Report on the ADVISORY GROUP ON SUGAR 16 th June Item 1: Approval of the agenda and report of the last meeting of 24 February 2014

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1 Report on the ADVISORY GROUP ON SUGAR 16 th June 2014 CHAIR: Mr MARIHART Item 1: Approval of the agenda and report of the last meeting of 24 February 2014 The agenda of the meeting was approved. The draft report was approved. Item 2: Opinion of the Advisory Group on the situation and prospects for the world market for EU sugar exports The ASSUC representative presented the situation on the world market. Some highlights: The market was still trading and was expected to continue to trade - in the range of 17 to just over 19 cts/lb. The market continued to be in contango (i.e. if you wait a little while you will buy sugar at a higher price); this premium reflected the storage and finance costs. The white sugar premium (aka the refiners margin) ranged between 70 and 90 USD/t, while the white sugar futures ranged between 460 and 500 USD/t; the recent price spike could be attributed to numerous factors (the worsening situation in Iraq feeding through into energy costs, the expiry of a number of options leading to trading out, Chinese demand,..). The London #5 price converted into Euros and the EU reported price were becoming slightly more correlated. Regarding the global supply and demand balance, 2014/15 was expected to be the 5 th consecutive year of surplus (production Mt, consumption Mt); stocks were forecast to remain at relatively high levels (around 30% of consumption). Item 3: Presentation by the Commission on the sugar and isoglucose 2013/14 prospects and balance - exchange of views The Commission representative presented the sugar price reporting and sugar trade statistics. The beet growers representative pointed out that it was not certain that at the end of this campaign the ending stocks would be lower than at the end of 2012/13; the lower imports from Brazil had so far been replaced by higher imports from EBA and EPA countries and by new imports from South American countries. She added that in view of this balance there was no need for temporary measures. The sugar industry representative asked whether it would be possible to obtain a table with the destinations of the quota for the Balkans. The Commission representative replied that the table of EU exports to the Balkans would be updated and could be made available to those interested. 1

2 The Commission representative proceeded with the presentation of the sugar balance. The sugar industry representative stated that, given the prospect of there being enough supply on the market, the Commission s decision not to vote temporary measures had been the right decision. The Commission representative explained that the presentation of the balance was not final yet we should wait and see. A sugar industry representative enquired about the difference between the closing stocks for 2012/13 (2.49 Mt of quota) and the opening stocks for 2013/14 (2.56 Mt). The Commission representative explained that we had moved from an EU-27 to an EU-28 balance. The difference between the two abovementioned stocks was the beginning stocks of Croatia. The consumption figure in the EU-28 balance was the five-year average consumption of the EU-27 to which Croatia s estimated consumption of tonnes had been added. Item 4: Exchange of views on first prospects for MY 2014/15 The Commission representative presented the 2014/15 beet area estimates communicated by the MS. The beet growers representative explained that according to the figures communicated by the beet growers associations, the 2014/15 beet area was estimated hectares, slightly higher than the estimate just presented by the Commission. At MS level, our figure for France was higher and our figure for Germany was lower. These differences would probably decrease in the coming months, based on better communications by the MS to the Commission s services and also on more precise communications from the growers. The Chair added that the 2014/15 crop was in good shape so far. Thus, there should be enough sugar available in the autumn. The Commission representative explained that the Commission s EU /15 beet area estimate ( hectares) was only about 1% lower than that of the beet growers. There was always some difficulty regarding the communications from MSs, because the Commission only took account of beet area used for COM sugar it did not take into account the beet area used to produce green juice (which was not part of the COM). Noting that it was clear that there would be plenty of sugar available in Europe under various quotas next year, the sugar trade representative asked whether the Commission would consider opening a quota for exports amounting to the total WTO limit or whether it would continue as it had done in recent years (i.e. open half in October and half in January/February). The Commission representative explained that it would vote in the next Management Committee for opening the export of out-of-quota sugar for half of the WTO limit, i.e. the Commission would continue to do what it had done in recent years. Notwithstanding the current good shape of the 2014/15 crop and everything pointing to a very good harvest, the Commission preferred to remain 2

