Common organisation of the sugar market

The common organisation of the market in sugar improves the competitiveness of the sector, thereby ensuring its long-term sustainability. It will remain in place until 30 September 2008.

ACT

Council Regulation (EC) No 318/2006 of 20 February 2006 on the common organisation of the markets in the sugar sector [See amending acts].

SUMMARY

From 1 October 2008, products falling within the scope of this Regulation will be covered by the common organisation of agricultural markets (CMO).

This Regulation introduces a substantial reform of the common organisation of the sugar market, which was previously governed by Regulation (EC) No 1260/2001.

This common organisation of the market provides for intervention on the internal market, including the fixing of reference prices and production quotas, and for certain support measures for European products when they are traded on international markets.

Scope

The common organisation of the sugar market applies to:

• sugar beet;
• sugar cane;
• cane sugar, beet sugar and sugar from other origins;
• syrup, including sugar syrup, maple syrup, inulin syrup and isoglucose syrup;
• molasses.

INTERNAL MARKET

Prices

The reference prices for white sugar are as follows:

• 631.90 per tonne for the 2006/07 and 2007/08 marketing years;
• 541.50 per tonne for the 2008/09 marketing year;
• 404.40 per tonne from the 2009/10 marketing year onwards.

The reference prices for raw sugar are as follows:

• 496.80 per tonne for the 2006/07 and 2007/08 marketing years;
• 448.80 per tonne for the 2008/09 marketing year;
• 335.20 per tonne from the 2009/10 marketing year onwards.

Price levels for the sugar market will be publicised by means of an information system via which data provided by operators in the sector are collected and processed.

The minimum price for quota beet is set at:

• 32.86 per tonne for the 2006/07 marketing year;
• 29.78 per tonne for the 2007/08 marketing year;
• 27.83 per tonne for the 2008/09 marketing year;
• 26.29 per tonne from the 2009/10 marketing year onwards.

Interprofessional agreements

Community growers and Community sugar undertakings set the terms for buying sugar beet and sugar cane by concluding agreements within the trade. Delivery contracts have to draw a distinction between beets used to manufacture quota sugar and beets used to manufacture out-of-quota sugar. Each sugar undertaking must provide the Member State in which it produces sugar with information on quantities of beet and yield. If no agreements within the trade exist, the Member State concerned will take the necessary steps to protect the interests of the parties concerned.

Quota production

National and regional production quotas for sugar, isoglucose and inulin syrup are laid down for each marketing year (for the 2007/08 marketing year, see Regulation (EC) No 247/2007). A production quota is then allocated to each sugar-producing undertaking which may, by 30 September 2007 at the latest, request an additional quota from the Member State in which it is established. In this way, the Member State decides on the quantities acceptable to it and collects a single amount of 730 for each tonne of additional quota allocated.

In each of the marketing years 2007/08 and 2008/09, a further isoglucose quota of 100 000 tonnes will be added to the quota of the preceding marketing year (this increase does not involve either Romania or Bulgaria).

Following the implementation of Regulation (EC) No 320/2006 establishing a temporary scheme for the restructuring of the sugar industry in the European Community, the Commission has reduced the existing quotas for sugar, isoglucose and inulin syrup on two occasions (by Regulations (EC) Nos 2011/2006 and 247/2007). The Member States have adjusted the quotas allocated to their undertakings accordingly.

In some circumstances (the conditions to be satisfied are laid down in Annex V to this Regulation) a Member State may reduce the sugar or isoglucose quota allocated to undertakings established on its national territory and transfer quotas between undertakings.

Out-of-quota production

The sugar, isoglucose or inulin syrup produced during a marketing year in excess of the quota may be:

• used in the manufacture of certain products such as bioethanol, alcohol, rum or specific pharmaceutical products;
• carried forward to the next marketing year. In such cases, the undertakings must inform the Member State and also undertake to store at their own cost the quantities carried forward;
• used for the specific supply arrangements for the outermost regions;
• exported, within the established quantitative limits and in compliance with the commitments resulting from international agreements;
• subjected to a surplus-amount levy by Member States.

Market management

From the 2007/08 marketing year onwards, Member States will levy a production charge on sugar-producing undertakings. This charge is set at 12 per tonne of sugar and inulin syrup. For isoglucose, the production charge is set at 50% of the charge applicable to sugar.

The Member States must grant an approval to producers or processors of sugar, isoglucose or inulin syrup, provided they meet certain conditions, such as proving their professional capacity. These undertakings are to provide the Member State with information about provisional and actual sales of their sugar products.

Private storage aid for white sugar may be granted to undertakings which are allocated a sugar quota if the market price falls below the reference price for a representative period and if it is likely to remain at that level. Up until the 2010 marketing year, the intervention agency will buy in up to 600 000 tonnes of sugar per marketing year provided that the sugar has been produced under quota and manufactured from beet or cane harvested in the Community. In addition, it must have formed the subject of a storage contract concluded between the seller and the intervention agency. Generally speaking, the intervention agency may only sell the sugar at a price higher than the reference price set for the marketing year in question. However, in some circumstances, it may be permissible to sell the sugar at a price lower than or equal to the reference price.

A percentage of sugar, isoglucose or inulin syrup under quota may be withdrawn from the market up to the start of the following marketing year in order to maintain the structural balance of the market at a price level that is close to the reference price. The quantities of sugar in question will be stored by undertakings that have been allocated a quota. If the sugar supply in the Community is inadequate, it may be decided that a certain quantity of these products may be sold on the Community market before the end of the withdrawal period. The sugar withdrawn from the market may be treated as the first sugar production of the following marketing year - in this case, beet growers will receive the minimum price set for the marketing year in question.

