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Temporary Scheme for the Restructuring of the Sugar Industry in the Community Regulation

Regulation 2006/320

Article 1: Temporary restructuring fund

The temporary fund for the restructuring of the sugar industry in the Community (hereinafter referred to as ‘restructuring fund’) is hereby established.
The restructuring fund shall form part of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund. As from 1 January 2007 it shall form part of the European Agricultural Guarantee Fund (EAGF).

The restructuring fund shall finance the expenditure resulting from the measures provided for under Articles 3, 6, 7, 8 and 9.

The temporary restructuring amount referred to in Article 11 shall be revenue assigned to the restructuring fund in accordance with Article 18(2) of Regulation (EC, Euratom) No 1605/2002.
Any amount that may be available in the restructuring fund after the financing of the expenditure referred to in paragraph 2 shall be assigned to the EAGF.

This Regulation shall not apply to the outermost regions referred to in Article 299(2) of the Treaty.

Article 2: Definitions

For the purposes of this Regulation, the following definitions shall apply:

‘isoglucose’ means the product obtained from glucose or its polymers with a content by weight in the dry state of at least 10 % fructose;

‘inulin syrup’ means the immediate product obtained by hydrolysis of inulin or oligofructoses, containing in the dry state at least 10 % fructose in free form or as sucrose, and expressed as sugar/isoglucose equivalents;

‘agreement within the trade’ means one of the following:

an agreement concluded at Community level, prior to the conclusion of any delivery contract, between a group of national undertakings' organisations on the one hand and a group of national sellers' organisations on the other;

an agreement concluded, prior to the conclusion of any delivery contract, between undertakings or a undertakings' organisation recognised by the Member State concerned on the one hand and a sellers' association recognised by the Member State concerned on the other;

in the absence of any agreement as referred to in point (a) or (b), the law on companies and the law on cooperatives, in so far as they govern the delivery of sugar beet by the shareholders or members of a company or cooperative manufacturing sugar;

in the absence of any agreement as referred to in point (a) or (b), the arrangements existing before the conclusion of any delivery contract, provided the sellers accepting the arrangement supply at least 60 % of the total beet bought by the undertaking for the manufacture of sugar in one or more factories;

‘marketing year’ means the period beginning on 1 October and ending on 30 September of the following year. By way of exception, the marketing year 2006/2007 begins on 1 July 2006;

‘full time refiner’ means a production unit:

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of which the sole activity consists of refining imported raw cane sugar or

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which refined in the marketing year 2004/2005 a quantity of at least 15 000 tonnes of imported raw cane sugar;

‘quota’ means any quota for the production of sugar, isoglucose and inulin syrup allocated to an undertaking in accordance with Articles 7(2), 8(1), 9(1) and (2) and Article 11 of COMISSR of 20 February 2006 on the common organisation of the markets in the sugar sector ( 8 ) .

Article 3: Restructuring aid

Any undertaking producing sugar, isoglucose or inulin syrup to which a quota has been allocated by 1 July 2006 shall be entitled to a restructuring aid per tonne of quota renounced, provided that during one of the marketing years 2006/2007, 2007/2008, 2008/2009 and 2009/2010 it:

renounces the quota assigned by it to one or more of its factories and fully dismantles the production facilities of the factories concerned;

renounces the quota assigned by it to one or more of its factories, partially dismantles the production facilities of the factories concerned and does not use the remaining production facilities of the factories concerned for the production of products covered by the common market organisation for sugar, or

renounces a part of the quota assigned by it to one or more of its factories and does not use the production facilities of the factories concerned for refining raw sugar. This last condition shall not apply in respect of: existing on 1 January 2006.

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the sole processing plant in Slovenia,

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the sole beet processing plant in Portugal,

For the purpose of this Article, dismantling of production facilities during the marketing year 2005/2006 shall be deemed to take place in the marketing year 2006/2007.

Restructuring aid shall be granted in respect of the marketing year for which the quotas are renounced in accordance with paragraph 1 and only for the quantity of quota renounced and not reallocated.
The quota may only be renounced after consultations conducted in the framework of the relevant agreements within the trade.