3 cautious; as soon as it was clear that there would be enough sugar, the Commission would open up exports to the maximum limit very quickly - as it had done last year. The beet growers representative noted that the opening of the out-of-quota export was also related to the opening up of the industrial sugar import TRQ which had already been decided for the three MYs to come. Could the Commission not consider that it was already given that all the out-of-quota sugar export would also be allocated? The Commission representative explained that there was not necessarily a link. In any case, the Commission had decided to open the quota for industrial sugar because this measure could be opened with a view to the uncertainty of out-of-quota production. Thus, given that out-of-quota production was always uncertain, opening this import TRQ gave a high degree of certainty for the industrial sector for the next three years. For the same reason (uncertainty of out-of-quota production), it was a wise decision to start with half the quantity of out-of-quota sugar exports before starting the harvest and then decide, depending on the harvest, whether the quantity can be increased to the maximum limit. A trade representative expressed surprise at the Commission s lack of faith in the sector, especially considering the high penalties which have to be paid for unused licences. Why did the Commission not leave the matter to the stakeholders, who should know what they applied for? Furthermore, these tenders for the application for export licence were by definition not over in a week; thus, if somebody had decided to apply for a licence and had second thoughts about further quantities, he could apply the next week until the full quantity was taken up, which was what was being done for the industrial sector. The sugar industry s representative strongly supported the views expressed by the beet growers and the trade on this topic. The Commission wanted more market orientation; so let the operators, who were well aware that they would be strongly penalised if they applied for quantities they were not able to export, decide whether they wanted to export and how much. Secondly, there had been a political link (mentioned by Mrs FISCHER-BOEL) between the opening of an annual TRQ for industrial sugar and the sector s exports authorisations during the same marketing year; the experience had shown that the industrial TRQ was never filled. This was why the justification for opening such a TRQ for 3 years while limiting exports to yearly authorisation only did not make sense. It was nul and void. The Implementation Regulation for industrial sugar in the Official Journal (635/2014, Ed.) read The experience of recent marketing years shows that the suspension of import duties has been sufficient to guarantee the supply. This was wrong and nonsense as the TRQ was never filled! The Commission representative explained that in 2012 the Commission had put a proposal on the table where it gave full faith to the sector in 2015 ( the quotas go, everything goes, you do what you want ); most stakeholders had lobbied very hard to maintain a tight ship (quotas until 2020). We had ended up somewhere in the middle, so until 2017 the Commission was still somehow obliged to keep the sector somewhat tight and would continue to manage the market in a way it considered reasonable. He was convinced that the approach chosen by the Commission s was reasonable and did not see a lot of opportunities to change that. The sugar industry s representative pointed out that it was really paradoxical and incomprehensible for the Commission consider tariff quota of tonnes as useful when it had never been filled. With regards to the period up to 2017, why did the Commission change the rules for the chemical industry but not for us? Why was the Commission allowing more isoglucose to be produced and marketed the same year yet had a different rule for sugar? What was the Commission s real thinking? 3

4 The Commission representative recalled that we were working within a regulatory context. Legally, there was no link between opening a quota for industrial sugar and exports. We were evolving within this regulation, and regarding exports in particular we were obliged to respect the export limit until the end of the quota regime. There was a nuance between used and useful. Regarding the 2014/15 MY, the Commission representative recalled that there was a 3% increase in beet area. This indicated that we were operating within a fixed quota system one year there was an increase of 2 or 3% and the next year there was a decrease of 2 or 3% - basically not a lot of change. The quotas would most likely be filled, so the 3% increase only had an impact on the out-of-quota. Thus, he hoped that the farmers and sugar companies who had concluded the contracts for these hectares had the notion that they were able to sell more out-of-quota sugar and that this was the purpose of the increased beet area. If there was a more or less fixed demand from the industrial sector, then he supposed that the remainder would be transformed into bioethanol. Here the Commission did not intervene so the stakeholders could do their market orientation in any way they wanted. There