Special Report No 6/2010 ‘Has the reform of the sugar market achieved its main objectives?’
Date: 2010-11-12
Institutions: European Court of Auditors
Subjects: EU agricultural market, agrarian reform, competitiveness, export, production control, sugar

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HaS tHe reforM of 
tHe SuGar MarKet acHIeVed 
ItS MaIN oBJectIVeS?

eN

 
 
 
 
Special r eport No 6 

 2010

HaS  tHe  reforM  of tHe  
SuGar  MarKet  acHIe Ved 
It S MaIN  oBJectIVeS?

(pursuant to article 287(4), second subparagraph, tfeu)

europeaN  court of audItorS

europeaN  court of audItorS  
12, rue alcide d e Gasperi
1615 Luxembourg
LuXeMBour G

tel. +352 4398-1
fax +352 4398-46410
e-mail: euraud@eca.europa.eu
Internet: http://www.eca.europa.eu

Special r eport No 6 

 2010

a great deal of additional information on the european union is available on the Internet.

It can be accessed through the europa server (http://europa.eu).

cataloguing data can be found at the end of this publication.

Luxembourg: publications office of the european union, 2010

ISBN 978-92-9207-862-1 

doi:10.2865/41975 

© european union, 2010

reproduction is authorised provided the source is acknowledged.

Printed in Luxembourg

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

coNteNt S

3

Paragraph

I–IX 

SUMMARY

1–14 

1–6 

INTRODUCTION

BACkgROUND AND PRe-RefORM SITUATION

7–14 

The SUgAR RefORM AND ITS OBjeCTIveS

10–11 

tHe  MaIN  featureS  of tHe reforM

12–14 

oVer VIew of tHe  MaNa GeMeNt  Sy SteMS

15–19 

AUDIT SCOPe  AND APPROACh

20–91 

OBSeR vATIONS

20–51 

26–30 

 hAS The SUgAR MARkeT RefORM eNSUReD The fUTURe COMPeTITIveNeSS Of The eU SUgAR
INDUSTRY?

 IN  tHe fIrSt t wo yearS  of tHe reforM , tHe eXpected  Le VeL  of VoL uNtary quota reNuNcIatIoNS  waS 
Not acHIe Ved

31–32 

froM tHe tHIrd year of tHe reforM, Key ModIfIcatIoNS were Made … 

33 

 … aNd tHe 6  MILLIoN  toNNeS  tarGet waS  Lar GeL y acHIe Ved,  INcL udING  0,5 MILLIoN  toNNeS  of 
ISoGL ucoSe aNd  INuLIN  Syrup …

34–38 

… aLtHouGH  quotaS  were aLSo aBaNdoNed  By producerS  tHat were  Not tHe  LeaSt coMpetItIVe

39–43 

 tHe reforM  proVIded  INceNtIVeS  to reduce tHe  Le VeL  of quotaS  aNd at tHe  Sa Me tIMe aLL ocated 
addItIoNaL  quotaS

44–47 

tHe  MeaSureS  INtroduced  Had a  LIMIted  IMpact oN  tHe  INdIVIduaL  coMpetItIVeNeSS  of GrowerS

48–51 

tHe curreNt quota  Sy SteM  MaINtaINS  paSt rIGIdItIeS  aNd coNStraINt S

52–64 

 hAS The SUgAR MARkeT RefORM STABIlISeD The MARkeTS AND gUARANTeeD The AvAIlABIlITY
Of SUgAR SUPPlIeS?

53–54 

prIceS  oN  tHe  eu SuGar  MarKet  HaVe  BeeN  StaBLe to date arouNd tHe refereNce prIceS

55–59 

 GuaraNteeING  tHe a VaILaBILIty of  SuppL y: tHe  Le VeL  of productIoN  quotaS  IS BeL ow eu 
coNSuMptIoN  aNd  eu IS Now a  Net  IMporter

60–61 

deL ocaLISatIoN  rISK

62–64 

BeNefItING  froM  SuGar prIce reductIoNS

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
4

65–86 

 hAve The SPeCIfIC INSTRUMeNTS/MeChANISMS BeeN SUCCeSSfUl IN ADDReSSINg AND
AllevIATINg The ADAPTATION PROBleMS RelATeD TO RefORM?

69–74 

reStructurING aId to producerS aNd tHeIr SocIaL aNd eNVIroNMeNtaL coMMItMeNtS

75 

reStructurING aId to GrowerS aNd MacHINery coNtractorS affected By tHe reNuNcIatIoNS

76–82 

dIVerSIfIcatIoN aId

83–86 

traNSItIoNaL aId to fuLL tIMe refINerS

87–91 

The COST Of The SUgAR RefORM

87–88 

It IS LIKeLy tHat aN aMouNt wILL Be aVaILaBLe IN tHe reStructurING fuNd to Be aSSIGNed to tHe eaGf

89–91 

otHer factorS affectING tHe oVeraLL coSt

92–109 

CONCl USIONS AND ReCOMMeNDATIONS

ANNeX I 

– 

 OveRvIew Of The ACTUAl ReveNUe AND eSTIMATeD eXPeNDITURe Of The 
ReSTRUCTURINg fUND

ANNeX II 
ANNeX III  – 

–  OveRvIew Of qUOTAS ReNOUNCeD BY The MeMBeR STATeS 

 BReAkDOwN Of MeMBeR STATeS BY TheIR COMBINeD PROfITABIlITY AND SUgAR qUOTA 
ReNOUNCeD

ANNeX Iv 
–  OveRvIew Of The AID AvAIlABle TO PRODUCeRS AND TheIR DIReCT ClOSURe COSTS
– 
ANNeX v 
ANNeX vI  – 

IMPleMeNTATION Of The DIveRSIfICATION AID
 eXAMPleS Of vARIeTY Of CRITeRIA BeTweeN MeMBeR STATeS IN The AllOCATION Of 
DIveRSIfICATION AID

ANNeX vII  –  glOSSARY Of keY TeRMS AND ABBRevIATIONS

RePlY  Of The C OMMISSION

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
 
 
 
 
 
I.
S u g a r   i s   m a n u f a c t u r e d   b y   e u  p r o d u c e r s 
m o s t l y   f r o m   s u g a r   b e e t   w h i c h   i s   c u l t i-
v a t e d   b y   g ro we r s.   pr i o r   t o   t h e   re fo r m   o f 
t h e   m a r k e t ,   t h e   e u  w a s   o n e   o f   t h e   l a r g-
e s t   p r o d u c e r s   o f   s u g a r   i n   t h e   w o r l d   a n d 
is the second largest consumer. I n 2006 a 
refor m of the sugar mar ket was approved 
i n   o rd e r   to   a l i gn   i t   w i t h   t h e   f u n d a m e nt a l 
p r i n c i p l e s   o f   t h e   n e w   c o m m o n   a g r i c u l-
t u r a l   p o l i c y   o f   i n c r e a s e d   m a r k e t   o r i e n-
t a t i o n   a n d   t o   c o m p l y   w i t h   t h e   un i o n’s 
inter nat ional  commitment s. 

II.
t h e   p r i n c i p a l   o b j e c t i v e s   p u r s u e d   b y   t h e 
refor m were :

—  t o   e n s u re   t h e   c o m p e t i t i ve n e s s   o f   t h e 

eu s ug ar indus tr y ;

—  to stabilise the markets and to guaran-
tee  t he availab il it y of su gar s upplie s;

—  to contribute to providing a fair stand-
ard  o f  l iving   fo r   th e  agr icu l tura l  co m-
m u n i t y   v i a   i n s t r u m e n t s   p u t   i n   p l a c e 
to   m i t i g ate   t h e   s i gn i f i c a nt   d i re c t   a n d 
i n d i r e c t   s o c i a l   a n d   e c o n o m i c   i m p a c t 
o n   t h e   a g r i c u l t u r a l   co m m u n i t y   i n   t h e 
regions  affe c ted.

III.
the main feat ures  of t he refor m we re :

—  r e d u c t i o n   i n   p r o d u c t i o n   q u o t a s   b y 
6  mil l io n ton nes, arou nd  30  %  of tot al 
quota produc tion, by September 2010, 
to   a   p ro d u c t i o n   l e ve l   w h i c h   t h e   co m-
mission estimated would preser ve the 
ma r k et b al ance ;

5

SuMM ary

—  g r a d u a l   r e d u c t i o n s   i n   t h e   p r i c e s   p e r 
t o n n e   o f   s u g a r   a n d   s u g a r   b e e t ,   t h e 
 latter reductions being par tly compen-
sated via dire c t  pay ment s to growe r s;

—  a   t e m p o r a r y   r e s t r u c t u r i n g   f u n d ,   f i-
n a n c e d   v i a   a   c o n t r i b u t i o n   p a i d   b y 
p r o d u c e r s   o n   t h e i r   q u o t a   t o t a l l i n g 
6 , 2  b i l l i o n   e u r o   a n d   f u n d i n g   p r i n c i-
p a l l y   r e s t r u c t u r i n g   a i d   ( 4 , 7   b i l l i o n 
e u r o ) ,   d i v e r s i f i c a t i o n   a i d   ( 0 , 7   b i l l i o n 
e uro)  a n d   t ra n s i ti on a l  a i d   to   f u ll   t i me 
re fin ers  (0 ,2  billion  euro) .

Iv.
th e   co u r t ’s   a u d i t   a s s e s s e d   t h e   e x t e n t   t o 
w h i c h   t h e   o b j e c t i ve s   o f   t h e   re fo r m   h a ve 
been  achieved to date.

v.
with regard to the competitiveness of the 
e u  s u g a r   i n d u s t r y,   t h e   c o u r t   c o n c l u d e s 
t h a t   o v e r a l l   t h e   r e f o r m   p r o c e s s   d i d   n o t 
fully ensure the future competitiveness  of 
the eu sugar industr y via a selective reduc -
tion   of   un profit able  produc tio n  cap acit y. 
I n   t h e   f i r s t   t w o   y e a r s   o f   t h e   r e f o r m ,  t h e 
expec ted  level  of  voluntar y   qu ot a  re nun-
ciations was not achieved. from the third 
year of the reform, key modifications were 
m a d e   a n d   t h e   o v e r a l l   6   m i l l i o n   t o n n e s 
t a r g e t   w a s   l a r g e l y   a c h i e v e d   a l t h o u g h   a 
s i g n i f i c a n t   p o r t i o n   o f   q u o t a s   w a s   a l s o 
abandoned by producers that were not in 
t h e   l e a s t   c o m p e t i t i ve   re g i o n s.  t h e   co u r t 
also notes that the reform simultaneously 
p r o v i d e d   i n c e n t i v e s   t o   r e d u c e   t h e   l e v e l 
o f   q u o t a s   b u t   a l s o   a l l o c a t e d   a d d i t i o n a l  
q u o t a s ,   o s t e n s i b l y   t o   t h e   m o s t   e f f i c i e n t 
p r o d u c e r s   b u t   t h a t   s o m e   o f   t h e s e   a d d-
i t i o n a l   q u o t a s   w e r e   s u b s e q u e n t l y   a b a n -
d o n e d.   ad d i t i o n a l l y,   t h e   m e a s u re s   i n t ro -
d u c e d   h a d   l i m i t e d   i m p a c t   o n   i n c r e a s i n g 
the competitiveness of individual growers 
a n d   t h e   c u r r e n t   q u o t a   s y s t e m   m a i n t a i n s 
past rigidities and constraints. according-
ly,   it  is  lik ely   that  the   prevailin g   ex ter n a l 
p re s s u re s   w i l l   c o n t i n u e   t o   we i g h   h e av i l y 
on t he  e u sugar  s ec tor.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

vI .
a s   t o   t h e   o b j e c t i v e   o f   s t a b i l i s i n g   t h e 
m a r k e t   a n d   g u a ra nte e i n g   t h e   ava i l a b i l i t y 
o f   s u g a r   s u p p l i e s ,   t h e   c o u r t   f o u n d   t h a t 
w h i l e   r e l a t i v e   m a r k e t   s t a b i l i t y   h a s   b e e n 
a s s u r e d   t h u s   f a r   a n d   p r i c e s   o n   t h e   e u 
s u g a r   m a r k e t   h a v e   b e e n   s t a b l e   t o   d a t e 
a ro u n d   t h e   re fe re n c e   p r i c e s,   i t   h a s   b e e n 
a c h i e ve d   t h ro u g h   t h e   u s e   o f   p ro d u c t i o n 
q u o t a s   w h i c h   c u r re nt l y   s e t   t h e   m a x i m u m 
a l l owe d   i nte r n a l   p ro d u c t i o n   at   a   l e ve l   o f 
produc tion mar kedly below inter nal mar-
ket requirements, at 85  % of eu consump -
t i o n .   as   a   re s u l t,   e u  s u p p l i e s   a re   i n c re a s-
i n g l y   d e p e n d e n t   o n   i m p o r t s   w h i l e   n e w 
u s e s   f o r   s u g a r   p l a c e   i n c r e a s e d   d e m a n d 
o n   s u p p l i e s .   t h e   c o u r t   a l s o   n o t e s   t h e 
increasing risk of displacement of produc-
t i o n   f a c i l i t i e s   d u e   t o   t h e   o p e n i n g   u p   o f 
i m p o r t s   f ro m   eBa  b e n e f i c i a r y   c o u n t r i e s. 
fu r t h e r m o r e ,   t h e   c o u r t   d r a w s   a t t e n t i o n 
t o   t h e   r i s k   t h a t   d o w n w a r d   m o v e m e n t s 
i n   s u g a r   p r i c e   a re   n o t   p a s s e d   o n   t o   c o n-
s u m e r s.   fo r   p r o c e s s e d   p r o d u c t s   m o s t   o f 
t h e   co s t   s av i n g s   a re   l i k e l y   to   b e   re t a i n e d 
by producers, while for retail sugar, pr ice 
t r a n s m i s s i o n   i s   a f f e c t e d   b y   t h e   c o n c e n-
trat ion  of  dis tr ib u tio n net wor ks.

6

SuMM ary

vII.
a s   t o   w h e t h e r   t h e   s p e c i f i c   i n s t r u m e n t s / 
m e c h a n i s m s   we re   s u c c e s s f u l   i n   a d d re s s -
i n g   a n d   a l l e v i at i n g   t h e   a d a p t at i o n   p ro b -
lems ar ising from refor m, the cour t notes 
that, overall, it is not yet possible to con-
c l u d e   o n   t h e   e x t e n t   t o   w h i c h   t h e   i n s t r u-
m e n t s   p u t   i n   p l a c e   h a v e   m i t i g a t e d   t h e 
s i gn i f i c a nt   d i re c t   a n d   i n d i re c t   s o c i a l   a n d 
economic impac t on the agricultural com-
munit y in the regions affec ted. as a result 
o f   t h e   r e f o r m ,   s o m e   8 0   f a c t o r i e s   w e r e 
c l o s e d.  th e   co m m i s s i o n   a n d   t h e   M e m b e r 
S t a t e s   h a v e   g i v e n   i n a d e q u a t e   a t t e n t i o n 
to   m o n i to r i n g   t h e   d i re c t   s o c i a l   i m p a c t   o f 
t h e   p r o d u c t i o n   f a c i l i t y   d i s m a n t l e m e n t . 
the cour t noted in cer tain M ember States 
delays in the implementation of the diver -
s i f i c a t i o n   m e a s u re s   i n te n d e d   to   d e ve l o p 
a l t e r n a t i ve s   t o   s u g a r   p ro d u c t i o n   a s   we l l 
a s   i n   t h e   co m p l i a n ce   w i t h   e nv i ro n m e nt a l 
o b l i g a t i o n s .   fu r t h e r m o r e ,   n o   e v i d e n c e 
w a s   a v a i l a b l e   t o   d e m o n s t r a t e   t h a t   t h e 
transitional aid amounting to 150  million 
e u r o   p a i d   t o   t r a d i t i o n a l   r e  f i n e r s   o f   c a n e 
sugar was based on objec tive parameters 
o f   t h e   e f f e c t s   o f   t h e   s u g a r   r e f o r m   o t h e r 
than a loss of ‘cer tain benefits’ previously 
en joyed by  t he af fec te d re fin er s.

vIII.
t h e   c o u r t   n o t e s   t h a t ,   w h i l e   i t   i s   l i k e l y 
t h a t   a n   a m o u n t   o f   a r o u n d   6 4 0   m i l l i o n 
e u r o   w i l l   b e   a v a i l a b l e   i n   t h e   r e s t r u c t u r -
i n g   f u n d   t o   b e   a s s i g n e d   t o   t h e   e aGf ,   o n 
the other hand, there are significant add-
itional related costs, not direc tly charged 
to the agr icultural sec tion of the budget, 
for compensating traditional acp countr y 
ex p o r te r s   fo r   t h e i r   l o s s   o f   i n co m e,   w h i c h 
l e a d   t o   t h e   o v e r a l l   c o s t   o f   t h e   r e f o r m 
b e i n g   1 , 2   b i l l i o n   e u r o   h i g h e r   t h a n   t h e 
a v e r a g e   b u d g e t a r y   s u p p o r t   b e f o r e   t h e 
refor m.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

7

SuMM ary

IX .
ta k i n g   t h e s e   f a c t o r s   i n t o   c o n s i d e r a t i o n , 
the c ou r t re comme nds th at:

—  fo r   a ny   f u r t h e r   a d j u s t m e n t   o f   i n t e r n-
a l   p r o d u c t i o n   d e e m e d   n e c e s s a r y,   i n-
s t r u m e n t s   a n d   m e a s u r e s   s h o u l d   b e 
d e s i gn e d   s o   a s   to   e n s u re   ove ra l l   co n-
s i s t e n c y   a n d   b e   b a s e d   o n   a   t h o ro u g h 
tec hnical  asse ss ment  of need s and  on 
ob jec t ive cr iter ia;

—  the commission proposes measures to 
re m ove   t h e   r i g i d i t i e s   a n d   c o n s t r a i n t s 
in  th e  cur rent   q uo ta  system  wh ic h  af-
fec t   a dvers ely  t he  com pet itiven es s   of 
growers and p rod ucer s;

—  any   fu tu re  d ecision s  w hich  impac t   e u 
s u g a r   p r o d u c t i o n   t a k e   i n t o   a c c o u n t 
th e l evel o f inte r nal  s ugar  p roduc t io n 
w h i c h   i s   c o n s i d e r e d   n e c e s s a r y   g i v e n 
th e treat y  ob jec t ive of  as su r ing avail-
abil it y o f su pp ly ;

—  p r i ce   fo r m a t i o n   b e   s u b j e c t   to   re g u l a r 
m o n i t o r i n g   b y   t h e   c o m m i s s i o n   a n d 
th at  th e co mmis sio n and  the  M ember 
St ate s   e n s u re   t h at   co m p e t i t i o n   l aw   i s 
c o r r e c t l y   e n fo r c e d   i n   t h e   s e c t o r   t h u s 
ensuring the treaty objective that sup -
p l i e s   r e a c h   c o n s u m e r s   a t   r e a s o n a b l e 
pr ice s;

—  t h e   c o m m i s s i o n   a n d   t h e   M e m b e r 
States take urgent measures to ensure 
t h e   d i v e r s i f i c a t i o n   m e a s u r e s   b e c o m e 
r a p i d l y   o p e r a t i o n a l   a n d   p r o d u c e   t h e 
inten ded imp ac t;

—  t h e   c o m m i s s i o n   a n d   t h e   M e m b e r 
States become more ac tively involved 
i n   e n s u r i n g   t h a t   t h e   e n v i r o n m e n t a l 
obligations entered into by the closed 
fac to r ies are fu l l y co mp l ied with .

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

INtroductIoN

8

1. 

2. 

B ACkgR O U N D   A N D   P Re- Re fO R M   S I T UAT I O N

 Sugar is manufac tured by eu producers either from sugar beet 1 
wh ich  is cu l tivated by growers, or  re f in ed  us ing  i mpo r te d raw 
s u g a r   m a d e   f r o m   s u g a r   c a n e .   S u g a r   b e e t   c u l t i v a t i o n   s h o u l d 
i d e a l l y   b e   l o c a t e d   o n   l a n d   i n   t h e   v i c i n i t y   o f   t h e   f a c t o r i e s   i n 
order to maintain transpor t costs at reasonable levels and be -
c a u s e   t h e   s u g a r   c o n t e n t   o f   t h e   b e e t   d e t e r i o r a t e s   s o o n   a f t e r 
har ves ting. M os t  su gar b eet growe r s mak e  u se  o f  t h e se r v ices 
of machiner y contrac tors who carr y out ac tivities such as seed -
ing and har vesting the beet. the sugar beet is then transpor ted 
to the producers’ fac tories for processing. the sugar producers 
f i n a l l y   s e l l   t h e   s u g a r   i n   b u l k   t o   fo o d   a n d   n o n - fo o d   i n d u s t r i a l 
users  or  in p ack ag ed fo r m to ret aile r s.

 t h e   s u g a r   c o m m o n   m a r k e t   o r g a n i s a t i o n   (cMo )   w a s   s e t   u p   i n 
1967 2 to ensu re a f air  inco me to commun it y  producer s an d to 
stab il ise the  mar k et.  eu p rod ucer s could sell sugar at g uaran-
teed  p r ices, i. e.  inter ventio n pr ice s  wh i ch i n t he  per i od 1 9 9 6 –
2006 were significantly higher than the world market price (see 
Gra ph  1).

1  the only factory in the eu which 
produced sugar from sugar cane 

(except for those in the outermost 

regions) was closed in 2006.

2  cMo was set up by regulation  
No 1009/67/eec of the council  

(oJ 308, 18.12.1967, p. 1).  

currently cMo is governed by 

council regulation (ec)  

No 1234/2007 of 22 october 2007 

establishing a common organisation 

of agricultural markets and on 

specific provisions for certain 

agricultural products (Single cMo 

regulation) (oJ L 299, 16.11.2007, 

p. 1).

gR A Ph   1

PRICeS fOR  whITe SUgAR fRO M  199 6  TO  2 0 0 6

e
n
n
o
t
/
o
r
u
e
–
u
c
e

700

600

500

400

300

200

100

96/97

97/98

98/99

99/00

00/01

01/02

02/03

03/04

04/05

05/06

Marketing year

EU intervention price

Average world sugar price (London Exchange)1

1 arithmetic mean of spot prices of white sugar, loaded fob designated european ports, in new bags.
S ource: the commission (dG aGrI) — ‘agriculture in the european union — Statistical and economic Information (2000-08)’.

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9

3. 

4. 

5. 

 production quotas distributed amongst the Member States kept 
the overall produc tion within cer tain limits. Impor t levies were 
a p p l i e d   o n   ex te r n a l   p ro d u c t i o n   a n d   s u g a r   s u r p l u s e s   we re   e x-
por ted. Sugar which had been produced within the quotas but 
was sur plus to mar ket requirements was expor ted with expor t 
r e f u n d s 3.   N o   e x p o r t   r e f u n d s   w e r e   g r a n t e d   f o r   t h e   e x p o r t   o f 
sugar w hich  had b een p ro du ced i n  exces s  of  th e  quotas.

 p r i o r   t o   t h e   r e f o r m ,   t h e   e u  w a s   t h e   t h i r d   l a r g e s t   s u g a r   p r o -
ducer in the wor ld with annual produc tion in excess of 20 mil-
lion tonnes and was the second largest consumer 4. the eu also 
h a d   a   l i m i te d   p ro d u c t i o n   o f   i s o g l u co s e   w h i c h   i s   d e r i ve d   f ro m 
pro cess in g starc h u su all y ex trac te d from mai ze  o r  f rom w he at 
or potatoes. Isoglucose is largely used in the food industr y and 
in many cases, for instance in sof t dr inks, is a potential substi-
tute for sugar. eu produc tion of isoglucose has been limited by 
th e  est ab lishment  o f  a  q uo ta  of   margi nal  m agn it ud e 5.  q uotas 
o f   l i m i t e d   i m p o r t a n c e   a l s o   e x i s t   fo r   t h e   p r o d u c t i o n   o f   i n u l i n 
s y r u p,   a   s we e t e n e r   o b t a i n e d   f r o m   a   f i b r e   e x t r a c t e d   f r o m   t h e 
chico r y ro ot. Ta bl e 1 p rovides ke y f ig ure s for  th e  s uga r  s e c tor 
pre an d p os t refor m.

 I n the years preceding the refor m, the eu came under increas-
i n g   p r e s s u r e   t o   a v o i d   e x p o r t i n g   s u r p l u s   q u a n t i t i e s   o f   s u g a r 
at   s u b s i d i s e d   rate s   o n   t h e   wo r l d   m a r k e t .  th i s   p re s s u re   f i n a l l y 
re s u l t e d   i n   a  w to  r u l i n g   i n   2 0 0 5   w h i c h   o b l i g e d   t h e   e u  t o   i n-
c l u d e   o u t - o f - q u o t a   s u g a r   e x p o r t s   a n d   r e - e x p o r t s   o f   t h e   ac p 
impor ts in its sugar expor t limit. thus, from 2006 onwards, the 
eu ca nnot  exp or t  more th an 1 ,3 7 mi lli on  ton ne s o f  subs idi s ed 
white sugar, instead of the previous annual average expor ts of 
6,5  million tonnes 6 — Box 1  contains some additional informa-
tion  on  the w to  ru l ing.

3  the cost of the export refund 
was partly covered by levies on 

producers. as indicated in Special 

report No 20/2000, paragraph 46: 

‘the annual cost to the eu budget 

of exports of surplus sugar is some 

1 500 million euro, of which 800 

million is recovered through the 

production levy’.

4 

In 2005 the eu produced 

20,3 million tonnes of sugar and 

consumed 15,6 million tonnes. the 

eu imported 2,3 million tonnes of 

raw sugar while exports amounted 

to 7,5 million tonnes, of which 

2,5 million tonnes were subsidised 

by the eu through export refunds.

5  council regulation (ec)  
No 318/2006 (oJ L 58, 28.2.2006, 

p. 1) set isoglucose quota at 

507 680 tonnes (eu-25); this was 

updated several times to take into 

account new allocations as well 

as renunciations and is currently 

690 441 tonnes (eu-27) (last update 

by regulation (ec) No 1234/2007). 

In the united States the production 

of isoglucose accounts for 

approximately half the production 

of natural sweetener.

6  annual average exports for 
marketing years 2003/04, 2004/05 

and 2005/06 — the commission: 

agriculture in the european 

union — Statistical and economic  

Information 2007.

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
10

TA Bl e   1

T h e   S UgA R   SeC TO R   P Re   A N D   P O S T   Re fO R M

Pre-reform EU-25 data

Post-reform EU-27 data1

Over 20 million tonnes of annual sugar production (bioetha-
nol use not included).

14 to 15,5 million tonnes of annual sugar production (with-
out bioethanol use).

285  000  sugar  beet  growers  cultivating  2,1  million  ha  of 
beet for sugar and making use of the services of machinery 
contractors; over 8 000 cane growers cultivating 43 000 ha 
of sugar cane, mainly in EU overseas territories.

189 sugar factories employing 50 000 workers.

164  000  sugar  beet  growers  cultivating  1,4  million  ha  of 
beet for sugar and making use of the services of machinery 
contractors; and less than 8 000 sugar cane growers.

114  sugar  factories  employing  30  000  workers  (including 
four factories located in the two new EU Member States).

16  isoglucose  and  four  inulin  syrup  producers,  producing 
820 000 tonnes.

10 isoglucose producers, producing 690 000 tonnes (and no 
inulin syrup producer).

7 full time refiners importing and processing annually 2 mil-
lion tonnes of raw sugar derived from sugar cane.

26 full-time refiners (of which 15 in new Members Bulgaria 
and Romania) importing and processing annually 2,7 mil-
lion tonnes of raw sugar derived from sugar cane.

Exports amounting to 7,5 million tonnes, of which 2,5 mil-
lion tonnes with export refunds.

Exports  not  exceeding  1,37  million  tonnes  out  of  quota 
sugar, not supported by export refunds.

EU consumption of more than 15 million tonnes (without 
bioethanol use).

EU consumption of more than 17 million tonnes (without 
bioethanol use).

1  where data for Bulgaria and romania have a significant impact, this has been indicated.

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7  Madagascar, Malawi, 
Mozambique, tanzania, uganda, 

Zambia.

6. 

 M o r e o v e r,   i n   2 0 0 1   t h e   e u  h a d   a l r e a d y   a d o p t e d   t h e   s o - c a l l e d 
‘e ve r yt hing  bu t ar ms’ (eBa ) initiative wh ich  suspen ded all im-
p o r t   t a r i f f s   f o r   p r o d u c t s   f r o m   4 9   d e v e l o p i n g   c o u n t r i e s .   t h i s 
i n i t i a t i ve   h a d   a   d i re c t   i m p a c t   o n   t h e   s u g a r   s e c t o r   a s   t h e   eBa  
i n i t i at i ve   b e n e f i c i a r i e s   i n c l u d e d   s i x 7  o f   t h e   s i gn ato r i e s   o f   t h e 
afr ic a,   car ib be an  and   pac ific  (acp )   S ugar   protocol.   e xpor ts   of 
3 , 5   m i l l i o n   t o n n e s   f ro m   t h e   eBa  a n d   ac p  co u n t r i e s   to   t h e   e u 
const itu te  o ne  o f  the  t hres ho lds  of   t he   safeg uard  me c h an is m 
d e s i g n e d   u n d e r   t h e   e pa  (e c o n o m i c   pa r t n e r s h i p   a g r e e m e n t ) 
r egulation. the suspension of duties on their sugar was intro -
duced in 2001 on limited quantities earmarked for the refining 
industr y. the quantities were subsequently gradually increased 
until free unrestric ted access was granted from 1 oc tober 2009 
onward s.

B O X   1

T h e  w TO   R UlI Ng  

Signatory Members of the 1994 Marrakesh protocol to the General agreement on tariffs and trade (Gatt) 
agreed, amongst other things, to reduce export subsidies by 36 % and subsidised quantities by 21 % 
over a six-year period. each signatory Member presented the details of its commitments in a separate 
Schedule of concessions, annexed to the Marrakesh protocol, to become Schedules to Gatt 1994.

In its schedule of concessions, the european community considered that its out of quota (c sugar) 
exports were not subsidised, as they did not benefit from export refunds; in addition, being a major 
importer and exporter at the same time, it decided to include in its reduction schedule only such export 
refunds as corresponded to its exports net of imports. on that basis, it calculated its reference subsi-
dised quantity as 1,612 million tonnes, to be reduced by 21 % to 1,273 million tonnes, a threshold which 
became 1,37 million tonnes after new Member States eu accession. Hence, depending on the level of 
c sugar production, total exports could fluctuate in the 4 to 7 million tonnes range. conformity with 
limits was ensured through management of export licences.

following a ‘request for consultations’ by Brazil, thailand and australia in 2002, the wto’s dispute Settle -
ment Body (dSB) re-examined the  ec’s commitments and export policy and in an april 28, 2005 final 
report, it found that the wording of the ec’s schedule of concessions did not imply that export of quanti-
ties corresponding to acp imports could be made in excess of the limit indicated and the exports of c 
sugar (out of quota) were to be regarded as subsidised, thus could not be made in excess of that limit 
either.

In practice, this meant a further decrease in european exports of a 5 million tonnes order of magnitude. 
the marketing year 2006/07 was the first to be fully subject to the export limits.

