Dáil debates

Thursday, 27 January 2005

Private Notice Questions.

Food Industry.

4:00 pm

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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I now come to deal with Private Notice Questions to the Minister for Agriculture and Food regarding the proposed closure of the Greencore sugar factory in Carlow. I will call on the Deputies to table questions to the Minister in the order in which they submitted them to my office.

Photo of Jack WallJack Wall (Kildare South, Labour)
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Question : To ask the Minister for Agriculture and Food if, in view of the serious implications for employment and farming due to the decision to close a plant (details supplied) in Carlow, she will enter into discussions with the company with a view to the retention of the plant, especially in view of the fact that no decisions have yet been taken at EU level regarding the future of the sugar regime; and if she will make a statement on the matter.

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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Question : To ask the Minister for Agriculture and Food the actions she is taking to avert the closure of the Carlow sugar factory; the measures she will take to reduce the potential impact of the EU reforms on the sugar industry here; the position regarding the ownership of the Irish sugar quota; and if she will make a statement on the matter.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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As both questions deal with the closure of the Carlow sugar factory and the future of the sugar regime I propose to take them together.

The Government has always been very committed to the sugar industry in Ireland, on both the growing and the manufacturing sides. The manufacturing industry provides the essential outlets for the sugar beet crop which is a very important element in the agricultural economy and a valuable source of income to 3,800 farmers in the beet growing sector. The industry has provided very important employment opportunities at the sugar plants in Carlow and Mallow, in addition to supporting employment in associated industries.

The most important element in the overall sugar sector is the EU sugar regime which underpins the sugar beet growing and sugar manufacturing industry in the community. The essential features of the regime are rules on prices and production of quotas. The regime has existed since 1968, long before Ireland joined the European Union.

Under the EU regime Ireland has a quota for manufactured sugar of approximately 199,000 tonnes. This amounts to approximately 1.1% of the total EU quota which is available for use by the sugar manufacturing enterprises in the member states. Here it is processed by Irish Sugar Ltd., the only manufacturer of sugar in the country. Irish Sugar Ltd. places annual contracts with farmers to grow a specific tonnage of sugar beet sufficient to manufacture the quota.

I compliment those involved in the industry on filling the quota almost every year since we joined the European Union. There were a few small exceptions when it was not filled, mainly due to bad weather. The 2004 harvest was very good and beet deliveries allowed for the manufacture of more than 220,000 tonnes, well above the quota.

Reform of the EU sugar regime is high on the agenda because of the World Trade Organisation and other international pressures. The EU Commission is expected to bring forward formal legislative proposals for reforms of the sugar regime in May this year. However, the Commission outlined its broad ideas for reform of the regime in a communication to the Council and the European Parliament last July. These proposals include a reduction in two stages in the institutional price of sugar by 33% to €421 per tonne; a similar two stage reduction in the price of sugar beet to €27.40 per tonne; and partial compensation to farmers of 60% for the reduction in the price of sugar beet, the compensation to be part of the direct payment and subject to cross compliance.

A reduction of 16% in quotas among the member states is proposed. The transfer of quotas between member states is also envisaged. It is generally acknowledged that reform of the EU sugar regime which was not dealt with in the main CAP reform process in 2003-04 is now unavoidable because of developments at World Trade Organisation level and other international pressures. However, the European Commission's initial reform ideas would, if adopted, have serious repercussions for sugar beet growing and processing in this country. I have made it clear in discussions with the Council of Ministers that the Commission's initial proposals are unacceptable.

With nine other EU member states I signed a letter to the EU Commissioner for Agriculture stating that the Commission's proposals would have a devastating effect on farms and the industrial enterprises working in the sector. We accept the necessity to reform the existing regime but believe that the reform should aim at maintaining the existing distribution of sugar beat and sugar production in the entire EU territory.

