New members face EU fines over sugar surplus

Estonia, Latvia, Slovakia, Cyprus and Malta will have until 30 November to eliminate their excess stocks or pay a fine into the EU budget, under the Commission regulation.

Producers would have until the 28 February to prove to national governments that stocks had been destroyed. The governments would then have until 31 March 2006 to provide evidence of elimination to the EU.

States would have until the 30 June to pay any fine, though this deadline may yet be extended.

Other accession states, including the Czech Republic, Hungary and Poland have also been investigated by the Commission to see if they are holding excess sugar.

Of those already identified, Estonia has by far the biggest surplus at 91,464 tonnes. Cyprus came second with 40,000 tonnes, while Latvia and Slovakia came third and fourth with more than 10,000 tonnes each. Malta had 2,452 tonnes.

The Commission said the regulation was to remove stocks that had built up prior to the five countries' accession to the EU on 1 May 2004.

"As is usual before every enlargement, the new Member States were required to ensure that there was no speculative stockpiling of agricultural products, which would upset the balance of the entire EU market,"​ said the Commission.

Producers could have been tempted to build up their sugar stocks to take advantage of the EU sugar price sitting three times above world market levels.

"A sudden increase in stocks has a negative effect on the market balance and affects the level of production levies to the disadvantage of sugar and beet producers all over the EU,"​the Commission said.

Producers will be allowed to destroy their surplus stocks either by processing it into animal feed or biofuels, or by exporting it without export refunds.

The regulation tallies with the EU's proposed sugar reform, due to be set down in detail over the next few months.

Initial proposals prepared last year state that minimum sugar beet prices would be cut by more than a third, from €43.6 per ton to €27.4, in two steps over three years; and the total EU production quota would come down by 2.8m tonnes to 14.6 million by 2008/9.

The World Trade Organisation has twice ruled that EU subsidies to sugar producers are illegal and EU agriculture minister Mariann Fischer Boel has repeatedly expressed her "determination"​ to modernise the bloc's sugar sector.

Some countries with smaller production, including Latvia, Hungary and Slovenia, have warned the reform could destroy their domestic industries.