ruling, the DG AGRI draft confirms that a review of the sector should be planned for 2008 – in line with the review of the CAP as foreseen under last year’s Fischler Reform.

While the proposed change in the support price will nominally reduce the market “safety net” by one third, it will probably cut the market price by more than 40%, officials claim, as the current market price (roughly 725 €/t) is so much higher than the intervention price due to the lack of competition on EU markets.

In line with other reforms, the public intervention system will therefore be replaced by a system of private storage, triggered when prices drop below a certain level. In order to monitor this, the Commission is also calling for the introduction of a price reporting mechanism.

The new reference price (421 €/t) will also be the basis for calculating the level of border protection and the guarantee price for preferential imports (e.g. ACP & EBA). Because of this link with the external tariff, DG AGRI is particularly keen to “front-load” the price cuts, so that there is already a notable impact by 2008, the second year of the EBA agreement when imports are expected to take off, in order to ensure that the Least Developed Countries have a realistic indication of the more medium term level of preference they might enjoy.

(Draft) Proposed EU direct aid envelopes for Single Farm Payment (in €m)

Note: * French Overseas Départements; ** Azores – as opposed to Mainland France

& Portugal respectively

Linked to the support price is a proposed 37% reduction in the Minimum Beet Price paid to producers, accompanied by the introduction of a decoupled area payment (again in 2 stages over 3 years),

based on production in the 2000-2002 reference period - equivalent to 60% of the estimated loss of revenue

- which will be incorporated into the Single Farm Payment.

Member states will again have flexibility on whether to adopt a national, regional or individual (historical) approach to these payments.

These payments would also be subject to modulation and cross-compliance rules - thereby addressing certain environmental concerns about the existing regime, the net effect of which is likely to oblige greater rotation of sugar beet area. (tas nav īpaši riskanti). The draft states that the amount of aid will be based on the combination of member state “A” & “B” quotas in the reference period, with a financial envelope earmarked each member state totalling €1.34m from 2007/8 onwards [see table]. As in other sectors, there would be special treatment for the outermost regions (bet Latvija jau nav, vai ne?) , e.g. excluding area payments from the Single Farm Payment.

In terms of quotas, the draft proposals seek to apply a linear quota cut of 2.8 million tonnes over 4 years – initially by 1.3mt, then by 0.5mt a year – from 17.4mt to the level of current EU consumption (14.6mt), while also merging the existing A & B quota system. In practice this will massively reduce the volume of subsidised EU exports (currently approximately 2.4mt) – and the cost of refunds (roughly €1.3m in the 2004 budget). However, DG AGRI is also looking to adjust the rules for industrial sugar such that the 400 000t sugar used by the chemical & pharmaceutical industries every year will in future be excluded from quotas (as is already the case for sugar used for alcohol, bioethanol & yeast production). Because of this & the price cut, the production refunds for the chemical industry will be abolished from 2005/6 (thereby saving a further €170-190m a year). Another significant change in the quota rules that the Fischler blueprint is seeking to introduce is the concept of cross-border quota transfers which will allow sugar companies in more competitive production regions to buy quota from other areas. By introducing this additional flexibility and the much greater emphasis on competition within the sector, DG AGRI officials suggest that it is the private sector which will most influence the future geography of sugar beet production across the EU. Officials concede that beet production may no longer be viable in certain areas, to the extent that the DG AGRI draft includes a new sugar factory “conversion” scheme, where factories are closed and the quota is not sold, providing aid for 5 years at a rate of 250 € per tonne of sugar processed under quota (50% EU funded, but 75% in Obj.1 areas). The quota corresponding to the closed factory would then be cancelled. While DG AGRI officials are wary of suggesting in which regions sugar beet production may die out, last year’s independent assessment on the potential impact of sugar reform [see AF77-03] indicated (albeit under different scenarios) that Gre, Ire & It were the member states likely to face the sharpest drop in production, followed by Esp, Fin, Port, Lat, Lith, Svk & Sln

The “C” sugar provisions under the current regime (non-quota production for export at world market prices) are foreseen to continue under the reformed regime, although officials concede that this would have to be reviewed (& potentially abolished) if the ongoing WTO Panel finds against the current system. Under the DG AGRI concept, aid to the refining industry (amounting to roughly €40m a year), the Maximum Refining Needs instrument (for managing preferential cane imports) and the so-called “declassification” mechanism (for redefining quota sugar as “C” quota) should be abolished, while the carryover mechanism (allowing over quota production to be stored & classified as “A” quota sugar the following year) should be amended such that carried forward volumes are deducted from quotas pro rata across the board.

In order to be able to respond to the cut in the sugar price (and profit from economies of scale) the DG AGRI draft proposes to allow an increase in isoglucose production quotas of 100 000t a year for 3 years.

In terms of trade, the proposed quota reduction will drastically reduce the volume of subsidised exports – from 2.4mt to roughly 0.4mt – plus the 1.3mt of ACP & India “re-exports” and the approximately 3mt of nonsubsidised “C” sugar. With the current WTO Panel examining whether this 1.3mt and/or the “C” sugar volumes should be defined under the EU’s subsidised export commitments, these figures may need to be addressed (presumably by further quota reductions) in future. DG AGRI officials were keen to underline, however, that this change would provide additional export opportunities onto the world market for suppliers such as Brazil, although the positive effect on world market prices is expected to be very limited.

With regard to imports, the ACP & India, EBA and Western Balkan preferential market access arrangements will remain in place, but the reduction in the import tariff (linked to the new reference price) will reduce the margin of preference and therefore make the EU market less attractive. This may result in a drop in import volumes from some of the less competitive ACP countries, with the DG AGRI draft suggesting that European Development Fund programmes, similar to those provided in the banana sector, could be used to improve quality or productivity, or to support diversification. The draft also proposes converting the current import regime for the Western Balkans into a Tariff Rate Quota. Finally, in order to avoid problems of fraud, the Commission intends to introduce new rules of origin in particular concerning the definition of processing.