We believe that reform should be based on the following principles: an import system from third countries should be put in place, which will ensure predictable and regular import quantities; the price reduction should be significantly less than what is currently proposed and should be implemented more gradually; the impact of the quota reduction should fall mainly on those member states that are net exporters of sugar; and the transfer of quotas among member states should not be allowed.

The Commission is expected to bring forward legislative proposals in May with a view to reaching agreement in the Council of Ministers before the end of this year. My overall objective in the forthcoming negotiations is to ensure the future shape of the EU sugar regime is consistent with the continuation of an efficient sugar beet growing and processing industry here.

The recent decision by Greencore to close its sugar plant in Carlow and to consolidate all its sugar manufacturing in Mallow was taken in light of the increasing competition in the sugar market and taking account of the reality that changes will occur in the industry as a consequence of the reform of the sugar regime.

Increased competition from overseas means that imported sugar now amounts to 20% of the Irish market. Competition in Ireland has increased since the announcement of the Commission's proposal for reform last July. The trend toward rationalisation and increased productivity in the sugar sector has been evident throughout the EU for some time with the number of plants decreasing by 40% between 1999 and 2001.

In the EU 15, for example, the number of sugar plants declined from 240 to 135 between 1990 and 2001 while employment in this sector declined from 37,000 to just over 20,000 in the same period. I am conscious that the recent decision by Greencore to close its plant in Carlow with the loss of the 189 full-time and 137 campaign jobs came as a shock to many people. I am concerned about the personal impact these jobs losses will have on families. I have been in touch with my colleague, the Minister for Enterprise, Trade and Employment, Deputy Martin, and I am aware that Enterprise Ireland is actively looking at replacement jobs for the area. However, the decision to close the Carlow plant was a commercial one taken by the company in light of the increasing competition in the sugar sector and taking into account the reality that changes will occur in the industry as a consequence of the reform of the regime. However, I am glad to note that Greencore's rationalisation programme involves an investment of between €20 million and €25 million in Mallow which clearly demonstrates a commitment to maintaining an efficient sugar processing industry here.

I understand work is to begin immediately on a substantial upgrading of the Mallow plant. To facilitate the one factory operation, beet from the Wexford region will be diverted to Wellington Bridge for transport to Mallow by rail. The company plans a new rail depot to be established in the Carlow region to assist beet growers make their deliveries. I understand a planning application will be submitted to Carlow County Council shortly in this regard. I am confident the company and the beet growers will be able to work out satisfactory arrangements to cope with the new situation.

As Minister, I hold a single special share in Greencore plc. That share has the same monetary value as any other share in the company but has conditions attached which prevent the company from engaging in a number of activities without the prior written consent of the Minister. The special share prevents the disposal of the controlling interest in Irish Sugar Limited or the sugar assets and prevents a single shareholder or group of shareholders acting together from gaining control of Greencore plc. The special share does not allow me to get involved in the operational matters or in the commercial decisions of the board. While I have had several meetings with stakeholders in the context of the forthcoming reform of the EU regime I have had no meetings specifically related to Greencore's rationalisation programme which is a commercial matter for the company.

The issue of the ownership of the quota has been raised in the context of the Commission's proposal to allow the possibility of cross-Border quota mobility. Several member states, including Ireland, are opposed to this idea. The Commission has indicated that if the proposal on quota mobility is maintained it will propose appropriate rules to deal with that situation. In the meantime I have sought the Attorney General's advice on the issue. I am aware that the ownership issue is currently unclear in the European Union.

In facing the future I anticipate that there will be difficult and protracted negotiations on the reform proposal. My overall objective in these discussions will be to protect the viability of sugar beet growing and processing here. I will work vigorously, in common with like-minded member states, towards that end.

Photo of Jack WallJack Wall (Kildare South, Labour)
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I thank the Ceann Comhairle and the Minister for taking this matter this evening because of the implications it has not only for the Carlow region but its adjacent counties. This decision has major implications. The Minister stated there are 326 jobs involved but the impact of this decision will be far greater than that when the ancillary jobs at stake are taken into account.

