Tobacco Production: European Union
Environment Food and Rural Affairs

Michael Penning (Hemel Hempstead, Conservative)

To ask the Secretary of State for Environment, Food and Rural Affairs what subsidies are available at (a) EU and (b) national level to producers of tobacco in the European Union.

Barry Gardiner (Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs; Brent North, Labour)

The European Union (EU) adopted budget for tobacco premiums in 2006 was €920 million and the provisional adopted budget for 2007 is €316.6 million. The main beneficiaries of the EU subsidy have been Greece and Italy.

European Community produced tobacco is classified so that payments (known as "premia") are made on eight groups. Premia are paid only when a standard contract has been concluded between the producer and a first processor for tobacco grown in recognised production zones. However, there is a quota system with a Community limit of 350,600 tonnes (divided by member state and variety group). Producers may not conclude contracts for tobacco beyond their quota, so any tobacco grown beyond quota will only fetch market prices and no premium.

Following a successful reform of the EU tobacco regime in 2004, direct support will cease in 2010.