Sugar Market Reform

Wednesday, 17 November 2010

Seanad Éireann Debate
Vol. 205 No. 13

First Page Previous Page Page of 12 Next Page Last Page

Acting Chairman (Senator Michael McCarthy): Information on Michael McCarthy Zoom on Michael McCarthy I welcome the Minister of State, Deputy Cuffe.

Minister of State at the Department of Agriculture, Fisheries and Food (Deputy Ciarán Cuffe): Information on Ciaran Cuffe Zoom on Ciaran Cuffe Go raibh maith agat.

Acting Chairman (Senator Michael McCarthy): Information on Michael McCarthy Zoom on Michael McCarthy We will hear from Senator Bradford before we hear the Minister of State.

Senator Paul Bradford: Information on Paul Bradford Zoom on Paul Bradford I always feared during these powerful Adjournment debates that Ministers and Ministers of State knew the answers before they had heard the questions.

Acting Chairman (Senator Michael McCarthy): Information on Michael McCarthy Zoom on Michael McCarthy I thank the Minister of State for his enthusiasm.

Senator Paul Bradford: Information on Paul Bradford Zoom on Paul Bradford I also welcome the Minister of State. I would like to speak about the recent revelation from the European Court of Auditors that the European Commission-inspired decision to virtually shut down the Irish sugar beet industry was based on erroneous figures. It was a gravely incorrect and disastrous decision, not just for Irish sugar beet growers but also for the Irish tillage industry, Irish agriculture in general and the economy as a whole. The Minister of State will be aware that the origins of the Irish sugar industry stretched back to the late 1920s. At its prime, there were factories in Tuam, Thurles, Carlow and Mallow. In relatively recent years the number of factories was eventually reduced to one.

When it was decided to close the plant in Carlow, much of the plant and equipment was transferred to the plant in Mallow where further moneys were invested. It appeared that the future of the industry there and in the sugar beet growing areas of the country was safe. However, in 2006 the EU debate on reform of the sugar industry, unfortunately, resulted in the decision to bring the Irish sugar beet industry to an end. This decision was the subject of much debate. There were numerous debates in this House and in the other one. The farming organisations were very involved in the debate and much dialogue took place with Greencore. The Minister for Agriculture, Fisheries and Food was involved, as were the European parliamentarians and the European Commission.

At the time I was very disappointed by the attitude of the then Minister, Deputy Coughlan, to the industry. It appeared she was not fully committed and that some sort of private deal had been struck in Brussels to allow the Irish industry to be shut down. That came to pass. There were promises of all sorts of compensation. From a north Cork and Mallow perspective, there were promises that the Greencore site would be transformed into a large industrial and residential complex which would employ hundreds of people in construction and so on but that never came to pass.

Purely from an agricultural perspective, we have no sugar beet industry in Ireland. That affected the hundreds of people who grew sugar beet and who could do so again. It affected thousands of tillage farmers from a crop rotation perspective. It also affected the thousands of people who worked directly in the factory or indirectly in the spin-off industries. The closure of the Irish sugar beet industry has had a very negative outcome.

[834]It is amazing that the European Court of Auditors has produced very damning evidence that the decision was possibly incorrect. I do not want to put words into the mouths of the auditors but the evidence is based on the fact, or the supposition, that the European Commission made a decision based on incorrect figures and an incorrect year of assessment. At the time the Mallow plant was shut, it was profitable and modern and was the only one remaining in this country.

Where do we go from here? As a result of the decision taken by the European Commission which was based on incorrect facts and in conjunction with the Government, which was very much complicit in accepting that decision, there is now a strong moral obligation on the European Commission and the Government to investigate the possibility of redeveloping or regrowing, if one will excuse the pun, a sugar beet industry in this country. A sugar beet industry would not simply process sugar, which is a much needed commodity in this country and in the European Union which is now a net importer of sugar. A sugar beet processing factory in Ireland could process sugar and produce ethanol, a bio-fuel type product, electricity or district heating. Those are some of the options being spoken about.

We are in a desperate place economically. We face a regime, perhaps imposed from outside, of further cuts and reductions in our income, industries and economic well-being. We must be in a position to offer some new hope and growth. The Government in the very new Irish State in the late 1920s had the vision to decide that a sugar beet industry should be set up. It took the political decision to do so and matched it with the appropriate funding and expertise and made an industry out of nothing.

Will the Minister of State and his Government colleagues reflect on the fact that agriculture needs a stimulus and that we should look at the possibility of reopening a sugar beet industry? Currently, the Minister of State’s colleagues in the Department of Agriculture, Food and Fisheries are negotiating, on a daily basis, the future of the Common Agricultural Policy. It is a very opportune time to reflect on the possibility of restarting a sugar beet growing industry. Will the Minister of State take a proactive role from an economic, environmental, agricultural and stimulus perspective?

This industry transformed parts of rural Ireland in the 1920s, 1930s and beyond and it can do so again. As we have learned, the decision to shut it was based on incorrect facts. There is an obligation on all of us, in particular on the Government and the European Commission, to try to reverse that decision and to begin again.