Why was this situation forced on the employees and the farming community of this region at such short notice? Does this decision not undermine the Minister's position entering negotiations with fellow EU Ministers to secure the maximum quota for Ireland? Is it the case that Greencore took it upon itself to determine the quota, given that the manufacturing ability of the Mallow factory is not near that of the Carlow factory? As such, Greencore determined what quota will be manufactured here.

As Minister for Agriculture and Food and with responsibility for the farming community as well as for the workforce concerned and for the other areas mentioned, will the Minister ask the company to postpone this decision until next year to allow everyone concerned to get to grips with what will be a major change in the industrial infrastructure of the Carlow area? Will she give an undertaking this evening that she will talk to Greencore executives to ensure the necessary platform is put in place to allow this to happen and to allow negotiations to be entered into with the IFA, all the public representatives, if necessary, and the Minister to ensure the major problems that exist and the major implications this decision presents for many people can be addressed by a postponement of this terrible decision?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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The Deputy raised a number of issues. The decision made by Greencore will not undermine our position at negotiations regarding the EU sugar regime. A number of issues have to be addressed. No further decisions or movement will take place until the WTO panel makes a decision. If that goes the wrong way, that will have serious implications for the sugar regime per se and the European Union may have to change its tack regarding that outcome. As the Deputy will be aware, the Union lost in that regard and that decision is being appealed to the panel. That in itself will have implications.

I have been vociferous in my discussions and correspondence with the Commission and the Commissioner regarding the implications of their proposals. It will come down to two issues, price and quota. I, like the public representatives in the House and members of the staff, was not aware of the decision that was being made, apart from the public pronouncements of the company. The decision has practical issues appertaining to the changes outside of the job losses in the factory. It is a matter for the farmers to negotiate with the company the best possible deal on transportation costs and the transportation of their sugar beet, bearing in mind that they come from north Wexford, parts of Meath and from the Deputy's constituency. On that basis, I hope the farming community can be facilitated. There is a view that this may not happen but I will not become entangled in that argument. I have supported and will support the continuation of the sugar beet industry. I am not in a position to meet Greencore to make a day to day decision but I urge the farming community and its representatives to take a professional view on this matter and to negotiate on behalf of their electorate, the sugar beet growers, to ensure the best possible deal can be achieved to facilitate the transportation and collection of their sugar beet.

I will not be in a position, regardless of whether I have a golden share, to tell the board of Greencore what to do with regard to the day to day management and working of the company. However, I believe the farming community, many of whom I met in Waterford, Carlow and another county——

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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They were from the south east, in any case.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I would be looking hard for sugar beet around my county. I will facilitate the farming community and have advised them of my views. We will work together seriously and closely on this issue and in regard to the sugar regime.

Members may not be aware that 20% of the sugar consumed in this country is not manufactured here, and it is in this regard I am sure a commercial decision was being made.

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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It is 25%.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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This is a significant amount. The multiples provide that choice although people are perhaps not aware of it. There is a serious competition issue, not just in Ireland but in the EU also, in that a number of other countries are able to produce sugar at a third less cost than our manufacturers.

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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Returning to the issue of the golden share, does this special share prevent the disposal of assets of more than 20% of Irish Sugar? The decision to close the plant in Carlow means there will be a disposal of greater than 20% of the assets of Irish Sugar. Is it not unusual and does it not raise serious questions that the management of Greencore did not bring this to the Minister's attention or that of the Department? Given that Greencore has not applied for planning permission for a rail depot, will the Minister intervene to ensure farmers do not have to pay the additional transportation costs associated with the transport of beet to Mallow?

