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EC calls for greater "responsibility" over new sugar reforms

By Neil Merrett , 22-Nov-2006

The sugar industry must take greater responsibility to ensure the successful restructuring of the EU market, said the European Commissioner for agriculture.

Speaking on Monday, Mariann Fischer Boel called on sugar processors operating within the EU, to take greater initiative in reducing their production levels as required by new EU reforms on sugar.

"The Commission is not going to bail out the industry. In collaboration with Member States, the sugar industry needs to take its responsibility to facilitate the restructuring process" she said.

The new reforms came into affect on 1 July this year following concern over the size and competitiveness of sugar production in the bloc.

Due to this issue, the commission received a number complaints from several World Trade Organisation (WTO) members and consumers groups, that subsidised sugar production in the EU, gave member states an unfair advantage.

As a result the EU has agreed to lower sugar production by 6m tons over a four year transition period.

Though sugar companies are acting on the need to lower production, the commissioner added that more needed to be done, if the industry was to meet it targets.

In order to encourage companies to surrender their production levels, a restructuring fund was announced by the EU, to help lower output.

Despite these measures, Fischer Boel revealed that the industry is not acting quick enough in restructuring.

"The quantity renounced so far is far below our expectations when we drew up the reform. If this is the end result, we will have a surplus of 4.5 million tonnes, corresponding to 25% of the quota for the marketing year 2007/2008," she said.

The statement comes amidst growing tension between the EC, sugar producers and beet growers over measures to reduce EU sugar output.

As part of measures to reduce its own production levels, Tate and Lyle announced last month that it was to disband its Eastern Sugar subsidiary in 2007.

By relinquishing Eastern Sugar, which is a joint venture with with German group Suedzucker AG, the companies would effectively phase out almost their entire operations in Czech Republic, Hungary, and Slovakia.

In response Sugar beet growers in the Czech Republic announced they will be taking to the streets this week in protest over plans by Tate and Lyle to disband its processing operations in the country.

With three plants residing in the Czech Republic alone, protesters are angry that sugar producters in the Czech Republic appear to be bearing the brunt of the reforms.

Tate and Lyle added however, that it would be looking to make further cuts with the possibility of scaling down its Food & Industrial Ingredients, Europe (TALFIIE) division, which employs around 2,500 people in 15 operating facilities across Western and Eastern Europe, currently makes up almost 20 percent of total group sales.

Despite some criticism within the industry of the current reduction plans, commissioner Boel revealed that if producers could not reduce its outputs, they would have far graver consequences in the future.

"If the restructuring scheme fails, the consequences are clear to everybody - there will be no other funds to facilitate the restructuring of the sugar industry and we will have to apply a linear cut in quotas by 2010," she said

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