The European Union today (22 February) formally adopted a far-reaching reform of the regulations governing the sugar industry.

Changes are designed to bring the system in line with the rest of the reformed common agricultural policy and comply with World Trade Organisation requirements.

The reform, which will come into force on 1 July, will cause prices to decline dramatically and European sugar production to fall by between six and seven million tonnes. EU exports wiil then fall drastically, allowing the EU to respect its WTO commitments. The EU says that the changes adopted are necessary to ensure the long-term sustainability of the industry.

“The measures may appear tough, but there is no alternative. Thanks to these reforms, the EU sugar sector can look to the future with confidence. And we have sufficient funds available to help those who have to leave the sector to find alternative sources of income,” said Mariann Fischer Boel, commissioner for agriculture and rural development.

The EU will compensate farmers who experience a loss in income due to the price cuts, while others will be offered financial incentives to cease sugar production.

In order to avoid oversupply in the first year and relieve pressure on the market, the Commission will reduce sugar production by between two and three million tonnes under quota.

“This one-off cut in sugar production is vital to ensure that the newly-reformed sugar market gets off to a good start,” said Fischer Boel. “Unless we act, heavy surpluses will weigh on the market as the reform gets underway. This way, we can kick off our new system with the market in balance.”