Full dismantling of production facilities shall require:

the definitive and total cessation of the production of sugar, isoglucose and inulin syrup by the production facilities concerned;

the closure of the factory or the factories and the dismantling of the production facilities thereof within the period referred to in point (d) of Article 4(2), and

the restoring of the good environmental conditions of the factory site and the facilitation of redeployment of the workforce within the period referred to in point (f) of Article 4(2). Member States may require the undertakings referred to in paragraph 1 to make commitments which go beyond the statutory minimum requirements imposed by Community law. However, such commitments shall not restrict the operation of the restructuring fund as an instrument.

Partial dismantling of production facilities shall require:

the definitive and total cessation of the production of sugar, isoglucose and inulin syrup by the production facilities concerned;

the dismantling of the production facilities that will not be used for the new production and were destined and used for the production of the products mentioned under (a), within the period referred to in point (e) of Article 4(2);

the restoring of the good environmental conditions of the factory site and the facilitation of redeployment of the workforce within the period referred to in point (f) of Article 4(2), insofar as necessitated by the cessation of the production of the products mentioned under (a). Member States may require the undertakings referred to in paragraph 1 to make commitments which go beyond the statutory minimum requirements imposed by Community law. However, such commitments shall not restrict the operation of the restructuring fund as an instrument.

The amount of restructuring aid per tonne of renounced quota shall be:

in the case referred to in point (a) of paragraph 1:

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EUR 730,00 for the marketing year 2006/2007,

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EUR 730,00 for the marketing year 2007/2008,

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EUR 625,00 for the marketing year 2008/2009,

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EUR 520,00 for the marketing year 2009/2010;

in the case referred to in point (b) of paragraph 1:

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EUR 547,50 for the marketing year 2006/2007,

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EUR 547,50 for the marketing year 2007/2008,

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EUR 468,75 for the marketing year 2008/2009,

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EUR 390,00 for the marketing year 2009/2010;

in the case referred to in point (c) of paragraph 1:

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EUR 255,50 for the marketing year 2006/2007,

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EUR 255,50 for the marketing year 2007/2008,

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EUR 218,75 for the marketing year 2008/2009,

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EUR 182,00 for the marketing year 2009/2010.

An amount of at least 10 % of the relevant restructuring aid fixed in paragraph 5 shall be reserved for:
Member States shall grant the aid on the basis of objective and non-discriminatory criteria, taking into account the losses resulting from the restructuring process.
The amount resulting from the application of the first and second subparagraphs shall be deducted from the applicable amount referred to in paragraph 5.

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growers of sugar beet, cane and chicory having delivered these products during a period preceding the marketing year referred to in paragraph 2 for the production of sugar or inulin syrup under the relevant quota renounced, and

—

machinery contractors, being private persons or enterprises having worked under contract with their agricultural machinery for the growers, for the products and in the period referred to in the first indent.

After consultation of the interested parties, Member States shall determine the applicable percentage as well as the period referred to in the first subparagraph provided that an economically sound balance between the elements of the restructuring plan as referred to in Article 4(3) is ensured.

Article 4: Application for restructuring aid

Applications for restructuring aid shall be submitted to the Member State concerned by 31 January preceding the marketing year during which the quota is to be renounced.
However, applications in respect of the marketing year 2006/2007 shall be submitted by 31 July 2006.

Applications for restructuring aid shall include:

a restructuring plan;

a confirmation that the restructuring plan has been prepared in consultation with the sugar beet, cane and chicory growers;

a commitment to renounce the relevant quota in the marketing year concerned;

in the case referred to in Article 3(1) (a), a commitment to fully dismantle the production facilities within the period to be determined by the Member State concerned;

in the case referred to in Article 3(1) (b), a commitment to partially dismantle the production facilities within the period to be determined by the Member State concerned and not to use the production site and the remaining production facilities for the production of products covered by the common market organisation for sugar;

in the cases referred to in Article 3(1) (a) and Article 3(1)(b), a commitment to meet the requirements provided for in, respectively, Article 3(3)(c) and Article 3(4)(c) within the period to be determined by the Member State concerned;

in the case referred to in Article 3(1) (c), if applicable, a commitment not to use the production facilities for refining raw sugar.

