25th Nov 2005 10:27
Associated British Foods PLC25 November 2005 Associated British Foods plc Council of European Ministers of Agriculture reach agreement on the Commission's proposals for the reform of the EU sugar regime For immediate release 25 November 2005 Associated British Foods plc ("ABF"), the international food, ingredients andretail group, today notes the agreement reached in Brussels by the Council ofMinisters for the reform of the EU sugar regime. This agreement followsrevisions to the proposals published by the European Commission on 22 June 2005. The agreement has yet to be ratified by the European Parliament. The ABF businesses affected by these proposals are the sugar operations ofBritish Sugar in the UK and Poland. These proposals are welcomed by British Sugar as one of the most efficientproducers in the EU. The main elements of the June proposal are retained inthis agreement but are phased in over a longer time and additional funds aremade available for industry restructuring. The new regime will run from 2006/7 until 2014/15 with no mid-term review. Therestructuring scheme, funded by a levy on the industry, designed to compensatemarginal producers who relinquish their quota with incentives for earlyredemption, has been strengthened with additional funds, and compensation is nowalso available for growers and national governments. It is anticipated thatthis scheme will deliver the reduction in EU production sought by theCommission. There are no mandatory quota cuts. In addition British Sugar isgiven the option of purchasing 83,000 tonnes of quota for its UK beet sugarbusiness and approximately 10,000 tonnes for its Polish business. The proposals include the restructuring levy, payable over 3 years commencing in2006/7, and reductions in the reference price for sugar of 17% in 2008/9, risingto 36% from 2009/10 onwards. The UK beet price will be reduced progressivelyfrom 2006/7 until 2009/10. The current export producer levy will be removed anda lower "production charge" will be introduced from 2007/8. Exports ofnon-quota C sugar will be reduced. Our best estimate of the operating profit impact on our sugar operations, whichresults from this agreement, is based on the assumptions made by the EuropeanCommission for its outcome. The outcome is slightly better at the end of theperiod of transition than the £40m guidance previously given. Trading in thecurrent year for British Sugar UK and Poland has been difficult and we expectvolatility to remain during the period of transition. We continue to work oncost reductions in both the UK and Poland and the exploitation of new revenueopportunities including the manufacture of bioethanol in the UK. For further enquiries please contact: Associated British FoodsJohn Bason, Finance DirectorTel: +44 (0)20 7399 6500Geoff LancasterTel: +44 (0)1733 422901 Citigate Dewe RogersonJonathan Clare, Chris Barrie, Sara BatchelorTel: +44 (0)20 7638 9571 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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