The EU Sugar Sector Reform Restructuring Fund Brussels, 30 June 2006

Why a reform of the sugar sector was necessary Sugar consumption in the EU remains relatively stable at around 16 mio tonnes EU production is around 19-20 mio tonnes, of which 17.4 mio tonnes quota production High EU support price attracts increasing levels of imports (mostly from EBA countries,+3.3 mio t), fuelled by the “swap” effect Under the WTO ruling, as from 2006/2007, Exports with refunds will be limited to 1.37 mio t and 513 mio Euro Automatic quota cuts (declassification) reduces EU quota relatively more in the most competitive regions Non-competitive regions suffer gradual decline without any incentive to seek an economic alternative

Key elements of the Sugar Reform – internal market Reduction of the reference price for sugar and the minimum beet price Restructuring fund to allow least competitive producers to stop production

Temporary Restructuring Fund Timeframe: 2006/2007-2009/2010 Elements: Restructuring amount (levy) Restructuring aid Aid for Diversification Additional Aid for Diversification Transitional aid to full-time refiners Transitional aid to certain Member States

Restructuring Amount To be paid by sugar and inulin producers per tonne of quota: 2006/2007: EUR 126.40 2007/2008: EUR 173.80 2008/2009: EUR 113.30 Isoglucose producers pay 50% of this amount

Restructuring Aid Full Dismantling (100%) Partial Dismantling (75%) Quota Renounciation (35%) 2006/2007 EUR 730.00 EUR 547.50 EUR 255.50 2007/2008 2008/2009 EUR 625.00 EUR 468.75 EUR 218.75 2009/2010 EUR 520.00 EUR 390.00 EUR 182.00

Application for the Restructuring Aid Restructuring Plan Commitment to renounce quota Actions foreseen Aid to growers and/or contractors (min10%) Social and Environmental Plan (additional national requirements) Consultation with growers

Granting of the Restructuring Aid First-come-first-served order of complete applications Member State decides on eligibility Commission decides on granting of the aid on the basis of financial resources

Payment of the Restructuring Aid 40% in June of the marketing year concerned 60% in February of the following marketing year Against the lodging of a security of 120% of the amount The amount for growers and/or contractors has to be paid from the first instalment

Aid for Diversification Granted to Member States for diversification measures in regions affected by the restructuring of the sugar industry Amount per tonne of quota renounced: EUR 109.50 in 2006/2007 EUR 109.50 in 2007/2008 EUR 93.8 in 2008/2009 EUR 78.00 in 2009/2010 Member State establishes national restructuring programmes

Additional Aid for Diversification The total amount of the aid granted to a Member State is increased by: 50% once 50-75% of the national quota has been renounced another 25% once 75-100% of the national quota has been renounced another 25% once 100% of the national quota has been renounced The Member State decides if the aid is granted for diversification measures and/or to growers in the region concerned

Transitional Aid to full-time refiners EUR 150 million to: UK (94.3), FR (24.8), PT(24.4), FI (5.0), SI (1.5) On the basis of a business plan 40% in September 2007, 60% in March 2008 Against the lodging of a security of 120%

Transitional Aid to certain Member States EUR 9 million to Austria for investments in collection centers for sugar beet EUR 5 million to Sweden for the direct or indirect benefit of sugar growers in Gotland and Öland giving up sugar production

Implementing Rules Conditions for granting of the aid Application for and granting of restructuring aid Other aids from the restructuring fund Payment of the aids Reporting, controls and penalties

Regulations: Council Regulation (EC) No 320/2006 establishing a temporary restructuring fund for the sugar industry in the Community and amending Regulation (EC) No 1290/2005 on the financing of the common agricultural policy Commission Regulation (EC) No xxx/2006 laying down detailed rules for the implementation of Council Regulation (EC) No320/2006 establishing a temporary restructuring fund for the sugar industry in the Community