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8  Legal basis: council regulations 
(ec) No 318/2006, (ec) No 

319/2006 and (ec) No 320/2006 

(oJ L 58, 28.2.2006, p. 1, 32 and 42). 

regulation (ec) No 318/2006 has 

since been repealed and replaced 

by regulation (ec) No 1234/2007. 

Implementing rules for regulation 

No 320/2006 are set by commission 

regulation (ec) No 968/2006 (oJ L 

176, 30.6.2006, p. 32). 

7. 

8. 

9. 

Th e   S UgA R   Re fO R M   A N D   I T S   O Bj eC T Iv eS

 a re for m o f t he s ugar  m ar ket was th erefore  cons id ered  n eces-
sar y in order to align the cMo with the fundamental principles 
o f   t h e   n e w   c o m m o n   a g r i c u l t u r a l   p o l i c y   o f   i n c r e a s e d   m a r k e t 
o r i e nt at i o n   a n d   to   m a i nt a i n   m a r k e t   b a l a n ce   w h i l e   co m p l y i n g 
wi th  the  union’s inter natio nal  comm it ments,  n amel y  th e  w to 
r u l i n g   t h a t   a l l   s u b s i d i s e d   e u  e x p o r t s   s h o u l d   b e   k e p t   w i t h i n 
1 , 3   m i l l i o n   to n n e s   ( s e e   p a ra gra p h   5 )   a n d   t h e   eBa  i n i t i at i ve   i n 
f avo u r   o f   l e a s t   d e ve l o p e d   co u n t r i e s   gra n t i n g   t h e m   u n l i m i te d 
dut y fre e access to t he eu as  fro m 2 00 9  ( se e paragra ph  6 ). 

 fo l l ow i n g   a   co m m i s s i o n   p ro p o s a l,   a   re fo r m   o f   t h e   s u g a r   m a r-
k e t   wa s   a p p rove d   by   t h e   co u n c i l   a n d   c a m e   i nto   e f fe c t   i n   J u l y 
2 0 0 6 8.   I t   wa s   p re ce d e d   by   a n   ex te n s i ve   co n s u l t at i o n   w i t h   t h e 
p r i n c i p a l   s t a k e h o l d e r s   a n d   b y   a   s e r i e s   o f   i m p a c t   a s s e s s m e n t 
pap ers  which  fo r med t he b asi s of  t he  commiss ion  proposal in 
200 5.

 the refor m p urs ued a var iet y  of  o bjec t ives,  wh ic h  were par tly 
conflic ting and therefore difficult to fulfil simultaneously. the 
pr in cip al o b je c t ives  s et we re:

— 

to ensure future competitiveness of the eu sugar industr y 
by  a redu c t io n of u npro fitable prod uc ti on  c apac i t y ;

— 

to   s t a b i l i s e   t h e   m a r k e t s   a n d   to   g u a ra nte e   t h e   ava i l a b i l i t y 
o f su g ar su p plies ;

— 

t o   c o n t r i b u t e   t o   p r o v i d i n g   a   f a i r   s t a n d a r d   o f   l i v i n g   f o r 
t h e   a g r i c u l t u r a l   c o m m u n i t y   v i a   i n s t r u m e n t s   p u t   i n   p l a c e 
t o   m i t i g a t e   t h e   s i g n i f i c a n t   d i re c t   a n d   i n d i re c t   s o c i a l   a n d  
economic impac t on the agr icultural communit y in the re -
gio ns  affe c ted.

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
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Th e   M A I N   f eAT U ReS   Of  Th e   Re fO R M

10.  

 the  ma in feat ures  of t he refor m are :

(a)  maintenance of produc tion quotas but a  reduc tion in their 
v o l u m e   b y   6   m i l l i o n   t o n n e s   ( a r o u n d   3 0  %   o f   t o t a l   q u o t a 
p r o d u c t i o n ) 9  b y   S e p t e m b e r   2 0 1 0   w h i c h   t h e   c o m m i s s i o n 
e s t i m a t e d   w o u l d   p r e s e r v e   t h e   m a r k e t   b a l a n c e.   H o w e v e r, 
s o m e   f l e x i b i l i t y   w a s   p r o v i d e d   t h r o u g h   m a k i n g   a v a i l a b l e 
to producers additional quota, of some 1,5 million tonnes, 
mo st l y  fo r  p u rchase  by  th ose  th at  co ns i de re d  th ems e lves 
to  b e co mp et itive in  the n ew m ar ket  e nvi ron me nt ;

(b)   g r a d u a l   re d u c t i o n s   i n   t h e   p r i ce   p e r   to n n e   o f   w h i t e   s u g a r 
f r o m   t h e   i n t e r v e n t i o n   p r i c e 1 0  o f   6 3 1 , 9   e u r o   p r i o r   t o   t h e 
marketing year 2006/07 to a reference price 11 of 404,4 euro 
as  fro m t he mar keting  year  2 009 /1 0;

(c)  g r a d u a l   r e d u c t i o n s   i n   t h e   m i n i m u m   p r i c e  p e r   t o n n e   o f 
q u o t a   s u g a r   b e e t   p a i d   t o   g r o w e r s   f r o m   4 4 , 0 1   e u r o   p r i o r 
t o   2 0 0 6 / 0 7 1 2  t o   2 6 , 2 9   e u r o   a s   f r o m   t h e   m a r k e t i n g   y e a r 
2009 /10;

(d)  t h e   e x p o r t   r e f u n d s   m e c h a n i s m   f o r   q u o t a   s u g a r   e x p o r t s 
wa s   n o t   a b o l i s h e d,   h owe ve r   i t   wa s   fo re s e e n   t h at ,   a s   f ro m 
t h e   m a r k e t i n g   ye a r   2 0 0 7 / 0 8 ,   i t   wo u l d   n o   l o n g e r   b e   u s e d. 
Never  theless, because of market imbalance in that market -
i n g   y e a r,   t h e   c o m m i s s i o n   a g r e e d   t o   o n e   m o r e   c a m p a i g n 
o f   s u b s i d i s e d   e x p o r t s   fo r   2 0 0 7 / 0 8   a n d   i t   w a s   n o t   u n t i l   a s 
from 26 September 2008 that it decided to suspend expor t 
ref un ds for su gar 13;

(e)  par tial 14 compensation to sugar beet growers for the effec t 
of the reduc tions in the sugar beet pr ice via the introduc-
t i o n   o f   p a y m e n t   e n t i t l e m e n t s   i n t o   t h e   d e c o u p l e d   S i n g l e 
payment S cheme (SpS) or a separate sugar payment in the 
new Member States not applying SpS.  under cer tain condi-
tions growers could also be granted an additional payment 
retained as coupled aid for a five -year transitionar y period. 
I n contrast, compensation was not granted to cereals pro -
ducers supplying isoglucose producers, under the assump -
tion that the reform would not entail significant change in 
t he ce reals  pr ices ;

9  this figure includes the sugar 
substitutes isoglucose and inulin 

syrup.

10  In the previous sugar cMo 
producers could sell a standard 

quality of sugar to national 

intervention agencies at the 

intervention price thus providing a 

minimum wholesale price in the eu. 

11  In the current sugar cMo, there 
is no intervention price, but the 

commission has set a reference 

price around which the wholesale 

market price should fluctuate.

12  the weighted average of the a 
and B quota sugar beet minimum 

prices after deduction of levies for 

the marketing years 2003/04 and 

2004/05.

13  commission regulations (ec)  
No 900/2007 (oJ L 196, 28.7.2007,  

p. 26), (ec) No 947/2008, (ec)  

No 948/2008 and (ec) No 951/2008 

(oJ L 258, 26.9.2008, p. 60, 61 and 

66) for sugar in solid state, sugar 

syrups and sugar in the form of 

goods not covered by annex I of  

the treaty.

14  SpS compensated sugar beet 
growers for around two thirds of the 

revenue reduction caused by the 

price reductions, i.e. one third is not 

compensated.

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
(f )  a   t e m p o r a r y   re s t r u c t u r i n g   f u n d ,   f i n a n c e d   v i a   a   c o n t r i b u-
t ion  p aid by  pro du cers on t heir quot a tot allin g 6 ,2  bi llio n 
euro. the temporar y restruc tur ing fund was set up largely 
to  f und comp en sator y p ayments for  vol untar y  pro duc t ion 
q u o t a   r e n u n c i a t i o n s .  t h e   r e s t r u c t u r i n g   f u n d   i s   m a n a g e d 
b y   t h e   c o m m i s s i o n   u n d e r   e u   b u d g e t   p r o v i s i o n s 1 5  a n d   i t 
is fore seen  th at any  fu nds rem aini n g at  th e  clos ure  of  th e 
fund in September 2012 will be assigned to the eaGf 16. the 
fu nd  was inten ded to  finance :

(i) 

r e s t r u c t u r i n g   a i d   ( 4  7 5 0   m i l l i o n   e u r o )  t o   p r o d u c e r s 
w h o   a b a n d o n   q u o t a   p r o d u c t i o n   a n d   r e n o u n c e   t h e 
quotas concerned. 10  % 17 of the restruc tur ing aid was 
to be reser ved for sugar beet growers affec ted by the 
renunciations and for machiner y contrac tors who pro -
vid ed t hem w ith s pecialised s er v ice s  ( se e Gra p h  2) ; 

(ii)  diversification aid (675 million euro) to encourage the 
d e ve l o p m e n t   o f   a l t e r n a t i ve s   t o   s u g a r   b e e t   a n d   c a n e 
growin g and sug ar p roduc tion  i n  re gi ons  af fec te d by 
t he re st ruc t ur ing  of th e sug ar  in dus tr y. 

(iii)  transitional aid to full time refiners (150 million euro) 
s o   a s   t o   a l l o w   t h e m   t o   a d a p t   t o   t h e   re s t r u c t u r i n g   o f 
t he s ug ar indu st r y 18.

14

15  article 1 of regulation (ec)  
No 320/2006: ‘the restructuring fund 

shall form part of the Guarantee 

Section of the european agricultural 

Guidance and Guarantee fund. as 

from 1 January 2007 it shall form 

part of the european agricultural 

Guarantee fund (eaGf) …. 

the temporary restructuring 

amount referred to in article 11 

shall be revenue assigned to the 

restructuring fund in accordance 

with article 18(2) of regulation 

(ec, euratom) No 1605/2002. any 

amount that may be available 

in the restructuring fund after 

the financing of the expenditure 

referred to in paragraph 2 shall be 

assigned to the eaGf.’

16  article 1 of regulation (ec)  
No 320/2006: ‘any amount that may 

be available in the restructuring 

fund after the financing of the 

expenditure referred to in  

paragraph 2 shall be assigned to the 

eaGf.’ deadline extended to 2012 by 

commission regulation (eu)  

No 1204/2009.

17  article 3(6) of regulation (ec)  
No 320/2006; as amended by 

council regulation (ec)  

No 1261/2007 (oJ L 283, 27.10.2007, 

p. 8).

18  additionally, regulation (ec) No 320/2006 foresaw 14 million euro as transitional aid to certain Member States (austria 9 million euro, 
Sweden 5 million euro). according to article 9: ‘In the context of the national restructuring programme referred to in article 6(3): (a) an aid of 

not more than 9 million euro shall be granted in austria for investments in collection centres of sugar beet and other logistical infrastructure 

needed as a consequence of restructuring; (b) an aid of not more than 5 million euro shall be granted in Sweden for the direct or indirect 

benefit of sugar beet growers in Gotland and Öland giving up sugar production as part of the national restructuring process.’

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11.  

 the  b reak dow n of  t he in come and  ex pen di ture  of  t h e res tr uc -
tur ing  fun d is  show n  in A nn ex I.

gR A Ph   2

O v eR vIe w   Of   Th e   ReS T R U C T U R I Ng   fU N D

Revenue

Aid to be granted and its beneficiaries1 

6,2 billion euro

Levies payable by 
producers on quota
held in the first three
marketing years

4,7 billion euro

Restructuring aid

0,7 billion euro

Diversification aid

Producers
Growers
Machinery contractors

Agricultural community 
affected

0,2 billion euro

Transitional aid

Full time refiners

1  any remaining funds not used will be assigned to the eaGf (currently estimated at 0,64 billion euro).

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
16

O v eR vIe w   Of  Th e   M A N Ag eMeN T   S YS TeM S

12.  

 th e   p ro c e d u re s   t o   b e   fo l l owe d   by   p ro d u c e r s  a p p l y i n g   fo r   re -
stru c tu r ing  aid are detailed in B ox   2. 

B O X   2

T h e   A P PlI C AT I O N   P R O CeS S   fO R   ReS T R U C T U R I Ng   A I D

In order to participate in the restructuring process, a producer had to renounce all or part of its quota 
and submit an application for restructuring aid to the Member State. the application had to include a 
restructuring plan with the following elements:

—  a social plan detailing the actions planned, in particular with respect to retraining, redeployment 

and early retirement of the workforce concerned;

—  an environmental plan detailing the actions planned so as to respect environmental obligations;

—  a business plan detailing the modalities, timetable and costs for the closure of the factory or factories 

and the full or partial dismantling of production facilities; and

—  a financial plan detailing all the costs in relation to the restructuring plan.

the Member State authorities had to review the application to ensure it satisfied the eu and national require -
ments. after approval, the producer could start carrying out the activities envisaged in the restructuring plan 
and had to provide an annual progress report. the producer received the restructuring aid in two instalments 
upon receipt of a security deposit of 120 % of the aid receivable. the security is released in line with the com-
pletion of the activities in the restructuring plan and the related checks done by the national authorities.

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13.  

 M e m b e r   S t a t e s  a r e   r e s p o n s i b l e   f o r   e s t a b l i s h i n g   n a t i o n a l   r e -
s t r u c t u r i n g   p ro gra m m e s   a n d,   a s   f a r   a s   t h e   re s t r u c t u r i n g   f u n d 
is co nce r ned, fo r :

(a)  c h e c k i n g   t h e   e l i gi b i l i t y   o f   p ro d u ce r s’  a p p l i c at i o n s   fo r   re -

st ru c tu r ing  aid;

(b)   i m p o s i n g   s o c i a l   a n d   e nv i ro n m e nt a l   re q u i re m e nt s   o n   p ro -
ducers, provided that this does not restric t the restruc tur -
ing  p ro ce ss;

(c)  deciding upon the aid to be awarded to beneficiaries where 

t his is  envis aged  by t he r eg ulations;

(d)  paying restruc tur ing and diversification aid to beneficiar-

ies ; an d

(e)  monitoring, verifying and repor ting on the implementation 

o f res t ru c t ur in g and divers ific at io n  aid.

14.  

 the commission is responsible for monitoring the implementa-
tion  o f  t he  re fo r m   p ro p o sing   cor re c t ive   ac ti ons   wh e n  n ee de d 
a n d   f o r   a d m i n i s t e r i n g   t h e   r e s t r u c t u r i n g   f u n d .   t h e   c o m m i s-
sion shall receive from M ember States the lists of applications 
fo r   a i d   ( a n d   c o p i e s   t h e r e o f ) ,   t h e   n a t i o n a l   r e s t r u c t u r i n g   p r o -
gramm es  and  rep o r ts   on  t he  im ple mentati on  of   re s tr uc t ur in g 
aid ac tiv it ies. 

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
audIt  Scope  aNd  approacH

18

15.  

 the   co ur t ’s  aud it   ass ess ed  th e  ex tent   to  wh ic h   t he   obj e c ti ves 
o f   t h e   re fo r m   o f   t h e   s u g a r   m a r k e t   h ave   b e e n   a c h i e ve d   by   a d-
dre ssing  t he  fo l low ing sp ec ific  que st io ns :

19  the producers of these Member 
States contributed over 70 % of the 

sugar quota renunciations made for 

each year of the restructuring fund.

16.  

17.  

(a)  H as  the   su ga r  mar ket   refor m  e nsu red   t he   f uture   co mpe ti-

t ivene ss o f th e eu s ugar indus tr y ?

(b)   H a s   t h e   s u g a r   m a r k e t   r e f o r m   s t a b i l i s e d   t h e   m a r k e t s   a n d 

g uarantee d the  avail ab il it y  of  s ug ar  s upplie s?

(c)  H ave  t he  sp ec ific   i ns tr u ments /mec han i sms  bee n  success -
fu l  in addre ssing  and al l eviating  t he  adapt at io n proble ms 
rel ated to  the refo r m? 

 add itio nal ly,  the audit  exam ine d th e compli an ce  wi th  t h e e n-
vironmental obligations linked to fac tor y dismantling and the 
like ly imp ac t  fo r con su mers  of  su gar  pr ice  re duc t io n.  fur th er-
more, t he aud it examined the  cos t of  t he  refor m .

 audit evidence was collec ted and examined by means of inter -
views and analysis of systems, documents and data at the com-
m i s s i o n   a n d   i n   a   s a m p l e   o f   e i g h t   M e m b e r   S t a t e s :   t h e   c z e c h 
r e p u b l i c,   fra n ce,   G e r m a ny,   G re e ce,   I re l a n d,   I t a l y,   po l a n d   a n d 
S p a i n 1 9.  th e   f i e l d wo r k   to o k   p l a c e   b e t we e n   e n d   2 0 0 8   a n d   m i d 
2 0 0 9 ,   a n d   c o v e r e d   t h e   o p e r a t i o n s   o f   t h e   r e s t r u c t u r i n g   f u n d 
d u r i n g   t h e   f i r s t   t h re e   m a r k e t i n g   ye a r s   o f   t h e   re fo r m   ( 2 0 0 6 / 0 7 
t o   2 0 0 8 / 0 9 ) .   M e e t i n g s   w e re   h e l d   w i t h   r e p r e s e n t a t i v e s   o f   t h e 
european committee of Sugar Manufac turers, the International 
co n fe d e r a t i o n   o f   eu ro p e a n   B e e t   G rowe r s   a n d   t h e   co m m i t te e 
of I nd us t r ial use rs o f Su g ar to obtain  t heir vie ws on th e s ug ar 
refo r m .

18.  

 In the Member States visited, the audit included a review of the 
paying agenc y ’s systems for implementing the refor m and the 
e x a m i n a t i o n ,   i n c l u d i n g   o n - t h e - s p o t   i n s p e c t i o n s,   o f   a   s a m p l e 
of  p ayme nt s  o f  res tru c tu r ing  aid.  I n   ad di ti on,   th e  re pres e nt a-
tive s  o f   stak ehol der s  in  t he  sug ar   s ec tor   (prod ucer s,  grower s, 
mach iner y  co nt rac tors  and  sugar   f ac tor y   wor k e r s)   we re  i nte r-
viewe d.

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
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P r e v i o u s   a u d i t  r e P o r t

19.  

 t h e   c o u r t   h a d   p r e v i o u s l y   r e p o r t e d   o n   t h e   m a n a g e m e n t   o f 
th e  s ug ar  cMo  in  a  sp ecial   repor t  in  2 0 01 20  th at   reviewe d  the 
a c h i e ve m e n t   o f   t h e   o ve r a l l   o b j e c t i ve s   o f   t h e   c a p.  t h e   re p o r t 
hig hl ig hted th e high  p r ices  imp ose d o n t he  e u sugar  use r, ex -
ce s s i ve   r i gi d i t i e s   i n   t h e   p ro d u c t i o n   q u o t a   s ys te m   w h i c h   we re 
c o n c e n t r a t e d   i n   t h e   h a n d s   o f   a   l i m i t e d   n u m b e r   o f   p r o d u c e r s 
and recommended tak ing steps to increase the industr y ’s com-
pet itive ness.

20  eca Special report No 20/2000 
concerning the management of the 

common organisation of the market 

for sugar (oJ c 50, 15.2.2001).

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
oBSer VatIoNS

20

hA S  Th e   S UgA R   M A Rk e T   Re fO R M   eN S U ReD 
Th e   fU T U Re   CO M Pe T I T Iv eNeS S   Of  Th e   eU 
S UgA R   I N D U S T R Y ?

 the reform intended to ‘launch a profound restructuring process 
l e a d i n g   to   a   s i gn i f i c a nt   re d u c t i o n   o f   u n p ro f i t a b l e   p ro d u c t i o n 
capacit y in the communit y ’ 21 providing an economic incentive 
for  p ro ducer s  with  the  l owes t  pro duc t iv i t y   to   volu nt ar ily   give 
up  t heir  quo ta  p ro duc t ion ,  t ak ing   into  a ccount   t he   re spe c t  of 
socia l  an d  environmental   comm it me nts   li n ked   to  aban don ing 
prod uc t io n 22. 

21  recital 1 of regulation (ec)  
No 320/2006.

22  recital 5 of regulation (ec)  
No 320/2006.

 the   co mmis sio n  a nt ic ip ated   that   th e  econ om ic   i n ce nt ives   of-
fere d wo ul d le ad t he un der tak in g s  wit h  th e  lowe st  produc tiv-
it y, i.e. w ith fa c to r ies that would not be compe ti ti ve af ter  t h e 
p r i c e   r e d u c t i o n s   e nv i s a g e d   b y   t h e   r e fo r m ,   t o   r e n o u n c e   t h e i r 
quota by accepting the compensation by the restructuring fund 
wi th ou t   the  need  fo r  t he  inst rume nt s  to  targ et  e ith er   spe c i fi c 
fac to r ies  or re gio ns. 

 t h e re fo re,   t h e   r a t i o n a l e   fo r   t h e   re fo r m   w a s   t h a t   t h e   re n u n c i-
at i o n   o f   6   m i l l i o n   to n n e s   f ro m   l owe r   p ro d u c t i v i t y   p ro d u c t i o n 
facilities would increase the average produc tivit y and thus en-
s u re   t h e   f u t u re   co m p e t i t i ve n e s s   o f   t h e   e u  i n d u s t r y.   H owe ve r, 
some flexibility was provided through mak ing available to pro -
ducers additional quota, of some 1,5 million tonnes, mostly for 
purchase by those producers that considered themselves to be 
comp et itive in t he new  mar ket e nv i ron ment. 

 the competitiveness of the eu sugar industr y is dependent, on 
t h e   o n e   h a n d,   o n   t h e   e f f i c i e n c y   o f   t h e   p r o d u c e r s   t o   p r o d u c e 
sugar and, on the other hand, on the abilit y of beet growers to 
deliver sugar beet to the producers at competitive prices. Not-
wi th stan ding  the g eneral  aim of  th e  refor m th at unde r tak in g s 
wi th  th e l owes t p roduc t ivit y give  up th ei r  produc ti on  quot as, 
th e  audit   fo und  that   no   co mpar i son   of  t h e  produc t iv i t y   of  in-
dividual producers or fac tor ies was available either within the 
co m m i s s i o n   o r   i n   M e m b e r   S t a t e s   M a n a g i n g   au t h o r i t i e s.   fu r -
th er mo re,   t he  co mmis sio n  did   n ot  require  t he  M e mber   State s 
a n d / o r   t h e   i n d u s t r y   to   p rov i d e   t h e   d at a   n e e d e d   to   a s s e s s   t h e 
i m p l e m e nt at i o n   o f   t h e   re fo r m   i n   te r m s   o f   t h e   p ro d u c t i v i t y   o f 
individ ual  pro ducers  or  fac to r ies.

20.  

21.  

22.  

23.  

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23  update of impact assessment of 
22 June 2005, Sec(2005) 808.

24.  

25.  

26.  

27.  

 I n this reg ard, t he imp ac t ass essm ent me re ly  re fe r re d to s t ud-
i e s 2 3  w h i c h   h ave   ra n k e d   t h e   s u g a r- p ro d u c i n g   re gi o n s   a cco rd-
i n g   t o   t h e   c o m b i n e d   p r o f i t a b i l i t y   o f   g r o w e r s   a n d   p r o d u c e r s , 
c ate g o r i s i n g   t h e   re gi o n s   a s :   l ow,   m e d i u m   a n d   h i g h   co m b i n e d 
p r o f i t a b i l i t y.   Ta b l e   2   p r o v i d e s   d e t a i l s   o n   t h e   r a n k i n g   a s   w e l l 
a s   o n   t h e   l e v e l   o f   i n i t i a l   q u o t a s   o f   w h i t e   s u g a r.   t h e   r a n k i n g 
w a s   b a s e d   o n   2 0 0 1   d a t a   fo r   t h e   e u   s u g a r   i n d u s t r y.   H o w e v e r, 
t h e   d a t a   h a d   n o t   b e e n   u p d a t e d   w h e n   t h e   c o m m i s s i o n   m a d e 
i t s   p ro p o s a l   i n   2 0 0 5 ,   n o t w i t h s t a n d i n g   t h at   ce r t a i n   s i gn i f i c a nt 
changes had taken place, such as increases in sugar beet yields 
in Spain and the united K ingdom and producer consolidation/
rati on al isat ion  in I rel and. 

 Bas ed o n t he p ro fitab il it y ran k in g  contai n ed  in  t he  im pac t  as-
sessment, given the unavailability of more precise commission 
data  on  co mp et it ivenes s of in divi dual pro ducer s  or  sug ar  f ac -
to r i e s,   t h e   ex te nt   o f   w h i te   s u g a r   q u o t a s   re n u n c i at i o n   co m i n g 
f r o m   p r o d u c e r s   i n   t h e   l o w   a n d   m e d i u m   p r o f i t a b i l i t y   r e g i o n s 
is  us ed  as  an  in dicator  of   the  ac hi eve me nt   o f   t he   targ e ti n g  of 
th e refo r m . However,  as  thes e are  ave rag e f ig ure s th ey  do not 
s h ow   t h e   e x i s te n ce   o f   i n d i v i d u a l   h i g h   p ro f i t a b i l i t y   p ro d u ce r s 
and /o r growers  in l ow  p rof itab ilit y  are as  or   vi ce  ver s a.

I N  Th e   fI R S T  T w O  Y eA R S   Of  Th e   Re fO R M , 
Th e   eX PeC TeD   l e v e l   Of  v Ol U N TA R Y   qU OTA 
ReN U N C I AT I O N S   wA S   N OT   AChIe v eD

 I n   t h e   f i r s t   t wo   ye a r s   o f   t h e   re fo r m ,   p ro d u ce r s   vo l u nt a r i l y   re -
n o u n c e d   o n l y   2 , 2   m i l l i o n   t o n n e s   c o m p a r e d   t o   t h e   t a r g e t e d 
a m o u n t   o f   6   m i l l i o n   t o n n e s ,   d u e   t o   t h e   s l o w   u p t a k e   i n   t h e 
second year. this was a clear indication that the incentives of -
fered were not considered by the industr y as being sufficiently 
att ra c tive  to  en cou rag e ab ando n me nt  of  quota.

 an  es sent ial   e le ment   whic h  affec te d  t h e  sug ar   prod uce r s’  de -
c i s i o n   w h e t h e r   o r   n o t   t o   a cce p t   q u o t a   a b a n d o n m e n t   w a s   t h e 
u n ce r t a i n t y   s u r ro u n d i n g   t h e   f i n a n c i a l   co m p e n s a t i o n   o f fe re d. 
I n effec t M ember States could decide how much restruc tur ing 
a i d   w a s   g r a n t e d   t o   p r o d u c e r s,   s u b j e c t   t o   a t   l e a s t   1 0  %   b e i n g 
reser ved for growers and machiner y contrac tors. producers did 
n o t   t h e re fo re   k n o w   a t   t h e   t i m e   o f   a p p l y i n g   fo r   re s t r u c t u r i n g 
aid,  how muc h co mp ens ation th e y  would  re ce ive.

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TA Bl e   2

BReAkDO wN Of MeMBeR   STATeS  BY Th eI R   COM BI NeD  PROfI TA BIlI T Y 
ON SUgAR PROD UC TION

Member State

Level of combined profitability1

Initial quota2 
(tonnes of white sugar) 

Ireland

Greece

Italy

Portugal (mainland)

Czech Republic

Denmark

Spain

Latvia

Lithuania

Hungary

Slovenia

Slovakia

Finland

Belgium

Germany

France (metropolitan)

Netherlands

Austria

Poland

Sweden

United Kingdom

Other Member States3

TOTAL

Low

2 143 923

Medium

2 923 655

High

12 895 381

Not included

604 114

18 567 073

1 

2 

3 

 Breakdown of Member States according to combined profitability which would affect their likely reduction in sugar 

production. (table 3 in the commission ‘update of impact assessment’ [Sec(2003) 1022]).

 the ‘Initial quota’ equals the initial quota allocated to Member States as per annex III of regulation (ec) No 318/2006 for 

marketing year 2006/07 together with additional quotas purchased in 2006/07 and 2007/08.

 ‘other Member States’ includes romania, Bulgaria, french overseas departments and the autonomous region of the 

azores. 

S ource: the commission (unit c.5 of dG aGrI).

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24  Greece, Hungary, Italy and Spain.

28.  

29.  

 a n   a d d i t i o n a l   f a c to r   w h i c h   m ay   h ave   i n f l u e n ce d   growe r s’  d e -
c i s i o n   t o   c o n t i n u e   p ro d u c i n g   s u g a r   b e e t   w a s   t h e   l e ve l   o f   a i d 
wh ich  co ntinued to b e available.  th e legislation  forese es  th at 
in M ember States that renounced at least 50 % of quota an ad-
dit io nal   payme nt  retained  as  co uple d  ai d  for   a  f ive -ye ar   t ran-
sitio nar y  p er io d  woul d  b e  gra nte d  to   grower s   re ma i nin g.  th is 
coupled aid has been granted in the four M ember States, clas-
sified in the low or medium combined profitabilit y categor ies, 
w h i c h   re n o u n c e d   t h a t   l e ve l   o f   q u o t a s 2 4  a n d   i t   c o n s t i t u t e d   a n 
incent ive for th os e rem aining growe r s to  conti nue to  pro duce 
sug ar b eet  fo r the fo l l ow ing  f ive year s. 

 B e yo n d   t h e   re a s o n i n g   o f   s i n g l e   o p e r a t o r s,   t h e   d i f fe re n c e   b e -
t we e n   t a rg e te d   a n d   a c t u a l   re n u n c i at i o n s   s h o u l d   a l s o   b e   a n a -
lysed in view of the overall size of the renunciations targeted. 
I t   w a s   u n l i k e l y   t o   b e   a   r e a l i s t i c   e x p e c t a t i o n   t h a t   a   s u b s t a n-
t i a l   q u o t a   re n u n c i a t i o n   o f   ro u g h l y   3 0  %   o f   t h e   to t a l   co u l d   b e 
ach ieved  o nl y  vi a vol u nt ar y c h oi ces  of  t he  produce r s  wit h  th e 
l o w e s t   p r o d u c t i v i t y.   I n   e f f e c t ,   t h e   c o m b i n e d   t o t a l   q u o t a   f o r 
th e  p rod uce rs  in  M emb er  St ates   c las s if ie d  by  th e  commiss ion 
as ‘ low ’  and ‘me dium’  p rod uc t ivit y   was   5, 1   mi llio n  to nne s,   i. e. 
l e s s   t h e n   t h e   t a rg e t e d   re d u c t i o n .   fu r t h e r m o re,   i f   a l l   o f   t h e s e 
producers had renounced their quotas, sugar production would 
have  ceas ed entirel y in  13 M ember   State s.

30.  

 the audit found that in one MS the only producer, which before 
th e  su g ar  refo r m  had  under t ake n   a  cons oli dati on /rat io nali sa-
tion of its processing facilities and defined itself as one of eur-
ope’s m ost  e fficient p ro du cers,  c l ose d down it s larg e,  m ode r n 
and potentially efficient sugar fac tor y justifying their decision 
o n   t h e   r i s k   o f   t h e   l o w e r   p r i c e s   r e d u c i n g   t h e   s u p p l y   o f   s u g a r 
beet  to  an un eco no mic level.

