Introductory text

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 37 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

Council Regulation (EC) No 320/2006^f1 was adopted with the aim of enabling the least competitive sugar producers to give up their quota production. However, the renunciation of quotas under that Regulation has not reached the level that was initially expected.

In accordance with Article 10(2) of Council Regulation (EC) No 318/2006 of 20 February 2006 on the common organisation of the markets in the sugar sector^f2, a linear reduction of national and regional quotas is to be carried out by the end of February 2010 at the latest, with a view to avoiding market imbalances in the marketing years as from 2010/2011, taking into account the results of the restructuring scheme. Such a linear cut may penalise the most competitive undertakings and weaken the industry as a whole. To avoid this, it is considered necessary to improve the functioning of the restructuring scheme, in order to increase the renunciation of quotas under that scheme.

It appears that sugar undertakings have been discouraged from making applications for restructuring aid by the fact that there is no certainty as regards the amount of restructuring aid that they will receive, since Member States can decide to increase the minimum percentage of the aid reserved for growers of beet, cane or chicory and for machinery contractors, in accordance with Article 3(6) of Regulation (EC) No 320/2006. To remove this uncertainty, the amount of aid to be reserved to growers and machinery contractors should be fixed at 10 % of the aid to be granted to the sugar undertakings, and the growers concerned should be granted an additional payment for the 2008/2009 marketing year. In certain cases, a longer preparatory period for the restructuring process is needed. Where, in such cases, undertakings decide to apply for restructuring aid as from the marketing year 2009/2010, and in order not to disadvantage growers in such cases, the additional payment to growers should also be granted for the 2009/2010 marketing year provided that the undertaking’s application is submitted by 31 January 2008.

In order not to penalise undertakings and growers who took part in the restructuring scheme in the 2006/2007 and 2007/2008 marketing years, the difference between the aid amount granted for those marketing years and the aid amount that would have been granted for the 2008/2009 marketing year should be paid retroactively to them.

In order to create a further incentive to participate in the restructuring scheme, it is considered appropriate to provide for the exemption of a part of the temporary restructuring amount to be paid in accordance with Article 11 of Regulation (EC) No 320/2006 for the 2007/2008 marketing year to those undertakings which renounce, for the 2008/2009 marketing year, a percentage of their quota of at least the withdrawal percentage applied to the undertaking in 2007/2008. The amount to be exempted should correspond to this withdrawal percentage.

Moreover, it is appropriate to set up a two-phase application procedure which should allow undertakings who decide up until 31 January 2008 to renounce a part of their quota, corresponding to at least that withdrawal percentage, to submit a second application by 31 March 2008 enabling them to renounce a further part or the totality of their quota in view of the market situation known at that stage.

It is considered that the restructuring scheme would give better result if growers were able to give up on their own initiative their production of beet or cane intended to be processed into quota sugar. To that end, growers should in the 2008/2009 marketing year be given the possibility to apply directly for the aid provided for in Article 3(6) of Regulation (EC) No 320/2006 provided that they cease to deliver sugar beet or cane to the undertakings to which they were bound by delivery contracts in the previous marketing year. As a consequence, Member States should reduce the quota of the sugar undertakings concerned. In certain cases it may be more appropriate to apply this possibility at Member State level rather than at undertaking level.

In order to avoid endangering the economic viability of the sugar undertakings concerned by growers’ aid applications, the quota reduction should be limited to 10 % of the quota allocated to each undertaking, which corresponds to the percentage of quota which the Member State can re-allocate each marketing year in accordance with Article 11(1) of Regulation (EC) No 318/2006.

Where the quota of a sugar undertaking is reduced as a result of growers’ aid applications, that undertaking should be granted restructuring aid as referred to in Article 3(1)(c) of Regulation (EC) No 320/2006. Consequently, the aid amounts granted should be those referred to in Article 3(5)(c) of that Regulation. However, those amounts should be adjusted downwards if the undertaking does not take measures in favour of the workforce concerned by the reduction of quota production.

A sugar undertaking concerned by growers’ aid applications should until 31 January preceding the marketing year concerned retain the right to submit an application for restructuring aid as provided for in Articles 3 and 4 of Regulation (EC) No 320/2006, provided that it renounces a quota corresponding to at least the same level of quota reduction that would have resulted from the applications for aid lodged by growers. In that case the sugar undertaking’s aid application should replace the growers’ applications.

Article 6 of Regulation (EC) No 320/2006 provides for aid for diversification. It has become apparent that there is need to clarify the meaning of the third subparagraph of paragraph 4 of that Article. It should be made clear that the aid payable in accordance with that Article in respect of measures envisaged under Axis 1 and 3 of Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)^f3 is limited by the amounts and rates of support as set out in the Annex to that Regulation.

Article 10(4) of Regulation (EC) No 320/2006 provides for the dates of payments of the aids under the restructuring fund. Experience shows that under certain conditions a further incentive for the uptake of the fund could be set by advancing the payments. The Commission should therefore be empowered to decide on such a measure taking into account the availability of financial means in the fund.

Regulation (EC) No 320/2006 should therefore be amended accordingly.

Account should be taken in this Regulation of the fact that the total quota for production of inulin syrup has already been renounced under the restructuring scheme in the 2006/2007 marketing year. Hence, there is no longer any need to refer to that product or to the raw material from which it is produced, that is to say chicory,

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