were of course some worries about the supply of the EU market; the ending stocks of the Commission s balance sheet for 2013/14 were going down a little towards the end of the MY; the Commission was not at all sure that the sugar which may not come from Brazil may come from via the quota-free duty-free origins of LDC and ACP. This meant that the stocks may in fact go further down towards the end of the year, maybe still within a safe limit but the situation got more difficult when looking at the 2014/15 MY, because a number of our major sugar suppliers from the ACP origins (notably Fiji and Swaziland) could lose their preferential access to the EU market and fall back to a GSP+ system (in which sugar was not included). We still had to see whether this would really materialise but as things stood now Fiji and Swaziland would not be able to export after 1 st October If that were to happen, the Commission had to be ready to fill that gap and prevent a further decrease in stocks. In any case, the Commission wanted to avoid a situation like the one we had at the end of 2010 and 2011, when there was hardly any sugar. This would not happen again; the Commission would be ready and would take measures if we were to lose certain origins. In addition, the quota for Central America-Peru-Colombia (around tonnes) had been used for only tonnes so far. The Commission had to watch carefully what was coming in towards the end of the MY, because if we lost some quantities there, our stocks figure estimated for 2013/14 would be reduced further. Thus, there were enough factors for the Commission to worry about as regarded the supply situation of sugar on the EU market. The Commission would therefore be ready to take urgent measures if necessary and as far as things stood now they were necessary. The beet growers representative noted that Swaziland was part of the South African Development Community (SADEC) which was discussing an EPA with the EU and that this EPA was apparently close to being concluded. If this EPA was concluded, would the issue of Swaziland be solved? The Commission representative confirmed that the problem would be solved once the EPA was signed/ratified, but it was quite a cumbersome procedure. At the moment, we were not certain about the timing there were still issues to be discussed. Thus, the Commission wanted to be ready to react whenever necessary. The Chair pointed out that the EU sugar sector was doing its part to ensure supply by increasing beet acreage. The sugar industry s representative added that 4 MT of ending stocks was significant. Item 5. Information by the Commission on the process of Single CMO delegated and implementing regulations on sugar following the entering into force of Single CMO 1308/2013 4

5 The Commission representative explained that the Lisbon Treaty had brought a new legislative structure which stipulated the separation between delegated and implementing acts. With the new Single CMO, the Commission had to apply this separation, which at present applied to some 200 CAP implementation regulations. A task force had been constituted carry out this revision, with the aim of achieving significant simplification, better coherence between the different measures, reduction of the risk of error and reduction of administrative burden. For example, all the international trade measures for agricultural products would be covered by one delegated act and one implementing act. The aim was to have this revision completed by the end of Regarding sugar, it did not really appear worthwhile to integrate the acts relating to quotas in this revision since quotas were scheduled to end in It had been decided to make a sort of mini-package for sugar to apply the modifications required to adapt to the provisions of 1308/2013 as well as possible improvements and modifications, some required by some stakeholders. The idea was to start with the presentation of a work plan at a future Management Committee meeting and to be able to publish the regulatory modification before the end of this campaign. The Spanish farmers union representative enquired whether inter-professional agreements (IPAs) would be valid until 2019/20 or 2020/21. Secondly, would it be possible to fix sugar beet prices within an IPA after the end of quotas without any problems regarding competition policy? The Commission representative explained that there was no last campaign for the IPA since there was no deadline in 1308/2013. The second question required careful consideration it was a matter of interpretation and thus it was impossible to give a quick response. In any case, the beet price had to be indicated in the delivery contracts. The trade representative enquired whether the Commission proposed to extent the validity of Regulation 828/2009 from 2015 to Part of that regulation concerned volumetric safeguards, with a mathematical formula in an annex. How would such a regulation extension square with the provisions of the EPAs which stipulated a safeguard until 2015? The Commission representative explained that the Commission was not only looking at a prolongation of this regulation but also at the simple cancelling of a number or articles. The Commission would prolong in principle the validity of regulation 828/2009, look at the