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25  council regulation (ec)  
No 1260/2007 of 9 october 

2007 amending regulation (ec) 

No 318/2006 on the common 

organisation of the markets in  

the sugar sector (oJ L 283, 

27.10.2007, p. 1).

31.  

32.  

fR O M  Th e  ThI R D  Y eA R   Of  Th e   Re fO R M ,  k eY 
M O D IfI C AT I O N S   w eRe   M A De  …

 a s   i n d i c a t e d   a b o v e ,   t h e   v o l u n t a r y   r e n u n c i a t i o n s   i n   t h e   f i r s t 
t wo   m a r k e t i n g   ye a r s   2 0 0 6 / 0 7   a n d   2 0 0 7 / 0 8   we re   l e s s   t h a n   e x -
pec ted. 

 I n order to achieve the overall 6 million tonnes target, in 2007 
the following key modifications were made to the restructuring 
fund 25:

(a )  t he  share   o f  re struc t ur in g  aid  for   s ug a r   producer s   was   i n-
cre ase d  and  fixed  at   90  %  of  t he   res truc tur ing   aid  and,  to 
ensure that affec ted growers were also compensated, they 
were granted a o ne - off  pay me nt  of 2 37 , 50  euro per  to nn e 
fore g one;

(b)   c o m p a n i e s   r e n o u n c i n g   a t   l e a s t   1 3 , 5  %   o f   t h e i r   2 0 0 8 / 0 9 
q u o t a   w e r e   e xe m p t   f r o m   p a y i n g   t h e   2 0 0 7 / 0 8   t e m p o r a r y 
re s t r u c t u r i n g   a m o u nt   o f   1 7 3 , 8 0   e u ro   p e r   to n n e   o n   1 3 , 5  % 
o f t heir q uot a ; 

(c)  a n   o b l i g a t o r y   u n c o m p e n s a t e d   q u o t a   c u t   i n   2 0 1 0   w a s   a n-
n o u n c e d   i f   v o l u n t a r y   r e n u n c i a t i o n s   w e r e   i n s u f f i c i e n t   t o 
m e e t   t h e   t a rg e t.   pro d u ce r s   w h i c h   h a d   n o t   re n o u n ce d   a ny 
of their quotas would be most affec ted by this latter meas-
u re.   co nse que nt ly,  suc h  prod ucer s  also   h ad  to  envi s age   a 
vo l unta r y ren unciation of  produc t io n.

…  A N D  Th e  6  M Il lI O N  TO N NeS  TA R g e T  wA S 
l A R g e lY   AChIe v eD,  I N Cl U D I Ng  0,5  M Il lI O N 
TO N NeS   Of   I S Og l U CO Se   A N D   I N UlI N   S Y R U P  …

33.  

 t h e s e   a m e n d m e n t s   a i m e d   a t   a c h i e v i n g   t h e   d e s i r e d   e u  s u g a r 
m a r k e t   b a l a n c e   t h r o u g h   a   6   m i l l i o n   t o n n e s   r e d u c t i o n   o f   t h e 
p ro d u c t i o n   o f   s u g a r,   i s o g l u co s e   a n d   i n u l i n   s y r u p.   as   a   co n s e -
quence of the changes introduced, in 2008 and 2009 producers 
g a ve   u p   a ro u n d   3 , 6   m i l l i o n   t o n n e s   q u o t a s.   B y   2 0 0 9 ,   s o m e   8 0 
fac tories were closed and total renunciations reached 5,77 mil-
l i o n   to n n e s,   o f   w h i c h   5 , 2 3   m i l l i o n   to n n e s   re l ate s   to   t h e   s u g a r 
q u o t a .   I s o g l u c o s e   p r o d u c e r s   r e n o u n c e d   0 , 2 2   m i l l i o n   t o n n e s 
while inulin syrup producers renounced all the quotas available 
corresponding to 0,32 million tonne produc tion (details shown 
i n   A n n ex   I I ) .  th u s,   t h e   n e e d   fo r   a   s i gn i f i c a nt   f i n a l   p ro d u c t i o n 
cut  was avo ided. 

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34.  

35.  

36.  

37.  

…  Al ThO Ug h   qU OTA S   w eRe   AlS O   A B A N D O NeD 
BY   P R O D U CeR S  ThAT   w eRe   N OT  Th e   l eA S T 
CO M Pe T I T Iv e  

 the commission ser vices confir med that af ter the second year 
of the restruc turing period, it had become evident that the re -
quired quota reduc tion could not be achieved only by the ces-
s at i o n   o f   s u g a r   p ro d u c t i o n   by   t h e   l e a s t   co m p e t i t i ve   f a c to r i e s 
i n   re gi o n s   l e a s t   s u i te d   to   b e e t   c u l t i vat i o n .  th e re fo re   a   s t ro n g 
incent ive  was  c reated  for   al l  prod uce r s  to   re n oun ce  at  lea st   a 
cer t ain p ercenta ge o f t heir q uot a in  orde r  to re ac h  th e  n e ces-
s a r y   re d u c t i o n   a n d   to   e n a b l e   t h e   s e c to r   to   f i n d   a   n e w   m a r k e t 
balance.

 t h e   a u d i t   f o u n d   c a s e s   o f   u n d e r t a k i n g s   w h i c h ,   c o n s i d e r i n g 
themselves amongst the most productive, purchased additional 
sugar  quotas and subsequently renounced those quotas, mainly 
t o   a vo i d   t h e   r i s k   o f   a n   u n p a i d   q u o t a   c u t .   I n   fr a n c e,   G e r m a ny 
and poland, the producers’ representatives inter viewed during 
t h e   a u d i t   s t a t e d   t h a t   t h e   m a i n   r e a s o n   f o r   h a v i n g   r e n o u n c e d 
par t of their quota was to reduce the risk of a final uncompens-
ated  cut.

 fur thermore, the renunciations per marketing year and Member 
S t a t e   i n d i c a te   t h a t   q u o t a   p ro d u c t i o n   a b a n d o n m e n t   o c c u r re d 
a c ro s s   a l l   p ro d u c t i v i t y   c ate g o r i e s   w h e re a s   t h e   i n i t i a l   a i m   wa s 
to create an incent ive fo r the leas t compe ti ti ve  s ug ar  prod uc -
ers  to  reno u nce t heir q uo tas.

 o ve r a l l,   a l m o s t   6   m i l l i o n   t o n n e s   o f   q u o t a   we re   re n o u n c e d   o f 
whic h 5,2 millio n  to nnes o f w h ite  s ug ar.  wh ile  th e propor tion 
o f   a v a i l a b l e   s u g a r   p r o d u c t i o n   q u o t a   r e n o u n c e d   w a s   s i g n i f i-
c a n t l y   h i g h e r   i n   t h e   re gi o n s   co n s i d e re d   to   h ave   l ow / m e d i u m 
p ro d u c t i v i t y,   2 , 4   m i l l i o n   t o n n e s,   i . e.   s o m e   4 7  %   re p re s e n t i n g 
19  % of their initial quota, were abandoned by producers with 
fac to r ies   loc ated  in  regions   con sid ered   by  th e   commiss ion  to 
be m os t co mpe titive (see A n nex  II I) .

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38.  

 t h i s   s i t u a t i o n   c a l l s   i n t o   q u e s t i o n   t h e   e f f e c t i v e n e s s   o f   t h e 
m e a s u r e s   i n t r o d u c e d   t o   e n s u r e   t h e   f u t u r e   c o m p e t i t i v e n e s s 
o f   t h e   s u g a r   i n d u s t r y   f ro m   t h e   p e r s p e c t i ve   o f   t h e   p ro d u c e r s.  
I n   p a r t i c u l a r,   t h e   m e a s u re s   i n t ro d u ce d   f ro m   t h i rd   ye a r   o f   t h e 
r e fo r m   w e r e   n o t   s u f f i c i e n t l y   t a r g e t e d   t o   a c h i e v e   t h e   d e s i r e d 
obj ec t ive.

26  regulation (ec) No 320/2006.

27  article 8 and 9 of regulation (ec) 
No 318/2006.

39.  

40.  

Th e   Re fO R M   P R O vI DeD   I N CeN T Iv eS  TO   ReD U Ce
Th e   l e v e l   Of   qU OTA S   A N D   AT  Th e   S A Me  T I Me  
Al l O C ATeD   A D D I T I O N Al   qU OTA S 

 the sugar reform introduced a wide range of mechanisms which 
sometimes conflic t with each other. one of these is the estab -
lishm ent o f th e desired l evel  of  quo ta  pro duc t io n.

 o n   t h e   o n e   h a n d   t h e   r e f o r m   e s t a b l i s h e d   a   r e s t r u c t u r i n g   a i d 
to   p rov i d e   i n ce nt i ve s   fo r   s u g a r   u n d e r t a k i n g s   to   gi ve   u p   t h e i r 
 q u o t a   p ro d u c t i o n   i n   o rd e r   to   m a i nt a i n   m a r k e t   s t a b i l i t y 2 6  a n d, 
on the other, in order to ensure a smooth changeover given the 
w to  r u l i n g   ( p a r a g r a p h   5 )   t h e   re fo r m   s i m u l t a n e o u s l y   o f fe re d 
t h e   s a m e   u n d e r t a k i n g s   a d d i t i o n a l   q u o t a   p ro d u c t i o n   to t a l l i n g 
up to 1 ,5 mill io n tonnes 27,  divided as  follows.

—  additional sugar quota: sugar under tak ings could request 
t h e   a l l o c a t i o n   o f   a d d i t i o n a l   s u g a r   q u o t a   u p   t o   a   g l o b a l 
a m o u nt   o f   1 , 1   m i l l i o n   to n n e s   p ay i n g   a   o n e - o f f   a m o u nt   o f 
7 3 0   e u r o   p e r   t o n n e   o f   a d d i t i o n a l   q u o t a   a l l o c a t e d .   S o m e 
1 m il lio n ton nes  were ac tually purc h as ed.

—  additional isoglucose quota: 300 000 tonnes of additional 
i s o g l u co s e   q u o t a   we re   a l l o c ate d   to   u n d e r t a k i n g s   p ro p o r -
tionately to the isoglucose quotas already held. these add-
it io n al  qu ot as were al l o cated free   of   c harg e.

—  S u p p l e m e n t a r y   i s o g l u c o s e   q u o t a :  u n d e r t a k i n g s   i n   I t a l y, 
Lithuania and Sweden could request the allocation of sup -
p l e m e n t a r y   i s o g l u c o s e   q u o t a   u p   t o   a   g l o b a l   a m o u n t   o f 
1 0 3  0 0 0   to n n e s   p ay i n g   a   o n e - o f f   a m o u nt   o f   7 3 0   e u ro   p e r 
t o n n e   o f   s u p p l e m e n t a r y   q u o t a   a l l o c a t e d .   to   t h e   d a t e   o f 
the audit no producer used the possibilit y to purchase the 
su p p le mentar y qu ota.

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28  Isoglucose producers were 
eligible to the aid for partial 

dismantling (unless they dismantled 

the whole starch plants), hence 

the amount is given by the 

compensation aid multiplied per 

tonne renounced in the marketing 

year, i.e. 547,50 euro × 32 664 

renounced in 2007/08 + 468,75 euro 

× 60 568 tonnes renounced in 

2008/09 + 390,00 euro × 129 083 

renounced in 2009/10.

41.  

42.  

43.  

 while the mak ing available of additional quotas could be justi-
fied  o n  gro unds   of   co mp etitiven es s  i n sof ar   as   i t  wa s  ai me d  at 
the more efficient producers, it inevitably increased the overall 
q u o t a   re d u c t i o n   re q u i re m e n t s   t o   a c h i e ve   t h e   d e s i re d   m a r k e t 
balan ce. 

 In effect, around 1 million tonnes of additional sugar quota have 
been allocated to under tak ings which paid a one - off amount of 
7 3 0   e u ro   p e r   to n n e   o f   q u o t a   a l l o c ate d.  th e   a u d i t   fo u n d   c a s e s 
of under tak ings renouncing, for the equivalent compensation, 
t h e s e   a d d i t i o n a l   s u g a r   q u o t a s   r e c e n t l y   p u r c h a s e d ,   m a i n l y   i n 
th e  se cond  p hase  o f  the  refor m  to  avoi d   t he   r isk   o f   an   u npaid 
q u o t a   c u t   a s   a n n o u n c e d   i n   2 0 0 7   ( s e e   p a r a g r a p h   3 2 ( c ) ) .   t h e 
a m o u n t   p a i d   by   t h e   u n d e r t a k i n g s   to   p u rc h a s e   t h e   a d d i t i o n a l 
quotas roughly corresponded to the amount they subsequently 
received to renounce them, with, as a consequence, that the fi-
nancial impac t can be considered as broadly neutral. However, 
there is no rationale for increasing quotas on the one hand and 
sub seq uent ly   t arg eting  t heir  red uc t ion   o n  th e  oth er.  fur th er-
more, this polic y also had negative financial consequences for 
th e eu bu dg et  as exp l ained here un d er. 

 I n   t h i s   re g a rd,   w h i l e   3 0 0   0 0 0   to n n e s   o f   a d d i t i o n a l   i s o g l u co s e 
q u o t a   w e r e   a l l o c a t e d   t o   u n d e r t a k i n g s   f r e e   o f   c h a r g e ,   t h e 
s a m e   u n d e r t a k i n g s   we re   s u b s e q u e n t l y   p a i d   i n c e n t i ve s   t o   re -
nounce their quota. B y 2009, isoglucose producers renounced 
2 2 2  3 1 6  t o n n e s   o f   p ro d u c t i o n   a n d   re c e i ve d   re s t r u c t u r i n g   a i d 
a s   c o m p e n s a t i o n   a t   a n   e s t i m a t e d   c o s t   o f   a r o u n d   9 7   m i l l i o n 
euro 28. consequently, it can be concluded that the reform paid 
under tak ings to renounce quotas which were granted to them 
for free. the l ogic of includin g th os e addit ional qu ot as free  of 
c h a r g e   i n   t h e   s u b s e q u e n t   q u o t a   re d u c t i o n s   i s   f a r   f r o m   c l e a r. 
fu r t h e r m o re,   t h e   a d d i t i o n a l   co s t s   i n c u r re d   i n   t h e s e   d e c i s i o n s 
can no t b e ju st ified.

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44.  

45.  

Th e   MeA S U ReS   I N T R O D U CeD   hA D   A   lI M I TeD 
I M PAC T   O N  Th e   I N D IvI D UAl   CO M Pe T I T Iv eNeS S   Of  
gR O w eR S

 t h e   c o m p e t i t i v e n e s s   o f   s u g a r   b e e t   g r o w e r s ,   i . e .   t h e i r   a b i l i t y 
to   d e l i ve r   s u g a r   b e e t   to   t h e   p ro d u c e r s   a t   c o m p e t i t i ve   p r i c e s, 
depends on whether they can reduce their sugar beet growing 
c o s t s   p e r   t o n n e   t o   k e e p   p a c e   w i t h   t h e   r e d u c e d   s u g a r   p r i c e s 
s e t   b y   t h e   r e f o r m .   H o w e v e r,   w h i l e   t h e   r e f o r m s   t h r o u g h   t h e 
Sin gl e  payme nt  S cheme p ar t ly compens ated  th e  be e t grower s 
for the loss of revenue ar ising from the significant drop in the 
m i n i m u m   p r i c e s   t o   b e   p a i d   fo r   t h e   s u g a r   b e e t ,   t h e   m e a s u r e s 
i nt ro d u ce d   h a d   a   l i m i te d   i m p a c t   o n   t h e i r   i n d i v i d u a l   co m p e t i -
tivene ss. 

 I n d e e d,   fo r   s e l e c te d   M e m b e r   S t ate s   t h e   co m m i s s i o n’s   i m p a c t 
assessment examined the break- even price, i.e. the level below 
which on average the grower decides to switch from sugar beet 
to   o t h e r   co m p e t i n g   c ro p s,   a n d   h i g h l i g hte d   t h at   b e e t   growe r s 
in the major it y of those producing M ember States had a break 
even significantly higher (see Table 3) than the minimum price 
o f   a r o u n d   2 6   e u r o   p e r   t o n n e   s e t   f o r   s u g a r   b e e t   f r o m   o c t o -
ber 2 009.

TA Bl e   3

BReAkD O wN   Of   Se l eC TeD   M S   ACCO R D I Ng   TO  Th e   eS T I M ATeD  
Av eR A g e   B ReAk - e v eN   P R I Ce   fO R   S UgA R   Be e T   AT   fA R M   l e v e l

Significantly higher than 25 euro/tonne

Close to 25 euro/tonne

Member States

Break-even price  
euro/tonne

Member States

Break-even price  
euro/tonne

Finland

Italy

United Kingdom

Austria

Spain

Sweden

Greece

44

42

40

40

36

34

34

S ource: Based on commission Sec(2005) 808, p. 11.

Belgium/the Netherlands

Denmark

France

Germany

30

25

26

30

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46.  

 additionally, as sugar beet cultivation should be located in the 
v i c i n i t y   o f   t h e   f a c t o r i e s   ( s e e   p a r a g r a p h   1 ) ,   i t   i s   d i f f i c u l t   fo r   a 
growe r  to  del ive r  to  a  d if ferent  f ac tor y   if   t he   loca l  on e  cl ose s 
down . H en ce  in a n umb er of  c ase s eve n th os e growe r s wil lin g 
or able to increase efficienc y by, for instance, increasing yields 
per hectare were deprived of the possibility to do so if the local 
producer decided to close the plant. the audit identified cases 
of sugar fac tories closed by the producers due to the relatively 
low capacity and obsolete technology even though the growers 
ach ieved  t he hig hes t  yiel ds  o f suga r  be e t pe r  h ec tare.

47.  

 I n the circumstances, the refor m proposals did not provide in-
centives to increase the competitiveness of growers intending 
to remain in the s ec to r.

29  Special report No 20/2000, 
paragraph 72(d).

30  Special report No 20/2000, 
paragraph 83.

31  Special report No 20/2000, 
paragraph 23(d).

32  coM(2004) 0499 final from 
the commission to the council 

and the european parliament — 

accomplishing a sustainable 

agricultural model for europe 

through the reformed cap — sugar 

sector reform.

48.  

49.  

Th e   C U R ReN T   qU OTA   S YS TeM   M A I N TA I N S   PA S T 
R IgI D I T IeS   A N D   CO N S T R A I N T S

 the cour t ’s previous special repor t on the sugar cMo (see para-
graph 18) drew attention to the r igidities linked to the quotas 
s y s t e m   a n d   c o n c l u d e d   t h a t  ‘n a t i o n a l   q u o t a s   h a v e   p r e v e n t e d 
produc tion moving to the most efficient areas’ 29, ‘nor mal com-
petitive forces do not operate and in several cases sugar com -
panies have been fined for abuses of competition’ 30 and stated 
that the existence of barriers to entr y for new sugar beet grow-
ers  war ranted  con sideration by  t he  c ommiss ion 31.

 I n   t h i s   r e g a r d   a   2 0 0 4   c o m m i s s i o n   c o m m u n i c a t i o n 3 2  i n i t i a l l y 
p r o p o s e d   a   s u g a r   s e c t o r   r e f o r m   b a s e d   o n   a   u n i f o r m   c u t   i n 
quo tas   and  inten ded  to  fo ster  quot as  t rans fera bi l it y   be t we en 
p ro d u ce r s   i n   t h e   e u.   H owe ve r,   t h i s   p ro p o s a l   wa s   n o t   a d o p te d 
because a majority of Member States opposed the idea of intra-
com mu nit y qu o ta transfers.

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50.  

51.  

 I n ter ms  o f s ug ar indu st r y p roce ss in g  ef f ici en c y, t he  mai nte n-
ance of rigidities and constraints incorporated into the current 
q u o t a   s y s t e m ,   i . e .   s u c h   a s   t h e   e s t a b l i s h m e n t   o f   q u a n t i t a t i v e 
q u o t a s   p e r   i n d i v i d u a l   g r o w e r   i n   c e r t a i n   M e m b e r   S t a t e s ,   t h e 
a b s e n ce   o f   t r a d a b i l i t y   o f   q u o t a s   a n d   t h e   l i m i te d   p o s s i b i l i t i e s 
for their transferabilit y, results in undue rigidit y of produc tion 
c a p a c i t y   a n d   r e d u c e s   s c o p e   fo r   b o t h   g r o w e r s   a n d   p r o d u c e r s 
to increase efficienc y. the audit confir med that in some of the 
a u d i t e d   M e m b e r   S t a t e s,   q u o t a   re s t r i c t i o n s   h a m p e r   t h e   e n t r y 
of  p o ssib l e  new   growers  and  d eli ve r y  r ig hts   o f  exi st ing   grow-
e r s   m a y   n o t   b e   c h a n g e d   w i t h o u t   t h e i r   c o n s e n t .   t h i s   e n t a i l s 
sign ific ant  constraints  in the s uga r  pro duc t ion  mar k e t. 

33  the availability of supplies 
and stability of markets is a cap 

objective which is laid down in 

article 39 of the treaty of the 

functioning of the union (so-called 

Lisbon treaty), previously article 33 

of the ec treaty, and therefore 

applies to the sugar cMo as well.

 whil e ce r t ain produ cers  attem pted  to m it igate  t hi s  con st rai nt 
t h r o u g h   p r i v a t e   i n i t i a t i v e s ,   o v e r a l l   t h e s e   c o n s t r a i n t s   a r e   a 
lim i t ing f ac to r in th e ap pl ic ation of t he  pr i n c iple  of eco nom ic 
sustainabilit y which the impac t assessment considered should 
b e   i m p r o v e d   b y  ‘m o v i n g   a w a y   f r o m   t h e   p r i n c i p l e   o f   t h e   a p -
p o r t i o n m e n t   o f   t h e   p ro d u c t i o n   c a p a c i t y,   c u r re n t l y   b u i l t   i n t o 
t h e   s u g a r   q u o t a   r e g i m e ,   t o w a r d s   a   m o r e   c o m p e t i t i v e ,   m o r e 
mar ke t- o r ient ated sec tor ’.

hA S  Th e   S UgA R   M A Rk e T   Re fO R M   S TA B IlI SeD 
Th e   M A Rk e T S   A N D   gUA R A N Te eD  Th e  
AvA Il A B IlI T Y   Of   S UgA R   S U P PlIeS ?

52.  

 one   o f  the   o bj ec tives   of  t he  s uga r   refor m   con si s ted   in  st abil-
i s i n g   t h e   m a r k e t s   a n d   g u a r a n t e e i n g   t h e   a v a i l a b i l i t y   o f   s u g a r 
s u p p l i e s 3 3.  th e   co u r t   a u d i t   ex a m i n e d   t h e   a c h i e ve m e nt   o f   t h i s 
obj ec t ive.

P R I CeS   O N  Th e   eU   S UgA R   M A Rk e T   hA v e   Be eN 
S TA Bl e  TO   D ATe   A R O U N D  Th e   Re f eReN Ce   P R I CeS

53.  

 the  au dit  asses se d the ac hievement  of  t h e mar k e t bala n ce for 
sugar with reference to the need for consumption to be in line 
w i t h   p r o d u c t i o n   a n d   i m p o r t s   m i n u s   e x p o r t s   a n d   f o r   m a r k e t 
pr ice s to  co r resp o nd  to referen ce  pr i ces.

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54.  

 th e   a u d i t   co n c l u d e d   t h a t   d u r i n g   t h e   f i r s t   t h re e   ye a r s,   t h e   e u 
sugar mar ket was stable; as shown in Gra ph 3, pr ice data indi-
c a te   t h a t   t h e   m a r k e t s   h ave   b e e n   s t a b l e   a ro u n d   t h e   re fe re n ce 
pr ice since t he star t  of th e refor m.

gUA R A N Te eI Ng  Th e   AvA Il A B IlI T Y   Of   S U P Pl Y: 
Th e   l e v e l   Of   P R O D U C T I O N   qU OTA S   I S   Be l O w   eU 
CO N S U M P T I O N   A N D   eU   I S   N O w   A   Ne T   I M P O R TeR

55.  

 the sugar market was subjected to the twin effects of increased 
i m p o r t s   a n d   r e d u c e d   p o s s i b i l i t i e s   f o r   s u b s i d i s e d   e x p o r t s .   I n 
effec t,  fro m  1   o c to b er  2009  o nwards,   t here  are  no   lo ng er   a ny 
quantitative restric tions imposed on impor ts from least devel -
oped co untr ies ( Ldc ’s ) w hic h b en efit from the  ever y th ing  B ut 
ar ms (eBa ) init iat ive.

gR A Ph   3

PR I CeS   fO R   w hI Te   S UgA R   D U R I Ng   Th e   Re fO R M

e
n
n
o
t
/
o
r
u
e
–
u
c
e

650 

550 

450 

350 

250 

150 

6
0
-
l
u
J

6
0
-
p
e
S

6
0
-
v
o
N

7
0
-
n
a
J

7
0
-
r
a
M

7
0
-
y
a
M

7
0
-
l
u
J

7
0
-
p
e
S

7
0
-
v
o
N

8
0
-
n
a
J

8
0
-
r
a
M

8
0
-
y
a
M

8
0
-
l
u
J

8
0
-
p
e
S

8
0
-
v
o
N

9
0
-
n
a
J

9
0
-
r
a
M

9
0
-
y
a
M

9
0
-
l
u
J

9
0
-
p
e
S

9
0
-
v
o
N

0
1
-
n
a
J

0
1
-
r
a
M

0
1
-
y
a
M

EU white sugar selling price1

Reference price2

World market price3

Notes: 

1 

2 
3 

average price for white sugar within the community, communicated by eu sugar producers and refiners (ex-
work prices for homogeneous granulated crystal, standard quality, in bulk or big bags).
reference price as stated in council regulation (ec) No 318/2006.
quoted future prices on London Liffe market (white sugar of standard quality, free on board ship and stowed).

S ource: ( 1-2)  the commission (unit c.5 of dG aGrI).

( 3)  L’économie sucrière 2010 and monthly statistics — oNIGc france agrimer.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32

56.  

57.  

 t h e r e fo r e,   t h e   l e v e l   o f   i n t e r n a l   p r o d u c t i o n   r e q u i r e d   t o   m e e t 
t h e   e u  n e e d s   h a s   b e c o m e   t h e   k e y   m a r k e t   s t a b i l i s i n g   f a c t o r. 
the   re fo r m  t argeted  and   main ly  a ch ie ve d  th e  re qui re d  re duc -
tion in internal produc tion via quota renunciation, but this has 
changed the eu market supply from a level of sugar produc tion 
significantly above the inter nal consumption to a level of pro -
duc tion markedly below consumption, the eu thus becoming a 
net impor ter, eu produc tion cover ing 85  % of its consumption 
(see G ra p h 4) .

 future increase in impor ts would have an adverse impact on the 
balance of the eu sugar mar ket and the  commission may have 
to   m a k e   u s e   o f   i t s   w i t h d rawa l   m e c h a n i s m   to   a g a i n   re d u ce   e u 
producers’ quotas, thus fur ther reducing the eu’s sugar produc-
tion capacity and likely resulting in additional fac tor y closures. 
I t   i s   i m p o r t a nt   to   n o te   t h at   t h e   l e a d - i n   t i m e   to   b r i n g   p ro d u c -
t i o n   c a p a c i t y   o n   s t re a m   i s   re l a t i ve l y   l o n g   a n d   t h a t ,   gi ve n   t h e 
high capital costs, once capacit y is reduced it is unlikely to be 
recovered  in t he s ho r t ter m.

gR A Ph   4

eU   S UgA R   P R O D U C T I O N   A N D   CO N S U M P T I O N   fR O M   20 01 /02   
TO  2008/09

s
e
n
n
o
t
n
o

i
l
l
i

m

r
a
g
u
s
e
t
i
h
w

f
o

25

20

15

10

5

0

2001/02         
(EU-15)

2002/03       
(EU-15)

2003/04       
(EU-15/25)

2004/05       
(EU-25)

2005/06       
(EU-25)

2006/07       
(EU-25/27)

2007/08       
(EU-27)

2008/09       
(EU-27)

Production

Consumption

Note: year 2006/07 (eu-25/27) has 15 months.

S ource: the commission (unit c.5 of dG aGrI).

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
 
 
33

58.  

 thus, the eu has become more dependent on impor ts for what 
is a strategic produc t for the agri-food and chemical industries, 
wh il e  ne w  u ses  for  su gar,  s uch   as   bio eth ano l,   pla ce  in cre ase d 
d e m a n d   o n   s u p p l i e s.   I n   a d d i t i o n ,   t h e re   i s   i n c re a s e d   vo l at i l i t y 
of the world market where supplies are dominated by a limited 
num b er o f exp o r ting cou nt r ies. 

59.  

 the available data suggests that the future availabilit y of sup -
p l i e s   a n d   e u   m a r k e t   s t a b i l i t y   w i l l   d e p e n d   u p o n   f a c t o r s   s u c h 
as:

(a)  whether producers will be able to pay growers a sufficient-
l y  hig h  pr ice   fo r  them  to  be   willi ng   to  conti n ue   to  supply 
su g ar b eet ;

(b)  to  w hat  ex te nt  third  co untr ies  wi th  whi ch  th e  e u has con-
cluded bilateral trade agreements will find it attrac tive to 
expor t their sugar to the eu. this depends upon many fac-
tors, such as world sugar prices, transpor t costs, the cost of 
cultivating other crops, etc, and entails greater uncer tainty 
in t he  sup pl y of  s ugar to  th e e u  ma r ke t.

60.  

61.  

De l O C AlI S AT I O N   R I Sk

 the increased rights of access from third countries also provide 
a n   i n ce n t i ve   fo r   p ro d u ce r s   to   i nve s t   i n   t h o s e   t h i rd   co u n t r i e s. 
this increases therefore the r isk of displacement of cer tain eu 
pro du c tio n fac il ities  w hich would i n c re ase  e u de pen den c y on 
impor ts and would possibly have negative effec ts on the social 
fabr ic  of  t he eu areas  af fec ted.

 t h e   c o u r t   n o t e s   t h a t   a t   l e a s t   t h r e e   e u  p r o d u c e r   g r o u p s   t h a t 
received aid by renouncing quotas and closing down fac tor ies 
in the eu have invested in sugar produc tion facilities or signed 
commercial agreements in third countr ies to which the eu has 
granted trade concessions. S ome producers have therefore re -
a c t e d   t o   q u o t a   r e d u c t i o n s   w i t h i n   t h e   e u  b y   i m p o r t i n g   s u g a r 
from  ou t side th e eu .

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
62.  

63.  

34

BeNe fI T I Ng   fR O M   S UgA R   P R I Ce   ReD U C T I O N S

 the reform is designed to reduce prices of sugar by up to 36 % 34 
and indeed the price of sugar in the eu has been following the 
re d u c t i o n s   i n   i t s   re fe re n c e   p r i c e.   G ra p h   3  s h o we d   t h e   d o w n-
wa rd  tre nd in su gar p r ices  s ince  th e  s ta r t  o f  t h e  re for m .

