Denis Naughten (Longford-Roscommon, Fine Gael)
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As the next two matters are being taken together, each Deputy has five minutes and the Minister or Minister of State has ten minutes to reply.

Joe Sherlock (Cork East, Labour)
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It is surprising to see a Fianna Fáil backbencher raising an Adjournment matter when he should have other access to the powers that be with regard to such circumstances.

The decision of the EU Council of Ministers to overhaul the Irish sugar industry poses serious questions about the negotiating position of the Minister for Agriculture and Food in those talks. I am disappointed that she is not present. I call on her to make a full statement on the stance she took in negotiating the Irish position. It seems the negotiations were concluded too easily and, once talk of compensation started filtering through, it appears the towel was already thrown in.

Workers in the Mallow plant deserve a full and frank account from the Minister as to her negotiating stance. In the past few weeks, we have heard nothing from her about the impending plight of workers. We are told the Irish sugar industry will get a compensation package worth €310 million under a deal. What percentage of that compensation package will go to the workers? The Minister must make some of the €44 million special assistance package available for workers.

The decision to wipe out a whole industry with the stroke of a pen in Brussels surely poses questions about the nature of our relationship with the EU. North Cork has seen the steady erosion of its industrial base in the past two years. The future for food production in this region looks unsteady. This issue has to be addressed by the Government. It is not enough to state we have become victims of global trends. We have always been model Europeans. The manner in which these proposals were rammed through further undermines our manufacturing base. Is this the model of European integration and social solidarity that we signed up to in 1973?

Furthermore, against the background of rapidly rising oil prices and our obligations under the Kyoto Protocol, there is a stronger case than ever for exploring the biofuel option. We must consider alternative products for the Mallow plant to manufacture.

The facilities exist within the Mallow plant to produce biofuel. We must put in place a viable alternative to ensure production continues within the Mallow plant, which has the capability to produce alternative fuel. I am calling on the Minister for Communications, Marine and Natural Resources to extend the biofuels mineral oil tax relief scheme to allow for greater tax relief on the production of biofuels.

This year alone the Government has failed to comply with the European Commission directive on the development of alternative fuel sources, which aimed for all EU states to ensure biofuels make up a minimum of 2% of their fuel mix by the end of 2005. The Government has opted instead for a 0.06% biofuels target for the same period. We have the wherewithal and resources to produce such a fuel in Mallow. Now is the time to act, in advance of the final overhaul of the sugar regime.

The Minister must tell us clearly whether she thinks Mallow sugar factory will be producing sugar beyond 2008 and whether that decision hinges on whether the IFA will accept the compensation package. Furthermore. Mallow has produced sugar since 1933, 40 years before we joined the Common Market and 40 years before a subsidy was ever paid to a beet grower. Why is it not possible now to produce beet in light of a change to the sugar regime? Are we to assume that if the profit margin to beet growers is not high enough in a changed regime, they will opt instead for the compensation package and cease production of beet?

The Minister must tell us whether she has directed Greencore to state whether the compensation package will be more beneficial to it in financial terms through closure or whether it is more feasible to keep the show on the road.

Tom Hayes (Tipperary South, Fine Gael)
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I thank the Ceann Comhairle for giving us the opportunity of discussing this important item. For many people, it is not easy to make a living from farming in the Ireland of 2005. The price of beef hovers at a dangerously low level, so much so that many farmers barely break even when selling beef. The latest development in Irish farming is the eradication of the Irish sugar beet industry following the decision of the European Council of Ministers to cut the price of sugar beet by 36%. Such a slashing of income means that farmers who make their livelihood from sugar beet production must now kiss that livelihood goodbye. As with beef imports, Irish farmers are being pushed aside to make way for cheap sugar cane from countries such as Brazil. They cannot hope to compete with countries whose production costs are vastly less than in European countries such as Ireland.

What seems to be forgotten by Ministers in Europe discussing economics is that at the heart of farming lie families and a way of life that is very important to nations such as Ireland. Some 3,700 farming families will be affected by the loss of the beet-producing sector in Ireland. That sector has existed since 1925 when engineers in Carlow began to mark out ground for what was to become the Carlow sugar factory. The development of other factories at Mallow, Thurles and Tuam proved that high quality sugar could be produced economically in Ireland from home grown material. It gave farmers the opportunity to diversify their production and gave them much-needed income.

Now, sugar beet production in Ireland, which has been a part of our history since shortly after the foundation of the State, has been signed away for a compensation package of €145 million. The upset at the destruction of the Irish beet sector was voiced recently in my constituency when hundreds of angry farmers met in Cahir. Many of them, from all over the beet-growing areas, including Wexford, Laois-Offaly, Carlow and Tipperary, implored the Minister to do something about their livelihood.

The Minister of State is in the enviable position of having discretion in the allocation of that European compensation fund and I appeal to him to consider as his first priority the 3,700 farming families which have recently seen their beet-producing days ended by the stroke of a pen in Europe. If any other sector had lost a similar number of jobs in one fell swoop, the Government would have responded with great urgency, not with the non-committal attitude that it reserves for farmers. Some 1,500 non-farmers employed in the sugar beet sector in Ireland will also shortly find themselves jobless. This is the bleak situation that must be considered by the Minister for Agriculture and Food when choices are being made about the allocation of the €145 million EU compensation package. The beet farmers who, at the end of the day, are the ones who will suffer most from this latest disaster must be properly and responsibly looked after by the Government.

