Brendan Smith (Cavan-Monaghan, Fianna Fail)

I welcome the opportunity to comment on the Commission's proposals for reform of the common market organisation for sugar, which were finally published today, having been well signalled over the past few weeks. The key elements of the proposals are a 39% price cut in the institutional price for sugar, a corresponding reduction in the minimum price for sugar beet and 60% compensation to farmers for the price cut. A voluntary restructuring scheme is proposed to encourage factory closures and the renunciation of quota. From Ireland's perspective, the bottom line is that the proposals are simply not acceptable in their current form.

While the need for reform of the EU sugar regime is acknowledged, following the basic principles of the CAP reforms of 2003 and 2004, I consider that the Commission's proposals are unbalanced and could lead to drastic consequences for the sugar beet industry in a number of member states, including Ireland. This is unprecedented in terms of CAP reform proposals presented by the Commission for any sector.

My colleague, the Minister, Deputy Coughlan, had voiced her opposition to the Commission's original ideas for reform, outlined last July, and this opposition was shared not only by several other member states but also by the developing countries which have preferential access to the EU sugar market. We had advocated a different approach to reform based on the following principles: the import system from third countries should ensure predictable and regular import quantities. In this context, it is important to remember that the poorest sugar-producing countries want such an arrangement, rather than the race to the bottom in price terms that totally free access would bring, the price reduction should be significantly less than that currently proposed and should be implemented more gradually, the impact of the quota reductions should fall mainly on production of 'C' sugar and transfers of quotas among member states should not be allowed.

While the idea of quota transfers has been dropped with the proposed compulsory quota cuts, nevertheless the latest proposals are even more radical than what the Commission originally had in mind. Consequently the Minister will oppose them strongly when they come before the Council of Ministers.

Everybody accepts that reform of the EU sugar regime is unavoidable and the ruling by the WTO appellate body in April against elements of the regime increased the pressure for reform. Taking account of this, the Irish sugar processing industry had already begun a process of adjustment and had embarked on a major rationalisation involving the closure of one of its two processing facilities. This rationalisation will enable the industry to survive at a lower price level, but not the one proposed by the Commission.

The Commission's proposals will be considered in the coming weeks and months in the Council and we intend to work with like-minded colleagues to have the proposals modified to ensure a more orderly and balanced adjustment to the EU sugar regime which would take account of all the stakeholders involved. The negotiations are now beginning in earnest and our overall objective will be to ensure that Irish interests are fully taken into account in whatever final agreement might emerge. In this context, I know that the Minister will reiterate our serious concerns about the direction the Commission proposes for the sugar regime when she meets Commissioner Fischer Boel who will visit Ireland tomorrow. The Minister will also use the opportunity to raise other issues in the beef and dairy sectors during those talks.

See this speech in context