The respect of the commitments under points (c) to (g) shall be subject to a decision granting the aid as referred to in Article 5(1).

The restructuring plan referred to in paragraph 2(a) shall include at least the following elements:

a presentation of the purposes and the actions foreseen, demonstrating a sound economic balance between them and their consistency with the objectives of the restructuring fund and of the rural development policy in the region concerned as approved by the Commission;

the aid to be granted to growers of sugar beet, cane or chicory and, if appropriate, machinery contractors in accordance with Article 3(6);

a complete technical description of the production facilities concerned;

a business plan detailing the modalities, timetable and costs for the closure of the factory or factories and the full or partial dismantling of the production facilities;

if appropriate, the scheduled investments;

a social plan detailing the actions planned in particular with respect to re-training, redeployment and early retirement of the workforce concerned and, if applicable, national specific requirements provided for in accordance with Article 3(3) (c) or Article 3(4)(c);

an environmental plan detailing the actions planned in particular to respect mandatory environmental obligations and, if applicable, national specific requirements provided for in accordance with Article 3(3) (c) or Article 3(4)(c);

a financial plan detailing all the costs in relation to the restructuring plan.

Article 5: Decision on the restructuring aid and controls

By the end of February preceding the marketing year referred to in Article 3(2), Member States shall decide on the granting of the restructuring aid. However, the decision for the marketing year 2006/2007 shall be adopted by 30 September 2006.

The restructuring aid shall be granted if the Member State has established after thorough verification that:

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the application contains the elements referred to in Article 4(2),

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the restructuring plan contains the elements referred to in Article 4(3),

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the measures and actions described in the restructuring plan are in conformity with the relevant Community and national legislation; and

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the necessary financial resources are available in the restructuring fund, on the basis of information obtained from the Commission.

If one or more of the conditions laid down in the first three indents of paragraph 2 are not respected, the application for the restructuring aid shall be returned to the applicant. The applicant shall be informed of the conditions that are not respected. The applicant may then either withdraw or complete his application.

Notwithstanding the control obligations referred to in FCAPR, Member States shall monitor, control and verify the implementation of the restructuring aid as approved by it.

Article 6: Aid for diversification

An aid for diversification measures in regions affected by the restructuring of the sugar industry may be granted in any Member State in relation to the sugar quota renounced by undertakings established in that Member State in one of the marketing years 2006/2007, 2007/2008, 2008/2009 and 2009/2010.

The total amount of aid available to a Member State shall be established on the basis of:

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EUR 109,50 per tonne of sugar quota renounced in the marketing year 2006/2007,

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EUR 109,50 per tonne of sugar quota renounced in the marketing year 2007/2008,

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EUR 93,80 per tonne of sugar quota renounced in the marketing year 2008/2009,

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EUR 78,00 per tonne of sugar quota renounced in the marketing year 2009/2010.

Member States which decide to grant aid for diversification referred to in paragraph 1 or transitional aid referred to in Article 9 shall establish national restructuring programmes detailing the diversification measures to be undertaken in the regions concerned and inform the Commission of these programmes.

Notwithstanding paragraph 5, to be eligible for aid referred to in paragraph 1 diversification measures shall correspond to one or more of the measures envisaged under Axis 1 and Axis 3 of EAFRD.
Member States shall fix criteria in order to distinguish the measures for which an aid for diversification may be granted from the measures for which Community support may be granted under EAFRD.
The aid referred to in paragraph 1 shall not be higher than the ceilings for the EAFRD contribution laid down in Article 70(3) (a) of EAFRD.

Diversification measures which differ from the measures envisaged under Axis 1 and Axis 3 of EAFRD shall be eligible for the aid referred to in paragraph 1 provided that they are in conformity with the criteria set out in Article 87(3) of the Treaty and, in particular, with the aid intensities and the eligibility criteria laid down in the Commission guidelines on State aid in the agricultural sector.

Member States shall not grant national aid in respect of diversification measures provided for in this Article. However, if the ceilings referred to in the third subparagraph of paragraph 4 were to permit the granting of an aid for diversification of 100 %, the Member State concerned shall contribute at least 20 % of the eligible expenditure. In this case, Articles 87, 88 and 89 of the Treaty shall not apply.

