Proposals for reform of the tobacco sector
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CTA. 2003. Proposals for reform of the tobacco sector. Agritrade, November 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52795
A communication containing proposals for reform of the EU tobacco ...
A communication containing proposals for reform of the EU tobacco regime was forwarded by the European Commission to the EU Council and European Parliament on September 23rd 2003. These proposals involve: the progressive decoupling of the existing tobacco premium from production over a three-year period; the phasing-out of the tobacco fund; the establishment of a special fund under the rural development pillar to support restructuring in tobacco-growing areas. By the end of the reform period more than 70% of the current tobacco premium will have been converted into the single farm payment and at least 20% will be deployed as restructuring assistance. A detailed assessment of the situation and options for reform in the EU tobacco sector can be found in a Commission staff working paper 'Extended Impact Assessment: Tobacco Regime. Full details of the Commission's proposals for reform of the tobacco regime, alongside a summary assessment of the current situation, can be found in the text of the Commission's communication to the Council and European Parliament on 'Accomplishing a sustainable agricultural model for Europe through the reformed CAP: the tobacco, olive oil, cotton and sugar sectors'. It is envisaged that the reform process will 'bring better market orientation and income growth for producers, in addition to the positive impact on producer income development from the increased transfer efficiency of decoupled payments'. This is especially the case for small scale producers who will receive a larger part of their income through the single farm payments. The reform process will also lead to the cessation of production of less profitable varieties of tobacco and the conversion of land to other uses. By the end of the reform period it is anticipated that EU prices will be aligned with world market prices. Comment: The alignment of EU prices with world market prices which the reform process is intended to bring about is likely to reduce the income to ACP suppliers of tobacco to the EU market. These price effects will need to be carefully assessed in the light of the prices which ACP suppliers currently enjoy.