The Minister and her predecessor stated on numerous occasions that they were in contact with the Attorney General's office to clarify the ownership of the sugar beet quota. How long will it take to clarify this? What advice is the Minister getting from the Attorney General in regard to the ownership of the quota? Who has the controlling interest? The golden share does not seem to be worth anything if Greencore is not even prepared to do the Minister the courtesy of letting her know it was about to dispose of greater than 20% of the assets of the company, as it is legally bound to do.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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It is important we clarify the position of the golden share. It affects the disposal of the controlling interest in Irish Sugar or the sugar assets and prevents a single shareholder or group of shareholders acting together to gain control of Greencore. We are not at that level.

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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We are at that level. We are over the threshold of 20%.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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The golden share does not allow me to interfere with the commercial or operational decisions of any company. When I refer to assets, I am thinking of an example where Irish Sugar might decide to sell the quota abroad. I would be able to interfere at that level.

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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Assets are different to quota.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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The controlling interest rather than assets is what we are talking about. If there was a coup d'état where somebody decided--——

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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In 2001 the Minister's predecessor stated that 20% of assets-——

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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Other speakers want to contribute, if Deputy Naughten will allow.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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There might be a coup in which shareholders would like to take over.

Some see this as a political opportunity. There are two basic parts to the issue. One is to ensure that all support possible in the context of replacement industry is provided to Carlow town and the other is to ensure the farming community is facilitated in the transportation of its beet. There are annual arrangements between farmers and the company regarding the costs of transporting the beet. I am sure the farming community and its representatives will be in consultation and negotiation with the company to ensure that those who have to transport beet further than heretofore will be facilitated.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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It will be facilitated but who will pay for it?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I have been advised of a number of practical issues. It is a matter for the company to deal with those issues. It is not up to me to get planning permission in Carlow; it is up to the company. If there are issues for the company to address, it will have to make a commercial decision as to what to do.

Out of courtesy, I and my Department were advised at the same time as the workers of the decision of the company. Of course, this matter was leaked from the board and I knew of the same leak as anybody else.

Séamus Pattison (Carlow-Kilkenny, Labour)
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Given that this was such an important decision and a shock to the people of Carlow and surrounding areas, it would only be natural to expect that the workers, producers, farming community and the Minister would have been consulted before the decision was taken. Having regard to the fact that there has been a demonstration of over 4,000 representatives of farmers, producers, workers and business people in Carlow, would the Minister add her voice to those of her party colleagues in Carlow who have called for the retention of the beet factory there? The Minister stated she cannot intervene but I am sure she can express a view and support the demands being made.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Kilkenny was the other county where I met with farming representatives.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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I thank the Minister for telling me.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I met them on the street so it was not a formal deputation. I would always telephone Deputy Hogan in time.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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It was not a proper meeting.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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They were still able to get their point across. I appreciate where Deputy Hogan, as a public representative for the area, is coming from. Deputy Nolan and members of the Opposition have contacted me on this issue. I have taken on board the views of public representatives, the IFA and the ICMSA. My Department is in constant contact with the farming community on this issue, as is Deputy McGuinness — I had better mention him.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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How can one forget him?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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How could Deputy Hogan forget him? We have had ongoing discussions. I took the opportunity during my initial term of office to meet representatives of the sugar industry. I met with representatives of Greencore who expressed views on the EU sugar regime, although not on the issue of rationalisation. One of the matters raised was that Greencore was finding the level of competition in this country difficult, as is the case for the industry in the UK.

I do not know that I would be successful if I was to intervene in a commercial decision made by the company.

Photo of Jack WallJack Wall (Kildare South, Labour)
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The Minister should try.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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The board made the decision. It is incumbent on the Government to ensure replacement employment and support for the workers of the company, whom Members represent, and that they be facilitated with a redundancy package. In the interim, every effort should be made to assist.