Article 7: Additional aid for diversification

The total amount of aid available to a Member State in accordance with Article 6(2) shall be increased by:

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50 % once the national sugar quota fixed in Annex III of COMISSR for that Member State has been renounced by at least 50 % but less than 75 %,

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another 25 % once the national sugar quota fixed in Annex III of COMISSR for that Member State has been renounced by at least 75 % but less than 100 %,

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another 25 % once the national sugar quota fixed in Annex III of COMISSR for that Member State has been completely renounced.

Any increase shall be available in the marketing year in which the quantity of the national sugar quota renounced reaches, as the case may be, 50, 75 or 100 %.

The Member State concerned shall decide whether the aid corresponding to the increase laid down in paragraph 1 shall be granted for diversification measures referred to in Article 6(1) and/or to growers of sugar beet or cane giving up their production in the regions affected by the restructuring. The aid to growers shall be granted according to objective and non-discriminatory criteria.

Article 8: Transitional aid to full-time refiners

A transitional aid shall be granted to full-time refiners so as to allow them to adapt to the restructuring of the sugar industry in the Community.

To this end, an amount of EUR 150 million shall be made available for the total of the four marketing years 2006/2007, 2007/2008, 2008/2009 and 2009/2010.
The amount fixed in the first subparagraph shall be divided as follows:

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EUR 94,3 million for full-time refiners in the United Kingdom,

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EUR 24,4 million for full-time refiners in Portugal,

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EUR 5,0 million for full-time refiners in Finland,

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EUR 24,8 million for full-time refiners in France,

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EUR 1,5 million for full-time refiners in Slovenia.

The aid shall be granted on the basis of a business plan approved by the Member State relating to the adaptation of the situation of the full-time refiner concerned to the restructuring of the sugar industry.
Member States shall grant the aid on the basis of objective and non-discriminatory criteria.

Article 9: Transitional aid to certain Member States

 In the context of the national restructuring programme referred to in Article 6(3): 
 a 
 an aid of not more than EUR 9 million shall be granted in Austria for investments in collection centres of sugar beet and other logistical infrastructure needed as a consequence of restructuring; 
 b 
 an aid of not more than EUR 5 million shall be granted in Sweden for the direct or indirect benefit of sugar beet growers in Gotland and Öland giving up sugar production as part of the national restructuring process. 

Article 10: Financial limits

Any aid referred to in Articles 3, 6, 7, 8 and 9 claimed for any of the marketing years 2006/2007, 2007/2008, 2008/2009 and 2009/2010 shall be granted only within the limit of the appropriations available in the restructuring fund.

Where, on the basis of the applications submitted for a marketing year and found eligible by the Member State concerned, the overall amount of aid to be granted exceeds the limit for that marketing year, the granting of aid, shall be based on the chronological order of the lodging of applications for aid (‘first come, first served’ principle).

The aids referred to in Articles 6, 7, 8 and 9 shall be independent of the aid referred to in Article 3.

The restructuring aid referred to in Article 3 shall be paid in two instalments:

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40 % in June of the marketing year referred to in Article 3(2), and

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60 % in February of the following marketing year.

However, the Commission may decide to split the instalment referred to in the second of the preceding indents into two payments, as follows:

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a first payment in February of the following marketing year, and

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a second payment at a later date when the necessary financial resources have been paid into the restructuring fund.

The Commission may decide to postpone the payment of the aids referred to in Articles 6, 7, 8 and 9 until the necessary financial resources have been paid into the restructuring fund.

Article 11: Temporary restructuring amount

A temporary restructuring amount shall be paid per marketing year per tonne of quota by those undertakings to which a quota has been allocated.
Quotas that have been renounced by an undertaking as from a given marketing year in accordance with Article 3(1) shall not be subject to the payment of the temporary restructuring amount for this marketing year and subsequent marketing years.

The temporary restructuring amount for sugar and inulin syrup shall be set at:

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EUR 126,40 per tonne of quota for the marketing year 2006/2007,

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EUR 173,8 per tonne of quota for the marketing year 2007/2008,

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EUR 113,3 per tonne of quota for the marketing year 2008/2009.