34  36 % being the difference 
between the pre-reform 

intervention price and the post-

reform reference price.

 o n e   o f   t h e   o b j e c t i v e s   o f   t h e   c o m m o n   a g r i c u l t u r a l   p o l i c y 3 5  i s 
to e nsu re that su p p lies  reach con s um er s  at  re aso nabl e pr i ce s. 
c o n s u m e r   p r i c e   f o r m a t i o n   i s   a   c o m p l e x   p r o c e s s   w i t h   p r i c e s 
being   infl ue nced   no t  on l y  by  th e   co st   of   th e   raw  m ate r i al  but 
also by other parameters such as energy and labour costs. con-
s e q u e n t l y   i t   i s   ve r y   d i f f i c u l t   to   d e te r m i n e   to   w h a t   e x te n t   t h e 
r e d u c t i o n   i n   t h e   r e f e r e n c e   p r i c e   o f   b u l k   s u g a r   s o l d   b y   p r o -
d u c e r s   w i l l   i m p a c t   o n   t h e   p r i c e   p a i d   b y   t h e   f i n a l   c o n s u m e r. 
th e   co m m i s s i o n   s t re s s e d   t h e   n e e d  ‘ to   e n s u re   t h a t   d ow nw a rd 
movements in commodit y prices are transmitted to consumers 
w i t h o u t   d e l ay ’ 3 6.   N o n e t h e l e s s,   s t u d i e s 3 7  c a r r i e d   o u t   o n   b e h a l f 
of the commission indicate that reduc tions in the price of bulk 
sugar are unlikely to be passed on to the final consumer. In the 
case of processed produc ts, which account for over t wo thirds 
of the sugar consumption, most of the cost savings due to price 
reduc tions will be added to the profit margin of industrial pro -
d u ce r s 3 8;   i n   t h e   c a s e   o f   t h e   re t a i l   s u g a r   p r i ce,   w h i c h   a cco u nt s 
for the remaining one third of consumption, price transmission 
is affec te d by t he concent rat ion  of  di s tr i but ion  n e t wor k s 39.

64.  

 fu r t h e r m o r e ,   f o l l o w i n g   t h e   r e f o r m ,   p r o d u c t i o n   h a s   b e c o m e 
even more concentrated such that 75  % of the eu internal pro -
duc tion is now produced by only six industr ial groups of com-
panies.

39  ‘cost differences in the sugar distribution and retailing among Member States are caused by 
differences in market structure (the existence of monopolistic or monopsonistic-type markets, 

35  article 39 of the treaty of the 
functioning of the union (previously 

article 33 of the ec treaty).

36  communication from the 
commission to the european 

parliament, the council, the 

european economic and Social 

committee and the committee 

of the regions on ‘food prices in 

europe’ — coM(2008) 821 final.

37  the ‘evaluation of the common 
organisations of the Markets in the 

Sugar Sector’ carried out by the 

Netherlands economic Institute and 

a study on ‘price transmission in 

the agri-food sector’ carried out by 

agraceaS consulting Ltd.

38  ‘It should be remarked that sugar- 
containing products generally show 

a low price elasticity of demand. 

Industrial producers of these 

products will not be very concerned 

about a price increase of sugar, 

because they can pass on the higher 

costs to the final consumer without 

a large drop in sales volume. they 

will generally favour a decrease 

of the sugar price, because this 

enables them to add most of the 

cost savings to their profit margin. 

there will be no strong incentive to 

the (ab)use of market power), and the (macro)economic and policy environment. differences 

pass on these savings to the final 

are reflected in different transport costs, labour costs, investment costs, value added and profit 

consumer.’ Source: ‘evaluation of 

taxes, etc, which together make up the cost side of the distribution and retail sector. these 

the common organisation of the 

cost differences will be reflected in differences in retail market prices.’ Source: ‘evaluation of the 

Markets in the Sugar Sector’ by the 

common organisation of the Markets in the Sugar Sector’ by the Netherlands economic Institute, 

Netherlands economic Institute, 

p. 77. 

p. 76.

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35

40  recital 2 of regulation (ec)  
No 318/2006.

41  Similarly, the July 2003 ‘Study to 
assess the impact of future options 

for the future reform of the sugar 

cMo’ carried out by eurocare 

estimated the secondary jobs 

connected to sugar factories as 

being twice the number of direct 

jobs.

42  article 3(5) of regulation (ec)  
No 320/2006.

43  It should be noted that 
article 3(6) of regulation  

(ec) No 320/2006 provided for ‘at 

least 10 %’ until it was changed 

into ‘10’ by regulation (ec) 

No 1261/2007.

65.  

66.  

67.  

hA v e  Th e   S PeC IfI C   I N S T R U MeN T S / MeChA N I S M S 
Be eN   S U CCeS SfUl   I N   A D D ReS S I Ng   A N D 
Al l e vI AT I Ng  Th e   A D A P TAT I O N   P R O Bl eM S 
Re l ATeD  TO   Re fO R M ? 

 the  l egislat ive framewor k s e ts, amon g st  oth e r s,  th e ob je c t ive 
o f   e n s u r i n g   a   f a i r   s t a n d a rd   o f   l i v i n g   fo r   t h e   a gr i c u l t u ra l   co m-
munit y 40. 

 I t   w a s   a n t i c i p a t e d   t h a t   t h e   a b a n d o n m e n t   o f   s u g a r   b e e t   p r o -
d u c t i o n   a n d   t h e   c l o s i n g   d o w n   o f   f a c t o r i e s   r e l a t e d   t o   t h e   r e -
structuring measures would have an impor tant direct and indir-
e c t   s o c i a l   i m p a c t   o n   t h e   a gr i c u l t u r a l   c o m m u n i t y   a n d   re g i o n s 
c o n c e r n e d .   t h e   i m p a c t   a s s e s s m e n t   p r e d i c t e d   a   s i g n i f i c a n t 
n u m b e r   o f   j o b   l o s s e s   i n   t h e   re g i o n s   c o n c e r n e d,   e s t i m a t e d   a t 
at least 4  500 agricultural, 24 500 industrial and 49 000 indirec t 
job s 41.

 co n s e q u e n t l y,   t h e   l e g i s l a t i o n   p r o v i d e d   fo r   t h e   r e s t r u c t u r i n g 
f u n d   t o   f i n a n c e   s p e c i f i c   i n s t r u m e n t s / m e c h a n i s m s   —   i . e .   r e -
s t r u c t u r i n g   a i d,   d i ve r s i f i c a t i o n   a i d,   a n d   t r a n s i t i o n a l   a i d   —   to 
face and alleviate the adaptation problems, thereby contribut -
ing   to   a  fair  st and ard  o f  l iving  for   th e  agr ic ult ural  comm un i t y 
invo l ved  in t he  s ugar sec to r. 

68.  

 the audit examined these instruments/mechanisms as detailed 
in th e fol lowing  sec tio ns.

ReS T R U C T U R I Ng   A I D  TO   P R O D U CeR S   A N D  Th eI R 
S O C I Al   A N D   eNvI R O N MeN TAl   CO M M I T MeN T S

69.  

 pro d u c e r s   w h o   a b a n d o n e d   q u o t a   p ro d u c t i o n   a n d   re n o u n c e d 
t h e   q u o t a s   co n ce r n e d   we re   e nt i t l e d   to   re s t r u c t u r i n g   a i d,   c a l-
c u l ate d   a s   a   f i xe d   a m o u nt   p e r   to n n e   o f   re n o u n ce d   q u o t a 4 2.   I n 
the case of sugar- quota renunciations, producers were granted 
roughly 90 % of the restruc turing aid 43, the rest being reser ved 
fo r   s u g a r   b e e t   growe r s   a n d   m a c h i n e r y   co n t r a c to r s.   S i m i l a r l y, 
inulin syrup producers were granted 90  % of the aid. Isoglucose 
producers renouncing their quota were entitled to 100  % of the 
res tru c t ur ing  aid comp ensation .

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
 
70.  

71.  

72.  

36

 Sugar produc tion within the eu is rather concentrated, so that 
the distribution of the restruc turing aid is limited. I n the eight 
Member States visited 45 factories were closed down, receiving 
restruc tur ing aid of around 2,1 billion euro as a compensation 
f o r   t h e   r e n u n c i a t i o n   o f   r o u g h l y   3 , 7   m i l l i o n   t o n n e s   o f   s u g a r 
quo ta  (A nnex IV) .

44  article 4(3)(f) of regulation (ec) 
No 320/2006.

 pro duce rs  t hat   g ave  u p   thei r  q uot a  pro duc t io n  we re   re qui re d 
to respec t their social and environmental commitments. In this 
regard, the governing regulations foresaw that the application 
f o r   r e s t r u c t u r i n g   a i d   s h o u l d   i n c l u d e  ‘a   s o c i a l   p l a n   d e t a i l i n g  
t h e   a c t i o n s   p l a n n e d   i n   p a r t i c u l a r   w i t h   re s p e c t   to   re - t r a i n i n g, 
r e d e p l o y m e n t   a n d   e a r l y   r e t i r e m e n t   o f   t h e   w o r k f o r c e   c o n-
cer ned ’ 44.

W i d e  v a r i a t i o n s  i n  t h e  r e s t r u c t u r i n g  a i d  n e t  o f  d i r e c t  d i s-
m a n t l i n g  c o s t

 restruc turing aid was not intended and did not reimburse only 
the direc t cost of dismantling fac tories. according to the com-
mission, the aid was also intended to meet the economic, social 
a n d   e nv i ro n m e n t a l   c o n s e q u e n c e s   l i n k e d   t o   q u o t a   re d u c t i o n . 
the audit examined the relationship between restruc turing aid 
gra nte d   to   p ro d u ce r s   i n   t h e   a u d i te d   M e m b e r   St ates   a n d   t h e i r 
budgeted direc t closure costs, i.e. closure costs excluding pos-
s i b l e   q u o t a s   v a l o r i s a t i o n .  th e   a u d i t   i d e n t i f i e d   t h a t   t h e re   w a s 
n o   c l e a r   d e f i n i t i o n   o f   w h i c h   c o s t s   h a d   t o   b e   i n c l u d e d   i n   t h e 
restructuring plans and that the costs budgeted were not com-
parable amongst Member States. consequently, the data avail-
a b l e   i n d i c ate   ve r y   w i d e   va r i at i o n s   ra n gi n g   f ro m   a   n e t   s u r p l u s 
of 39 0 euro  p er to nne ren ounce d co mpared  to t he  n et  c lo sure 
cost s to a net  deficit o f 226 euro per  ton ne  (A n nex  IV) .

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37

45  commission regulation (eu)  
No 1204/2009 of 4 december 2009 

amending regulation (ec)  

No 968/2006 laying down detailed 

rules for the implementation of 

council regulation (ec)  

No 320/2006 establishing a 

temporary scheme for the 

restructuring of the sugar industry 

in the community (oJ L 323, 

10.12.2009, p. 64).

46  article 3(6) of regulation (ec) 
No 320/2006, as amended by 

regulation (ec) No 1261/2007.

47  In poland, there was no 
association of machinery 

contractors, so the national 

authorities selected three 

contractors for consultations.

48  regulation (ec) No 1260/2007.

73.  

74.  

75.  

i n a d e q u a t e  m o n i t o r i n g  o f  s o c i a l  o b l i g a t i o n s

 as a result of the refor m, some 80 fac tor ies were closed across 
t h e   e u.   M e m b e r   S t a te s   we re   n o t   re q u i re d   by   t h e   co m m i s s i o n 
to   re p o r t   o n   t h e   d i re c t   s o c i a l   i m p a c t   o f   t h e   p ro d u c t i o n   f a c i l-
i t y   d i s m a n t l e m e n t .  t h e   a u d i t   fo u n d   t h a t   s u c h   i n fo r m a t i o n   i s 
n o t   co n s i s te n t l y   ava i l a b l e   to   t h e   co m m i s s i o n   a n d   t h e re   i s   n o 
comp rehe ns ive  d at a  on  th e  impac t  o f  quo ta  ren un ci ati on s  on 
the local economies, on how many jobs were lost or alternative 
empl oyment  o f  t he  s taff  p rev io us ly   e m ploye d  at  th e   f ac tor ie s 
w h i c h   w e r e   d i s m a n t l e d .  t h i s   h a m p e r s   t h e   a s s e s s m e n t   o f   t h e 
ove ra ll  e ffe c t o f th e refo r m o n  t he  regio ns  co nce r n ed.

d e l a y s  i n  e n v i r o n m e n t a l  o b l i g a t i o n s

 the   c l os ure  o f  p ro duc t ion   fac ilit ie s  als o  e nt ai ls  se r i ous  env ir-
o n m e n t a l   c h a l l e n g e s ,   h e n c e   t h e   g o v e r n i n g   r e g u l a t i o n s   p r o -
v i d e   t h a t   t h e   c l o s u re   o f   p ro d u c t i o n   f a c i l i t i e s   i s   a c c o m p a n i e d 
by appropriate measures to dismantle produc tion facilities and 
re s to re   t h e   e nv i ro n m e n t a l   co n d i t i o n   o f   t h e   f a c to r y   s i te s.  th e 
aud it   fo u nd,  however,  th at  th ere  we re   c ase s   o f  s er i ous  de lays 
a n d   i n c re a s i n g   u n ce r t a i n t y   a s   re g a rd s   t h e   t i m e l y   c o m p l i a n c e 
of the producers with those environmental obligations. I n d e -
cember 2009 the commission amended the legislation to allow 
for an  ex ten sion o f the deadl ine s  unti l S e ptembe r  2 0 1 1 45.

ReS T R U C T U R I Ng   A I D  TO   gR O w eR S   A N D   M AChI NeR Y 
CO N T R AC TO R S   Af f eC TeD   BY  Th e   ReN U N C I AT I O N S

 I n the case of sugar- quota renunciation, which covers the vast 
major it y of quota renunciation, a par t of the restruc tur ing aid 
( a t   l e a s t   1 0  %   u n t i l   2 0 0 7 ,   1 0  %   f ro m   2 0 0 7   o nw a rd s )   w a s   to   b e 
reser ved for sugar beet growers affec ted by the renunciations 
and machiner y contractors who provided them with specialised 
ser v ices 46.  Sim il ar l y, a p ar t o f the aid was  res e r ved  fo r  c hicor y 
growe r s   a f fe c te d   by   i n u l i n   s y r u p   q u o t a   re n u n c i at i o n s.   on   t h e 
other hand, no aid was reser ved for maize growers when isoglu-
cose producers renounced their quota. the allocations were de -
cided upon by the national authorities following consultations 
with representatives of growers and, where they existed 47, con-
t ra c to r s.   I n   2 0 0 7   a   o n e - o f f   p ay m e nt   o f   2 3 7 , 5 0  e u ro   p e r   to n n e 
fore go ne  was granted 48 to  t he  affe c te d grower s,  whic h cons ti-
tute d t he lio n’s s hare of the com pe ns ati on  t he y  re ce ived.

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49  article 6 of regulation (ec)  
No 320/2006.

50  council regulation (ec)  
No 1698/2005 of 20 September 2005 

on support for rural development by 

the european agricultural fund for 

rural development (eafrd)  

(oJ L 277, 21.10.2005, p. 1).

51  article 7 of regulation (ec)  
No 320/2006.

76.  

77.  

78.  

D Iv eR S IfI C AT I O N   A I D

 as a result of the refor m, some 80 sugar fac tor ies were closed. 
Sugar fac tories have a strong territorial link with the surround-
ing  comm unit y.  par t icul ar l y  when   th e  f ac tor ies   are  loc ate d  in 
r e m o t e   a n d   d i s a d v a n t a g e d   a r e a s ,   t h e i r   c l o s u r e   c a n   p r o v o k e 
sign ificant   n egat ive  co ns eq uen ces   for   th e  soci al  f abr i c  of   t he 
areas  af fec te d.

 there is no legal definition as to who is included in the concept 
of ‘agr icul t ural  co mmunit y ’.  N on et h ele ss   it   is   ass e ss ed  t hat  as 
a   r e s u l t   o f   t h e   s u g a r   r e fo r m ,   t h e   w i d e r   l o c a l   c o m m u n i t y   w a s 
a f f e c t e d   r a t h e r   t h a n   j u s t   t h e   k e y   s t a k e h o l d e r s   o f   t h e   s u g a r 
sec to r,  w hic h were ear mar ked in  th e  reg ulat ion  to re ce ive  t h e 
aid (p ro du ce r an d it s emp l oyees, grower s, mach i ne r y contrac-
tors) . 

 the legislation provided for aid, amounting to 675 million euro, 
t o   e n c o u r a g e   t h e   d e v e l o p m e n t   o f   a l t e r n a t i v e s   t o   s u g a r   b e e t 
an d su gar  pro du c tio n in regions  af fe c te d by  t h e res tr uc tur in g 
o f   t h e   s u g a r   i n d u s t r y   ( s e e   b r e a k d o w n   b y   M e m b e r   S t a t e s   i n 
A nnex  V) . 

—  the aid for diversification 49 is primarily to finance measures 
intende d  to   b e  id e nt ic a l   to  th ose  suppor ted  unde r  axis  1 
a n d   a x i s   3   o n   s u p p o r t   by   t h e   eu ro p e a n   agr i c u l t u ra l   fu n d 
f o r   ru r a l   d e v e l o p m e n t 5 0.   ty p i c a l l y   t h e s e   w o u l d   f i n a n c e 
s p e c i f i c   p r o j e c t s   t o   i n c r e a s e   t h e   c o m p e t i t i v e n e s s   o f   t h e 
agr icu l t ural   and  fores t r y  s ec tor,   to  im prove  th e   qua lit y   of 
l ife  in rural areas  o r to diversif y  th e  r ural  econ omy.

—  an additional aid for diversification 51 is granted to a M em-
ber State once the quota renunciations are above 50 %, and 
is incre ased w hen the perce nt age  i s hig he r.  th e aid could 
b e   g r a n t e d   i n   t h e   s a m e   w ay   a s   d i ve r s i f i c a t i o n   a i d   o r   m ay 
b e p aid d ire c t ly to grower s.

79.  

 M e m b e r   S t a t e s   w h i c h   d e c i d e   t o   g r a n t   a i d   f o r   d i v e r s i f i c a t i o n 
shall establish national restructuring programmes detailing the 
divers ific atio n m eas ures  to b e un de r t ak en  in  t he  re gion s  con-
cer ned  and  info r m  the  co mmiss ion   of   t hese  programm es.  th e 
com mis sio n is no t requ ested to approve  t he  programm es.

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 t h e   a n a l y s i s   o f   t h e   n a t i o n a l   r e s t r u c t u r i n g   p l a n s   e s t a b l i s h e d 
by   t h e   M e m b e r   S t a t e s   i n d i c a te   t h a t   t h e   a l l o c a t i o n   o f   d i ve r s i-
f i c a t i o n   a i d   w a s   b a s e d   o n   a   w i d e   v a r i e t y   o f   c r i t e r i a   b e t w e e n 
M emb e r States, as sh ow n in A nnex  VI.

52  regulation (eu) No 1204/2009.

53  article 24 of regulation (ec)  
No 968/2006.

 additionally, the cour t noted delays in cer tain M ember States 
in the implementation of these measures, intended to  develop 
a l t e r n a t i v e s   t o   s u g a r   b e e t   g r o w i n g   a n d   s u g a r   p r o d u c t i o n , 
t h a t   h ave   ye t   t o   b e c o m e   f u l l y   o p e r a t i o n a l.  t h i s   d e l ay   c a u s e d 
a  t i m e   l a g   o f   s e ve r a l   ye a r s   b e t we e n   f a c t o r y   c l o s u re   a n d   e c o -
n o m i c    a l t e r n a t i v e s   b e i n g   o p e r a t i o n a l ,   i f   a t   a l l .   I n   d e c e m b e r 
2 0 0 9   t h e   c o m m i s s i o n   a m e n d e d   t h e   l e g i s l a t i o n   t o   a l l o w   f o r 
a n   ex te n s i o n   o f   t h e   d e a d l i n e   to   i m p l e m e nt   t h e   m e a s u re   u nt i l 
 S eptemb er 2011 52. 

54  the only checks carried out by 
the commission in the Member 

States are those of the clearance of 

account unit of dG aGrI on their 

compliance with regulations.

55  article 8 of regulation (ec)  
No 320/2006.

56  article 2 of regulation (ec)  
No 320/2006.

 M o re ove r,   t h e   co m m i s s i o n   h a s   n o   ove r v i e w   o f   t h e   i m p a c t   o n 
re gi o n s   a f fe c te d   o f   t h e   d i ve r s i f i c a t i o n   a i d,   a l t h o u g h   M e m b e r 
S t a t e s   a r e   r e q u i r e d   t o   c o m m u n i c a t e   t o   t h e   c o m m i s s i o n   a n -
n u a l   p ro g re s s   re p o r t s   c o n c e r n i n g,   i n t e r   a l i a ,   t h e   n a t i o n a l   re -
s t r u c t u r i n g   p ro g r a m m e s 5 3.   H owe ve r,   t h e   co m m i s s i o n   h a s   n o t 
est ab l ishe d  p ro cedures   to  syste mati c ally   re vie w  and  e valu ate 
th is info r mat ion 54. 

T R A N S I T I O N Al   A I D  TO   fUl l  T I Me   Re fI NeR S

 t h e   l e g i s l a t i o n   p r o v i d e d   fo r   a   t r a n s i t i o n a l   a i d   t o   b e   g r a n t e d 
to   f u l l   t i m e   re f i n e r s   ( 1 5 0   m i l l i o n   e u ro)   s o   a s   to   a l l ow   t h e m   to 
adapt to the restruc turing of the sugar industr y 55. full-time re -
finers mean produc tion units which refined impor ted raw cane 
s u g a r   e i t h e r   a s   t h e i r   s o l e   a c t i v i t y   o r   a b o v e   a   c e r t a i n   t h r e s h-
old 56.

 these aids were not par t of the commission’s initial proposals 
b u t   we re   s u b s e q u e n t l y   i n t ro d u c e d   a f t e r   co u n c i l   d i s c u s s i o n s. 
t h e   a i d   w a s   p a i d   t o   a   ve r y   l i m i t e d   n u m b e r   o f   re f i n e r s   ( s e ve n 
i n   t o t a l )   fo r   a m o u n t s   v a r y i n g   f ro m   1 , 5   t o   9 4   m i l l i o n   e u ro   p e r 
refi ner y.

80.  

81.  

82.  

83.  

84.  

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85.  

 the audit found no evidence that the aid was based on a tech-
n i c a l   a s s e s s m e n t   o f   t h e   n e e d s   o f   re f i n e r s   a n d   t h a t   t h e   c a l c u-
l a t i o n   o f   t h e   a m o u n t s   o f   a i d   w a s   b a s e d   o n   o b j e c t i ve   c r i t e r i a . 
fu r t h e r m o re,   t h e   va g u e n e s s   o f   t h e   o b j e c t i ve s   to   b e   a c h i e ve d 
(a dap t  to  th e res t ru c tu r ing of t he  s ug ar  in dus tr y ) 57 an d of t he 
actions which could be included in the business plan to receive 
the aid (including contributions to operational costs and other 
provisions considered to be necessar y) 58 makes it impossible to 
eval uate t he ef ficien c y o r e ffec ti ve ne ss  of  th e a id.  I n d ic at io ns 
are th at  t he  aid  was  mainl y o f  t he  nat ure  of  compe ns ati on  fo r 
f u l l - t i m e   r e f i n e r s   o f   i m p o r t e d   r a w   c a n e   s u g a r   f o r   t h e   f u t u r e 
loss  o f   their  mo no p o l y  in  raw   sug ar   im por t s.  th e  commiss ion 
regulation merely refers to the loss of ‘cer tain benefits’ 59 which 
were  pre viou sly  hel d.

86.  

 I n most of the MS concer ned there is only one potential bene -
ficiar y. this pre - empted the legislative provision that M ember 
S t a t e s   s h a l l   g r a n t   t h e   a i d   o n   t h e   b a s i s   o f   o b j e c t i ve   a n d   n o n - 
disc r iminato r y cr iter ia 60.

Th e   CO S T   Of  Th e   S UgA R   Re fO R M

I T   I S   lIk e l Y  ThAT   A N   A M O U N T   wIl l   Be   AvA Il A Bl e  
I N  Th e   ReS T R U C T U R I Ng   fU N D  TO   Be   A S S IgNeD  TO 
Th e   eA g f

 according to the legislative provisions 61 ‘any amount that may 
b e   a v a i l a b l e   i n   t h e   r e s t r u c t u r i n g   f u n d   a f t e r   t h e   f i n a n c i n g   o f 
t h e   e x p e n d i t u re   re fe r re d   to   i n   p a r a gr a p h   2   s h a l l   b e   a s s i gn e d 
to t he ea Gf .’

 the low rate of quota renunciations, par ticularly in the second 
y e a r   o f   t h e   r e fo r m ,   r e s u l t e d   i n   m o r e   i n c o m e   f r o m   t e m p o r a r y 
restruc tur ing amounts than had been anticipated by the com-
m i s s i o n .   any   f u n d s   re m a i n i n g   i n   t h e   re s t r u c t u r i n g   f u n d   w h e n 
it is  c l ose d in S e p temb er 2012 wi ll  be as s ign e d to t he  e aGf . I t 
is currently estimated that around 640 million euro will remain 
ava il ab le.

87.  

88.  

57  article 8 of regulation (ec)  
No 320/2006.

58  ‘Investments, dismantling of 
production facilities, contributions 

to operational costs, provisions 

for depreciation of equipment 

and other provisions considered 

to be necessary in order to adapt 

to the new situation’ (article 15 of 

regulation (ec) No 968/2006).

59  regulation (ec) No 968/2006 
implementing regulation (ec)  

No 320/2006, recital 10: ‘In order to 

make it easier for full-time refiners 

who have lost certain benefits 

which they held under council 

regulation (ec) No 1260/2001 

of 19 June 2001 on the common 

organisation of the markets in the 

sugar sector to adapt to the new 

situation following the entry into 

force of regulation (ec) No 318/2006 

of 20 february 2006 on the common 

organisation of the markets in the 

sugar sector, regulation (ec) No 

320/2006 introduces a transitional 

aid allocated in those Member 

States where refiners within the 

meaning of regulation (ec) No 

1260/2001 were established in the 

past.’

60  article 8(3) of regulation (ec)  
No 320/2006.

61  article 1 of regulation (ec)  
No 320/2006.

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62  this includes forecasts made for 
the 2007–2013 financial framework. 

the budget thereafter is subject to a 

future agreement.

63  Section 5 on the budgetary 
impact of the proposals for the 

reform in the commission’s 

proposal, coM(2005) 263 final.

64  production levy could be for a 
part of quotas (so-called B quota) up 

to 39,5 % of intervention price  

(631 euro per tonne), i.e. up to 

249 euro per tonne (article 15 of 

regulation (ec) No 1260/2001).

OTh eR   fAC TO R S   Af f eC T I Ng  Th e   O v eR Al l   CO S T

89.  

 w h e n   i t   p ro p o s e d   t h e   re fo r m ,   t h e   co m m i s s i o n   e s t i m a te d   t h e 
c o s t   t o   t h e   e u  b u d g e t   o f   t h e   s u g a r   cMo  f o r   t h e   s e v e n   y e a r s 
f r o m   2 0 0 7   t o   2 0 1 3   a t   1 0 , 7   b i l l i o n   e u r o 6 2.  t h i s   i s   e q u a l   t o   a p -
proximatel y  se ven  times   t he  ex pen di ture  of  t he   s ug ar   cMo  in 
2 0 0 6 .   on   t h i s   b a s i s,   t h e   co m m i s s i o n   s t a t e d   t h a t   t h e   e x p e n d-
iture  in clu ded  in   the  agr icul ture  s ec t ion   of   th e  budg e t   would 
equ al  th at  of t he p revious  cMo 63.

90.  

 H o we ve r,   t h e   co u r t   n o t e s   t h a t   t h e re   a re   t wo   o t h e r   i s s u e s   re -
l a t e d   t o   t h e   s u g a r   m a r k e t   w h i c h   i m p a c t   t h e   e u   b u d g e t   fo r   a 
total of 1,2 billion euro, although they are not direc tly charged 
to t he agr icul tu ral s ec tion of  th e bud ge t :

(a)  t h e   p ro d u c t i o n   l e v y 6 4  t h a t   a m o u n t e d   t o   4 9 8   m i l l i o n   e u ro 
i n   2 0 0 6   w a s   a b o l i s h e d   a n d   re p l a ce d   by   a   f l at- r ate   c h a rg e 
o f   1 2   e u r o   p e r   t o n n e .   H o w e v e r,   d u e   t o   t h e   c o m m u n i t y ’s 
i n t e r n a t i o n a l   c o m m i t m e n t s ,   t h e   l e v e l   o f   p r o d u c t i o n   l e v -
i e s   a s   o f   2 0 0 6   wo u l d   n o t   h ave   b e e n   m a i n t a i n e d,   a s   t h e s e 
l e v i e s   we re   a p p l i c a b l e   o n l y   t o   t h e   p ro d u c t i o n   e xc e e d i n g 
co nsu mp t ion, an d

(b)   1,2 billion euro has been earmarked during the seven-year 
p er iod  for accomp any ing measure s for  th e s ug ar  protocol 
countries. this aid has been proposed to the acp countries 
for the loss of income due to the lower pr ices received for 
their histor ical preferential impor ts. Since this is included 
under title 21 ‘d evelopment and relations with acp States’, 
it  has  not  be en co ns idere d to  be par t of  t he  s ug a r  cMo .

91.  

 t h e   s u g a r   re fo r m   w a s   d e s i g n e d   t o   b e   b u d g e t   n e u t r a l.   I n   t h i s 
contex t,  the  co ur t  no tes  t hat if th e above cos ts  are  ta ke n  i nto 
account, the overall cost to the eu budget af ter the refor m for 
th e p er io d 200 7– 13  is  l ikel y to be 1 ,2  billi on  e uro hi g he r  t han 
before t he  refo r m. 

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coNcL uSIoNS  aNd  
recoMMeNdatIoNS

42

92.  

93.  

94.  

95.  

 t h e   re fo r m   o f   t h e   s u g a r   m a r k e t   w a s   c o n s i d e re d   n e c e s s a r y   i n 
order to align the sugar sec tor with the fundamental principles 
o f   t h e   n e w   c o m m o n   a g r i c u l t u r a l   p o l i c y   o f   i n c r e a s e d   m a r k e t 
or ientation and to comply with the union’s inter national com-
mit me nt s. 

 the  re fo r m pu rsu ed a var iet y  of obje c t ive s,  wh i c h we re  pa r tly 
conflic ting and therefore difficult to fulfil simultaneously. the 
cour t ’s audit assessed the extent to which the principal objec t-
ives  have  be en ac hieved to  date.

h A S  Th e   S UgA R   M A Rk e T   Re fO R M   eN S U ReD  
Th e   fU T U Re   CO M Pe T I T Iv eNeS S   Of   Th e   eU 
S UgA R   I N D U S T R Y ?

 the  re fo r m targe ted a signific ant  red uc ti on  ( 6  mi llion  ton ne s ) 
of unprofitable production capacity in the community by intro-
ducing an impor tant economic incentive for sugar under takings 
with the lowest produc tivity to give up their quota produc tion. 
t h e   r a t i o n a l e   w a s   t h a t   t h e   r e n u n c i a t i o n   o f   l o w   p r o d u c t i v i t y 
pro du c tio n  fac il ities  wou l d  in crea s e  th e  avera ge   prod uc ti v it y 
and thus ensure the future competitiveness of the eu industr y. 
However,  neith er  th e  co mmiss ion  nor   th e  M ember  St ates   h ad 
d a t a   a v a i l a b l e   o n   t h e   r e l a t i v e   p r o d u c t i v i t y   o f   t h e   i n d i v i d u a l 
producers. at the same time, some additional quota of 1,5 mil-
lion ton ne s was made availab le most ly  for  purcha se,  ai me d at 
the  mo re ef ficient p ro ducer s.

 pro duce rs,   in  t he   first   t wo  yea rs   of   t he   re for m,   volunt ar ily   re -
nounced only 2,2 million tonnes indicating that the incentives 
o f fe re d   we re   n o t   d e e m e d   to   b e   s u f f i c i e n t l y   a t t r a c t i ve   by   t a r -
geted producers. therefore, in 2007 several modifications were 
made  to  t he re fo r m p ro cess c reat in g  a  s trong  in ce nt ive for  a ll 
p ro d u c e r s   t o   re n o u n c e   a t   l e a s t   a   c e r t a i n   p e rc e n t a g e   o f   t h e i r 
quota. thus, while the targeted quota reduc tion was achieved, 
i t   co u l d   n o t   b e   a c h i e ve d   o n l y   by   t h e   ce s s a t i o n   o f   p ro d u c t i o n 
by  the  l eas t co mp etitive fac tor ies.