I realise there is a relationship difficulty between the farming community and members of Greencore. However, there is an osmosis. There would be no sugar company without sugar beet. Therefore, there must be at least a working relationship. I hope that working relationship will ensure that the practical issues of concern that have been put forward by Deputies, councillors and members of the farming organisations can be addressed as quickly as possible. I appreciate the personal views the Leas-Cheann Comhairle has expressed on behalf of his constituents. Of all the Members of the House, I can empathise with him exactly.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister has accepted that there is a difficult relationship between Greencore and the farmers. I ask her to intervene on behalf of people who cannot do so for themselves. She should take the initiative in bringing all sides together to sort out the outstanding issues that are likely to emerge from this serious blow to the economy of Carlow and for producers and workers alike. The Minister either has a golden share, and therefore an interest in the company, or she has not. If she takes the initiative to bring all sides together to thrash out these issues it would be much appreciated by everybody in the constituency, including the employees who are directly involved and the producers.

During the privatisation of the Irish Sugar Company, the Taoiseach, who was then the Minister for Finance, sent correspondence to the Irish Congress of Trade Unions. He gave all sorts of assurances about the impact the golden share would have on any processing plants, employment and the sugar quota. The Minister should refer to the 1993 file where the present Taoiseach's commitments were given. Perhaps he could take a personal interest in this matter, given the views he expressed at that time and the commitments that were given which now, unfortunately, mean nothing. Would the Minister agree that the golden share that was promised in the context of privatisation actually means nothing in terms of the power the Minister for Agriculture and Food has?

Photo of Mary UptonMary Upton (Dublin South Central, Labour)
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I re-iterate the last point that the golden share appears to mean very little. The bottom line is that 323 people have lost their jobs in the town of Carlow. Is it beyond the scope of Greencore to examine some alternative related opportunities, based on the sugar industry? If the company is unwilling or unable to keep the sugar business going, it could incorporate something positive there for those who have lost their jobs.

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
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Since their appointment to office, have the Minister or either of her two Ministers of State been in contact with the Carlow sugar beet management or with Greencore? I read in the newspapers that the IFA was aware of the forthcoming closure of the Carlow sugar beet factory but I find it unbelievable that the Minister for Agriculture and Food was not made aware of it. Coming from a farming background, I know the consequences of the closure for sugar beet growers are unprecedented. The seriousness of this will be realised further down the road.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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It would be easy for me to say that I will go in as the golden girl and sort it all out, but I am not and I will not do so——

Photo of Denis NaughtenDenis Naughten (Longford-Roscommon, Fine Gael)
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The Minister is the golden girl.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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——because political opportunism is downright imprudent. Deputies on the other side of the House have been eloquent.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am sure they have been in touch with the company, as well as other elected representatives, to try to facilitate them.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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We have.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I would hate to take from their glory. That said, I had the opportunity to meet the farming organisations yesterday on another issue and, on the margins, we discussed the need for the farming community to work with Greencore — we all appreciate there are difficulties there — in trying to get the best possible deal.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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The golden shareholder.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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We can be facetious about the golden share issue but we must examine the controlling interests within the company. We have now allowed increased competition within the sugar sector here, 20% to 25% of consumption coming mainly from the French market. Another issue that we must examine is that we may have no sugar industry and if so, even if there is sugar production in Mallow, we will have no sugar beet. If the consolidation of this company is to facilitate the continuation of a competitive sugar regime, as well as the production of sugar beet in the south east, we will have to ensure that happens.

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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The time for questions has concluded.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I appreciate, however, the genuine concerns being expressed. I am abundantly sure those concerns will be made known to the management of Greencore who, I hope, will facilitate the farming community.

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
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Has the Minister met Greencore since her appointment?

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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Yes. I met Greencore in the context of the EU stability measures.

Photo of Rory O'HanlonRory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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As it is now 4.45 p.m. I am obliged to move on to matters selected for the Adjournment.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I also met the farmers of Wexford, Carlow and Kilkenny.

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
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We were not invited.

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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I am going down to Kerrysoon and I am sure they will meet me there as well.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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She is the golden girl.