elements which were redundant (e.g. references to safeguards, regional thresholds of the different EPA regions, the annex with the calculation) and propose their removal. The Commission would also consider simplification proposals by the stakeholders, such as those received in a letter from the ACP countries and ESRA. The Commission had received green light from its legal services to simplify the regulations, so it would try to look at integrating simplification proposals. The sugar refiners representative pointed out that the letter requesting modifications to 828/2009 just mentioned by the Commission representative had been sent in March and that so far we had not heard anything from the Commission other than Regulation 828 will die. Given that the Commission had been given the green light by its legal services, would it be possible to know which requests would be taken into account and when we would hear from the Commission on this. The Commission representative explained that he was glad that the Commission had not replied so far because a few months ago the Commission s reply would have been that regulation 828 would not exists beyond its expiry date. The Commission would look at the issues addressed in ESRA s letter and see whether its legal services defined them as simple changes or not. It was too early to give definite answers to all of ESRA s questions, which was why the Commission had not replied officially so far. The sugar refiners representative enquired whether the Commission intended to finish this work by September this was not much time. 5

6 The Commission representative confirmed that the Commission s objective was to finish by the end of September. The yeast industry representative enquired whether the issues of price monitoring and private storage from 2017/18 would be in the mini-package for sugar or in the horizontal regulation. In addition, would there be a transitional regulation for the final year, explaining certain measures? The Commission representative explained that private storage would be part of a horizontal regulation (delegated & implementing act). The basic regulation did not contain any specific provision regarding the last campaign; thus, one would not suppose that there would be many transitional provisions. Returning to Regulation 828/2009, the sugar beet growers representative pointed out that there was a general safeguard clause regarding preferential imports as from 1 st October Some stakeholders (of which ACP countries) had requested a removal of this safeguard clause. The beet growers were not in favour of the removal of this clause and hoped that it would remain in the new simplified regulation. The Commission representative explained that the safeguard clause was in a Council regulation. When the specific sugar safeguard clause of 3.5 MT and the 1.6 MT would end in 2015, the general safeguard clause would apply automatically and there was no intention whatsoever to remove it. However, there were a number of conditions in the regulation which would need to be met to be able to trigger this safeguard clause, the most obvious being the EU price decreasing to 80% of what it had been in the previous 12 months due to an increase in imports. If such conditions were met, then the Commission may impose a safeguard clause, which in any way remained in place. Item 6. Information by the Commission on isoglucose carry forward as from 1st January 2014 The Commission representative explained that during the final quota campaign of the current regulation there was some doubt regarding the possibility of carry forward from the last campaign with quotas to the first campaign without quotas. One interpretation could be that in the absence of quota there was no limit to the quantity which could be carried forward, which could be said to de facto anticipate the end of the quota system. One could reasonably think that it had not been the intention of the legislators to anticipate the end of the quota system by one year relative to what was written in the regulation. Another interpretation could be that in the absence of quotas in 2017/18 the quantity carried forward would be zero. This would create a big problem for the sector, which had not been the intention of the legislators either. However, there were no specific provisions in Regulation 1308/2013 to address this issue. It was now up to the Commission to find a way of interpreting this situation which would allow finding a system which would ensure that during the last campaign with quotas the system would work as similar as possible to the preceding campaigns. The Commission s services were in consultation with the legal services so as to find a good solution. The beet growers representative thanked the Commission for this clarification with regards to its objective. This was important because during a previous Advisory Group we had been told that in theory isoglucose producers could be in a position to double their production to be put on the market during this last MY under the quota regime because of this interpretation regarding the carry forward of out-of-quota isoglucose. If the management of this last MY should be the as similar as possible to the previous MYs, the logic would be that a doubling of isoglucose production would signify something not at all similar to previous MYs. 6