I ask the Minister of State to clarify his intentions in respect of the distribution of the €145 million EU compensation package provided to compensate for the loss of the Irish sugar beet sector and to give his views on the viability of farming in Ireland in the future.

John Browne (Wexford, Fianna Fail)
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I thank Deputies Sherlock and Hayes for raising this important issue. The recent agreement by the Council of Agriculture Ministers on reform of the EU sugar regime was the culmination of a protracted and difficult negotiating process. I am satisfied that the outcome from Ireland's perspective was the best possible deal in the circumstances.

The reasons reform of the sugar regime could no longer be postponed are well known. As well as the increasing internal EU pressures to bring sugar into line with the other agricultural sectors, there were also strong international pressures. These fell under three main headings: the everything but arms agreement, EBA, the WTO Doha round of trade negotiations and the ruling by the WTO panel against aspects of the EU sugar regime, following a complaint by Brazil, Thailand and Australia. The recent decision by the WTO arbitrator that the EU must implement the panel ruling by next May added to the pressure for early action. There was considerable support for the ambition of the UK Presidency to achieve political agreement ahead of this month's WTO ministerial meeting in Hong Kong. In any event, the sugar regime in its current form expires at the end of June 2006 so there was need for an early decision on future arrangements to avoid a legal vacuum from next July.

While it is over a year since the Commission first outlined its thinking on the future shape of the sugar regime, the formal legislative proposals only emerged at the end of June 2005. These proposals turned out to be even more severe than anybody had anticipated and they went even further than the Commission had initially envisaged.

From the outset, the Minister for Agriculture and Food, Deputy Coughlan, availed of every opportunity to highlight the serious repercussions that the reform proposals would have for the Irish industry. Beet growing has long been a valuable cash crop for Irish farmers, as well as playing an important role in the tillage cycle as a break crop. In Brussels, Ireland played an active role in a group of 11 member states which had common cause in opposing the Commission's proposals. With her ministerial colleagues from these countries the Minister made joint submissions to the Agriculture Commissioner, the most recent one just before the formal discussions of the proposals at the October Council meeting. Furthermore, the Minister engaged, as did our officials, in an intensive round of discussions with the Commission, the Presidency and other member states with a view to modifying the proposals to take account of Ireland's particular circumstances.

On 24 November, after three days of intensive negotiations in Brussels, the Minister had to make a judgment on what was the best possible deal for Ireland, taking account of the negotiating positions being adopted by other member states. The outcome of the negotiations represents the best possible deal that could have been achieved and is a considerable improvement on the Commission's initial proposals of last June.

From Ireland's perspective, the main features of the agreement, as already announced, are a lower reduction in the support price of sugar than originally proposed — 36% instead of 39%, a phasing in of the corresponding reduction in the minimum sugar beet price over four years instead of the two-step reduction originally proposed, an increased rate of compensation for beet growers of up to 64% of the price reduction to be paid in the form of direct payments worth approximately €121 million to Irish beet growers over the next seven years, a once-off payment worth almost €44 million exclusively for beet growers in the event that sugar beet production ceases in Ireland, and an aid package of up to €145 million for the economic, social and environmental costs of restructuring of the Irish sugar industry involving factory closure and renunciation of quota.

The entire compensation package has an estimated value in excess of €300 million. 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.

Joe Sherlock (Cork East, Labour)
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Has the Minister any say in the matter?

John Browne (Wexford, Fianna Fail)
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I will come to that point presently.

Denis Naughten (Longford-Roscommon, Fine Gael)
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She does not want it.

John Browne (Wexford, Fianna Fail)
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In the event that sugar production ceases in Ireland, a once-off payment of almost €44 million would be available for growers. In addition, the restructuring fund of up to €145 million would become available to provide compensation for the economic, social and environmental costs arising from factory closure. The agreement provides that at least 10% of the fund shall be reserved for sugar beet growers and machinery contractors to compensate notably for losses arising from investment in specialised machinery. This amount may be increased by member states after consultation with interested parties as long as the financial breakdown of the elements of the restructuring plan is kept balanced according to a sound economic proposal.

The formal legal texts giving effect to the agreement will be adopted by the Council of Ministers early next year after the opinion of the European Parliament has been received. The Commission will then come forward with proposals for detailed implementation rules. Pending the adoption of the relevant regulations, it is not possible to give definitive information but, as with the earlier phases of the Common Agricultural Policy reform, my Department will make timely arrangements for implementing the new regime in due course.

In reply to Deputy Sherlock, my Department has been working closely with the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, to bring forward proposals as quickly as possible in the biofuels area. I am sure the Minister for Finance will take a direct interest in further exemption of the excise area. Deputy Hayes referred to a recent angry meeting of farmers in Cahir. I, along with all my fellow public representatives, will attend a similar public meeting on Saturday night in Wexford.

Denis Naughten (Longford-Roscommon, Fine Gael)
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The Minister of State will not get out of that as easily.