Mary Coughlan (Donegal South West, Fianna Fail)

The political agreement on reform of the EU sugar regime reached by the Council of Agriculture Ministers in November 2005 was the culmination of protracted and difficult negotiations. For some time past there was general acceptance that reform of the EU sugar regime, which had remained largely unchanged for almost 40 years, was inevitable. It became acutely urgent last year due mainly to international pressures arising from the WTO panel finding on the complaint from Brazil, Thailand and Australia on subsidised sugar exports, as well as obligations under the everything but arms, EBA, agreement. To comply with these obligations, the EU had no option but to curb production substantially.

Impact studies by the EU Commission had shown that in four member states, Italy, Greece, Portugal and Ireland, sugar production was likely to be drastically reduced or phased out as a consequence of reform. However, most member states are affected in varying degrees and already factory closures have been announced in 11 member states and more are expected.

Throughout the negotiations my primary objective was to seek to have the Commission's reform proposals modified to ensure the continuation of an efficient sugar processing sector in Ireland. I had several meetings with the Commissioner in that regard and Ireland played an active role in a group of 11 member states who had common cause in seeking to modify the proposals. The group remained steadfast in its opposition to the reform proposals from the time they were first mooted in July 2004 right up to the final Council meeting in November 2005. During the course of the negotiations I also engaged regularly with Irish stakeholders and had full support for my negotiating stance.

When it became evident at the final Council meeting that there was not sufficient political support to adapt the proposals to the extent necessary, I focused my efforts on securing the best possible compensation package for Irish stakeholders. I also succeeded in having the reform arrangements phased in in a manner that opened up the possibility of sugar processing being continued in Ireland for a further two campaigns. Unfortunately, the recent deterioration in the sugar market was the decisive factor for Greencore and on 15 March the company announced its decision to cease sugar production. I learnt of the company's decision the same day.

The success of my negotiating strategy in these difficult negotiations was reflected in the final compensation package worth over €310 million,which was higher than the most optimistic expectations. There are three elements to the package, including compensation to beet growers of up to 64% of the reduction in the minimum price for beet. This compensation will be incorporated in the existing single payment scheme and is worth approximately €123 million to Irish beet growers over the next seven years.

Compensation by way of a restructuring fund covering the economic, social and environmental costs of restructuring of the sugar industry involves factory closure and renunciation of quota. In Ireland's case this will be worth up to €145 million. The fund is subject to the submission of a detailed restructuring plan for the industry following consultations between the processor and the beet growers. The reform agreement provides that at least 10% of the restructuring fund shall be reserved for sugar beet growers and machinery contractors. That proportion may be increased by member states after consultation with interested parties provided that an economically sound balance between the elements of the restructuring plan is secured.

The reform agreement provides for the introduction of aid for diversification measures where sugar beet production completely ceases. This aid, worth almost €44 million to Irish growers, would be drawn down in the framework of a national restructuring programme to be elaborated when the Commission's implementing regulation has been adopted.

The decision taken by Greencore marks the end of an era and is obviously difficult for everyone concerned including workers, beet growers and all those who have depended on the sector in one way or another over the years. The compensation arrangements will be finalised when the Commission's implementing regulations are adopted in the coming months and I will endeavour to ensure that they are implemented in a fair and equitable manner in accordance with the regulations.

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