EU farm ministers avoided an all-night negotiating session on Wednesday aimed at hammering out a deal to overhaul Europe's much-criticised sugar policy but still face many hours of tough bargaining, officials said.
The ministers have started negotiations on a blueprint that would slash sugar support prices, production and exports, bringing EU policy into line with a World Trade Organisation ruling that has branded most EU sugar exports as illegal.
EU sugar policy has survived virtually all attempts at reform since its birth in the late 1960s and is often attacked for harming Third World producers as it encourages millions of tonnes of EU sugar to flow onto world markets, lowering prices.
Britain, as current EU president, is handling the talks and has called the ministers back to resume their meeting at 0800 GMT on Thursday, when they will be presented with a revised compromise offer in an attempt to secure a reform deal.
"The Presidency's intention is to gain as broad a consensus as possible. There may be some limited scope to accommodate outstanding difficulties," a spokeswoman for the UK Presidency told reporters, adding there had been "significant progress".
Before the latest offer is presented, ministers from nine countries will be called in for more individual closed-door sessions with EU Agriculture Commissioner Mariann Fischer Boel - author of the reform plan - and UK sugar experts.
The countries are Austria, Belgium, Denmark, Finland, Ireland, Italy, Portugal, Spain and the Czech Republic.
Diplomats said the next compromise deal might contain a first dilution on the depth of price cut and allow a partial link to be kept between sugar production and amounts of subsidy paid by Brussels, but only for a temporary period.
"They (ministers) made good progress and we're getting closer to a text where we might get a consensus. It's not a done deal yet," a Commission official told reporters.
Speaking in the European parliament, Peter Mandelson the EU's Trade Commissioner said he wanted a sugar reform deal this week ahead of World Trade Organisation negotiations in Hong Kong in December. "I want to go to Hong Kong with the market stabilised ... I don't want to leave this loose end trailing as we go into Hong Kong."
Fischer Boel has already given ground in the negotiations, offering to spread a 39-percent net cut to minimum prices over four years, not two, from July 2007, and raising compensation for cash-strapped sugar operations wishing to leave the sector.
The depth of the cut to the EU's minimum beet and sugar prices, along with amounts of available compensation, will be the next areas up for debate, though not necessarily in the second offer but maybe sometime during the night, officials say.
The pressure for change is even greater now that the EU has lost a WTO panel on sugar, in a case brought by major exporters Brazil, Australia and Thailand. Its appeal was also dismissed and the EU was told to bring its policy into line by mid-May.
Fischer Boel's blueprint aims for a radical change in the EU's supply structure with lower output and exports, offset by more imports from Third World producers like Malawi and Sudan.
But the planned cuts to support prices, which inflate the EU market to more than three times the world level, are seen as a death knell for sugar production in countries like Finland, Greece and Ireland - still vehemently opposed to the reform.
These countries, with historically lower sugar yields, are likely to see national industries collapse due to lower revenues, with thousands of job losses. Ireland has called the cuts "devastating", saying they will wreck its sugar industry. While 11 EU countries have declared themselves opposed to the reform - a minority whose combined voting weight is enough to block a deal - this group may now be weaker, diplomats said.