The temporary restructuring amount per marketing year for isoglucose shall be set at an amount equal to 50 % of the amounts fixed in the first subparagraph.

Member States shall be liable to the Community for the temporary restructuring amount to be collected on their territory.
Member States shall pay the temporary restructuring amount to the restructuring fund in two instalments, as follows:

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60 % by 31 March of the marketing year concerned, and

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40 % by 30 November of the following marketing year.

If the temporary restructuring amount is not paid before the due date, the Commission shall, after consultation of the Committee on the Agricultural Funds, deduct a sum equivalent to the unpaid restructuring amount from the monthly advances on the provision for expenditure effected by the Member State concerned, referred to in Article 14(1) and Article 15(2) of Council FCAPR. Before taking its decision, the Commission shall give the Member State the opportunity to submit its observations within a period of two weeks. The provisions of Article 14 of Council BDR ( 9 ) shall not apply.

The totality of the temporary restructuring amounts to be paid in accordance with paragraph 3 shall be allocated by the Member State among the undertakings on its territory according to the allocated quota during the marketing year concerned.
Undertakings shall pay the temporary restructuring amounts in two instalments, as follows:

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60 % by the end of February of the marketing year concerned, and

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40 % by 31 October of the following marketing year.

Article 12: Detailed rules

Detailed rules for the implementation of this Regulation and, in particular as regards the requirements provided for in Article 3 and the measures necessary to resolve transitional difficulties, shall be adopted in accordance with the procedure referred to in Article 13 of FCAPR, or, as from 1 January 2007, referred to in Article 41(2) of FCAPR.

Article 13: Specific measures
Such measures may derogate from certain parts of this Regulation, but only to the extent that, and for such a period, as is strictly necessary.

Measures which are both necessary and justifiable in an emergency, in order to resolve practical specific problems shall be adopted in accordance with the procedure referred to in Article 13 of FCAPR or, as from 1 January 2007, that referred to in Article 41(2) of FCAPR.

Article 14: Amendments to Regulation (EC) No 1290/2005

FCAPR is hereby amended as follows:

The following point shall be added to Article 3(1): ( *1 ) OJ L 58, 28.2.2006, p. 42 .’;"

‘e

restructuring aid, aid for diversification, additional aid for diversification and transitional aid provided for in Articles 3, 6, 7, 8 and 9 of Council Regulation 2006/320 of 20 February 2006 establishing a temporary scheme for the restructuring of the sugar industry in the Community ( *1 ) .

Article 34 shall be amended as follows:

the following point shall be added to paragraph 1:

‘c

temporary restructuring amounts collected under Regulation 2006/320. ’

in paragraph 2 the words ‘The sums referred to in paragraph 1(a) and (b)’ shall be replaced by ‘The sums referred to in paragraphs 1(a), (b) and (c)’.

the following paragraph shall be added: .

‘3

The provisions of this Regulation shall apply mutatis mutandis to assigned revenue referred to in paragraph 1 of this Article.’

Article 15: Entry into force
It shall apply from 1 July 2006. However, Articles 12 and 13 shall apply from the date of entry into force of this Regulation.

 This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union . Official Journal of the European Union 

Recital 1

Due to developments within the Community and at international level, the sugar industry in the Community is faced with structural problems which could seriously put at stake the competitiveness and even the viability of the industry as a whole. These problems cannot be addressed effectively by using the market management instruments as provided for in the common market organisation for sugar. To bring the Community system of sugar production and trading in line with international requirements and ensure its competitiveness in the future it is necessary to launch a profound restructuring process leading to a significant reduction of unprofitable production capacity in the Community. To this end, as a precondition for the implementation of a functioning new common market organisation for sugar a separate and autonomous temporary scheme for the restructuring of the sugar industry in the Community should be established. Under this scheme quotas should be reduced in a manner that takes account of the legitimate interests of the sugar industry, sugar beet, cane and chicory growers and consumers in the Community.

