Thursday, 8 December 2005
Sugar Beet Industry.
The recent agreement reached by EU Ministers at the Agriculture and Fisheries Council about the reform of the EU sugar regime was the culmination of a protracted and difficult negotiating process. The outcome represents the best deal that could have been achieved for Irish beet growers in the circumstances. It represents a considerable improvement on the Commission's initial proposals, which were made last June. The main features of the agreement are a lower reduction — 36% rather than 39% — than originally proposed in the support price of sugar; a phased introduction of the corresponding reduction in the minimum sugar beet price over four years, rather than the two-step reduction that was 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 one-off payment of almost €44 million exclusively for beet growers if sugar beet production ceases in Ireland; and an aid package of up to €145 million to meet the economic, social and environmental costs of restructuring of the Irish sugar industry in the event of factory closure and the renunciation of quota. The entire compensation package for Ireland has an estimated value of more than €300 million.
Beet growers and Irish Sugar Limited will be responsible for making decisions about sugar beet growing in light of the reformed sugar regime. A one-off payment of almost €44 million will be available for growers, as I have said, if sugar production in Ireland ceases. In such circumstances, a restructuring fund of up to €145 million will be made available to provide compensation for the economic, social and environmental costs of factory closure. The agreement provides that at least 10% of that fund will be reserved for sugar beet growers and machinery contractors, to compensate them for losses arising from their investment in specialised machinery. The fund may be increased by member states after they consult interested parties, as long as the financial breakdown of the elements of the restructuring plan is balanced in line with a sound economic proposal.
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 implementing rules. It is not possible to give further definitive information in advance of the adoption of the relevant regulations. The Department of Agriculture and Food will make timely arrangements for implementing the new regime in due course, as it did during the earlier phases of Common Agricultural Policy reform.
Based on the current proposals, 70% of the income of beet growers will have disappeared by 2008. Does the Minister see a future for sugar production in Ireland? What steps can be taken to ensure that the sugar production industry has a viable future? At least 10% of the funds allocated under the proposed compensation package will be given to sugar beet growers and machinery contractors, but I understand that the Minister rejected a proposal to increase the relevant percentage to 25%. Why did she reject the proposal to assign 25% of moneys to such people?
I would like to ask about the restructuring budget of €145 million. We accept that those funds will not be used to restructure Greencore but to close the remaining sugar plant. Sugar beet growers have invested in quota, land and machinery, but it seems that 90% of the funds which will be made available will be focused on Greencore rather than on the growers. I understand that member states have the flexibility to top up that level of payment. Does the Minister plan to consider such an approach?
The reform of the EU sugar regime is still in its early stages, as I have said. We are awaiting the final official legal text from the European Union. Growers will be able to participate in the sugar regime over the next two years. That will be a matter for growers and for Irish Sugar Limited. I would like to respond to Deputy Naughten's suggestion that I rejected a proposal to allow growers to be given 25% of the available funds. At approximately 3.30 a.m. or 4 a.m. on the night of the negotiations, the Irish delegation decided to renegotiate after the blocking minority of 11 member states decreased in size when a number of member states withdrew from it. I decided at that stage to support the proposal to offer compensation. A number of permutations were suggested for consideration and I expressed my views on the need to afford maximum flexibility to member states. The decision to provide that a minimum of 10% of the funds should be given to growers and contractors was taken on foot of that discussion.
It is important to say two things about the restructuring fund. It will be made available only on the renunciation of quota. It will be possible to use up to 75% of the fund if the sugar factory gets involved in alternative forms of production, such as the production of bioethanol or other biofuels. All such matters are being considered at present, but no definitive decisions have been made. The Minister of State, Deputy Browne, and I met farmers, the people of Mallow, the representative association and some of the retired workers, and we will take part in further discussions with all those involved in the sugar industry. I appreciate that this is a difficult matter. The sugar regime will continue in 2006 and 2007, at least. I hope those who wish to continue their involvement in the sugar industry will have an opportunity to do so over the next two years despite the price reductions, which have not been as bad as we had anticipated.