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The common organisation of the sugar market

The common organisation of the sugar market

The sugar industry evolves under a Common Organisation of the Sugar Market (COSM), a community body since 1968, based on production quotas and price support.

In 2006, the Sugar OCM was extensively reformed to adapt to the rules of the World Trade Organisation (WTO) and the increased openings of the community sugar market to imports from Least Developed Countries (LDC) and the African Caribbean Pacific area (ACP). A restructuring fund financed by the sugar industry was created to compensate for abandoning production quotas and plant closures in the EU countries. Thus:

- Production quotas were reduced by 30%
- Five Member States abandoned beet growing totally and five others reduced it by over half. In the EU, 79 sugar-producing plants were closed between 2005/06 and 2009/10, i.e. more than 40%. In France, five out of thirty sugar-producing plants closed.
- The EU changed from a net exporter of sugar to a net importer, due to the export ceilings under EU commitments vis-à-vis the WTO and increased imports. The EU is today the leading world sugar importer.

The 2006 reform also included beet in the direct aid system of the Common Agricultural Policy. This had incorporated, in 2003 and for several agricultural productions including cereals, new rules on reducing price support in favour of "decoupled" aids (independent of the actual production) for farmers.

A new reform is taking shape

In June 2013, the EU adopted a new reform of the Common Agricultural Policy (CAP), applicable since 1 January 2014.
In terms of sugar, the reform provides for the quota arrangements to end on 30 September 2017. The minimum price for beet will also be withdrawn. Both these measures mean that sugar manufacturers will be able to export without the constraint of a WTO ceiling.