Recital 2

A temporary restructuring fund should be set up in order to finance the restructuring measures for the Community sugar industry. For reasons of sound financial management the fund should form part of the Guarantee Section of the EAGGF and thus be governed by the procedures and mechanisms of Council FCAPR of 17 May 1999 on the financing of the common agricultural policy ( 3 ) and, as from 1 January 2007, of the European Agricultural Guarantee Fund set up by Council FCAPR of 21 June 2005 on the financing of the common agricultural policy ( 4 ) .

Recital 3

Owing to the fact that outermost regions are currently the object of development programmes aimed at improving their competitiveness in raw sugar production and also produce raw cane sugar in competition with third countries, which are not subject to the temporary restructuring amount, undertakings in the outermost regions should not fall under the scope of this Regulation.

Recital 4

The restructuring measures provided for by this Regulation should be financed by raising temporary amounts from those sugar, isoglucose and inulin syrup producers which will eventually benefit from the restructuring process. As this amount falls outside the scope of the charges traditionally known in the framework of the common market organisation for sugar, the proceeds resulting from its collection should be considered as ‘assigned revenue’ as provided for by Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities ( 5 ) .

Recital 5

An important economic incentive for sugar undertakings with the lowest productivity to give up their quota production in the form of an adequate restructuring aid should be introduced. To this effect, a restructuring aid should be set up that creates an incentive to abandon sugar quota production and renounce the quotas concerned, at the same time allowing to take into due account the respect of social and environmental commitments linked to the abandoning of production. The aid should be available during four marketing years with the aim to reduce production to the extent necessary to reach a balanced market situation in the Community.

Recital 6

To support sugar beet, cane and chicory growers that have to give up production due to the closure of factories they had supplied previously, a part of the restructuring aid should be made available to these growers as well as to machinery contractors that have worked for these growers in order to compensate for losses resulting from these closures and in particular the loss of value of investments in specialised machinery.

Recital 7

As payments of the restructuring amount into the temporary restructuring fund are made over a certain period of time, it is necessary that payments of the restructuring aid are spread in time.

Recital 8

The decision as to the granting of the restructuring aid should be taken by the Member State concerned. Undertakings prepared to renounce their quotas should submit an application to this Member State providing the latter with all the relevant information in order to enable it to reach a decision on the aid. Member States should have the possibility to impose certain social and environmental requirements in order to take account of the particularities of the case presented as long as these requirements do not restrict the operation of the restructuring process.

Recital 9

A restructuring plan should form part of the application for restructuring aid. This plan should provide the Member State concerned with all the relevant technical, social, environmental and financial information allowing it to decide on the granting of the restructuring aid. Member States should take the necessary measures in order to exercise the necessary control over the implementation of all of the elements of the restructuring.

Recital 10

In the regions concerned by the restructuring process it might prove to be appropriate to encourage the development of alternatives to sugar beet and cane growing and sugar production. To this effect, Member States should have the possibility to allocate a certain part of the money available from the restructuring fund to diversification measures. These measures, established in the context of a national restructuring plan, may take the form of measures identical to certain measures supported under Council EAFRD of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) ( 6 ) or to measures that are in conformity with Community law regarding State aid.

Recital 11

In order to speed up the process of restructuring, the aid available for diversification should be increased if the quotas renounced go beyond certain levels.

Recital 12

Full-time refiners should have the possibility to adapt their situation to the restructuring of the sugar industry. The adaptation should be supported by means of an aid from the restructuring fund provided that the Member State approves the business plan providing for the adaptation. Member States concerned should ensure an equitable break down of the aid available among the full-time refiners on their territory.

Recital 13

Some specific situations in certain Member States should be taken care of by means of an aid from the restructuring fund provided that it forms part of the national restructuring programme.

Recital 14

As it is to be funded over a period of three years, the restructuring fund does not dispose from the outset of all the necessary financial means. Rules as to the limitation of the granting of the aid should therefore be established.

Recital 15

The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission ( 7 ) .

Recital 16

The Commission should be authorised to adopt necessary measures to solve specific practical problems in the case of emergency.

Recital 17

The restructuring fund will finance measures which, due to the nature of the restructuring mechanism, do not fall under the categories of expenditure referred to in Article 3(1) of FCAPR. It is therefore necessary to amend that Regulation accordingly,

Footnote p0: This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 20 February 2006.

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