TRADE WITH NON-EU MEMBER COUNTRIES

Common provisions on imports and exports

As a general rule, in trade with Non-EU Member Countries, the levying of any charge having equivalent effect to a customs duty and the application of any quantitative restriction or measure having equivalent effect are prohibited.

Imports and exports of sugar products (except for the waste produced by sugar undertakings) are subject to presentation of an import or export licence. The licence is issued by the Member States and is valid throughout the European Community.

In certain circumstances, the use of inward processing arrangements for sugar products may be prohibited.

Safeguard measures may be applied in cases where trade with Non-EU Member Countries threatens to disrupt the balance on the Community market. The Commission, acting at the request of a Member State or on its own initiative, will decide on the necessary measures, which will remain in place until the threat has subsided.

Provisions applicable to imports

The rates of import duty in the Common Customs Tariff apply to sugar products. However, in order to ensure that the Community market is adequately supplied, the Commission may suspend in whole or in part for certain quantities the application of import duties on certain products.

Imports of products covered by this Regulation may be subject to an additional import duty to protect the Community market against possible adverse effects. This duty may be imposed during a year in which the Community market is likely to experience such effects or when imports are made at a price below the level notified by the Community to the WTO.

The Commission opens and manages tariff quotas for sugar products in a way that avoids any discrimination between the operators concerned. To achieve this, various methods are applied, such as processing applications in chronological order ("first come, first served"), or distributing quotas in proportion to the quantities requested in applications.

The refining sector's traditional supply need for sugar, expressed in white sugar, is set for the Community as a whole at 2 324 735 tonnes per marketing year and is distributed among the Member States. During the 2006/07, 2007/08 and 2008/09 marketing years, this need is distributed as follows (tonnes):

• Bulgaria: 198 748
• France: 296 627
• Portugal: 291 633
• Romania: 329 636
• Slovenia: 19 585
• Finland: 59 925
• United Kingdom: 1 128 581

Guaranteed prices set for sugar originating in the African, Caribbean and Pacific (ACP) countries and India apply to imports of standard quality raw sugar and white sugar originating in certain countries (listed in Annex VI to this Regulation and in Regulation (EC) No 980/2005). These countries must certify that the products covered by the guaranteed price comply with the rules laid down in the relevant international agreements.

Measures may be taken to ensure that imports of sugar into the Community from the ACP countries and India are carried out under the conditions laid down in the Protocol to the ACP-EC Partnership Agreement and in the Agreement on cane sugar between the European Community and the Republic of India.

Provisions applicable to exports

Export refunds may be granted to cover the difference between sugar prices on the world market and sugar prices in the Community. The quantities of sugar benefiting from these refunds are set using various methods which take into account the nature of the product, the situation on the market and administrative efficiency. Export refunds may be set at regular intervals or by invitation to tender.

Export restrictions may be applied when the quotations or prices of a product reach a level which threatens to disrupt supplies on the Community market, and where this situation is likely to deteriorate.

Other provisions

Further measures may be taken if there is a significant change in prices on the Community market and if all measures laid down by this Regulation have been exhausted and the situation is likely to continue to disrupt the market.

The Management Committee for Sugar assists the Commission in dealing with administrative aspects of the common organisation of the sugar market.

Background

The first common organisation of the sugar market was established by Council Regulation No 44/67/EEC in 1967. Since entering into force it has been reformed on several occasions, in 1974, 1981, 1999 and 2001. The reform introduced by the current Regulation in 2006 reduces the minimum guaranteed price and encourages unprofitable growers to cease farming. It also includes Council Regulations (EC) Nos 319/2006 and 320/2006, both adopted on the same day as the current Regulation, which establish the temporary restructuring fund.

RELATED ACTS

Detailed implementing rules

Commission Regulation (EC) No 950/2006 of 28 June 2006 laying down detailed rules of application for the 2006/2007, 2007/2008 and 2008/2009 marketing years for the import and refining of sugar products under certain tariff quotas and preferential agreements [Official Journal L 178, 1.7.2006]. See consolidated version (pdf).

Commission Regulation (EC) No 951/2006 of 30 June 2006 laying down detailed rules for the implementation of Council Regulation (EC) No 318/2006 as regards trade with Non-EU Member Countries in the sugar sector [Official Journal L 178, 1.7.2006]. See consolidated version (pdf).

Commission Regulation (EC) No 952/2006 of 29 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 318/2006 as regards the management of the Community market in sugar and the quota system [Official Journal L 178, 1.7.2006]. See consolidated version (pdf).

Commission Regulation (EC) No 967/2006 of 29 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 318/2006 as regards sugar production in excess of the quota [Official Journal L 176, 30.6.2006]. See consolidated version (pdf).

Regulations complementing the 2006 reform of the common organisation of the sugar market

Regulation(EC) No 320/2006 [Official Journal L 58, 28.2.2006].

This Regulation establishes a temporary restructuring fund to finance restructuring and diversification measures in the sugar industry. It lays down the requirements which undertakings in this sector must satisfy in order to qualify for aid under this fund.

See consolidated version (pdf).

Regulation(EC) No 319/2006 [Official Journal L 58, 28.2.2006]. This Regulation lays down rules for granting Community aid to sugar beet and cane growers in Member States eligible for restructuring aid under Regulation No 320/2006. It amends the rules laid down in Regulation No 1782/2003 in relation to support schemes in the sugar sector.

See consolidated version (FR) (pdf).

International context

International Sugar Agreement 1992 [Official Journal L 379, 23.12.1992]. This Agreement lays down rules for the operation of the International Sugar Organisation, of which the European Community is one of the main members. In April 2007, the Council of the European Union agreed to vote in favour of extending this Agreement (Decision 2007/316/EC).

See also

For more information about the common organisation of the sugar market, please go to the website of the Directorate-General for Agriculture and consult the relevant Community legislation.

Last updated: 11.03.2008