Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 117: To ask the Minister for Agriculture and Food her position regarding the proposed EU sugar reforms; and if she will make a statement on the matter. [26537/05]

Mary Coughlan (Donegal South West, Fianna Fail)
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I have already made it clear that the Commission's proposals for reform of the EU sugar regime, which were published on 22 June, are unacceptable in their present form. 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.

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

I expressed my serious concerns about the proposals when I met with Commissioner Fischer Boel on her visit to Ireland in June, and again at the Council of Agriculture Ministers in July. I emphasised that the price cuts proposed are too severe, that the reforms should be based on a longer lead-in time for the Everything But Arms agreement and that it would be preferable to await the outcome of the WTO meeting in Hong Kong in December before seeking to conclude an agreement on sugar reform. I have also continued to remain in contact with like-minded colleague Ministers from other member states who are opposed to the reform proposals.

My overall objective is to ensure a more balanced agreement, which will take Irish interests into account. The proposals will be considered by the Council again on 24-25 October and given their severity, it is clear that the negotiations will continue to be difficult.

Denis Naughten (Longford-Roscommon, Fine Gael)
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I thank the Minister for her reply. We would all acknowledge that the proposals, as framed, are unacceptable. While the Minister has expressed to the Commission that these proposals are unacceptable and that she wants steps taken to change them, has she put forward formal proposals in this regard? Has she discussed formal proposals with her fellow colleagues who would form a blocking minority in order that we can get unanimous support across those ten member states for putting forward a case? The Minister might elaborate on that.

Who owns the sugar quota? Legal advice on this matter is being considered for the past 18 months. Surely at this stage the Minister has an answer on this matter.

In regard to the proposed compensation, will the State will hand over such compensation to a company such as Greencore, given that the vast majority of its operations are now based in the UK, or what mechanism will the Minister use to hand over any such compensation that may come down the line from the Commission?

Mary Coughlan (Donegal South West, Fianna Fail)
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I have continued to speak to my colleagues over the summer. I will shortly meet my colleague from Italy where the implications for sugar are equally severe. We have not had a bilateral meeting yet with either the Commission or the Presidency. I hope to do that on the Monday night of the Council meeting. The high level group of officials will meet the Commission to discuss this matter on Thursday. I will not submit a negotiating proposal until such time as I have evaluated the outcome of that. However, the Group of Ten will also meet on the Monday night prior to the Council, where we will discuss the methodology for dealing with this issue. A strategic balanced approach and the timeframe will be very important.

On the issue of ownership, the Commission has confirmed that the quota is not an asset. Accordingly, it is not owned by anybody. It is simply a mechanism for regulating the market and this is confirmed by our legal advice from the Attorney General. One of the proposals is that if a sugar factory closes, the quota will be quenched. That means there would be no production in the country in question and this is a matter for EU compensation. Such EU compensation would come from a levy on the other sugar factories that remain in production. It has nothing to do with the Irish State. However, I hope I do not find myself in such a situation. The negotiations on this will be very difficult.

I have taken the opportunity to meet a number of stakeholders and national and local representatives in the affected counties in the region. I will take every opportunity at diplomatic level among my ministerial colleagues to put together what I believe will be a more balanced approach. To bring this to finality prior to Hong Kong would be the wrong decision. The matter would be pocketed, in effect, and we would get no credit for any work done. That is my major concern prior to the World Trade Organisation talks.

Denis Naughten (Longford-Roscommon, Fine Gael)
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Is it not the case that any compensation that may come at some future date will be funded through the Government? In the context of what we now know, was it not a major mistake to close the Carlow plant prematurely, as happened earlier this year? When did the Minister meet the Spanish authorities on this issue?

Mary Coughlan (Donegal South West, Fianna Fail)
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As I said, this will be paid for through a levy on existing sugar producing factories from throughout the European Community. National funding will not be involved.

The Deputy asked about the Spanish authorities. I met the Spanish Minister for Agriculture, Ms Elena Espinosa, the last time I attended a Council meeting, which was three weeks ago. As regards meetings with officials, unfortunately the Spaniards have changed their secretary general. However, there will be a further meeting of officials at that level when the new appointment is made.

As regards the closure of Carlow, I am not in a position to put forward the view of Greencore. As the Deputy knows, it is a publicly quoted company listed on the Stock Exchange. In my view Greencore made its decision on the basis of the initial publication from the European Commission of its view on reform of the sugar regime. Ultimately we are all agreed there needs to be reform of the regime. It will impact not only on Ireland and the European Community but also on developing countries who have put forward their case vociferously to the Council. Their viewpoints must be taken on board as well. We are not reviewing just one aspect of agriculture but are taking into consideration quite a number of pieces which are part of the puzzle. It will not be easy to put it together.