Sugar is the only agricultural sector in the European Union where production is subject to a quota system.
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It was introduced with the first rules on the sugar common market organisation (CMO) in 1968, along with a support price for producers at a level significantly above the world market price.
At the time, the recently introduced Common Agricultural Policy (CAP) had as one of its main objective the self-sufficiency of the continent for its food production by encouraging agricultural production with remunerative and stable prices for farmers.
Quotas, together with a support price, gave a welcome incentive to achieve these goals in the sugar sector.
The CAP is a dynamic policy which has constantly adapted over time to fit with the evolving challenges and realities of food production, farmers' needs, environmental concerns and market demands.
Following the shift from product support (through prices) to producer support (through income support via direct payments), initiated in 1992, an additional reform in 2003 consolidated this transition by decoupling the direct payments from the production of any particular product.
In the case of sugar, the way for the transition was paved with a significant reform in 2006.
This reform agreed by the Member States included the progressive reduction of support prices for beet and sugar, the phasing out of public intervention until 2008/2009, ceasing paying export refunds as from 2008, including a mechanism to support the restructuring of the whole industry that took place between 2006 and 2010.
At that same occasion, Member States agreed on the principle of the end of quotas in 2015.
A system of voluntary compensation (worth €5.4 billion) for ceasing the activity resulted in the reduction of the quota production by roughly 6 million tonnes and led to the creation of a more competitive EU sugar sector ready to compete on a deregulated EU market closer to international prices, and to benefit from market opportunities, both in the domestic and the world markets.
Following this important transition, and after initially agreeing the end of the quota system for sugar in 2015, the European Parliament and Member States decided in the 2013 CAP reform to postpone this landmark by two years until the end of the 2016/17 sugar marketing year, i.e. from 30 September 2017.
There is also a long established and wide consensus among European Parliament, Member States and agricultural stakeholders that the CAP needs to be simplified.
The price and quota management required complex monitoring and administrative resources both for the operators and the authorities. ■
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