7 Pointing out that Item 6 was Information by the Commission on isoglucose carry forward as from 1st January 2014, the sugar industry representative pointed out that currently the Commission was allowing isoglucose producers to market more than their quota every year. From CEFS point of view this was illegal. The Commission must correct the situation to avoid it worsening when quotas ended. Regarding the final MY under the quota system, sugar producers could not imagine that Commission s aim was to penalise sugar producers in the last year she trusted that a good solution would be found. For the time being however, if the Commission did not take a decision by 30 th August 2014, it would put isoglucose producers in the position to market more than their quota every year and by 2016/17 they could double their quota. Legal certainty was needed to prevent this from happening. The Commission representative explained that the Commission had said that it would try to find the best solution possible which did not change the last MY under quotas relative to the previous MYs. Such a solution had to have a solid legal base which needed to be found. Regarding the point put forward by the sugar industry representative, nothing had changed the legislators had simply extended an existing regime for 2 years. If there was a system today which allowed - according to our legal services isoglucose producers to put their quota production on the market during the same campaign, this system did not have to change due to 1308/2013. From the Commission s point of view, the only thing to concentrate on now was to try and find a balanced solution for the last campaign under quotas. The beet growers representative asked whether the Commission or the isoglucose producers could provide the quantities of out-of-quota isoglucose which had been marketed during the same year of their production so that the advisory group could get the necessary information on this issue. In addition, would it be possible to include this information and these quantities in the balance sheet provided by the Commission? It would be logical to include these quantities if they were not equal to zero and it would provide the Advisory Group with the necessary information to understand what was going on with regards to this issue. The Commission representative explained that each time the Commission presented a balance the quantity of isoglucose carried forward was indicated. One could assume that a very significant part of this quantity had been already put on the market given the fact that isoglucose could not be stored for very long. While the exact quantities of isoglucose carried forward and already put on the market during the same campaign were not known, they would not be much lower than the quantity of isoglucose carried forward. The sugar industry representative pointed out that the end of quotas constituted a change to the current situation. Had the sugar industry known that the Commission would grant different treatment to isoglucose producers it would probably have started discussions earlier. The sugar industry was not convinced by the technical justifications from isoglucose producers to benefit from this possibility. The services needed to correct the situation, the sooner the better. The Commission representative explained that the difficulty was to convert the somewhat simplistic reasoning (we just prolonged the quota regime without any changes) into legal terms. For the time being, we had not been in a position to do so. There were around twice as many regulatory acts under the Lisbon treaty than before but the Commission had not doubled the number of lawyers for all that. Thus, there was a sort of bottleneck at the level of legal services to take into the consideration the points they considered a priority. So far, we could not yet support our intention not to make a difference in legal terms because we had not been able to get lawyers around a table to discuss the issue. Regarding the final period of quotas, there would be in principle no transitional measures. The Commission considered that one could not arrive at a solution at the end of the quota regime without legislating because it would be immediately attackable; if we ever managed to make an interpretative note, immediately those who were not happy with it could make an appeal against it; the legal services would never enter into such a situation. We would not sort out this 7

