Mr. Michael Kelly:

I thank the Chairman and the committee for the opportunity to present on the committee's strategy report. Given the long afternoon, I do not intend to read my presentation in detail but will summarise it in my own words. It is about the restoration of the sugar industry in Ireland. I advise the committee that I became aware of this initially in 2006 when I was the CEO of Carlow County Enterprise Board and was approached by a number of people regarding their desire to review the decision that had been made and see whether there was an opportunity to restore it. I recommended to the board that we carry out a feasibility study. I propose to elaborate on the findings of that study. The study was drawn up by former senior executives of Irish Sugar, Greencore, scientists in UCD and farmer representatives, and the financial figures within the study, which is available, were verified by the international consultancy firm PricewaterhouseCoopers.

The primary findings of the report are in the conclusion which states that a viable and profitable industry based on sugar beet as the primary raw material and sugar and ethanol as the main products can be established in Ireland. The industry would have very significant employment opportunities during construction and operation and wider benefits for growers, contractors, hauliers and the local and national economy. Some obstacles would have to be overcome before it would become a reality, although these are not considered insurmountable. The report is approximately two years old. Some of the figures quoted at the time would have changed, for example, the price of sugar would have increased. Obstacles is a word one could use but if I were asked what needs to be done now to take this to the next level, one is quite imminent.

Shortly after the report was concluded we met the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney. While he supported our endeavours at the time he clearly stated, and has since stated, that any venture to develop a combined sugar or bio-ethanol production facility would have to be a commercial proposition, financed in total by investors and interested parties and make sound economic sense to be viable and to justify the very substantial investment to build a new facility. Clearly, that was giving us the position of Government at the time. The second issue that needs to be addressed is the quota. Again, historically, in 2005, at the time of the reform, Greencore, which was the holder of the entire Irish sugar quota, availed of the voluntary scheme and dismantled its facilities and ceased production in 2006. In other words, there is no mechanism that would enable us to grow beet and produce sugar. However, under the Irish Presidency, negotiations are ongoing to finalise the Common Agricultural Policy, CAP, reform package that will be in place for the future, including provisions for sugar production in the European Union post 2015.

At the March meeting of the Council of Agriculture Ministers, the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, as president of the Council, made a compromise proposal that garnered the support of a majority of member states to extend the current quota regime for a further two years until September 2017 when it would finally cease. This is now the formal negotiating mandate for the Agriculture Council as it enters the final phase of the ongoing CAP reform negotiations with the European Parliament and the Commission. We understand that a decision on the overall CAP reform package, including the future of the EU sugar regime, will be sought at the next session of the Agriculture Council beginning on 24 June when it is hoped it can be brought to a successful conclusion before the Irish Presidency ends on 30 June. Clearly, that is a key date from the point of view of the findings in this particular report. We are hopeful that a conclusion can be reached and, if so, planning can take place. Without a quota it is very difficult to engage with investors who will be required. For the proposal to be progressed, presuming we get clarity after the end of June, expressions of interest from farmers will be key. They are going to produce the raw material. Therefore, we need expressions of interest from farmers.

I think we can advance a suitable site, even while awaiting the outcome of the CAP negotiations. Our group is of the view that given the competitive nature of the production of sugar in Europe, we have to be extraordinarily competitive. One of the key fundamentals will be cost of transport. Therefore, this plant has to be central to the growing area - the southern parts of Offaly, Kildare, Carlow, Wexford, east Cork and east Tipperary. Our research identifies that it is somewhere between Carlow and Kilkenny. We are not being specific but we clearly believe it is in the south east and is driven 100% by virtue of the cost of transporting the raw material to the factory. Any particular site must have good road structures and must be central to the heart of beet growing in Ireland.

That is a short summary of the findings of the study. Some of the figures in the study are being updated. Certainly it gives us food for thought. If there are any questions, I will certainly answer them. We see this as an opportunity. It will be a challenge because of our competitors. We are entering an already well-established business. As there is no evidence of a shortage of sugar in Ireland, there are players already in a position to supply Ireland with its quota. However, one of the significant benefits of Ireland having its own industry is that some of our significant employers in the confectionery business would be guaranteed a supply. There is a whole list of reasons we should do this. We have to be realistic also and recognise the challenges that lie ahead and see how, working together, we can make it happen.