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96.  

97.  

98.  

99.  

43

 t h e   a u d i t   f o u n d   c a s e s   o f   u n d e r t a k i n g s   r e n o u n c i n g   t h e   a d d-
i t i o n a l   s u g a r   q u o t a s   t h e y   h a d   o b t a i n e d   o r   p u r c h a s e d .   t h e r e 
i s   n o   rat i o n a l e   i n   i n i t i a l l y   m a k i n g   ava i l a b l e   a d d i t i o n a l   q u o t a s 
and later striving to reduce them. Moreover, in the case of add-
i t i o n a l   i s o g l u c o s e   q u o t a ,   u n d e r t a k i n g s   we re   p a i d   e ve n   w h e n 
t h e y   re n o u n ce d   q u o t a s   w h i c h   h a d   j u s t   b e e n   gra nte d   fo r   f re e. 
the costs involved amounting to around 97 million euro cannot 
be ju st ified.

65  Special report No 20/2000 
concerning the management of the 

common organisation of the market 

for sugar.

 w h i l e   t h e   r e f o r m s   p a r t l y   c o m p e n s a t e d   t h e   b e e t   g r o w e r s   f o r 
t h e   l o s s   o f   r e v e n u e   a r i s i n g   f r o m   t h e   s i g n i f i c a n t   d r o p   i n   t h e 
m i n i m u m   p r i c e s   t o   b e   p a i d   fo r   t h e   s u g a r   b e e t ,   t h e   m e a s u r e s 
introduced had limited impac t on their individual competitive -
nes s. 

 fur th er m ore, as al ready o b ser ved by   th e c our t in  its previous 
repor t 65, the maintenance of r igidities and constraints incor p -
orated  into  th e c u r rent  qu o ta syste m re sul ts  i n un d ue  r i gid it y 
of produc tion capacity and reduces scope for both growers and 
pro du cers  to  inc reas e efficienc y. 

 o v e r a l l   i t   c a n   b e   c o n c l u d e d   t h a t   t h e   o b j e c t i v e   o f   s t a b i l i s i n g 
t h e   m a r k e t   v i a   a   vo l u n t a r y   re d u c t i o n   o f   q u o t a   p ro d u c t i o n   o f 
6  million tonnes was given pr ior it y over the objec tive of redu-
c t i o n   o f   u n p ro f i t a b l e   p ro d u c t i o n   c a p a c i t y   i n   t h e   co m m u n i t y. 
con se que nt ly,  th e  refor m  process   d id  n ot   f ully   en sure  t h e  f u-
ture co mpe titivenes s  of the eu suga r in dust r y.  accordin gly, it 
is likely that the prevailing ex ter nal pressures will continue to 
weig h he avil y o n  t he eu s u gar s ec tor.

R eC O M MeN D AT I O N   1

t h e p rev ailin g e x te r nal  p re ssure s m ay re quire  th e  co mmis-
sion to prop ose f ur th er adjus tm ent s of inter nal pro duc tion . 
In su ch a c as e, th e co ur t re co mm e n ds that ins tr um e nt s an d 
m e a s u r e s   s h o u l d   b e   d e s i g n e d   s o   a s   t o   e n s u r e   ov e r a l l   co n -
sistenc y and be based on thorough technical assessments of 
n e e ds an d o bj e c ti ve an d n o n - dis cr im inato r y  cr i te r ia . 

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
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R eC O M MeN D AT I O N   2

In view of the impor tance of sugar produc tion in the agricul-
tur al e cono my, th e co ur t re comm en ds that th e commission 
p ro p os es m easures to re m ove th e r igi dities an d co ns tr aint s 
in the current quota s ystem which af fec t adversely the com -
p e ti ti ve n e ss o f growe r s  an d  p ro du ce r s . 

100.  

101.  

h A S  Th e   S UgA R   M A Rk e T   Re fO R M   S TA B IlI SeD  
Th e   M A Rk e T S   A N D   gUA R A N Te eD  Th e 
AvA Il A B IlI T Y   Of   S UgA R   S U P PlIeS ?

 the sugar market was subjected to the twin effects of increased 
i m p o r t s   a n d   r e d u c e d   p o s s i b i l i t i e s   f o r   s u b s i d i s e d   e x p o r t s .   I n 
t h e   c i r c u m s t a n c e s ,   t h e   l e v e l   o f   i n t e r n a l   p r o d u c t i o n   r e q u i r e d 
to   m e e t   t h e   e u   n e e d s   h a s   b e co m e   t h e   k e y   m a r k e t - s t a b i l i s i n g 
fac tor. future increases in impor ts are likely to tr igger fur ther 
wi thd rawals   o f  qu ot as  w ith  the  co ns equ ent   f ur th e r   red uc t ion 
of eu su gar  p rod uc tio n.

 th e   co u r t   co n c l u d e s   t h at   w h i l e   m a r k e t   s t a b i l i t y   h a s   b e e n   a s-
sured thus far, it has been achieved through the use of produc -
tion quotas which currently set the maximum allowed inter nal 
production at a level approximately 85 % of eu consumption for 
wh at   is  a  strategic  p ro du c t  for   t he   agr i-fo od   and  ch e mi c al  in-
dustries, thus increasing the eu dependence on impor ts, while 
wo r l d   m a r k e t   s u p p l i e s   a re   d o m i n ate d   by   a   l i m i te d   n u m b e r   o f 
expo r ting  co untr ies.

R eC O M MeN D AT I O N   3

t he cour t re commends that p ossible future de cisions which 
i m p a c t   eu  su g a r   p r o d u c t i o n   t a ke   i nto   a cco u nt   t h e   l e ve l   o f 
i n t e r n a l   s u g a r   p r o d u c t i o n   w h i c h   i s   c o n s i d e r e d   n e c e s s a r y   
g i v e n   t h e   tr e a t y   o b j e c t i v e   o f   a s s u r i n g   a v a i l a b i l i t y   o f   
sup p l y.

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
45

102.  

 S u p p l i e s   s h o u l d   re a c h   c o n s u m e r s   a t   re a s o n a b l e   p r i c e s 6 6.  t h e 
re fo r m   i s   d e s i g n e d   to   re d u c e   p r i c e s   o f   s u g a r   by   u p   t o   3 6  % 6 7. 
B e c a u s e   o f   t h e   co m p l e x   p ro ce s s   o f   p r i ce   fo r m a t i o n ,   i t   i s   ve r y 
diff icu l t to  de ter mine to w hat ex tent th e re duc ti on in  th e  ref-
e r e n c e   p r i c e   o f   b u l k   s u g a r   w i l l   i m p a c t   o n   t h e   p r i c e   p a i d   b y 
t h e   f i n a l   c o n s u m e r.  w h i l e   t h e   co m m i s s i o n   s t re s s e d   t h e   n e e d 
to ens ure  t hat  dow nward move ments  in  com modit y p r ice s  are 
transmitted to consumers without delay, studies carried out on 
i t s   b e h a l f   i n d i c a t e   t h a t   re d u c t i o n s   i n   t h e   p r i c e   o f   b u l k   s u g a r 
are u nl ike ly to  b e p assed o n to  th e  f i n al con s um e r.

66  article 33 of the ec treaty, which 
became article 39 of treaty of the 

functioning of the union (so-called 

Lisbon treaty) sets that one of 

the objectives of the common 

agricultural policy is to ensure 

that supplies reach consumers at 

reasonable prices.

67  36 % being the difference 
between the pre-reform 

intervention price and the post-

reform reference price.

R eC O M MeN D AT I O N   4

w hil e  a ck n ow l e d gin g  that   p r i ce   f o r m ati o n   in  th e  f o o d  s e c-
to r is p ar ticularl y co mp l e x , th e cour t co nsi d er s that it mus t 
b e   s u b j e c t   t o   r e g u l a r   m o n i t o r i n g   b y   t h e   c o m m i s s i o n .   t h e 
co m missi o n  an d   th e  M e m b e r  St ate s  mus t   e nsure  th at   co m -
p e ti ti o n  law   is  co r re c tl y  e nf o rce d  in   th e   s e c to r   thus   e nsur-
i n g   t h e   tr e a t y   o b j e c t i v e   t h a t   s u p p l i e s   r e a c h   co n s u m e r s   a t 
re as o n ab l e p r i ce s .

h Av e  Th e   S PeC IfI C   I N S T R U MeN T S / MeChA N I S M S  
Be eN   S U CCeS SfUl  
Al l e vI AT I Ng   Th e   A D A P TAT I O N   P R O Bl eM S  
Re l ATeD  TO   Re fO R M ?

I N   A D D ReS S I Ng   A N D 

 t h e   a b a n d o n m e n t   o f   s u g a r   b e e t   p r o d u c t i o n   a n d   t h e   c l o s i n g 
down of fac tories have an impor tant direc t and indirec t impac t 
on t he agr ic u lt ural  co mmu nit y an d re gion s  con cer n e d in c lud-
ing a significant number of job losses. the legislation provided 
for the temporar y restruc turing fund to finance specific instru-
ment s  to face an d al leviate the  ad aptati on  pro blems. 

 the  au dit fou nd  that  neit her the commiss ion  n or t he M ember 
S t a t e s   c o n c e r n e d   h a d   p u t   i n   p l a c e   a n   a d e q u a t e   fo l l o w - u p   o f 
th e so cial  co nse quen ces of  the  res tr uc tur in g.  th ere is t hus no 
comp rehe ns ive  d at a  on  th e  impac t  o f  quo ta  ren un ci ati on s  on 
th e l o cal e co no m ies.

103.  

104.  

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
46

105.  

106.  

107.  

108.  

 fur th er m ore, in var iou s M ember State s t h e d ive r si fi cat ion  ai d 
meas ures  had  yet   to   b ecom e  fully   ope rati onal   at   th e   mom ent 
o f   t h e   a u d i t   v i s i t s.  th e   t i m e   l a g   b e t we e n   t h e   f a c to r y   c l o s u re s 
and the implementation of diversification measures may result 
in h ard ship  in t ho se region s affe c te d. 

 the closure of produc tion facilities had to be accompanied by 
a p p ro p r i a t e   m e a s u re s   t o   d i s m a n t l e   p ro d u c t i o n   f a c i l i t i e s   a n d 
re s to re   t h e   e nv i ro n m e n t a l   co n d i t i o n   o f   t h e   f a c t o r y   s i te s.  th e 
a u d i t   fo u n d,   h o we ve r,   c a s e s   o f   d e l ay s   a s   re g a rd s   t h e   c o m p l i-
ance  o f th e pro d ucer s w ith thos e  e nv i ron menta l o blig ati on s.

 r e g a r d i n g   t h e   t r a n s i t i o n a l   a i d   t o   b e   g r a n t e d   t o   f u l l - t i m e   r e -
f i n e r s ,   t h e   a u d i t   f o u n d   n o   d a t a   t o   i n d i c a t e   t h a t   t h e   a i d   w a s 
base d o n a tech nic al  as sess ment of  ne e ds an d t hat t h e calcul-
atio n o f t he amo unts  of aid was  bas ed  on  obj e c ti ve  cr i te r i a. 

 overall, it is not yet possible to conclude on the extent to which 
t h e   i n s t r u m e n t s   p u t   i n   p l a c e   h a v e   m i t i g a t e d   t h e   s i g n i f i c a n t 
direc t and indirec t social and economic impac t on the agricul-
tural  co mmu nit y  in the regio ns a ffe c te d.

R eC O M MeN D AT I O N   5

t h e co u r t  re co m m e n ds  that th e co mmissi o n  an d th e M e m -
b e r   St a te s   t a ke   u r g e nt   m e a s u r e s   to   e n su r e   t h e   d i ve r s i f i c a -
ti o n m easures b e co m e r ap i dl y o p e r ati o nal an d p ro du ce th e 
inte n d e d imp a c t to  p ro m ote al te r n ati ve s  to su gar  b e e t a n d 
su g ar p ro du c ti o n .

R eC O M MeN D AT I O N   6

t h e co u r t  re co m m e n ds  that th e co mmissi o n  an d th e M e m -
b e r  St ate s   b e co m e  m o re  a c ti ve l y  invo l ve d   in   e nsu r in g  that 
t h e   e nv i r o n m e n t a l   o b l i g a t i o n s   e n t e r e d   i n t o   b y   t h e   c l o s e d 
f a c to r i e s are f u ll y co mp li e d w i th .

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
 
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CO S T   Of   Th e   Re fO R M

109.  

 th e   co u r t   n o te s   t h at   i f   a d d i t i o n a l   co s t s,   n o t   d i re c t l y   c h a rg e d 
t o   t h e   a g r i c u l t u r a l   s e c t i o n   o f   t h e   b u d g e t ,   n a m e l y   t h e   c o s t   o f 
acco mp anying   measu res  for  the   acp   sugar   protocol  countr ies 
are taken into account, the overall cost to the eu budget af ter 
the reform for the period 2007–13 is likely to be 1,2 billion euro 
hig her  than b efore t he refor m .

.

 th i s   r e p o r t   w a s   a d o p te d   by   ch a m b e r   I ,   h e a d e d   by   M r   M i c h e l 
cre tIN, Member of the cour t of auditors, in Luxembourg at its 
meet ing o f 21 Ju l y 2010.

Fo r  th e  Co u r t  o f  Au d ito r s

Vítor Manuel da SILVa caLdeIra 
Presi d e nt

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

 
 
 
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A N Ne X   I

O v eR vIe w   Of  Th e   AC T UAl   Re v eN Ue   A N D   eS T I M ATeD   eX PeN D I T U Re  
Of  Th e   ReS T R U C T U R I Ng   fU N D

Member State

Total revenue

Restructuring 
aid1

Diversification 
aid2

Transitional aid3

Total

Expenditure

(million euro)

Belgium

Bulgaria

Czech Republic

Denmark

Germany

Ireland

Greece

Spain

France

Italy

Latvia

Lithuania

Hungary

Netherlands

Austria

Poland

Portugal

Romania

Slovenia

Slovakia

Finland

Sweden

United Kingdom

(A)

339

13

166

163

1 350

0

88

346

1 354

293

8

40

152

344

152

657

10

32

7

76

45

128

466

TOTAL

6 229

(B)

331

2

88

37

639

187

130

454

611

981

59

17

260

177

25

288

34

10

51

77

64

63

165

4 750

(C)

19

1

11

8

71

44

26

70

64

167

15

2

52

12

5

34

15

0

12

16

7

9

15

675

(D)

(E) = (B) + (C) 
+ (D) 

0

0

0

0

0

0

0

0

25

0

0

0

0

0

9

0

24

0

2

0

5

5

94

164

350

3

99

45

710

231

156

524

700

1 148

74

19

312

189

39

322

73

10

65

93

76

77

274

5 589

1  also includes the retroactive payment. 
2 
3 

Includes both aid for diversification and additional aid for diversification. 

 as per articles 8 and 9 of council regulation (ec) No 320/2006 (transitional aid for full-time refiners and certain Member 

States).

S ource: the court's auditors used the renunciation figures provided by the commission (unit c.5 of dG aGrI) to calculate the 
above amounts.

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A N Ne X   I I

O v eR vIe w   Of   qU OTA S   ReN O U N CeD   BY  Th e   MeM BeR   S TATeS

A — SUGAR

Member State

Initial 
quotas1

Quota renounced for given marketing year

2006/07

2007/08

2008/09

2009/10

(A)

(B)

(C)

(D)

(E)

(tonnes of white sugar)

Quotas  
available from 
marketing year 
2009/10 

Percentage of 
total quotas 
renounced

(F) = 
(A+B+C+D+E)

(G) = 
Σ(B+C+D+E)/A 

-132 106 

France2
Germany 
Poland 
United Kingdom 
Netherlands 
Belgium 
Italy 
Spain
Czech Republic 
Denmark 
Austria 
Sweden 
Greece 
Slovakia 
Hungary 
Romania3
Lithuania 
Finland 
Portugal4
Slovenia 
Latvia 
Ireland 
Bulgaria3

4 120 687
3 655 456
1 772 477
1 221 474
931 435
882 301
1 557 443
996 961
474 932
452 466
405 812
385 984
317 502
216 037
406 684
109 164
111 010
146 087
79 671
52 973
66 505
199 260
4 752

-683 655 
-757 200 
-366 869 
-165 000 
-126 547 
-206 066 
-245 467 
-256 578 

-80 083 
-54 785 
-50 236 

-33 584 
-193 171 
-4 475 
-20 758 
-9 001 
-15 000 

-4 752 

-778 737 
-93 119 

-42 562 

-35 218 

-199 260 

-24 861 
-16 679 
-102 473 

-158 800 
-70 133 
-108 093 

-56 087 
-19 500 
-52 973 
-66 505 

3 437 032
2 898 256
1 405 608
1 056 474
804 888
676 235
508 378
498 479
372 459
372 383
351 027
293 186
158 702
112 320
105 420
104 689
90 252
80 999
9 953
0
0
0
0

16,6 %
20,7 %
20,7 %
13,5 %
13,6 %
23,4 %
67,4 %
50,0 %
21,6 %
17,7 %
13,5 %
24,0 %
50,0 %
48,0 %
74,1 %
4,1 %
18,7 %
44,6 %
87,5 %
100,0 %
100,0 %
100,0 %
100,0 %

TOTAL

18 567 073

-1 148 896

-676 104

-3 273 227

-132 106

13 336 740

28,2 %

Total sugar quotas renounced = 5 230 333

1 

 ‘Initial quota’ equals initial quota allocated to Member States as per annex III of regulation (ec) No 318/2006 for marketing year 

2006/07 together with additional purchased in 2006/07 and 2007/08.
2  quotas for french overseas departments included (480 245 tonnes).
3  quotas available only from 2007/08 (new MS that joined the eu in 2007).
4  quotas for the autonomous region of the azores included (9 953 tonnes).

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A N Ne X   I I

B — INULIN SYRUP

Member State

Initial quotas1

Quota renounced for given marketing year

2006/07

2007/08

2008/09

2009/10

(A)

(B)

(C)

(D)

(E)

Belgium

Netherlands

France

215 246

80 950

24 521

-215 246

-80 950

-24 521

TOTAL

320 717

-320 717

0

0

0

Total inulin syrup quotas renounced = 320 717

C — ISOGLUCOSE

Member State

Initial quotas1

Quota renounced for given marketing year

2006/07

2007/08

2008/09

2009/10

(A)

(B)

(C)

(D)

(E)

(tonnes of sugar equivalent)

Quotas available 
from marketing 
year 2009/10 

Percentage of 
total quotas 
renounced

(F) = 
(A+B+C+D+E)

(G) = 
(B+C+D+E)/A 

0

0

0

0

100,0 %

100,0 %

100,0 %

100,0 %

(tonnes of dry matter)

Quotas available 
from marketing 
year 2009/10 

Percentage of 
total quotas 
renounced

(F) = 
(A+B+C+D+E)

(G) = 
(B+C+D+E)/A 

Hungary 

Belgium 

Bulgaria2

Slovakia 

Germany 

Spain

Poland 

Italy 

Portugal

France

United Kingdom 

Netherlands 

Greece 

Romania2

Finland 

220 266

114 580

89 198

68 095

56 638

131 423

42 861

32 493

15 871

27 664

43 592

14 563

20 636

15 879

18 999

220 266

114 580

89 198

68 095

56 638

53 810

42 861

32 493

12 500

0

0

0

0

0

0

0,0  %

0,0 %

0,0 %

0,0 %

0,0 %

59,1 %

0,0 %

0,0 %

21,2 %

100,0 %

100,0 %

100,0 %

100,0 %

100,0 %

100,0 %

24,4 %

-5 000 

-3 000 

-69 613 

-27 664 

-3 371 

-14 563 

-20 636 

-18 999 

-60 569

-43 592 

-15 879 

TOTAL

912 758

0

-32 664

-129 084

690 441

Total isoglucose quotas renounced = 222 317

1 

‘Initial quota’ equals initial quota allocated to Member States as per annex III of regulation (ec) No 318/2006 for marketing year 

2006/07 together with additional quotas allocated from 2006/07, 2007/08, 2008/09.

2  quotas available only from 2007/08 (new MS that joined the eu in 2007) together with additional quotas allocated till 2009/10.
S ource: eca based on data by the commission (dG aGrI).

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A N Ne X   I I I

B ReAkD O wN   Of   MeM BeR   S TATeS   BY  Th eI R   CO M B I NeD 
P R OfI TA B IlI T Y   A N D   S UgA R   qU OTA   ReN O U N CeD

Member State

Level of 
combined 
profitabil-
ity1

(tonnes of white sugar)

Initial quotas2

Quota 
renounced in 
the first two 
years

Actual impact of the reform

Quota 
renounced for 
2008/20093

Percentage of 
initial quota 
renounced

Percentage of 
the total quota 
renounced

(A)

(B)

(C)

(D) = (B+C)/(A)

(E) = (B+C)/ 
total B+total C

Quota  
available 
 from 
2009/2010

(F) = A+B+C

Ireland

Greece

Italy

Portugal  
(mainland)

Czech Republic

Denmark

Spain3

Latvia

Lithuania

Hungary

Slovakia

Slovenia

Finland

Belgium

Germany

France  
(metropolitan)

Netherlands

Austria

Poland

Sweden

United Kingdom

Other Member 
States4

Low

2 143 923

-1 216 376

-260 466

68,9 %

28,2 %

667 081

Medium

2 923 655

-566 062

-725 282

44,2 %

24,7 %

1 632 311

High

12 895 381

-42 562

-2 410 358

19,0 %

46,9 %

10 442 461

Not included

604 114

0

-9 227

TOTAL

18 567 073

-1 825 000

-3 405 333

1,5 %

28,2 %

0,2 %

594 887

100,0 %

13 336 740

1  Breakdown of Member States according to combined profitability which would affect their likely reduction in sugar production (table 3 

in the commission ‘update of impact assessment’ [Sec(2003) 1022]).

2  the ‘Initial quota’ equals the initial quota allocated to Member States as per annex III of regulation (ec) No 318/2006 for marketing year 

2006/07 together with additional quotas purchased in 2006/07 and 2007/08.

3  quotas of 132 106 tonnes renounced in Spain for marketing year 2009/10 are included under 2008/09.
4 

‘other Member States’ includes romania, Bulgaria, french overseas departments and the autonomous regions of the azores.

S ource: the commission (unit c.5 of dG aGrI).

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A N Ne X   Iv

O v eR vIe w   Of  Th e   A I D   AvA Il A Bl e  TO   P R O D U CeR S   A N D  Th eI R 
D I ReC T   Cl O S U Re   CO S T S

Member States audited

Czech 
Republic

Germany

Ireland

Greece1

Spain

France

Italy

Poland

No of sugar factories closed

3

5

1

2

7

5

14

8

(A)  No of sugar quotas 

renounced for the factories 
closed (1 000 tonnes of white 
sugar)

(B) Total restructuring aid 

available to the producer 
— incl. retroactive pay-
ment for the factories 
closed

(C)  Total direct closure costs2 

relating to assets, stocks and 
stores write-offs

relating to social costs (re-
dundancy, pension, training, 
redeployment)

relating to dismantling and 
other closure costs

Difference between the 
restructuring aid and the 
direct closure costs (B-C)

Restructuring aid per tonne 
renounced net of direct 
closure costs (B-C)/A

102

736

199

159

498

651

1 049

296

(million euro)

58

48

22

8

18

10

98

415

127

178

67

49

62

172

108

42

22

237

-45

72

21

4

5

12

51

322

-226

321

277

358

666

166

266

165

62

39

11

22

104

42

37

25

450

237

67

146

254

216

98

51

15

32

68

390

206

230

1  the two factories should be converted into biomass production units (only aid for partial dismantling was applied for). 
2  Losses of future profits were not regarded as being direct closure costs.
S o urce: r estructuring plans and progress (final) reports submitted by the producers in the audited Member States.

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A N Ne X   v

I M Pl eMeN TAT I O N   Of  Th e   D Iv eR S IfI C AT I O N   A I D

Diversification aid allocated for 2006–101

(euro)

Member States

(A)

Belgium

Bulgaria

Czech Republic

Denmark

Germany

Ireland

Greece

Spain

France (metropolitan)

Italy

Latvia

Lithuania

Hungary

Netherlands

Austria

Poland

Portugal (mainland)

Romania

Slovenia

Slovakia

Finland

Sweden

United Kingdom

Aid for diversification

Additional aid for 
diversification

(B)

19 328 991

445 738

11 220 772

7 511 785

71 025 341

21 818 970

17 388 600

46 394 042

64 126 854

111 018 706

7 282 298

1 947 100

29 955 623

11 870 109

5 138 833

34 412 305

7 398 621

419 772

5 800 544

10 829 743

6 985 820

9 372 676

15 477 000

(C)

0

445 738

0

0

0

21 818 970

8 694 300

23 197 021

0

55 509 353

7 282 298

0

22 466 717

0

0

0

7 398 621

0

5 800 544

5 414 871

0

0

0

Total

(D) = (B)+(C)

19 328 991

891 475

11 220 772

7 511 785

71 025 341

43 637 940

26 082 900

69 591 063

64 126 854

166 528 059

14 564 595

1 947 100

52 422 341

11 870 109

5 138 833

34 412 305

14 797 242

419 772

11 601 087

16 244 614

6 985 820

9 372 676

15 477 000

TOTAL

517 170 242

158 028 432

675 198 674

1 

 diversification aid represents both aid for diversification (article 6 of regulation (ec) No 320/2006) and the additional aid for 

diversification (article 7 of regulation No 320/2006).

S ource: the commission (unit c.5 of dG aGrI).

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A N Ne X   vI

eX A M Pl eS   Of  vA R Ie T Y   Of   C R I TeR I A   Be T w e eN   MeM BeR   S TATeS   I N 
Th e   Al l O C AT I O N   Of   D Iv eR S IfI C AT I O N   A I D

the allocation of diversification aid was based on a wide variety of criteria between Member States, 
for example:

—  in Ireland, all diversification aid was granted to growers who had lost their delivery rights with-

out their needing to demonstrate any diversification costs;

—  in the czech republic, growers also received all diversification aid but it was limited to part of 

the cost of newly acquired agricultural machinery;

—  in Italy and  poland, diversification aid was allocated to diversification projects carried out by 

growers and other types of beneficiary, mainly small and medium enterprises;

—  in france, Germany and Spain, the regional authorities allocated diversification aid to a variety 
of rural development-style measures, benefiting growers, small and medium enterprises and 
local authorities.

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A N NeX   vI I

g lO S S A R Y   Of   k eY  TeR M S   A N D   A B B Re vI AT I O N S

ACP: africa, caribbean and pacific 

Beet sugar and cane sugar: sugar is manufactured either from sugar beet or from sugar cane. 
cane (a type of reed) is normally grown in tropical regions and beet (a root) crop traditionally in 
temperate regions, although there is growing interest in promoting tropical sugar beet. Maximum 
sugar yields per hectare are potentially higher for the cane but this may be partly offset by the 
beet’s shorter production cycle. currently, 80 % of world sugar production is based on cane.

Bioethanol from cane or beet: is obtained after fermentation of the raw juice (immediately after 
extraction from sugar cane or sugar beet) or thick juice (result of further processing including a 
concentration phase, which allows for intermediate storage) and distillation; the production process 
does not include production of sugar in solid form. Bioethanol may also be obtained from other 
crops; it may be used as fuel or as a fuel additive.

CAP: common agricultural policy

CMO: c ommon Market organisation

c Sugar: see under ‘q uotas A, B and so-called C sugar’

Direct payments: payments directly granted to farmers under an income support scheme (such as 
the single payment scheme listed in annex I of council regulation (ec ) No 1782/2003). Such pay-
ments could be coupled (i.e. linked to a specific production) or decoupled, based on entitlements 
based on receipts during historical reference periods.

everything but arms (eBA): a unilateral initiative adopted by the  council as regulation (ec ) No 
416/2001; it allows duty-free and quota-free access to the european market for all products, ex-
cept arms and arm munitions, originating in the least developed countries (Ldcs: a category of 
countries established by the united Nations on the basis of specific development indicators); it 
is incorporated in a multiannual generalised scheme of tariff preferences. that initiative was pre-
sented as an all-sector extension of a preference already existing in most areas of the trade with 
Ldcs: therefore, a high impact for the  eu was not expected, except in the case of bananas, rice and 
sugar, so that full implementation was postponed for these for a transitional period ending 2006 
for bananas and 2009 for rice and sugar.

export refunds: mechanism of market support that consists in enabling producers or traders to 
export agricultural products available at prices higher than world market selling prices, by paying 
a subsidy compensating the difference between internal prices and export prices on each export 
operation.

Import duties: mechanism of market support that consists in collecting a specified taxation on 
quantities imported from the world market, thus making the price of these higher as compared 
to domestic production. under a multilateral trade agreement in 1995, import duties have been 
partly dismantled for agricultural world trade and negotiations are underway at the world trade 
organisation ( wto) for further dismantling.

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A N Ne X   vI I

Intervention (public storage): mechanism of market support that consists in enabling producers 
to sell an agricultural product in the Member State (Intervention agency) at a price established 
by a council regulation; this intervention price then operates as a minimum price on the domestic 
market. Initially, unlimited quantities were eligible to this mechanism. as regards the sugar sec-
tor, the 2006 reform first restricted this to limited quantities subject to discounted prices, then 
abolished the mechanism.

Inulin and inulin syrup: inulin is a fibre (made of a chain of fructose molecules) present in a 
number of plants. Industry extracts it from the chicory root. Hydrolysis of the inulin is a way to 
obtain fructose and the result of this process, a sweetener called inulin syrup, is included in the 
eu sugar common market organisation. Its 2006 production quota was about 321 000 tons (a 1,5 % 
market share). N.B. Inulin is not related to insulin which is a hormone contributing to blood sugar 
control.

Isoglucose: also known as HfcS (high fructose corn syrup), it is a sweetener obtained through the 
processing of glucose whereby part of it is converted into fructose so as to obtain a syrup similar 
to that resulting of the hydrolysis of sugar (which converts sucrose into its glucose and fructose 
components); standard qualities contain 42 % and 55 % fructose. Glucose used to that end is a 
sweetener too, that has specific uses in food industries; it results from processing of starch; the 
latter is usually extracted from maize but the starch industry can use wheat or potatoes as well. 
Being a competitor to sugar in significant uses such as soft drinks, isoglucose is included in the 
eu sugar common market organisation: its post-reform production quota was about 508 000 tons 
(a market share under 3 % in eu-25).

lDC: least developed countries

Market support: maintaining the domestic market price for agricultural products at a higher level 
than would be caused by world market forces (differently from direct income support). to this end 
measures such as import duties, export refunds and intervention with public storage have been 
used. In previous cap reforms, as well as in the sugar 2006 reform, the level of market support 
was reduced and this was compensated by direct support to farmers, such as under the single 
payment system.

