Denis Naughten (Longford-Roscommon, Fine Gael)
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With the agreement of the House, I will share time with Deputy Stanton. I thank the Chair for the opportunity to raise this extremely important issue.

There is no doubt that the European Commission's proposals on the so-called reform of Europe's sugar regime will decimate the Irish sugar industry and must be vehemently opposed by the Irish Government. The proposed 39% price cut over two years, which in real terms is closer to 50%, will directly impact on the viability of farming for the 3,700 farmers who grow 80,000 acres of beet. These proposals will bring the price of beet below production cost and will not only wipe out the industry, including 288 direct jobs in sugar processing in Mallow, but will also destroy the livelihoods of 240 hauliers, seasonal workers and many others along the supply and service chain.

It is imperative that the Minister for Agriculture and Food forms alliances with other member states, especially those where sugar production as a whole is threatened by these proposals, including Italy, Portugal, and Greece. With those countries, it is important that Ireland ties up with Spain, Latvia, Lithuania, Estonia, Finland and Hungary, where the future of the sugar industry is also under a cloud. If these ten countries work together, their 121 votes can provide a blocking minority in the Council of Ministers. At a minimum, the Minister must ensure that farmers are fully compensated for any and all losses in income associated with the reform of the sugar regime.

It is also imperative that there is a longer lead-in time than the two years currently proposed before the cuts become operational. Any phased reduction in price support for sugar must happen in tandem with the establishment of alternative, financially viable enterprises for the Irish tillage sector, for example, biofuels. Sugar beet is one of the best raw materials for the production of bio-ethanol, but as things stand it is uneconomical. The Government could be more proactive and secure the future viability of the sugar beet sector by widening the value of excise relief for biofuels. International studies have shown that there is a significant return to the Exchequer, both from an economic activity point of view and through the reduction of environmental damage.

Today's proposals by the Commission highlight the fact that the Greencore decision and the Minister's failure to use her golden share to defer the closure of the Carlow sugar factory were fatally flawed. It seems that had this decision been delayed, there would be additional compensation available to Greencore and the farmers who supplied the plant. In light of the Minister's failure to act on the closure of the Carlow plant, she must put forward an irrefutable case for compensation which may be made available on a retrospective basis with regard to the Carlow sugar factory.

It is important to point out that the suggestion that these proposals will benefit poor countries is misleading, to say the least. For example, a cut in EU sugar prices would have a negative impact on less developed African countries, which currently gain from the high prices guaranteed for sending their sugar cane to Europe.

Currently, Ireland does not over-produce sugar. We meet our own demands. Our sugar industry is commercially sensitive and should be defined as such. Will the Minister clarify who controls our sugar quota? This debate has gone on for ages. We want legal clarity on the issue and we want it now.

David Stanton (Cork East, Fine Gael)
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This matter is extremely serious and these proposals are unacceptable. The Minister must reject them out of hand and she will have the support of everybody in the House to do that. There are 3,700 beet growers and as many people again depending on the industry. There are 350 of my constituents working in the Mallow sugar plant and those jobs are at risk.

The situation is serious and the Minister must do her utmost to ensure these proposals do not go forward. If the price is cut, the price to the producer will not necessarily fall — we saw what happened with coffee. The middleman will benefit from this. Sugar is worth €70 million to farmers annually and €140 million to the nation. If these proposals are allowed go ahead, they will be a fatal blow to agriculture here. The Minister must do everything in her power to stop this and reject it totally. Otherwise, agriculture as we know it here is finished.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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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.