8 issue without legislating, and this issue was far from being a priority. Regarding carry forward during the current period (2013/14), the Commission representative s personal view was that an isoglucose producer was unlikely to take the risk of carrying forward in the same period because there was no legal certainty on it. It was unlikely that we would be able to legislate on the issue within a time frame which was consistent with the end of the campaign. Therefore, we should exercise great caution in this area because legal certainty was to look at what was in the text; transitional measures were not included in the text and we were taking a risk if we moved from what written in the text. The sugar industry representative questioned whether it was a priority for the Commission s legal services to grant quota for industrial sugar for three years. She contended that it was a priority for those services to know how sugar and isoglucose should be treated during the last years, starting from now, and again offered the sugar industry s help to work with the Commission and its services to try to find a good solution. The Commission representative replied that gladly accepted this offer. Unfortunately, we had to bring in the lawyers and up to now we had not been capable of doing so. For three years was once rather than thrice - this was irresistible lawyers (adjudicating once rather than three times). If this was not a priority, it was a simplification from the lawyers point of view. As soon as the Commission had a date with its lawyers, the members of the advisory group would be given the opportunity to associate themselves to try to see what was possible in the present circumstances and how to act if applicable. Item 7. Any other business a. Presentation by the Commission of the state of play of the implementation of the new civil society dialog The Commission representative explained that there would be more news on this issue starting from 1 st July. The new Civil Dialogue Group (CDG) concerning the sugar sector was no longer named sugar but arable crops This meant that it regrouped a lot of sectors together which in turn meant a new organisation regarding the agenda: for example, a CDG on sugar was no longer possible it would be arable crops - and during the full day meeting (as from 1 st July 2014, the CDG meetings would be all-day meetings rather than the current half-day) maybe in the morning or afternoon CDG Arable Crops would perhaps speak about sectors (e.g. sugar) and discuss other matter for the rest of the meeting. The CDG Arable Crops consisted of the sectors cereals, oilseeds & proteins, cotton, energy & non-food crops, flax & hemp, dried fodder, hops, rice, seeds, starch and sugar; it was thus one of the biggest CDG. This meant that there would be more meetings, but during these meetings each sector had to take the needs of the other sectors into account. It was not yet known when the first meeting would take place. The Commission would be finalising its decision on the CDGs over the next two weeks everything would be published on the website and the stakeholders would be informed about the number of meetings and number of seats allocated for each interest group. One Chair for the CDG Arable Crops elected for one year - would have to lead the discussion of all the different sectors in all the meetings of this CDG. The Commission representative recalled that the Commission had decided to reform the system because it apparently had not been transparent enough and not balanced between the economic and noneconomic interests and the Parliament had said that it was needed because we had a new CAP. She invited the experts present to write a letter if they had strong comments and wanted to send proposals regarding their sector (e.g. how many meetings were needed) to the Chair and the Commission, and there would be a good compromise with all the other sectors in the CDG Arable Crops, where all the different markets would be discussed; issues such as for example international aspects and quality & promotion would be treated respectively in the CDG International Aspects in Agriculture and the CDG Quality and Promotion. In the past, DG AGRI used to invite its colleagues from SANCO and TRADE; now, when there would be specific questions on these, they 8

9 would be addressed through a colleague who participated in the relevant CDG. This was because we would have less time and wanted to focus all the questions, and it made sense not to always invite the same colleague to talk about the same bilateral negotiations to different CDGs. The COPA representative enquired whether the decision provided for the possibility to establish market forecast and analysis groups. A big part of the meetings of Advisory Group Sugar was dedicated to market analyses at least 4 times a year, including market analyses from the sugar trade, from the Commission and from the beet/sugar sector. She found it difficult to envisage how we could discuss market analyses in such a broad manner when we were going to have an agenda which covered sugar, seed, flax & hemp and cereals. Did the Commission s decision provide for the possibility to establish forecast groups, as we currently had in the fruit and vegetables sector for tomatoes, citrus and stone fruit. Besides, were these forecast groups going to be maintained in the context of the CDG horticulture? The Commission representative explained that the CDG meeting would last at least one day; there would be another sector in the morning, and in the afternoon the meeting would continue with sugar; thus, there would be enough time to discuss what the sector wanted to discuss. As far as the forecast groups were concerned, she understood that what we had in the past was still valid. The Chair enquired about the number of people who would participate in this CDG. The Commission representative explained that this had not been decided yet. There was a maximum for all CDGs. According to the requests received by the Commission, there