Minister of State at the Department of the Agriculture, Fisheries and Food (Deputy Ciarán Cuffe): Information on Ciaran Cuffe Zoom on Ciaran Cuffe I am pleased to have the opportunity to address the House on this matter. I followed the debate in the other House last week and on the Irish Economy website, and the words of Professor Alan Matthews on this subject and make for quite interesting reading.

The situation is complex and not as simple as it sounds. It is tied into the future of Irish farming and the Common Agricultural Policy. We must think again about many of the traditional crops and sources of employment in agriculture and look at the other options and at issues such as energy crops, how the agri-environment scheme works and how reform of the Common Agricultural Policy will work. We must look at all the options and evaluate them quite carefully. I mention the work my colleague, the Minister of State, Deputy Mary White, did in putting forward a proposal to make ethanol in Carlow.

As part of the reform of the EU sugar regime in 2006, a temporary restructuring scheme was introduced with the aim of reducing EU sugar production in order to comply with WTO and other international obligations. The scheme provided an incentive for sugar processors to [835]renounce sugar quota and dismantle the associated sugar processing plant and it provided compensation for affected stakeholders. Greencore plc, the sole Irish sugar processor and holder of the entire Irish quota allocation, decided to avail of the restructuring scheme. Accordingly the company renounced the quota and dismantled the last remaining Irish sugar factory at Mallow in compliance with the conditions of the scheme.

This brought the Irish sugar industry to an end. As a result of the restructuring scheme, the overall EU sugar quota was reduced by almost 6 million tonnes, of which the Irish quota contributed 200,000 tonnes. At the time of the reform negotiations, the Government made strenuous efforts to have the Commission’s reform proposals modified in such a way that an efficient sugar industry could have been retained in Ireland. In the end, there was insufficient political support for the Irish position and our efforts had to be directed at achieving the best possible compensation package.

The sugar reform package we secured was as a whole — that is, restructuring aid, diversification aids and single payments — worth approximately €226 million to Irish beet growers and machinery contractors. The restructuring aid and diversification aids were paid to stakeholders in 2007 and 2008.

Following the restructuring of the EU sugar industry, sugar production is now concentrated in 18 member states — as opposed to 23 before the reform — which enjoy favourable agronomic conditions. More than 75% of production is accounted for by seven of these member states, namely, France, Germany, Poland, UK, Netherlands, Belgium and Italy.

Any proposal to review the EU sugar quota would be a matter for the EU Commission in the first instance and any proposal to re-establish a sugar factory in Ireland would, subject to the availability of quota, be a matter for commercial decision by interested parties. Currently, there is no mechanism under the regulations that would allow for the application of a re-instatement of the sugar quota. I trust this explains the position for the Senator.

Senator Paul Bradford: Information on Paul Bradford Zoom on Paul Bradford Will the Minister of State agree that the decision to terminate the Irish sugar beet industry appears to have been based on erroneous facts and figures in the EU Commission? Will he further agree there is an obligation on the European Commission to demonstrate a willingness to enter into serious negotiations with the Government, if it is so interested, and relevant stakeholders to reassess the possibility of reintroducing the sugar beet industry in Ireland which was shut down as a result of incorrect facts and figures?

Deputy Ciarán Cuffe: Information on Ciaran Cuffe Zoom on Ciaran Cuffe I am not sure I accept that fact. While the European Court of Auditors criticised the Commission for not using up-to-date information in the impact assessment exercise in the case of a number of member states, the Commission rejected that finding by indicating that the original impact assessment was followed by an updated version in 2005 and the Commission, in its response, stated:

[The reform] ... model [did] ... not require an analysis of the current profitability and prospects of every individual sugar producer in the EU. Therefore, the Commission did not consider it necessary to collect such data on productivity and efficiency for the model chosen.

Whatever about a theoretical pre-negotiation assessment of the possible impact of the reform, the fact is that Ireland brought the most up-to-date available information to the negotiating table. The reality is that the reform, as agreed, allowed for voluntary closure. As the Commission points out repeatedly in its 17-page response to the court, it was up to operators to decide whether to close processing plants and avail of the compensation package. Industry operators would have had the most up-to-date information available to them in making that decision.

[836]Looking back at that decision and looking ahead to future conditions, we have to examine in a very level-headed and clear fashion what best facilitates Ireland and what is best in the agri-economic environment in terms of crops and diversification within Irish agriculture. I am not an expert on what grows best in Ireland, what gives the best return per hectare or the best crop with which to rotate. I defer to others in those decisions. There are some of the brightest and best officials within the Department of Agriculture, Fisheries and Food who make decisions that are in the best interests of Ireland. That is not to say we cannot, in the discussion of the future of Common Agricultural Policy, examine carefully again what crops we should be growing and for what we should be seeking support in the future. If sugar beet figures in that, well and good, but I am not the expert on that. I will listen carefully to the advice of the officials and I will bring this message back to the Minister for Agriculture, Fisheries and Food, Deputy Smith.

Last Updated: 21/04/2015 12:13:46 First Page Previous Page Page of 12 Next Page Last Page