Minimum beet price: the council regulation (ec ) No 318/2006 establishes a minimum beet price 
and makes it compulsory for sugar producers to pay the beet growers a price not lower than that 
for the sugar beet of a standard quality intended for processing into quota sugar; its level is based 
on that of the sugar reference price; this mechanism aims at ensuring that the market support for 
the sugar benefits the farmers.

quotas (production quotas): mechanism of market support that essentially aims at avoiding sur-
pluses by allocating to each producer a limited market share. production exceeding quota may be 
subject to a penalty or to compulsory storage, or eligible to a specific use (such as unsubsidised 
export, as in the sugar sector). In the sugar sector quotas can be transferred between producers 
in the same Member State (within limits) but cannot be transferred between producers located in 
different Member States.

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A N Ne X   vI I

quotas A, B and so-called C sugar: it refers to the sugar quota system prior to the 2006 reform: 
‘a’ quotas roughly corresponded to the european community consumption needs and ‘B’ quotas, 
a fixed percentage of a quota, corresponded to the quantities which could be exported with ex-
port refunds. B quotas were subject to a significant production levy to finance the cost of export 
refunds, while a quotas were subject to a much lower levy. out-of-quota production, so-called ‘c’ 
sugar, was sugar produced in excess of the combined total of a and B quotas and it was exported 
without refund.

Reference price for sugar: reference prices have been established in  council regulation (ec ) No 
318/2006, for raw sugar and for white sugar; they are not prices guaranteed to producers but some 
specific market support measures may be triggered by the commission when actual market prices 
differ from the reference price by more than a certain percentage.

SPS: Single p ayment Scheme

Sugar, raw and white: white sugar is defined as sugar with a sucrose (the chemically pure molecule 
which composes sugar) content of at least 99,5 %; raw sugar standard quality is a 96 % sucrose 
content, although this is generally higher, and it has a light beige to medium brown colour. raw 
sugar is usually produced from sugar cane, while white sugar is obtained either directly from the 
processing of the sugar beet or sugar cane, or from further processing (refining) of the raw sugar. 
white sugar is the standard form in consumption but smaller quantities of raw sugar are also used 
(mainly for colour or for sugar cane flavour).

wTO’s DSB: dispute Settlement Body of the  world trade organisation.

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repLy of tHe  
coMMISSIoN

t h e   s u g a r   r e f o r m   s h o u l d   b e   c o n s i d-
e re d   a g a i n s t   t h e   b a c k g ro u n d   o f   t h e   e u' s 
‘ e v e r y  t h i n g   b u t   a r m s   I n i t i a t i v e’  ( e B a )   i n 
2 0 0 1 ,   a n d   t h e   2 0 0 5  w o r l d   tr a d e   or g a n-
i s a t i o n   ( w t o )   r u l i n g   o n   t h e   e u  s u g a r 
re gi m e.  th e   eBa  gra nte d   l e a s t   d e ve l o p e d 
c o u n t r i e s   ( Ld c )   f r e e   a c c e s s   t o   t h e   e u 
m a r k e t ,   i n c l u d i n g   s u g a r.  th e  w to  r u l i n g 
n e c e s s i t a t e d   a   r e d u c t i o n   o f   s u b s i d i z e d 
e u  s u g a r   e x p o r t s .   I n   r e s p o n s e ,   t h e   e u 
h a d   t o   c u t   i t s   s u g a r   p r o d u c t i o n   q u o t a s 
t o   m a i n t a i n   t h e   a p p ro p r i a t e   m a r k e t   b a l-
a n c e .   t h u s ,   s o m e   o f   t h e   d e v e l o p m e n t s 
d e s c r i b e d   b y   t h e   c o u r t   ( e . g .   t h e   r e d u c -
tion  of produc tion  quotas) are ul ti mate ly 
r a t h e r   a   c o n s e q u e n c e   o f   t h e   t w o   a f o r e -
mentioned changes in the broader polic y 
e nv i ro n m e nt.   o t h e r s   ( e. g.   t h e   co n ce nt ra-
t i o n   a n d   c l o s u re   o f   p ro d u c t i o n   f a c i l i t i e s ) 
c a n   a t   l e a s t   p a r t i a l l y   b e   a t t r i b u t e d   t o 
long er-ter m tren ds.

v.
t h e   o v e r a l l   i n c r e a s e   i n   c o m p e t i t i v e n e s s 
o f   t h e   e u  s u g a r   s e c t o r   a c h i e v e d   b y   t h e 
r e f o r m   i s   e v i d e n t   a n d   t h e   c o m m i s s i o n 
c o n s i d e r s   t h a t   t h i s   o b j e c t i v e   h a s   b e e n 
fully m et.

the refor m was based on a voluntar y sys-
t e m   o f   q u o t a   r e n u n c i a t i o n   u n d e r p i n n e d 
i n   p a r t i c u l a r   b y   a   t e m p o r a r y   r e s t r u c t u r -
i n g   f u n d .   t h e   c h o i c e   o f   a b a n d o n i n g   o r 
k e e p i n g   p r o d u c t i o n   w a s   t o   b e   m a d e   b y 
e v e r y   s u g a r   p r o d u c i n g   c o m p a n y   b e a r -
in g in  mind th at in  th e futu re th ey  woul d 
have to secure their long-ter m profitabil-
i t y   i n   a   s i t u a t i o n   o f   s u b s t a n t i a l l y   l o w e r 
in stitution al pr ices.

SUMMARY

I.–III .
t h e   2 0 0 6   re fo r m   o f   t h e   e u  s u g a r   m a r k e t 
h a s   s u c c e s s f u l l y   m a n a g e d   t h e   r e s t r u c -
t u r i n g   o f   t h e   s e c t o r,   p r o v i d i n g   i t   w i t h   a 
l o n g - t e r m   p o l i c y   f r a m e wo r k   a n d   c o n s i d-
e r a b l y   i m p r o v i n g   i t s   c o m p e t i t i v e n e s s . 
e u  s u g a r   p r o d u c e r s   a r e   n o w   o p e r a t i n g 
i n   a n   e n v i r o n m e n t   w i t h   i n s t i t u t i o n a l 
p r i c e s   r e d u c e d   b y   3 6  % ,   a n d   p r o d u c t i o n 
is more concentrated in high profitabilit y 
regions.

t h e   k e y   e l e m e n t s   o f   t h e   r e f o r m   w e r e   a 
s u b s t a nt i a l   re d u c t i o n   o f   t h e   i n s t i t u t i o n a l 
p r i c e s   a n d   a   t e m p o r a r y   r e s t r u c t u r i n g 
f u n d   a i m e d   a t   c o m p e n s a t i n g   o p e r a t o r s 
for giving up produc tion quota and help -
i n g   c o u n t e r b a l a n c e   t h e   p o t e n t i a l   n e g a-
t i v e   s o c i a l   a n d   e nv i r o n m e n t a l   e f fe c t s   o f 
t h e   re fo r m .  th i s   c re a te d   a n   i n ce n t i ve   fo r 
t h e   l e a s t   co m p e t i t i ve   s u g a r   p ro d u ce r s   to 
renounce their quotas. M oreover, in order 
t o   f u r t h e r   p r o m o t e   t h e   c o m p e t i t i v e n e s s 
o f   t h e   e u   s u g a r   p r o d u c i n g   s e c t o r,   a d d -
i t i o n a l   q u o t a s   we re   m a d e   ava i l a b l e   to   e u 
o p e rato r s   i n   exc h a n g e   fo r   a   o n e - o f f   p ay -
ment.

t h e   r e f o r m   h a s   b e e n   b u d g e t   n e u t r a l   i n 
ter ms of agr icultural expenditure. adjust-
m e nt   n e e d s   i n   ac p  co u nt r i e s   s i gn ato r i e s 
to  t he  Sug ar  pro to col   were  exp l ic itly   rec -
o gn i s e d   i n   t h e   co m m i s s i o n   p ro p o s a l   a n d 
a d d r e s s e d   i n   a   s p e c i f i c   a i d   p r o g r a m m e 
agreed by the council and the par liament 
as par t  of  t he re fo r m p ac k ag e.

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repLy of tHe  
coMMISSIoN

vI I .
I n   l i n e   w i t h   t h e   p r i n c i p l e   o f   s u b s i d i-
a r i t y,   t h e   r e s p o n s i b i l i t y   f o r   a d d r e s s i n g 
t h e   co n s e q u e n ce s   o f   f a c to r y   c l o s u re s   ( o r 
p r o d u c t i o n   r e d u c t i o n s ) ,   i n c l u d i n g   t h e 
i m p l e m e n t a t i o n   o f   t h e   n e c e s s a r y   d i v e r -
s i f i c a t i o n   m e a s u r e s ,   l i e s   w i t h   t h e   M e m-
b e r   S t a t e s .   N e v e r t h e l e s s ,   w i t h   a   v i e w   t o 
s e c u r i n g   t i m e l y   i m p l e m e nt at i o n   o f   t h e s e 
m e a s u r e s   a n d   t h e n   a v o i d i n g   u n n e c e s-
s a r y   d e l a y s ,   t h e   e u  l e g i s l a t i o n   c o n t a i n s 
d e t a i l e d   e x e c u t i o n   a n d   p a y m e n t   d e a d -
l i n e s   w h i c h   M e m b e r   S t a te s   a re   b o u n d   to 
meet. 

t h e   r e f o r m   e n t a i l s   a   m o r e   c o m p e t i t i v e 
b u s i n e s s   e n v i r o n m e n t   f o r   t r a d i t i o n a l 
refiners, which need to adjust their oper -
a t i o n s   i n   o rd e r   t o   re m a i n   c o m p e t i t i ve   i n 
t h i s   n e w   s c e n a r i o .   t h e   p u r p o s e   o f   t h i s 
t r a n s i t i o n a l   a i d ,   w h i c h   w a s   n o t   p a r t   o f 
t h e   c o m m i s s i o n’s   i n i t i a l   p r o p o s a l ,   i s   t o 
e n a b l e   t h e s e   co m p a n i e s   to   t a k e   t h e   n e c-
e s s a r y   m e a s u r e s   t o   i m p r o v e   t h e i r   c o m-
petit iven ess.

vI I I.
a s   f a r   a s   t h e   re fo r m   o f   t h e   s u g a r   re g i m e 
i s   c o n c e r n e d ,   a l l   t h e   c h a n g e s   t h a t   w e r e 
i n t r o d u c e d   w i t h i n   t h e   c o m m o n   M a r k e t 
or g a n i s a t i o n   ( cMo )   f o r   s u g a r   n e e d   t o 
b e   t a k e n   i n t o   a c c o u n t ,   i . e .   t h e   t r a n s f e r 
f ro m   m e a s u re s   e n co m p a s s i n g   h i g h   g u a r-
a n t e e   p r i c e s   o f   s u g a r   b e e t ,   p r o d u c t i o n 
a n d   e x p o r t   r e f u n d s   t o   a   s y s t e m   m a i n l y 
b a s e d   o n   d i r e c t   a i d   t o   f a r m e r s .   I n   t h i s 
s e n s e ,   t h e   s u g a r   r e g i m e   w a s   c o n c e i v e d 
to   b e   b u d g e t- n e u t ra l   i n   te r m s   o f   a gr i c u l-
t u r a l   e x p e n d i t u r e   ( s e e   a l s o   t h e   c o u r t ' s 
obser vation in point 89). the commission 
c o n s i d e r s   t h a t   t h i s   o b j e c t i v e   h a s   b e e n 
achieved. 

I n accordance with ar ticle 1(3) of council 
r egulation ( ec ) No 320/2006, the remain -
i n g   b a l a n c e   i n   t h e   s u g a r   r e s t r u c t u r i n g 
f u n d   w i l l   b e   a s s i g n e d   t o   t h e   e a Gf  a f t e r 
th e  fin ancin g  of  th e  me as ures   un de r   th at 
fun d.

t h e   f a c t   t h a t   t h e   r e fo r m   s i m u l t a n e o u s l y 
o f f e r e d   t h e   o p t i o n   o f   a b a n d o n i n g   a n d 
o b t a i n i n g   a d d i t i o n a l   q u o t a s   r e s p o n d e d 
p re c i s e l y   to   t h e   o b j e c t i ve   o f   a c h i e v i n g   a 
s m a l l e r   b u t   m o r e   c o m p e t i t i v e   e u  s u g a r 
producing  sec to r.

a s   d o c u m e n t e d   i n   c o m m i s s i o n   ta b l e   1 , 
t h e   re n u n c i at i o n   o f   q u o t a   h a s   b e e n   m o re 
p ro n o u n ce d   i n   M e m b e r   St ate s   w i t h   a   l ow 
l e ve l   o f   c o m b i n e d   p ro f i t a b i l i t y,   w h e re a s 
9 3  %   o f   n e w   q u o t a s   h ave   b e e n   a l l o c a t e d 
t o   M e m b e r   S t a t e s   w i t h   a   h i g h   c o m b i n e d 
p r o f i t a b i l i t y.   a s   a   r e s u l t   o f   t h i s   p r o c e s s , 
M e m b e r   S t a t e s   w i t h   h i g h   p r o f i t a b i l i t y 
a c c o u n t   f o r   7 8  %   o f   t h e   e u  q u o t a   ( 6 8  % 
b e f o r e   t h e   r e f o r m )   w h e r e a s   M e m b e r 
States with low profitabilit y now hold 5  % 
of t he qu o ta (12  % b efo re). 

vI.
t h e   c o m m i s s i o n   w e l c o m e s   t h e   c o u r t ’s 
a c k n o w l e d g m e n t   t h a t   t h e   r e f o r m ’ s 
o b j e c t i ve   o f   s t a b i l i s i n g   t h e   s u g a r   m a r k e t 
an d sug ar pr ice s  has b een m et.

th e   h i g h e r   re l i a n ce   o n   e x te r n a l   s u p p l i e s 
o f   s u g a r   i s   t h e   r e s u l t   o f   t h e   t r a d e   a n d 
d e v e l o p m e n t   p o l i c i e s   o f   t h e   e u,   a n d   i n 
p a r t i c u l a r   t h e  ‘e v e r y t h i n g   b u t   a r m s’  i n i-
t i at i ve   t h at   h a s   gra nte d   u n l i m i te d   a cce s s 
t o   t h e   e u  m a r k e t   t o   i m p o r t s   f r o m   l e a s t 
developed countr ies, some of which have 
substant ial  su gar  exp or t  po tent ia l. 

M o re ove r,   t h e   s u g a r   re gi m e   i n co r p o rate s 
t h e   n e c e s s a r y   t o o l s   t o   d e a l   w i t h   a   hy p o -
t h e t i c a l   s i t u a t i o n   o f   u n d e r s u p p l y   o f   t h e 
eu mar ket mainly by conver ting available 
ou t- of- qu o ta su gar into  qu o ta sug ar.

t h e   c o m m i s s i o n   w i l l   s h o r t l y   l a u n c h   a 
s t u d y   o n   p r i ce   t r a n s m i s s i o n   i n   t h e   s u g a r 
sec tor to shed mo re l ight  on  thi s  is sue.

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I X.  fou r th  indent
I n   o rd e r   to   s h e d   m o re   l i g ht   o n   t h i s   i s s u e, 
t h e   c o m m i s s i o n   w i l l   s h o r t l y   l a u n c h   a 
s t u d y   o n   p r i ce   t r a n s m i s s i o n   i n   t h e   s u g a r 
sec tor. 

I X.  fi f th  indent
I n   l i n e   w i t h   t h e   s u b s i d i a r i t y   p r i n c i p l e , 
t h e   re s p o n s i b i l i t y   fo r   i m p l e m e n t a t i o n   o f 
diversification measures and for ensur ing 
c o m p l i a n c e   w i t h   e n v i r o n m e n t a l   o b l i g a -
t i o n s   l i e s   w i t h   t h e   M e m b e r   St ate s,   w h i c h 
a r e   b e t t e r   p l a c e d   t o   t a k e   t h e   n e c e s s a r y 
d e c i s i o n s   i n   t h e   l i g h t   o f   t h e   n u m b e r   o f 
spec ific fac tor s apply in g in  each  c as e. 

INTRODUCTION

4 .
th e   s m o o t h   o p e r a t i o n   o f   a   s u g a r   re g i m e 
b a s e d   o n   q u o t a s   re q u i re s   q u o t a s   fo r   i s o -
g l u c o s e   a n d   i n u l i n   s y r u p   a s   w e l l ,   s i n c e , 
a s   t h e   c o u r t   r i g h t l y   p o i n t s   o u t ,   b o t h 
p r o d u c t s   a r e   p o t e n t i a l   s u b s t i t u t e s   f o r 
s u g a r.   q u o t a s   we re   i n t ro d u c e d   a t   a   t i m e 
when the produc tion of these alter native 
s we e t e n e r s   i n   t h e   co m m u n i t y   re a c h e d   a 
volume that r isked disrupting the nor mal 
operation of the sugar regime. the quota 
l e v e l s   f i x e d   t h e n   c o r r e s p o n d e d   t o   t h e 
produc tion volume of that  t ime.

5 .
the commission would like to clar ify that 
i n   t h e   l i g h t   o f   t h e   wo r l d   tr a d e   or g a n-
i s a t i o n   ( w to )   r u l i n g ,   t h e r e   i s   n o   a b s o -
l u t e   q u a n t i t a t i v e   l i m i t   o n   w h i t e   s u g a r 
expor t s:

t h e   a c c o m p a n y i n g   m e a s u r e s   f o r   a c p 
countr ies result from the overall eu com-
m i t m e n t ,   w i t h i n   t h e   f r a m e w o r k   o f   t h e 
ac p–e u  p a r t n e r s h i p   a g r e e m e n t ,   t o   s u p -
p o r t   ac p  co u nt r i e s   o n   t h e i r   p at h   to   p ov -
e r t y   re d u c t i o n   a n d   s u s t a i n a b l e   d e ve l o p -
m e n t .   d u r i n g   t h e   p ro c e s s   l e a d i n g   t o   t h e 
s u g a r   re fo r m ,   t h e   co m m i s s i o n   h a d   c o m-
m i t t e d   i t s e l f   t o   s u p p o r t   t h e   a d j u s t m e n t 
n e e d s   o f   p r i v i l e g e d   S u g a r   pro to co l   co u n-
t r i e s   a n d   m a d e   a n   a n a l ys i s   o f   t h e   i m p a c t 
of the sugar reform on acp countries. the 
need for such accompanying measures to 
ac p  co u nt r i e s   h a d   b e e n   d u l y   a nt i c i p ate d 
a n d   t h e y   d o   n o t   p e r t a i n   t o   t h e   a g r i c u l -
tura l  s ec tio n of  t he b ud get.

IX. firs t in de nt
a s   a   m a t t e r   o f   c o u r s e ,   t h e   c o m m i s-
s i o n   a l w a y s   e xe r c i s e s   g r e a t   d i l i g e n c e   t o 
e n s u r e   t h a t   i n s t r u m e n t s   a n d   m e a s u r e s 
a re   d e s i gn e d   s o   a s   to   e n s u re   ove ra l l   co n-
sistenc y and are based on thorough tech-
n i c a l   a s s e s s m e n t s   o f   n e e d s   a n d   o b j e c -
t i ve   a n d   n o n - d i s c r i m i n ato r y   c r i te r i a .  th i s 
a p p r o a c h   h a s   a l s o   b e e n   f o l l o w e d   i n   t h e 
refor m o f t he su gar mar k et.

IX. second  ind e nt
I n   p r e p a r i n g   i t s   p r o p o s a l   f o r   t h e   r u l e s 
g o v e r n i n g   s u g a r   a f t e r   m a r k e t i n g   y e a r 
2 0 1 4 / 1 5 ,   t h e   c o m m i s s i o n ,   b u i l d i n g   o n 
t h e   e x p e r i e n c e   o f   t h e   p a s t ,   w i l l   e x a m i n e 
a whol e s er ie s of  op t io ns.

IX. third inde nt
t h e   c o m m i s s i o n   i s   o f   t h e   v i e w   t h a t   t h e 
new sugar mar ket balance emerging from 
the refor m, including the level of eu self-
s u f f i c i e n c y,   i s   i n   l i n e   w i t h   tr e a t y   p r o v i-
s i o n s ,   w h i c h   d o   n o t   s t i p u l a t e   t h a t   t h e 
e u  s h o u l d   b e   s e l f - s u f f i c i e n t   w i t h   r e g a r d 
t o   e v e r y   a g r i c u l t u r a l   p r o d u c t .   fu r t h e r -
m o re,   t h e   s u g a r   re gi m e   i n co r p o rate s   t h e 
n e c e s s a r y   t o o l s   t o   d e a l   w i t h   s i t u a t i o n s 
o f   u n d e r s u p p l y   o f   t h e   m a r k e t ,   m a i n l y   by 
c o nve r t i n g   av a i l a b l e   o u t - o f - q u o t a   s u g a r 
into qu o ta su gar.

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t h e r e f o r e   t h e   e u  m a y   a l l o w   e x p o r t s   o f 
o u t - o f - q u o t a   s u g a r   i n   e xc e s s   o f   i t s   w to 
co m m i t m e nt s,   p rov i d e d   t h e   e u  c a n   d e m-
o n s t r a t e   t h a t   t h e s e   e x p o r t s   a re   n o t   s u b -
sidis ed. 

B ox 1
See reply to point 5.

7.
th e   co m m i s s i o n   wo u l d   l i k e   to   u n d e r l i n e 
at the outset that not all eu sugar expor ts 
b u t   o n l y   s u b s i d i s e d   e x p o r t s   s h o u l d   b e 
k e p t   w i t h i n   t h e   l i m i t   i m p o s e d   b y   t h e 
w to ruling. accordingly, quota sugar and 
quota and out- of- quota isoglucose, as far 
as no refund is granted, are not subjec t to 
this limit.

9.
th e   o b j e c t i ve s   o f   t h e   re fo r m   a re   d i re c t l y 
linked to the objec tives of the  cap, which 
are enshrined in the treaties. Moreover, it 
is not a shor tcoming of the reform to have 
p a r t l y   d i ve rgi n g   o b j e c t i ve s,   b u t   ra t h e r   a 
r e s u l t   o f   i t s   c o m p r e h e n s i v e   s c o p e .   t h e 
different  objec tives  of  the  refor m  reflec t 
the  different  aspec ts  of  the  sugar  market 
and need to be balanced off against each 
other.

10. (d)
a  l owe r   l e ve l   o f   q u o t a   re n u n c i at i o n   d u r -
i n g   t h e   s e co n d   ye a r   l e d   to   a   s i t u at i o n   o f 
o v e r s u p p l y   o f   t h e   d o m e s t i c   m a r k e t ,   i n 
r e s p o n s e   t o   w h i c h   t h e   c o m m i s s i o n   h a d 
to  take  t wo  sets  of  measures:  on  the  one 
h a n d,   ex te n d i n g   ex p o r t   re f u n d s   i nto   t h e 
marketing year 2007/08, and, on the other 
h a n d ,   s e t t i n g   a   w i t h d r a w a l   p e r c e n t a g e 
o f   1 3 . 5  %   ( c o m m i s s i o n   r e g u l a t i o n   ( e c ) 
N o  2 9 0 / 2 0 0 7 )   i n   o r d e r   t o   p r e s e r v e   t h e 
struc tural balance of the market.

t h e   w to  pa n e l   a n d   t h e   a p p e l l a t e   B o d y 
r e c o m m e n d e d   t h a t   t h e   di s p u t e   S e t t l e -
m e n t   B o d y   (dS B )   r e q u e s t   t h e   e u r o p e a n 
communit y (ec ) to bring its sugar regime, 
t o   t h e   e x t e n t   i t   w a s   f o u n d   t o   b e   i n c o n-
s i s t e n t   w i t h   t h e  w to  Ag re e m e n t   o n   Ag r i-
c u l t u re ,   i n   l i n e   w i t h   i t s   o b l i g at i o n s   u n d e r 
that a gre eme nt. 

a s   r e g a r d s   t h e   s c o p e   o f   t h e   i n c o n s i s t -
e n c y,   i n   i t s   r e p o r t   o f   2 8   a p r i l   2 0 0 5   t h e 
w to  a p p e l l a t e   B o d y   u p h e l d   t h e   pa n e l ’s 
finding s  that: 

—  footnote 1 in the ec Schedule relating 
t o   p r e f e r e n t i a l   i m p o r t s   f r o m   c e r t a i n 
ac p   co u nt r i e s   a n d   I n d i a   d i d   n o t   h ave 
th e l e g al ef fe c t o f enl arging  or ot h er-
w i s e   m o d i f y i n g   t h e   e u r o p e a n   c o m-
m u n i t i e s’  q u a n t i t y   c o m m i t m e n t   l e ve l 
cont aine d in  t he ec S chedu l e,

—  the complainants (australia, Brazil and 
t h a i l a n d )   h a d   p r o v i d e d   p r i m a   f a c i e 
e v i  d e n ce   t h at   p ro d u ce r s / ex p o r te r s   o f 
c (i.e. out- of- quota) sugar that exceed 
t h e   e c ’s   c o m m i t m e n t   l e v e l s   r e c e i v e d 
‘payments’ on expor t (i) through sales 
o f   c   b e e t   to   c   s u g a r   p ro d u ce r s   b e l ow 
their total costs of produc tion; and (ii) 
in the form of transfers of financial re -
s o u r c e s ,   t h r o u g h   c r o s s - s u b s i d i s a t i o n 
resulting from the operation of the ec 
s u g a r   r e g i m e ,   w i t h i n   t h e   m e a n i n g   o f 
a r t i c l e   9 . 1 ( c )   o f   t h e   w to  A g r e e m e n t 
o n   A g r i c u l t u r e  ( a n d   h e n c e   s u b j e c t   t o 
r e d u c t i o n   c o m m i t m e n t s   f o r   e x p o r t 
sub sidie s), 

—  t h e   e c   h a d   n o t   d e m o n s t r a t e d   t h a t 
i t s   e x p o r t s   o f   c   s u g a r   a n d   a c p / I n d i a 
( e q u i v a l e n t )   s u g a r   t h a t   e xc e e d e d   t h e 
e u r o p e a n   c o m m u n i t i e s’  c o m m i t m e n t 
level  we re  no t s ub s idis ed.

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23.
fo r   r e a s o n s   o f   e f f i c i e n c y   a n d   t r a n s p a r -
enc y,  the  commission  opted  for  a  refor m 
m o d e l   i n   w h i c h   t h e   f i n a l   d e c i s i o n s   f o r 
keeping, reducing or abandoning produc-
t i o n   wo u l d   b e   t a k e n   by   i n d i v i d u a l   s u g a r 
co m p a n i e s,   a g a i n s t   t h e   b a c k gro u n d   o f   a 
future characterised by substantially lower 
p r i c e s.   I n   a d d i t i o n ,   a   f i n a n c i a l   i n c e n t i ve 
was provided for companies that decided 
to   s u r re n d e r   q u o t a .  th i s   m o d e l   d o e s   n o t 
re q u i re   a n   a n a l ys i s   o f   t h e   c u r re nt   p ro f i t -
a b i l i t y   a n d   p ro s p e c t s   o f   e ve r y   i n d i v i d u a l 
s u g a r   p ro d u ce r   i n   t h e   e u.  th e re fo re,   t h e 
commission did not consider it necessar y 
to   co l l e c t   s u c h   d at a   o n   p ro d u c t i v i t y   a n d 
e f f i c i e n c y   f o r   t h e   m o d e l   c h o s e n .   M o r e -
over, such an analysis would concern con-
fidential  aspec ts  of  private  business,  and 
c o m p a r i s o n s   b e t w e e n   c o m p a n i e s   b a s e d 
t h e re o n   wo u l d   n o t   b e   e xe m p t   f ro m   co n-
troversy. 

t h e   g a i n s   i n   c o m p e t i t i v e n e s s   o f   t h e   e u 
sugar industr y af ter the reform are incon-
te s t a b l e   s i n ce   o p e rat i n g   co m p a n i e s   n ow 
have to maintain profitability in a scenario 
of substantially lower institutional prices.

24.
t h e   c o m m i s s i o n   h a s   c o n s i s t e n t l y   m a d e 
u s e   o f   t h e   b e s t   ava i l a b l e   i n fo r m at i o n   fo r 
the purpose of estimating the profitability 
of the sugar sec tor in each Member State. 
I n   o r d e r   t o   s e c u r e   r e l i a b i l i t y   o f   r e s u l t s , 
these analyses are to be based on consoli-
dated  underlying  trends  over  a  meaning-
f u l   p e r i o d   o f   t i m e.  th e   c u r re nt   re s u l t s   o f 
t h e   r e fo r m   h a v e ,   t o   a   v e r y   l a r g e   e x t e n t , 
confirmed the validity of these estimates.

10. (e)
S i n ce   t h e   re fo r m   i nvo l ve d   a   re d u c t i o n   o f 
beet  prices,  it  had  a  direc t  impac t  on  the 
income of growers, hence the justification 
for  compensation.  for  cereal  growers  the 
i s o g l u c o s e   o n l y   c o n s t i t u t e s   a   m a r g i n a l 
o u t l e t   f o r   c e r e a l s   w h o s e   p r i c e   i s   m u c h 
m o re   d e p e n d e n t   o n   o t h e r   v a r i a b l e s.   th e 
re fo r m   d i d   n o t   h ave   a   n o t i ce a b l e   i m p a c t 
o n   t h e   i n c o m e   o f   c e r e a l   g r o w e r s   a n d 
t h e r e f o r e   a n y   c o m p e n s a t i o n   w o u l d   n o t 
have been justified. 

OBSeRvATIONS

21.
In order to secure an efficient and smooth 
re s t r u c t u r i n g,   t h e   co m m i s s i o n   o p te d   fo r 
a  refor m  model  based  on  voluntar y  deci-
sions by sugar producers. this choice has 
p rove n   e f f i c i e n t   i n   d e l i ve r i n g   t h e   o b j e c -
tives of the reform. an approach based on 
t a r g e t i n g   s p e c i f i c   r e g i o n s   o r   i n d i v i d u a l 
p r o d u c e r s   w o u l d   h a v e   e n c o u n t e r e d   n o t 
only  major  opposition  by  M ember  States 
and  operators  affec ted  by  quota  cuts  but 
also great prac tical difficulties in singling 
o u t   w h o   s h o u l d   g o   o u t   o f   b u s i n e s s   a n d 
who should remain. 

22.
the primar y objective of the reform was to 
attain a new balance for the eu sugar pro -
d u c i n g   s e c t o r   i n   a   s c e n a r i o   m a r k e d   by   a 
greater openness of the domestic market 
to   i m p o r t s   f ro m   t h i rd   co u nt r i e s.   I n   o rd e r 
to   a c h i e ve   t h i s   o b j e c t i ve,   a   q u o t a   re d u c -
t i o n   w a s   re q u i re d ;   re m a i n i n g   co m p a n i e s 
should be able to operate in a market with 
substantially lower institutional prices. 