had been very few calls of interest from non-economic sector NGOs for some groups. This meant that we could not allocate the seats to an NGO which had requested very low numbers (i.e. it is not possible to give you something you did not ask for ). Regardless of the Commission s efforts to rebalance the noneconomic and economic sectors, we were still tending to one side; to make things more equal, the Commission was trying to allocate the seats, but still on the basis of the requests received. Because of this, we may never reach the maximum. The Commission had been a little astonished when it received the requests because it had expected to see more interest from some NGOs; for some NGOs in the non-economic sector, it was probably also a matter of resources they did not have so many people to send to Brussels to participate in such meetings. The CDG would also need a Chair who would spend a lot of time in Brussels to cover all the sectors. She encouraged the participants to be positive and recommended that the Chair and Vice-Chair be elected from different sectors within arable crops. The Chair enquired again about the number of people who would participate in this CDG; if the total number for the CDG was limited to 50 and there were 10 sectors, it would mean 5 seats for the sugar sector. What did this signify for the diversity of opinion (all the representatives of farmers, producers, traders, unions, NGOs, etc.)? Was this really a progress? The yeast industry representative explained that his industry was part of FoodDrinkEurope and that the items on the agenda other than sugar did not interest the industry, given that sugar was the yeast industry s principal topic. He did not understand how the new system could work if there were only 5 representatives there would be nobody; the interest of the current advisory group was to have direct exchanges with and information from the Commission. Imagine if the item of interest to us were only to be covered during the afternoon of the CDG Arable Crops meeting. In the current situation, one attended for example the entire Advisory Group Bio and not only the item of interest, otherwise one would not obtain a seat. In the new situation, did the Commission envisage for example that of 400 registrants only some would come for their item(s) of interest or did it envisage limiting the number to say 70, in which case there would be people who would not be there half the time? 9

10 The Commission representative recalled that the Commission had never allocated seats to experts: the Commission had always worked with NGOs (e.g. COPA-COGECA, FoodDrinkEurope, CELCAA, etc.). This meant that the Commission allocated the seats to European organisations; it was then up to each European organisation, on the basis of the agenda, to send the expert(s). Obviously this was a reform and we had to reform by something that also added value, otherwise it would not be a reform but a simple copy-paste of the previous system. She imagined that especially in the beginning it would not be easy for an agenda and the elections, but we would have to make do. The beet growers representative declared she was not certain whether she had really understood everything about this reform. What she could see was that even if there would be enough time to discuss the sugar sector, she feared that the dialog would be impoverished in the end and thus achieve an objective contrary to the original objective; instead of enriching the dialog between the Commission and the different organisations we would end up impoverishing this dialog and instead of an open dialog we would each end up discussing just with the Commission and thus this open dialog would turn into a much more closed dialog for each group with the Commission. She was slightly pessimistic taking into account what had just been presented and hoped that the Commission representative would apply his full weight to ensure that could at least for this sugar group maintain as much as possible something which was rational and operational so that the largest possible number of stakeholders could participate in the CDG and that we did not end up with a CDG with very poor discussions between Chair and Vice-Chair because there would not be much room for all the participants, in which case we would have a very poor dialog. She also hoped that there would perhaps be a rationalisation, perhaps carried out by the Commission; we presently had an AG Sugar and an AG Starch; these could perhaps be merged, as this would allow saving at best a bit more space for seats and representatives. The sugar refiners representative pointed out that all the other associations in this room belonged to other umbrella organisations; ESRA did not belong to FoodDrinkEurope, the association which allocated the seat to ESRA in this group. ESRA only had this one seat; if it lost this seat, it would no longer be represented. The sugar industry representative recapitulated that there would be a day-long meeting of the CDG Arable Crops ; the sugar sector did not need a full-day meeting but a half-day meeting; thus, according to the explanations from the Commission, the morning session could be on cereals or oilseed & proteins, followed by sugar in the afternoon. In this room, there were 