John Browne (Wexford, Fianna Fail)

Political agreement on reform of the EU sugar regime was reached at the meeting of the Agriculture and Fisheries Council on 24 November 2005. It will be a matter for beet growers and Irish Sugar Limited to make decisions about sugar beet growing in light of the reformed sugar regime. The reform agreement, as the Minister has already outlined, includes a compensation package with a potential value of more than €300 million for Ireland, including measures that will apply in the event that sugar production ceases in Ireland.

While the production of ethanol from sugar beet is a possible alternative outlet for farmers, as matters stand, Irish Sugar Limited has arrangements in place to process the full Irish sugar quota at its Mallow plant which has been upgraded for that purpose. The question of establishing a bioethanol plant based on sugar beet would be a matter for commercial decision.

In future, under the decoupled system of support payments, farmers will only grow crops which provide an economic return. The announcement in yesterday's budget of the excise duty relief scheme to cover 163 million litres of biofuels per year when the relief is fully operational should stimulate the production of crops for the manufacture of liquid biofuels. This is a very welcome development.

To encourage the growing of sugar beet as an energy crop, the European Commission intends during 2006 to amend the relevant regulations to allow sugar beet to qualify for set-aside payments when cultivated as a non-food crop, and also to be made eligible for the energy crop aid of €45 per hectare. The sugar reform agreement also permits the partial dismantling of a sugar factory and the continued use of the production site for the production of non-food products such as bioethanol. In these circumstances, the final agreement provided that 75% of the restructuring aid be payable. This represented an increase on what the Commission originally proposed.

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