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26.
the  rationale  for  the  refor m  was  the  vol-
u n t a r y   r e n u n c i a t i o n   o f   6   m i l l i o n   t o n n e s 
of quota produc tion by the 2009/10 cam-
p a i g n   f o r   w h i c h   a   f o u r - y e a r   r e s t r u c t u r -
ing  scheme  was  set  up. while  the  uptake 
o f   t h e   f i r s t   y e a r   ( 1 , 4 7   m i l l i o n   t o n n e s 
r e n o u n c e d )   w a s   i n   l i n e   w i t h   t h i s   g o a l , 
t h i s   w a s   n o t   s o   m u c h   t h e   c a s e   f o r   t h e 
s e co n d   ye a r   ( 0 , 7 1  m i l l i o n   to n n e s ) ,   w h i c h 
p r o m p t e d   t h e   c o m m i s s i o n   t o   m a k e   t h e 
n e c e s s a r y   a d j u s t m e n t s .   t h e   r e l e v a n t 
council regulation (ec ) No 1261/2007 was 
adopted in o c tober 2007.

t h e   i n s t r u m e n t s   e n c o u r a g i n g   t h e   a b a n-
d o n m e n t   o f   q u o t a   d u r i n g   t h e   f i r s t   t w o 
years  of  the  refor m  proved  to  be  attrac t-
i ve   o n l y   to   t h e   l e a s t   co m p e t i t i ve   p ro ce s-
sors and the volume of quota abandoned 
was  not  sufficient  for  the  sec tor  to  find  a 
new balance. as the cour t rightly explains 
i n   g r e a t e r   d e t a i l   i n   p o i n t   2 7 ,   a   m a j o r 
obstacle for the industr y was not a lack of 
financial incentives, but rather the uncer -
tainties linked to the par t of the aid to be 
reser ved for growers and contrac tors.

28.
th e   t ra n s i t i o n a l   f i ve -ye a r   co u p l e d   a i d   to 
growers has to be assessed in the political 
contex t  of  the  reform  of  the  sugar  sec tor 
which  also  had  to  be  suppor ted  by  those 
M e m b e r   S t ate s   w h i c h ,   a s   a   re s u l t ,   wo u l d 
lose sugar produc tion capacity. the sugar 
re fo r m   i s   to   b e   a s s e s s e d   a g a i n s t   i t s   f i n a l 
r e s u l t s ,   o n c e   t h e   t r a n s i t i o n a l   p e r i o d   i s 
over. 

the original Impac t assessment Sec(2003) 
1022 was based on data from the ‘Study to 
assess the impact of future options for the 
future reform of the sugar cMo ’, prepared 
by LMc for the  cefS (2003), which largely 
co n f i r m e d   p re v i o u s   co n c l u s i o n s   re a c h e d 
by the c ommission. 

the update of the I mpac t assessment Sec 
( 2 0 0 5 )   8 0 8   d r e w   o n   a   r a n g e   o f   s o u r c e s , 
i n c l u d i n g   v a r i o u s   s t u d i e s   c o m m i s s i o n e d 
either by sector organisations (e.g. comité 
e u r o p é e n   d e   fa b r i c a n t s   d e   S u c r e ,   c o n-
f é d e r a t i o n   G é n é r a l e   d e   B e t t e r a v i e r s )   o r 
M e m b e r   S t a t e s,   a s   we l l   a s   c o n t r i b u t i o n s 
from the academic world. 

a c c o r d i n g l y,   t h e   d a t a   i n   ta b l e   2   o f   t h e 
u p d a t e d   i m p a c t   a s s e s s m e n t   a r e   t h e   l a t -
e s t   av a i l a b l e   s u i t a b l e   fo r   t h e   p u r p o s e   o f 
e s t i m at i n g   t h e   p ro f i t a b i l i t y   o f   t h e   e nt i re 
sugar sec tor in each Member State. 

25.
S e e   t h e   re p l y   to   p o i nt   2 3   fo r   t h e   fe at u re s 
of the reform model retained by the com-
mission .

a s   d o c u m e n t e d   i n   c o m m i s s i o n   ta b l e   1 , 
t h e   s h a r e   o f   q u o t a   h e l d   b y   h i g h - p r o f i t -
abilit y M ember States has increased from 
6 8  %   t o   7 8  %   a f t e r   t h e   r e f o r m   w h i l e   t h e 
s h a re   o f   l ow- p ro f i t a b i l i t y   M e m b e r   St ate s 
h a s   d ro p p e d   f ro m   1 2  %   to   5  % .  th e   g a i n s 
i n   t h e   ove r a l l   c o m p e t i t i ve n e s s   o f   t h e   e u 
suga r  produ cing  sec tor are c l ear.

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34.
a s   t h e   c o u r t   d e s c r i b e s   i n   p o i n t   2 7 ,   a n 
essential element that precluded a greater 
u p t a k e   o f   t h e   re s t r u c t u r i n g   f u n d   d u r i n g 
t h e   s e c o n d   y e a r   w a s   a   d e g r e e   o f   u n c e r-
taint y  about  the  ac tual  level  of  aid  to  be 
received by the sugar processor. Moreover, 
the  commission  wishes  to  stress  that  the 
total aid amount was not increased during 
the  second  phase  of  the  reform  in  which, 
never theless, the objec tive of total quota 
renunciation has been achieved.

35.
d e c i s i o n s   o n   q u o t a   r e n u n c i a t i o n   w e r e 
t a k e n   v o l u n t a r i l y   b y   c o m p a n i e s   o n   t h e 
basis  of  their  own  assessment  of  the  cur-
rent  situation  and  perspec tives. all  oper-
ators  in  the  eu  were  confronted  with  the 
s a m e   c h o i c e   u n d e r   t h e   s a m e   c o n d i t i o n s 
and ever yone took the decision that they 
considered to be the most appropriate. 

36.
the aim was to achieve an overall increase 
in the produc tivit y of the  eu sugar sec tor 
a f t e r   t h e   re fo r m ,   a n d   t h i s   g o a l   h a s   b e e n 
reached.   

B e i n g   a   v o l u n t a r y   s c h e m e ,   a l l   e u  s u g a r 
producers had access to the restruc turing 
scheme. the final decisions were taken by 
i n d i v i d u a l   u n d e r t a k i n g s   b e a r i n g   i n   m i n d 
the  likely  profitabilit y  of  the  company  in 
the new market environment.

See also the figures presented in the com-
mission reply to point 25.

29.
the total level of quota renunciation esti-
mated by the commission is not based on 
t h e   a n a l y s i s   o f   t h e   p r o f i t a b i l i t y   o f   i n d i-
v i d u a l   c o m p a n i e s   b u t   t h e   r e s u l t   o f   t h e 
n e w   m a c ro e c o n o m i c   c o n d i t i o n s   p re v a i l-
ing in sugar economics in the eu, namely 
the w to panel decision and the increased 
a c c e s s   g r a n t e d   t o   c e r t a i n   s u g a r   e x p o r t -
ers. 

S i n ce   t h e   co m m i s s i o n   l a rg e l y   s h a re s   t h e 
co u r t ’s   p o s i t i o n   t h a t   t h e   p ro f i t a b i l i t y   o f 
sugar producers can var y within the same 
region, it opted for a reform model where 
final decisions would be taken by individ-
u a l   s u g a r   c o m p a n i e s.   ag a i n s t   t h i s   b a c k -
g ro u n d,   t h e   o b j e c t i ve   o f   t h e   re fo r m   w a s 
n o t   t o   a c h i e v e   t h e   n e w   m a r k e t   b a l a n c e 
s o l e l y   by   a   to t a l   ce s s at i o n   o f   p ro d u c t i o n 
in the least profitable Member States but 
to set up conditions and incentives allow-
ing the sec tor to under take the necessar y 
cuts in produc tion. 

30.
t h e   d e c i s i o n   t o   c e a s e   s u g a r   p r o d u c t i o n 
was taken by individual sugar companies. 
M o s t   e f f i c i e n t   s u g a r   p r o d u c e r s   a r e   c e r -
tainly better placed to keep their ac tivit y 
in a scenario of lower prices.  as the cour t 
r i g h t l y   p o i n t s   o u t   i n   o t h e r   p a r t s   o f   i t s 
repor t, the combined profitability of sugar 
produc tion depends not only on the eco -
nomic per formance of processing facilities 
b u t   a l s o   o n   t h e   c o m p e t i t i v e n e s s   o f   t h e 
g row i n g   s e c t o r.  to   b e   c o m m e rc i a l l y   s u s-
tainable, both should go hand in hand.

32. (c)
the introduc tion of an obligator y uncom-
p e n s ate d   q u o t a   c u t   i n   2 0 1 0   i f   t h e   t a rg e t 
h a d   n o t   b e e n   m e t   by   vo l u n t a r y   re n u n c i -
ations  proved  instrumental  in  secur ing  a 
l a r g e   u p t a k e   f r o m   t h e   t h i r d   y e a r   o f   t h e 
reform. 

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37.
the competitiveness of individual compan-
i e s   i s   n o t   o n l y   a   f u n c t i o n   o f   t h e   M e m b e r 
S t a t e   w h e r e   t h e y   o p e r a t e   b u t   a l s o   t h e i r 
s i z e,   t h e   p e r fo r m a n c e   o f   t h e   p ro c e s s i n g 
f a c i l i t i e s ,   m a n a g e m e n t   a n d   m a n y   o t h e r 
fac tors. as rightly explained by the cour t, 
p r o f i t a b i l i t y   d i f fe r e n t i a l s   b e t w e e n   c o m-
panies located in the same Member State 
can be impor tant. 

4 0. second indent
wh e re a s   s u g a r   p ro ce s s o r s   wo u l d   b e n e f i t 
f ro m   l o we r   b e e t   p r i c e s   a f t e r   t h e   re fo r m , 
the price of maize and other raw materials 
used  for  processing  isoglucose  would  be 
unaffec ted. In order to ensure that isoglu-
cose processors could maintain their rela-
t i v e   c o m p e t i t i v e n e s s ,   a d d i t i o n a l   q u o t a s 
f re e   o f   c h a rg e   we re   gra nte d   s o   t h at   t h e y 
could profit from economies of scale. 

t h e   t o t a l   q u o t a   a l l o c a t e d   b e f o r e   t h e 
reform to high-profitability Member States 
was much higher than in low-profitabilit y 
M e m b e r   S t a t e s .   a s   e m e r g e s   f r o m   a n n e x 
I I I ,   q u o t a   a v a i l a b l e   i n   l o w - p r o f i t a b i l i t y 
M ember  States  af ter  the  refor m  amounts 
to 31 % of the quota they held before the 
r e fo r m .   I n   t h e   c a s e   o f   h i g h - p r o f i t a b i l i t y 
Member States, this percentage is 81 %.

41.
the result of the combined application of 
b o t h   m e a s u re s   wa s   to   f a c i l i t ate   t h e   co n-
c e n t r a t i o n   o f   s u g a r   p r o d u c t i o n   i n   t h o s e 
u n d e r t a k i n g s   w i t h   t h e   b e s t   p ro s p e c t s   o f 
remaining competitive over the years and, 
t h e re by,   a c h i e v i n g   a n   ove ra l l   i n c re a s e   i n 
the  competitiveness  of  the  eu  sugar  pro -
ducing sec tor. 

38.
t h e   c o m m i s s i o n   i s   o f   t h e   v i e w   t h a t   t h e 
o b j e c t i ve s   o f   t h e   re fo r m   h ave   b e e n   f u l l y 
a c h i e v e d   a n d   r e m a i n s   p e r s u a d e d   t h a t 
i n d i v i d u a l   p r o d u c e r s   a r e   b e s t   p l a c e d   t o 
take decisions based on their assessment 
of their future competitiveness.

39 .–40.
t h e   c o m m i s s i o n   c o n s i d e r s   t h a t   t h e 
m e c h a n i s m s   d o   n o t   c o n f l i c t   g i v e n   t h a t 
t h e   r a t i o n a l e   f o r   o f f e r i n g   t h e   o p t i o n   o f 
a d d i t i o n a l   q u o t a s   s i m u l t a n e o u s l y   w i t h 
i n c e n t i v e s   t o   s u r r e n d e r   q u o t a   t h r o u g h 
t h e   r e s t r u c t u r i n g   f u n d   w a s   p r e c i s e l y   t o 
u n d e r p i n   t h e   g o a l   t h a t   t h e   c o u r t   m e n -
t i o n s,   n a m e l y   to   f a c i l i t ate,   by   i n c re a s i n g 
their processing capacity, fur ther gains in 
competitiveness for those companies that 
were already competitive. 

42.
the purpose of the reform was to achieve 
the necessar y adjustment of the eu sugar 
p r o d u c t i o n   s e c t o r   i n   a   s m o o t h   a n d   e f f i-
c i e n t   w a y .   t h i s   r e q u i r e d   a   r e s t r u c t u r -
i n g   f u n d   fo r   t h o s e   c o m p a n i e s   g i v i n g   u p 
 q u o t a s   a n d   f l ex i b l e   a d j u s t m e nt   to o l s   fo r 
t h o s e   d e c i d i n g   t o   r e m a i n   i n   b u s i n e s s . 
Sugar companies in the eu were called on 
to take a series of decisions based on their 
own analysis of prospec ts and market out-
l o o k .   I n   t h i s   co m p l e x   e co n o m i c   e nv i ro n-
m e n t ,   s o m e   c o m p a n i e s   d e c i d e d   t o   b u y 
q u o t a   f i r s t   a n d   t o   re n o u n c e   s o m e   q u o t a 
af ter wards. 

t h e   co m m i s s i o n   i s   o f   t h e   v i e w   t h a t   t h i s 
enhanced flexibilit y of operators resulted 
i n   a   m o re   e f f i c i e nt   a d j u s t m e nt   o f   t h e   e u 
sugar sec tor, while giving equal treatment 
to all operators.

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4 5.
t h e   r e s u l t s   o f   t h e   r e f o r m   s h o w   t h a t   e u 
b e e t   g r o w e r s   h a v e   e x h i b i t e d   g r e a t e r 
c a p a c i t y   t o   a d a p t   t h a n   i n i t i a l   e s t i m a t e s 
indicated and sugar beet growing contin-
ues  in  substantial  areas  of  those  M ember 
States referred to in table 2.

4 6.–4 7.
B y   i t s   n a t u re,   s u g a r   p ro d u c t i o n   re q u i re s 
h e a v y   i n d u s t r i a l   f a c i l i t i e s .   I t   c a n   o n l y 
re m a i n   co m p e t i t i ve   i f   b o t h   b e e t   p ro d u c -
t i o n   a n d   b e e t   p ro ce s s i n g   a re   c a r r i e d   o u t 
competitively. the  cases  repor ted  by  the 
cour t not withstanding, it is also possible 
that  per for ming  industr ial  facilities  were 
fo rc e d   t o   c l o s e   d o w n   d u e   t o   t h e   l i m i t e d 
competitiveness of the beet grown in the 
surroundings. this appears to be the case 
described by the c our t in point 30. 

5 0.
t h e   c o u r t ’s   o b s e r v a t i o n s   r e l a t e   t o   t h e 
l e g a l   b a s i s   a s   a d o p t e d   b y   t h e   c o u n c i l , 
which the commission is bound to imple -
ment.

5 1.
t h e   r e f o r m   h a s   c o n t r i b u t e d   t o   b r i d g i n g 
the price gap between the internal eu and 
t h e   wo r l d   m a r k e t.  th e   e u  s u g a r   s e c to r   i s 
n ow   m o re   m a r k e t- d r i ve n   a n d   m o re   co m-
petitive than it was before the reform.

5 4.
t h e   c o m m i s s i o n   w e l c o m e s   t h e   c o u r t ’s 
a c k n ow l e d gm e nt   t h at   t h e   e u  s u g a r   m a r -
ket  has  been  stable  since  the  star t  of  the 
reform.

a s   t h e   c o u r t   r i g h t l y   p o i n t s   o u t ,   t h e 
a m o u n t   c h a r g e d   f o r   q u o t a   p u r c h a s e s 
and  granted  for  quota  renunciations  was 
equivalent.

as to the alleged negative financial conse -
quences, please see the commission reply 
to point 43.

43 .
wh e re a s   s u g a r   p ro ce s s o r s   wo u l d   b e n e f i t 
f ro m   l o we r   b e e t   p r i c e s   a f t e r   t h e   re fo r m , 
t h e   p r i c e   o f   m a i ze   a n d   o t h e r   r aw   m a t e r -
ials used for processing isoglucose would 
re m a i n   u n a f fe c t e d.   a s   t h e   d ro p   i n   s u g a r 
p r i c e s   e n t a i l s   a   r e d u c t i o n   i n   t h e   p r i c e 
o f   i s o g l u c o s e ,   t h e   r e f o r m   w o u l d   h a v e 
r e s u l t e d   i n   a   r e d u c t i o n   o f   t h e   p r o f i t s   o f 
isoglucose producers.

I n   o r d e r   t o   m a k e   s u r e   t h a t   i s o g l u c o s e 
p ro c e s s o r s   c o u l d   m a i n t a i n   t h e i r   re l a t i ve 
c o m p e t i t i v e n e s s   a n d   t h e r e b y   t o   e n s u r e 
a   l e ve l   p l a y i n g   f i e l d   b e t we e n   p r o d u c e r s 
o f   s u g a r   a n d   o f   i s o g l u c o s e ,   a n   i n c r e a s e 
o f   q u o t a s   fo r   i s o g l u c o s e   w a s   g r a n t e d   s o 
that  they  could  profit  from  economies  of 
scale.

the commission would like to stress that, 
as is the case for sugar quotas, isoglucose 
companies  giving  up  quota  and  applying 
for  the  restruc tur ing  amount  had  to  sub -
mit  and  prove  cor rec t  implementation  of 
a restruc turing plan.

44 .
t h e   r e f o r m   a i m e d   a t   a   g l o b a l   i m p r o v e -
m e n t   o f   t h e   o v e r a l l   c o m p e t i t i v e n e s s   o f 
t h e   s e c t o r   i n c l u d i n g   g ro we r s,   t h ro u g h   a 
l owe r   m i n i m u m   p r i ce   fo r   b e e t .   as   a n n e x 
VI of the cour t highlights, cer tain Member 
States decided to focus the diversification 
aids mainly on sugar beet growers. 

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5 9. (b)
this greater reliance on impor ts depends 
e s s e n t i a l l y   o n   t h e   g a p   b e t w e e n   w o r l d 
and eu sugar prices.  the reform has been 
instrumental in bridging this gap and has 
t h e r e f o r e   c o n t r i b u t e d   t o   m a i n t a i n i n g   a 
robust albeit smaller sugar-producing sec-
tor in the eu . 

6 0.
B y   s u b s t a nt i a l l y   ra i s i n g   t h e   ove ra l l   co m-
p e t i t i ve n e s s   o f   e u  p ro d u c t i o n ,   t h e   co m-
m i s s i o n   t a k e s   t h e   v i e w   t h a t   a f t e r   t h e 
r e f o r m   t h e   e u  s u g a r   s e c t o r   i s   b e t t e r 
equipped to resist delocalisation. 

6 1.
a s   t h e   co u r t   r i g h t l y   e x p l a i n s,   t o   re c e i ve 
r e s t r u c t u r i n g   a i d   t h e   o p e r a t o r   m u s t 
p r e s e n t   a   r e s t r u c t u r i n g   p l a n   c o n t a i n i n g 
detailed, concrete measures whose imple -
mentation is enforced by national author-
i t i e s.   on l y   co m p a n i e s   t h at   h ave   s at i s f a c -
t o r i l y   i m p l e m e n t e d   t h e s e   m e a s u r e s   a r e 
entitled to receive payments. 

t h e   f a c t   t h a t   e u  s u g a r   p r o d u c e r   g r o u p s 
are also impor ting sugar into the eu is not 
n e w.   M o re ove r,   i n   a   n e w   s c e n a r i o   w h e re 
t h e   e u  i s   m e a n t   t o   i n c r e a s e   i t s   i m p o r t s 
o f   s u g a r,   t h e   f a c t   t h a t   c e r t a i n   p r o d u c -
i n g   f a c i l i t i e s   a re   b e i n g   t r a n s fo r m e d   i n to 
refiner ies would allow par t of the process-
ing of such sugar to remain in the eu .

55 .
t h e   a c t u a l   l e v e l   o f   i m p o r t s   f r o m   t h e s e 
countries depends on the relative attrac t-
iveness  of  the  eu  in  comparison  with  the 
world market. therefore, one of the goals 
achieved by the reform has been to bridge 
this price gap. 

56 .
G r e a t e r   r e l i a n c e   o n   i m p o r t s   i s   n o t   t h e 
result  of  the  sugar  reform  but  the  conse -
q u e n ce   o f   e u  p o l i c i e s   a i m e d   at   b o o s t i n g 
the role of sugar as a driver for economic 
ac tivit y in least developed countries with 
a good produc tion potential. 

57 .
t h e   c o m m i s s i o n   i s   o f   t h e   v i e w   t h a t   t h e 
n e w   m a r k e t   b a l a n c e   a c h i e v e d   b y   t h e 
reform of the sec tor can be sustained over 
t h e   fo re s e e a b l e   f u t u re.   M a r k e t   d e ve l o p -
ments seem to confirm this.

58 .
t h e   f a c t   t h a t   t h e   e u  h a s   b e c o m e   m o r e 
dependent  on  impor ts  is  the  logical  con-
s e q u e n c e   o f   o p e n i n g   t h e   e u  m a r k e t   t o 
t h i r d   c o u n t r i e s .   N e v e r t h e l e s s ,   t h i s   l e v e l 
o f   re l i a n c e   o n   i m p o r t s   wo u l d   h ave   b e e n 
much larger if present sugar prices in the 
eu had remained at the high level prevail-
ing before the reform. 

a l l   i n   a l l,   t h e   l e ve l   o f   s e l f - s u p p l y   w i t h i n 
quota maintained after the reform (around 
85  %)  can  be  considered  satisfac tor y  and 
the  commission  would  like  to  stress  that 
t h e   r e g i m e   i n c o r p o r a t e s   t h e   n e c e s s a r y 
i n s t r u m e n t s   t o   d e a l   w i t h   h y p o t h e t i c a l 
situ ations  of  undersupply  of  the  eu  mar -
ket mainly by conver ting available out- of-
quota sugar into quota sugar.

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7 2.
as ack nowledged by the cour t in point 13 
a n d   i n   l i n e   w i t h   t h e   p r i n c i p l e   o f   s u b s i d i-
ar it y,  the  implementation  of  the  restruc -
t u r i n g   a i d   i s   t h e   r e s p o n s i b i l i t y   o f   t h e 
M ember  States,  which  are  best  placed  to 
grasp the par ticular circumstances of indi -
vidual situations.

fu r t h e r m o re,   t h e  co mm i s si o n   wo ul d   l ik e 
to stress that the payment of the restruc-
turing  aid  is  conditional  upon  the  imple -
m e n t a t i o n   o f   a   p l a n   p r e s e n t e d   b y   t h e 
operator  to  the  M ember  State  concer ned 
i n c l u d i n g   a   d e t a i l e d   d e s c r i p t i o n   o f   c o n-
crete ac tions. Needless to say, these plans 
h a v e   t o   c o m p l y   w i t h   e u  a n d   n a t i o n a l 
r u l e s ,   s o m e   o f   w h i c h   m a y   v a r y   s u b s t a n-
tially across Member States. 

7 3.
M e m b e r   S t a t e   a u t h o r i t i e s   m u s t   c h e c k 
t h a t   s o c i a l   o b l i g a t i o n s   a re   i m p l e m e n t e d 
i n   c o m p l i a n c e   w i t h   s o c i a l   p l a n s .   a u d i t s 
by clearance of accounts include verifica-
t i o n   t h a t   M e m b e r   S t a t e s   c a r r y   o u t   s u c h 
checks.

S o c i a l   p l a n s   fo r   t h e   m o s t   p a r t   a re   d raw n 
u p   i n   a g r e e m e n t   b e t w e e n   t h e   p r o d u c e r 
and workers/unions. fulfilment of obliga-
tions — training, redeployment, compen -
s a t i o n ,   e t c.   —   w i l l   a l s o   b e   m o n i t o re d   by 
the par ties involved.

62 .
t h e   c o m m i s s i o n   w e l c o m e s   t h e   c o u r t ’s 
a c k n o w l e d g e m e n t   t h a t   t h e   r e f o r m ’s 
objec t ive  of  reducing the  sugar  price  has 
been met.

63 .
I n  order  to  shed  more  light  on  this  issue, 
the commission will shor tly be launching 
a study on price transmission in the sugar 
sec tor. 

fu r t h e r m o r e ,   i n   t h e   c o n t e x t   o f   i t s   p e r i-
o d i c   e va l u at i o n   o f   p o l i c i e s,   t h e   co m m i s-
sion  will  launch  an  ex-post  evaluation  of 
cap measures applied to the sugar sec tor. 
the evaluation will examine the impac t of 
c a p  m e a s u re s   a p p l i e d   t o   t h e   s u g a r   s u p -
p l y   c h a i n ,   i n c l u d i n g   t h e   f a r m   s e c to r   a n d 
s u g a r   p r o d u c e r s   a n d   r e f i n e r s ,   s i n c e   t h e 
reform was adopted in 2006. work on the 
e v a l u a t i o n   i s   e x p e c t e d   t o   b e g i n   i n   t h e 
four th quar ter of 2010. the results can be 
expec ted at the end of 2011.

64 .
I t   i s   n o t   s u r p r i s i n g   t h a t   a   r e f o r m   r e d u-
c i n g   t h e   o ve r a l l   s i z e   o f   t h e   s e c t o r   w h i l e 
r e q u i r i n g   r e m a i n i n g   c o m p a n i e s   t o   s u b -
s t a nt i a l l y   i n c re a s e   t h e i r   co m p e t i t i ve n e s s 
l e a d s   t o   a   c e r t a i n   d e g r e e   o f   i n d u s t r i a l 
 concentration. 

69 .
I s o g l u c o s e   i s   p r o c e s s e d   f r o m   c e r e a l s 
( m a i n l y   m a i z e   a n d   w h e a t )   a n d ,   i n   c o n-
t r a s t   t o   t h e   s u g a r   b e e t   s e c t o r,   t h e re   a re 
n o   s p e c i f i c ,   i n t e r - b r a n c h   d e l i v e r y   c o n -
t r a c t s   b e t w e e n   g r o w e r s   a n d   p r o c e s s o r s. 
Hence  reser ving  par t  of  the  aid  for  grow-
ers would not have been justified. 

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

fu r t h e r m o r e ,   t h e   c o m m i s s i o n   h o s t s   t h e 
‘ S e c t o r a l   S o c i a l   di a l o g u e   co m m i t t e e   fo r 
the  Sugar  I ndustr y ’  which  comprises  rep -
resentatives from trade unions and sugar 
i n d u s t r i e s.   I n   p a r t i c u l a r,   t h i s   co m m i t t e e 
has agreed a code of conduc t of the euro -
p e a n   S u g a r   I n d u s t r y   o n   co r p o ra te   s o c i a l 
responsibility, which has been ex tensively 
applied in the contex t of the reform.

Moreover, the social impac t of the reform 
w i l l   b e   c o n s i d e r e d   i n   t h e   e v a l u a t i o n   o f 
c a p  m e a s u r e s   a p p l i e d   t o   t h e   s u g a r   s e c -
t o r.   wo r k   o n   t h e   e v a l u a t i o n   i s   e x p e c t e d 
t o   b e g i n   i n   t h e   f o u r t h   q u a r t e r   o f   2 0 1 0 . 
the results can be expec ted at the end of 
2011.

74 .
t h e   r a t i o n a l e   f o r   e x t e n d i n g   t h e   d e a d-
l i n e   p ro d u c e r s   h a d   t o   c o m p l y   w i t h   t h e i r 
e nv i ro n m e nt a l   o b l i g at i o n s   wa s   t wo - fo l d : 
on  the  one  hand,  the  initial  deadline  was 
f i xe d   i n   2 0 0 6   a n d   t h e   t i m e t a b l e   n e e d e d 
updating to take into account the impor t-
a n t   c h a n g e s   i n   n a t i o n a l   r e s t r u c t u r i n g 
programmes  that  star ted  in  2008.  on  the 
other hand, the consequences of the glo-
b a l   f i n a n c i a l   c r i s i s   fo r   t h e   e c o n o m i e s   o f 
cer tain  M ember  States  made  this  amend-
ment appropriate.

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7 5.
I s o g l u c o s e   i s   p r o c e s s e d   f r o m   c e r e a l s 
( m a i n l y   m a i z e   a n d   w h e a t )   a n d ,   i n   c o n-
trast to the sugar beet sector, there are no 
s p e c i f i c,   i n t e r - b r a n c h   d e l i ve r y   c o n t r a c t s 
b e t we e n   growe r s   a n d   p ro ce s s o r s.   H e n ce 
reser ving par t of the aid for cereals grow-
e r s   w o u l d   n o t   h a v e   b e e n   j u s t i f i e d   s i n c e 
c e r e a l   p r i c e s   w e r e   n o t   a f f e c t e d   b y   t h i s 
reform.

7 6.–77.
See also c ommission reply to point 73.

the  commission  would  also  like  to  stress 
that the reduc tion in the number of sugar 
f a c t o r i e s   h a s   b e e n   a n   o n g o i n g   p r o c e s s 
f o r   m a n y   y e a r s ,   s i n c e   w e l l   b e f o r e   t h e 
sugar reform, as each produc tion unit was 
i n c r e a s i n g   i t s   p r o c e s s i n g   c a p a c i t y.   fo r 
instance, bet ween 2000 and 2006, 67 fac-
tories closed down in the eu . 

t h e   r e s t r u c t u r i n g   f u n d   h a s   p r o v i d e d   a 
l e g a l   f r a m e w o r k   a n d   f i n a n c i a l   s u p p o r t 
t h a t   c l o s u re s   w h i c h   o c c u r re d   b e fo re   t h e 
reform could not benefit from.

8 0.
diversification aid was introduced to give 
Member States the option of tak ing meas-
ures  in  the  regions  concerned  and  allows 
t h e m   to   i n c l u d e   m e a s u re s   fo r   o t h e r   e co -
nomic ac tors affec ted by sugar restruc tur-
i n g   t h a t   h ave   n o t   b e e n   c o m p e n s a t e d   b y 
restruc turing aid.

8 1.
See c ommission reply to point 74.

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Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

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I n d e e d ,   t h e   r e f o r m   e n t a i l s   a   m o r e   c o m-
p e t i t i v e   b u s i n e s s   e n v i r o n m e n t   f o r   t r a d-
itional refiners, which need to adjust their 
operations in order to remain competitive 
in this new scenario. concerned oper ators 
h a d   t o   s e t   o u t   t h e   n e c e s s a r y   c h a n g e s 
i n   a   b u s i n e s s   p l a n   t o   b e   s u b m i t t e d   t o 
n a t i o n a l   a u t h o r i t i e s .   B y   g r a n t i n g   t h i s 
a i d,   t h e   re fo r m   s e c u re d   e q u a l   t re a t m e n t 
o f   a l l   s u g a r   p ro d u ce r s   i n   t h e   co m m u n i t y 
w h e t h e r   t h e y   u s e   b e e t   o r   raw   s u g a r   a s   a 
raw material.

8 6.
e u   l e gi s l at i o n   i s   to   b e   a p p l i e d   u n i fo r m l y 
in  M ember  States  whether  they  have  one 
or more potential beneficiaries.   