60 persons. Did this mean that for each meeting we needed to divide the number of experts by half (e.g. out of 8 experts for a sector 4 for cereals and 4 for sugar)? What were the reimbursement modalities? Would we really have in the meeting room the expert who knew their topic and who could help the Commission with for example its sugar balance which we looked at every month? Where was the sense in asking an expert on cotton or flax & hemp to discuss sugar stocks? She asked the Commission to ensure that, at least for as long as there were quotas, it had the right people in the room. The Commission representative explained that the idea of the reform was to have CDGs of variable geometry depending on the agenda because the CDGs composition would be according to the number of seats allocated to the associations. There would not be many more participants in the CDG than in the present advisory group there was no room. However, depending on the number of seats allocated to the associations which had been selected, it would be possible to adapt to the agenda. The Commission could certainly work with farmers on this level because they were invariably involved and interested in several arable crops. It could be a bit more complicated with for example specialised traders. We would have to see how this would work out, but in principle it made a lot of sense to have this CDG Arable Crops because all depended on the farmers land use. Downstream, we needed representatives from processors, trade and especially more links to noneconomic NGOs (representation of European citizens and public opinion). He did not believe that 10

11 the dialog in the CDG would be impoverished; on the contrary, with the composition of the CDG there would be a many subjects to discuss, and indeed quite strongly. Furthermore, there was less and less constraining legislation in this area of arable crops and in the CAP in general (e.g. disappearance of milk and sugar quotas); all the questions relating to the regulation and to the Commission s management of the regulation would disappear and a lot of discussion would be on market situations and forecasts and this was of interest to the entire arable crops sector. There were strong links between the crops in this sector because of the markets. Regarding the small sectors (e.g. flax & hemp, cotton), they would be items which would appear on the agenda in a very infrequent manner compared to the more recurring matter such as for example market situations or current issues (e.g. evolution of a certain number of marketing standards). While there was certainly a lack of information (the Commission/DGAGRI had not been associated with this reform), we should not overestimate the difficulties resulting from this reform because even if we did not know exactly how it was going to work there was a logic to it. It was certain that the Chairs would have to do a lot of work and would certainly need to be assisted by several Vice-Chairs which could take over. The reimbursements would be made according to the seats allocated; if for example there were 10 seats for COPA there would be 10 reimbursements. The experts would divide themselves up according to the items of the agenda and if the agenda was well organised between the morning and afternoon sessions. For the time being, the Commission was impatiently awaiting the allocation of seats because this had not been finalised yet. The Chair concluded that this was the last meeting in this Advisory Group Sugar format. A sugar industry representative enquired whether the agendas of the meetings of the CDG Arable Crops would include trade matters or whether they would be restricted to CAP. The Commission representative explained that the CDG International Aspects in Agriculture would address trade matters, which meant that sector specific trade issue had to be addressed via members of that CDG. Another Commission representative added that in the market organisation there were provisions on trade with third countries (import licenses, TRQs, etc.) which could be part of the items discussed by the CDG Arable Crops. The European Trade Representative Organisations had applied for seats and the Commission would certainly allocate some seats to them. Progress on for example FTA negotiations would be part of the CDG International Aspects. Item 7. Any other business b. molasses The molasses industry representative pointed out that he had not received the most recent calculations of the representative prices for cane and beet molasses. It had worked well since January, and for June there was no information. All he could say was that molasses was very expensive. The Commission representative expressed surprise, since the Commission carried out these calculations every month and put them on its website. The high price of molasses was good news since it meant that the Commission did not have to impose additional duties. He also noted that imports from Pakistan had increased a lot last year. Another Commission representative explained that the information on molasses could be found in the group Natural fibres and sugar on the CIRCA website (no password needed), where the most recent prices had been published this very day at around 3 pm under new documents. The meeting ended at