8 8.
t h e s e   v a r i a t i o n s   a r e   d u e   t o   t h e   a c t u a l 
quota that was renounced and the timing 
of renunciation. In reality more temporar y 
r e s t r u c t u r i n g   a m o u n t s   w e r e   c o l l e c t e d 
and  less  expenditure  was  incur red  under 
t h e   s u g a r   r e s t r u c t u r i n g   f u n d .   t h e   h i g h -
e s t   r a t e s   o f   a i d   p e r   t o n n e   o f   q u o t a   we re 
available during the first t wo years of the 
reform.

9 0.
t h e   r e f o r m   o f   t h e   s u g a r   r e g i m e   w a s 
designed to be budget-neutral in terms of 
agricultural expenditure, rather than self-
f i n a n c i n g.   t h e   s u g a r   r e s t r u c t u r i n g   f u n d 
was designed to be self-financing.

82 .
I n   l i n e   w i t h   t h e   dG   a GrI   m u l t i - a n n u a l 
e va l u at i o n   p l a n   2 0 1 0 – 1 2 ,   t h e   e va l u at i o n 
of cap measures applied to the sugar sec -
t o r   w i l l   b e   c a r r i e d   o u t   i n   2 0 1 0 – 1 1 .   t h e 
e v a l u a t i o n   w i l l   e x a m i n e   t h e   i m p a c t   o f 
c a p  m e a s u re s   a p p l i e d   t o   t h e   s u g a r   s u p -
p l y   c h a i n ,   i n c l u d i n g   t h e   f a r m   s e c to r   a n d 
s u g a r   p r o d u c e r s   a n d   r e f i n e r s ,   s i n c e   t h e 
re fo r m   wa s   a d o p te d   i n   2 0 0 6 .  th e   i m p a c t 
of  diversification  aid  on  regions  affec ted 
by restruc turing should also be examined 
i n   t h i s   e v a l u a t i o n   ( o n   t h e   b a s i s   o f   c a s e 
studies). 

wo r k   o n   t h e   e v a l u a t i o n   i s   e x p e c t e d   t o 
b e gi n   i n   t h e   fo u r t h   q u a r te r   o f   2 0 1 0 .  th e 
r e s u l t s   c a n   b e   e x p e c t e d   a t   t h e   e n d   o f 
2011. 

the  commission  car r ies  out  its  checks  as 
par t of the clearance of a ccounts proced-
ures. 

85.
a l t h o u g h   t h e   c o m m i s s i o n   p r o p o s a l   d i d 
n o t   i n c l u d e   t r a n s i t i o n a l   a i d   t o   f u l l - t i m e 
r e f i n e r s,   i t   b e c a m e   c l e a r   d u r i n g   co u n c i l 
d i s c u s s i o n s   t h at ,   l i k e   s u g a r   b e e t   p ro ce s-
s o r s ,   f u l l - t i m e   r e f i n e r s   h a d   t o   u n d e r g o 
a   s e r i e s   o f   s t r u c t u r a l   a d j u s t m e n t s   a s   a 
co n s e q u e n ce   o f   t h e   d ro p   i n   i n s t i t u t i o n a l 
sugar prices. 

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9 0. (b)
th e   a cco m p a ny i n g   m e a s u re s   re s u l t   f ro m 
t h e   o v e r a l l   e u  c o m m i t m e n t ,   w i t h i n   t h e 
f r a m e w o r k   o f   t h e   a c p –e u  p a r t n e r s h i p 
a gre e m e nt ,   to   s u p p o r t   ac p  co u nt r i e s   o n 
t h e i r   p at h   to   p ove r t y   re d u c t i o n   a n d   s u s -
tainable development. during the pro cess 
leading to the sugar reform, the commis-
s i o n   h a d   c o m m i t t e d   t o   s u p p o r t i n g   t h e 
a d j u s t m e n t   n e e d s   o f   p r i v i l e g e d   S u g a r 
pro to co l   co u nt r i e s   a n d   m a d e   a n   a n a l ys i s 
of the impac t of the sugar reform on  acp 
countr ies. the  need  for  such  accompany-
i n g   m e a s u re s   to   ac p  co u nt r i e s   h a d   b e e n 
duly anticipated.

the suppor t provided to the acp countries 
f a l l s   o u t s i d e   t h e   s c o p e   o f   co u n c i l   r e g u -
l a t i o n   (e c )   N o   1 2 9 0 / 2 0 0 5 ,   a s   i t   co n ce r n s 
development aid to the acp countries and 
t h e re fo re   i s   n o t   c o ve re d   b y   t h e   e x p e n d-
iture of the common agricultural polic y. 

9 1.
See c ommission reply to point 90.

CONClUSIONS AND  
ReCOMMeNDATIONS

9 3.
th e   o b j e c t i ve s   o f   t h e   re fo r m   a re   d i re c t l y 
linked to the objec tives of the  cap, which 
are enshrined in the treaties. Moreover, it 
is not a shor tcoming of the reform to have 
p a r t l y   d i ve rgi n g   o b j e c t i ve s,   b u t   ra t h e r   a 
result of its comprehensive scope. the dif-
ferent objec tives of the reform reflec t the 
different aspec ts of the sugar market and 
need to be balanced against each other.

as   f a r   a s   t h e   re fo r m   o f   t h e   s u g a r   re gi m e 
i s   c o n c e r n e d ,   a l l   t h e   c h a n g e s   t h a t   w e r e 
i n t r o d u c e d   w i t h i n   t h e   c o m m o n   M a r k e t 
organisation  ( cMo )  for  sugar  need  to  be 
taken  into  account,  i.e.  the  transfer  from 
m e a s u re s   e n c o m p a s s i n g   h i g h   g u a r a n t e e 
prices  for  sugar  beet  and  produc tion  and 
expor t  refunds  to  a  system  mainly  based 
on direc t aid to farmers. I n this sense, the 
sugar regime was conceived to be budget-
n e u t r a l   i n   t e r m s   o f   a g r i c u l t u r a l   e x p e n d-
iture  (see  also  the  cour t ’s  obser vation  in 
point 89). the commission considers that 
this objec tive has been achieved. 

the sugar restruc turing fund, which is not 
a component of the cMo , was designed to 
b e   s e l f - f i n a n c i n g,   a n d   t h i s   h a s   a l s o   b e e n 
achieved.

90 . (a)
a t   t h e   m o m e n t   o f   t h e   r e f o r m ,   s u g a r 
i m p o r t s   i n t o   t h e   e u  w e r e   e x p e c t e d   t o 
i n c r e a s e ,   p r i m a r i l y   a s   a   r e s u l t   o f   t h e 
‘e ve r y t h i n g   B u t   ar m s’  m e a s u re s.  th u s,   i n 
t h e   a b s e n c e   o f   a   re fo r m   a n d   t a k i n g   i n t o 
account  the w to  ruling,  the  evolution  in 
the  eu  sugar  market  would  have  resulted 
i n   a   d e c r e a s e   i n   e u  p r o d u c t i o n .   H e n c e , 
s u r p l u s   p r o d u c t i o n   w o u l d   d e c r e a s e   a n d 
thus also the revenue from the production 
l e v i e s   w a s   a n t i c i p a te d   to   d i m i n i s h   gr a d-
u a l l y   t o   z e r o   a s   f r o m   b u d g e t   y e a r   2 0 1 0 . 
I n   t h i s   d y n a m i c   c o n t e x t ,   t h e   p ro d u c t i o n 
c h a rg e,   i n t ro d u c e d   by   t h e   s u g a r   re fo r m , 
was set at 12 €/tonne in order to preser ve 
b u d g e t   n e u t r a l i t y   a s   f a r   a s   r e v e n u e   w a s 
concerned.

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t h e   c o m m i s s i o n   s t r e s s e s   t h a t   t h e   s i z e 
o f   t h e   n e ce s s a r y   q u o t a   c u t   wa s   a s s e s s e d 
against the need to provide a market bal-
a n c e   i n   t h e   l i g h t   o f   t h e   n e w   e c o n o m i c 
environment of the sector. I t was achieved 
by means of those companies that consid-
e re d   t h e m s e l ve s   t o   b e   u n c o m p e t i t i ve   i n 
the new prevailing conditions ceasing (or 
reducing) produc tion. 

9 6.
the rationale behind simultaneously offer-
ing  the  option  of  renouncing  quotas  and 
o b t a i n i n g   a d d i t i o n a l   q u o t a s   r e s p o n d e d 
to   t h e   n e e d   to   m a n a g e   a   co m p re h e n s i ve 
restruc turing of the sugar produc tion sec-
tor in the eu. as a result, the sec tor is now 
s m a l l e r   b u t   c o n s i d e r a b l y   m o re   c o m p e t i-
tive. 

wh e re a s   s u g a r   p ro ce s s o r s   wo u l d   b e n e f i t 
f ro m   l o we r   b e e t   p r i c e s   a f t e r   t h e   re fo r m , 
t h e   p r i c e   o f   m a i ze   a n d   o t h e r   r aw   m a t e r -
ials used for processing isoglucose would 
remain  unaffec ted  in  spite  of  the  drop  in 
i s o g l u c o s e   p r i c e s.   I n   o rd e r   t o   m a k e   s u re 
that isoglucose processors could maintain 
their relative competitiveness, additional 
q u o t a s   f r e e   o f   c h a r g e   w e r e   g r a n t e d   s o 
that  they  could  profit  from  economies  of 
scale.

9 7.
o verall, eu growers are more competitive 
af ter the reform. that being said, growers’ 
competitiveness  cannot  be  seen  in  isola-
tion from that of the factor y to which they 
d e l i ve r   t h e i r   c ro p s.   S e e   a l s o   co m m i s s i o n 
replies to points 46–47.

94 .
c o m p a n i e s   o p e r a t i n g   a f t e r   t h e   r e f o r m 
h ave   t o   m a i n t a i n   p ro f i t a b i l i t y   i n   a   s c e n-
a r i o   o f   l o w e r   i n s t i t u t i o n a l   p r i c e s   a n d 
h e n c e   t h e   o b j e c t i v e   o f   i m p r o v i n g   t h e 
overall  competitiveness  of  the  sec tor  has 
been fulfilled. this gain in produc tivit y is 
confirmed by the fac t that Member States 
w i t h   h i g h   p r o f i t a b i l i t y   a c c o u n t   n o w   f o r 
7 8  %   o f   t h e   q u o t a   ( c o m p a r e d   w i t h   6 8  % 
b e fo re   t h e   re fo r m )   w h i l e   M e m b e r   S t a t e s 
w i t h   l o w   p r o f i t a b i l i t y   n o w   a c c o u n t   f o r 
only  5  %  (compared  with  12  %  before  the 
reform).

t h e   a d d i t i o n a l   q u o t a   m a d e   av a i l a b l e   ( i n 
e x c h a n g e   f o r   a n   a m o u n t   e q u i v a l e n t   t o 
t h e   r e s t r u c t u r i n g   a i d )   s o u g h t   t o   f u r t h e r 
re i n fo rc e   t h e   c o m p e t i t i ve n e s s   o f   t h e   e u 
sugar sec tor by giving the companies the 
o p p o r t u n i t y   t o   e x p a n d   t h e i r   p ro d u c t i o n 
and benefit from economies of scale, or at 
l e a s t   m a i nt a i n   a   p ro d u c t i o n   l e ve l   s i m i l a r 
to that prevailing before the reform in the 
event of a final quota cut. 

See also c ommission reply to point 23.

95.
af te r   t h e   re fo r m   t h e   s u g a r   m a r k e t   fo u n d 
a   n e w   b a l a n c e   r e s u l t i n g   f r o m   r e d u c e d 
d o m e s t i c   p r o d u c t i o n   a n d   l o w e r   i n s t i t u-
t i o n a l   p r i c e s.  th e   d e c i s i o n   t o   c e a s e   p ro -
d u c t i o n   w a s   t a k e n   v o l u n t a r i l y   b y   t h e 
f a c t o r i e s   c o n c e r n e d   a f t e r   a s s e s s i n g   t h e 
long-ter m  viabilit y  of  their  operations  in 
the  new  scenar io.  all  operators  in  the  eu 
w e r e   c o n f r o n t e d   w i t h   t h i s   o p t i o n   u n d e r 
identical conditions. 

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98 .
t h e   c o u n c i l   d e c i d e d   t o   m a i n t a i n   a 
regime  based  on  produc tion  quotas  until 
2014/15. 

99 .
t h e   c o m m i s s i o n   c o n s i d e r s   t h a t   b o t h 
o b j e c t i v e s ,   s t a b i l i s i n g   t h e   m a r k e t   a n d 
r e d u c i n g   u n p r o f i t a b l e   p r o d u c t i o n   c a p -
acit y,  have  been  fully  met.  following  the 
reform,  the  eu  produces  6  million  tonnes 
l e s s   o f   q u o t a   s u g a r   a n d   o p e r a t i n g   c o m-
p a n i e s   h ave   t o   f i n d   t h e i r   p ro f i t a b i l i t y   i n 
a   s ce n a r i o   o f   s u b s t a nt i a l l y   l owe r   i n s t i t u-
tional prices.

the  refor m  has  br idged  the  gap  bet ween 
eu and world prices.  this has contributed 
to easing the pressure on the eu’s domes-
tic sugar sec tor.

Recom m en datio n 1
a s   a   m a t t e r   o f   c o u r s e ,   t h e   c o m m i s-
s i o n   a l w a y s   e xe r c i s e s   g r e a t   d i l i g e n c e   t o 
ensure that instruments and measures are 
designed  so  as  to  ensure  overall  consist-
enc y and are based on thorough technical 
a s s e s s m e n t s   o f   n e e d s   a n d   o b j e c t i ve   a n d 
non- discriminator y criteria. this approach 
h a s   a l s o   b e e n   fo l l o w e d   i n   t h e   r e fo r m   o f 
the sugar market.

1 01 .
G r e a t e r   r e l i a n c e   o n   i m p o r t s   i s   n o t   t h e 
result  of  the  sugar  reform  but  the  conse -
q u e n ce   o f   e u  p o l i c i e s   a i m e d   at   b o o s t i n g 
the role of sugar as a driver for economic 
ac tivit y in least developed countries with 
good produc tion potential. 

Recommendatio n 3
th e   co m m i s s i o n   t a k e s   t h e   v i e w   t h a t   t h e 
new sugar market balance emerging from 
the reform, including the level of  eu self-
s u f f i c i e n c y,   i s   i n   l i n e   w i t h   tr e a t y   p r o v i-
s i o n s.  th e  tre at y   d o e s   n o t   s t i p u l ate   t h at 
t h e   e u  s h o u l d   n e c e s s a r i l y   b e   s e l f - s u f f i-
c i e n t   w i t h   r e g a r d   t o   e v e r y   a g r i c u l t u r a l 
p r o d u c t .   c e r t a i n   i n s t r u m e n t s   b u i l t   i n t o 
the  sugar  regime  would  enable  the  eu  to 
deal with situations of undersupply of the 
m a r k e t ,   m a i n l y   b y   c o n v e r t i n g   a v a i l a b l e 
out- of- quota sugar into quota sugar.

1 02 .
t h e   c o m m i s s i o n   c o n s i d e r s   t h a t   t h e 
re fo r m’s   o b j e c t i ve   o f   re d u c i n g   t h e   s u g a r 
price has been met. 

the commission will shor tly be launching 
a study on price transmission in the sugar 
sec tor  in  order  to  shed  more  light  on  the 
issue. 

Recom m en datio n 2
I n  the  preparation  of  its  proposal  for  the 
rules governing sugar af ter the marketing 
years  2014/15,  the  commission,  building 
on  the  experience  of  the  past,  will  exam-
ine a whole series of options.

10 0.
the reform has contributed to mak ing the 
e u  s u g a r   s e c t o r   m o r e   c o m p e t i t i v e   a n d 
s h o u l d   e n s u re   c o n t i n u i n g   p ro d u c t i o n   i n 
the eu .

fur thermore, as par t of its periodic evalu-
a t i o n   o f   p o l i c i e s ,   t h e   c o m m i s s i o n   w i l l 
l a u n c h   a n   e x - p o s t   e v a l u a t i o n   o f   c a p 
measures applied to the sugar sec tor. the 
e v a l u a t i o n   w i l l   e x a m i n e   t h e   i m p a c t   o f 
c a p  m e a s u re s   a p p l i e d   t o   t h e   s u g a r   s u p -
p l y   c h a i n ,   i n c l u d i n g   t h e   f a r m   s e c to r   a n d 
s u g a r   p r o d u c e r s   a n d   r e f i n e r s ,   s i n c e   t h e 
reform was adopted in 2006. work on the 
e v a l u a t i o n   i s   e x p e c t e d   t o   b e g i n   i n   t h e 
four th quar ter of 2010. the results can be 
expec ted at the end of 2011.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

74

repLy of tHe  
coMMISSIoN

fu r t h e r m o r e ,   t h e   c o m m i s s i o n   h o s t s   t h e 
‘ S e c t o r a l   S o c i a l   di a l o g u e   co m m i t t e e   fo r 
the  Sugar  I ndustr y ’  which  comprises  rep -
resentatives from trade unions and sugar 
i n d u s t r i e s.   I n   p a r t i c u l a r,   t h i s   co m m i t t e e 
has agreed a code of conduc t of the euro -
p e a n   S u g a r   I n d u s t r y   o n   co r p o ra te   s o c i a l 
responsibility which has been ex tensively 
applied in the contex t of the reform.

1 05 .
I n   l i n e   w i t h   t h e   p r i n c i p l e   o f   s u b s i d i a r i t y, 
re s p o n s i b i l i t y   fo r   t h e   i m p l e m e nt at i o n   o f 
the diversification measures lies with the 
Member States.

1 06 .
I n   d e c e m b e r   2 0 0 9 ,   t h e   c o m m i s s i o n 
a m e n d e d   t h e   l e g i s l a t i o n   t o   a l l o w   fo r   a n 
e x t e n s i o n   o f   t h e   d e a d l i n e s   c o n c e r n i n g 
e n v i r o n m e n t a l   m e a s u r e s   u n t i l   S e p t e m-
ber 2011. the rationale for ex tending this 
d e a d l i n e   wa s   t wo - fo l d :   o n   t h e   o n e   h a n d, 
t h e   i n i t i a l   d e a d l i n e   w a s   f i x e d   i n   2 0 0 6 
a n d   t h e   t i m e t a b l e   n e e d e d   u p d a t i n g   t o 
take  into  account  the  impor tant  changes 
i n   n a t i o n a l   r e s t r u c t u r i n g   p r o g r a m m e s 
t h a t   s t a r te d   i n   2 0 0 8 .   on   t h e   o t h e r   h a n d, 
t h e   c o n s e q u e n c e s   o f   t h e   g l o b a l   f i n a n-
c i a l   c r i s i s   f o r   t h e   e c o n o m i e s   o f   c e r t a i n 
M e m b e r   S t a t e s   m a d e   t h i s   a m e n d m e n t 
 appropriate.

1 07 .
a l t h o u g h   t h e   c o m m i s s i o n   p r o p o s a l   d i d 
n o t   i n c l u d e   t r a n s i t i o n a l   a i d   t o   f u l l - t i m e 
r e f i n e r s,   i t   b e c a m e   c l e a r   d u r i n g   co u n c i l 
d i s c u s s i o n s   t h at ,   l i k e   s u g a r   b e e t   p ro ce s-
s o r s,   f u l l - t i m e   re f i n e r s   h a d   to   u n d e rg o   a 
series of struc tural adjustments as a con-
s e q u e n c e   o f   t h e   d r o p   i n   s u g a r   i n s t i t u-
tional prices. 

Recom m en datio n 4
I n  order  to  shed  more  light  on  this  issue, 
t h e   c o m m i s s i o n   w i l l   s h o r t l y   l a u n c h   a 
s t u d y   o n   p r i ce   t ra n s m i s s i o n   i n   t h e   s u g a r 
sec tor.

10 3.
the  commission  would  also  like  to  stress 
that the reduc tion in number of sugar fac -
t o r i e s   h a s   b e e n   a n   o n g o i n g   p r o c e s s   f o r 
m a ny   y e a r s ,   s i n c e   w e l l   b e fo r e   t h e   s u g a r 
r e f o r m ,   a s   e a c h   p r o d u c t i o n   u n i t   w a s 
i n c r e a s i n g   i t s   p r o c e s s i n g   c a p a c i t y.   fo r 
instance, bet ween 2000 and 2006, 67 fac-
tories closed down in the eu . 

t h e   r e s t r u c t u r i n g   f u n d   h a s   p r o v i d e d   a 
l e g a l   f r a m e w o r k   a n d   f i n a n c i a l   s u p p o r t 
t h a t   c l o s u re s   w h i c h   o c c u r re d   b e fo re   t h e 
reform could not benefit from.

104.
I n   l i n e   w i t h   t h e   s u b s i d i a r i t y   p r i n c i p l e , 
t h e   l e g i s l a t o r   h a s   g i v e n   r e s p o n s i b i l i t y 
fo r   t h e   i m p l e m e nt at i o n   a n d   fo l l ow- u p   o f 
t h e   s o c i a l   c o n s e q u e n c e s   t o   t h e   M e m b e r 
States, which are better placed to per form 
this task . 

Member State authorities must check that 
s o c i a l   o b l i g a t i o n s   a r e   i m p l e m e n t e d   i n 
compliance with social plans. clearance of 
a cco u nt s   a u d i t s   i n c l u d e   ve r i f i c at i o n   t h at 
Member States carr y out such checks.

S o c i a l   p l a n s   fo r   t h e   m o s t   p a r t   a re   d raw n 
u p   i n   a g r e e m e n t   b e t w e e n   t h e   p r o d u c e r 
and workers/unions. fulfilment of obliga-
tions — training, redeployment, compen -
s a t i o n ,   e t c.   —   w i l l   a l s o   b e   m o n i t o re d   by 
the par ties involved.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

7575

repLy of tHe  
coMMISSIoN

1 09 .
as   f a r   a s   t h e   re fo r m   o f   t h e   s u g a r   re gi m e 
i s   c o n c e r n e d ,   a l l   t h e   c h a n g e s   t h a t   w e r e 
i n t r o d u c e d   w i t h i n   t h e   c o m m o n   M a r k e t 
organisation  ( cMo )  for  sugar  need  to  be 
taken  into  account,  i.e.  the  transfer  from 
m e a s u re s   e n c o m p a s s i n g   h i g h   g u a r a n t e e 
p r i ce s   o f   s u g a r   b e e t   a n d   p ro d u c t i o n   a n d 
expor t  refunds  to  a  system  mainly  based 
on direc t aid to farmers. I n this sense, the 
sugar regime was conceived to be budget-
n e u t r a l   i n   t e r m s   o f   a g r i c u l t u r a l   e x p e n d-
iture. the commission considers that this 
objec tive has been achieved.

I n accordance with  ar ticle 1(3) of  council 
regulation (ec ) No 320/2006, the remain-
i n g   b a l a n c e   i n   t h e   s u g a r   r e s t r u c t u r i n g 
f u n d,   c u r re n t l y   e s t i m a t e d   a t   6 4 0   m i l l i o n 
e u ro,   w i l l   b e   a s s i g n e d   t o   t h e   e aGf  a f t e r 
the  financing  of  the  measures  under  that 
fund.

as far as the revenue is concerned, please 
see c ommission reply to point 90 (a).

th e   a cco m p a ny i n g   m e a s u re s   re s u l t   f ro m 
t h e   o v e r a l l   e u  c o m m i t m e n t ,   w i t h i n   t h e 
f r a m e w o r k   o f   t h e   a c p –e u  p a r t n e r s h i p 
a gre e m e nt ,   to   s u p p o r t   ac p  co u nt r i e s   o n 
t h e i r   p at h   to   p ove r t y   re d u c t i o n   a n d   s u s -
tainable development. during the pro cess 
leading  to  the  sugar  refor m  the  commis-
s i o n   h a d   c o m m i t t e d   t o   s u p p o r t i n g   t h e 
a d j u s t m e n t   n e e d s   o f   p r i v i l e g e d   S u g a r 
p r o t o c o l   c o u n t r i e s   a n d   m a d e   a n   a n a-
lysis of the impac t of the sugar reform on 
ac p  c o u n t r i e s .   t h e   s u p p o r t   p r o v i d e d   t o 
ac p  c o u n t r i e s   f a l l s   o u t s i d e   t h e   s c o p e   o f 
council regulation (ec ) No 1290/2005, as 
i t   c o n c e r n s   d e ve l o p m e n t   a i d   t o   t h e   ac p 
countries and therefore is not covered by 
t h e   e x p e n d i t u re   o f   t h e   co m m o n   a gr i c u l-
tural polic y.

I n d e e d ,   t h e   r e f o r m   e n t a i l s   a   m o r e   c o m-
p e t i t i v e   b u s i n e s s   e n v i r o n m e n t   f o r   t r a d-
itional refiners, which need to adjust their 
operations in order to remain competitive 
in this new scenario. concerned oper ators 
h a d   t o   s e t   o u t   t h e   n e c e s s a r y   c h a n g e s 
i n   a   b u s i n e s s   p l a n   t o   b e   s u b m i t t e d   t o 
n a t i o n a l   a u t h o r i t i e s .   B y   g r a n t i n g   t h i s 
a i d,   t h e   re fo r m   s e c u re d   e q u a l   t re a t m e n t 
o f   a l l   s u g a r   p ro d u ce r s   i n   t h e   co m m u n i t y 
w h e t h e r   t h e y   u s e   b e e t   o r   raw   s u g a r   a s   a 
raw material.

10 8.
the  commission  would  also  like  to  stress 
that the reduc tion in the number of sugar 
f a c t o r i e s   h a s   b e e n   a n   o n g o i n g   p r o c e s s 
f o r   m a n y   y e a r s ,   s i n c e   w e l l   b e f o r e   t h e 
sugar reform, as each produc tion unit was 
i n c r e a s i n g   i t s   p r o c e s s i n g   c a p a c i t y.   t h e 
r e s t r u c t u r i n g   f u n d   h a s   p r o v i d e d   a   l e g a l 
f r a m e w o r k   a n d   f i n a n c i a l   s u p p o r t   t h a t 
clos ures which occurred before the reform 
could not benefit from.

Recom m en datio n 5
I n   l i n e   w i t h   t h e   s u b s i d i a r i t y   p r i n c i p l e , 
re s p o n s i b i l i t y   fo r   t h e   i m p l e m e nt at i o n   o f 
the diversification measures lies with the 
Member States, which are better placed to 
t a k e   t h e   n e ce s s a r y   d e c i s i o n s   i n   t h e   l i g ht 
of the number of specific fac tors applying 
in each case.

Recom m en datio n 6
I n   l i n e   w i t h   t h e   s u b s i d i a r i t y   p r i n c i p l e , 
r e s p o n s i b i l i t y   f o r   e n s u r i n g   c o m p l i a n c e 
with  environmental  obligations  lies  with 
t h e   M e m b e r   S t a t e s ,   w h i c h   a r e   b e t t e r 
placed  to  take  the  necessar y  decisions  in 
the light of the number of specific fac tors 
applying in each case.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

76

Sugar restructuring
Breakdown of Member States by their combined profitability
Total 
Quota 
renounced 
2009/2010
(tonnes)
158 800

in % of 
initial 
Quota

Quota 
2006/2007

Added/
Bought

317 502

158 702

Greece

50 %

MS

0

Ireland

Italy

Portugal

Czech Republic

Denmark

Spain

Latvia

Lithuania

Hungary

Slovenia

Slovakia

Finland

Belgium

Germany

France

Netherlands

Austria

Poland

Sweden

United Kingdom

199 260

199 260

1 557 443

1 049 064

69 718

69 718

2 143 923 
12 %

1 476 842 
28 %

454 862

420 746

996 961

66 505

103 010

401 684

52 973

207 432

146 087

2 850 260 
16 %

819 812

3 416 896

3 288 747

864 560

387 326

102 473

80 083

498 481

66 505

20 758

301 264

52 973

103 717

65 088

1 291 342 
25 %

206 066

757 200

683 655

126 547

54 785

1 671 926,0

366 868,9

368 262

1 138 627

92 798

165 000

11 956 156 
68 %

2 452 920 
47 %

604 114

9 227

17 554 453

5 230 331

100 %

67 %

100 %

69 % 

23 %

19 %

50 %

100 %

20 %

75 %

100 %

50 %

45 %

45 % 

25 %

22 %

21 %

15 %

14 %

22 %

25 %

14 %

21 % 

2 %

0

0

0

0 
0 %

20 070

31 720

8 000

5 000

8 605

73 395 
7 %

62 489

238 560

351 695

66 875

18 486

0

508 379

0

667 081 
5 %

372 459

372 383

498 480

0

90 252

105 420

0

112 320

80 999

1 632 313 
12 %

676 235

2 898 256

2 956 787

804 888

351 027

100 551,0

1 405 608,1

17 722

82 847

293 186

1 056 474

939 225 
93 %

10 442 461 
78 %

0

594 886

1 012 619

13 336 741

Level of 
combined 
profitability

LOW

Total Group 
in % of TOTAL

MEDIUM

Total Group 
in % of TOTAL

HIGH

Total Group 
in % of TOTAL

Others1

TOTAL

Agri C5 - 8.7.4

in % of 
initial 
Quota

50 %

0 %

33 %

0 %

31 % 

82 %

89 %

50 %

0 %

88 %

26 %

0 %

54 %

55 %

57 % 

82 %

85 %

90 %

93 %

91 %

84 %

80 %

93 %

87 % 

1  azores, Madeira, french overseas departements, ro, Bu.

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

european court of auditors

Special Report No 6/2010

has the reform of the sugar market achieved its main objectives?

Luxembourg: publications office of the european union

2010 — 76 pp. — 21 × 29,7 cm

ISBN 978-92-9207-862-1

doi:10.2865/41975

Special r eport No 6/2010 – Has the reform of the sugar market achieved its main objectives?

how to obtain eU publications

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q
J
-
a
B
-
1
0
-
0
0
6
-
e
N

-
c

tHe  eu  LauNcHed  a  Ma Jor  reforM  of  ItS  SuGar  Sec tor  IN 

2006,  to  eNSure   It S  coMpe tItIVeNeSS  aNd   to  StaBILISe   tHe  

MarKet  wHILe  coMpL yING wItH INterNatIoNaL  coMMItMeNt S. 

tHIS INVoLVed  a prIce  decreaSe  aS  weLL  aS  a 30 % reductIoN 

IN  pr oduc tIoN  quotaS,  reSuL tING  IN  tHe   cL oSure   of  80 

factorIeS.  a reStructurING  fuNd  aNd  aId  for dIVerSIfIcatIoN 

were to MItIGate tHe SocIaL a Nd eco NoMIc IMpact of  tHeSe 

MeaSure S, tH e  court  coNduc ted   aN  audIt   of tH e  reforM 

aNd coNcLuded tHat SoMe of tHe MoSt effIcIeNt producerS 

were forced to reNouNce  quotaS  aNd  rIGIdItIeS LINKed  to 

tHe  quota Sy SteM  are StILL  preSeNt . tHere  IS aN INcreaSed  

depeNdeNce  oN IMport S wHILe  tHere  are douB tS aS  to tHe  

decreaSe  IN prIceS BeING  paSSed  oN to tHe  fINaL  coNSuMerS 

aNd   deLay S  perSISt   IN  IMpLeMeNtING  dIVerSIfIcatIoN  aNd  

eNVIroNMeNtaL MeaSureS.

europeaN  court of audItorS