Dáil debates
Tuesday, 31 January 2006
Adjournment Debate.
Sugar Beet Industry.
8:00 pm
David Stanton (Cork East, Fine Gael)
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I thank the Ceann Comhairle for allowing me to raise this very important issue. I hope the Minister of State will provide clarification on the levy. The IFA issued a press release on 20 January 2006 which accused the Minister for Agriculture and Food of misleading the IFA annual general meeting by saying that it was not necessary to pay a restructuring levy of €25 million in 2006. Less than 24 hours later, the Commissioner responded to a question on the matter put by my colleague, Mairéad McGuinness, MEP. She asked whether a country like Ireland must contribute to the restructuring levy in 2006 if it grows sugar beet that year and whether it should intend to cease production in 2007. She stated that this issue was crucial as it would determine whether Ireland produces sugar beet in 2006, which could be the last season for growing sugar beet in this country. The Commissioner responded that the only way to avoid this payment to the restructuring fund is to do away with sugar beet production in 2006 and 2007.
The Minister must clarify this matter because the situation is becoming very serious. A total of 3,700 farmers grow sugar beet who need to know now about the position regarding the levy. A total of 1,000 people employed in the sugar beet processing industry and ancillary activities also need to know how matters stand regarding the levy. Greencore Sugar issued a letter to its growers dated 27 January 2006 which mentioned the necessity of clarification regarding the temporary quota cut in 2006. This cut, which appears likely to happen, could range between 8% to 14%. The decision is critical, particularly if the restructuring levy must be paid on the entire quota. The letter went on to state that Greencore Sugar faces substantial risks attached to processing a sugar beet crop in 2006. The company would like to process sugar beet in 2006 but must engage with its partners to see how these risks can be mitigated or eliminated before such a decision is made.
Farmers must decide whether to grow sugar beet this year. They must make arrangements about matters such as conacre, fertiliser, seed and getting the land ready. They are making these arrangements at the moment. The Minister of State must clarify whether or not the levy must be paid if sugar beet is grown in 2006. What is his understanding about the quota cut?
It is a sad day for Ireland to see the end of the sugar beet industry but people are beginning to accept that it will happen. However, it is crucial that we find out whether 2006 or 2007 is the last year for growing it. If 2007 is the last year for growing sugar beet, will a levy of €25 million be paid this year and a levy of €38 million next year? I am pleading with the Minister of State to clarify issues surrounding the levy because it is a matter of smoke and mirrors at the moment. The people affected are angry, upset and confused. I am sure the Minister of State realises that much hinges on the operation of the levy. I could address the compensation fund but it is a matter for another occasion. On this occasion, we need clarification regarding the levy. Must it be paid this year? The Minister told the IFA that it does not need to be paid but the Commissioner has stated that it does. Who is right? We need an answer tonight. I await the Minister of State's answer with anticipation.
Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I thank Deputy Stanton for raising this important issue. I wish to put on record that the Minister did not mislead anyone with regard to the levy. 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 on which political agreement was reached by the Council of Ministers in November 2005.
The main features of the reform package have already been widely publicised. After a long and difficult negotiating process, we succeeded in having the proposals changed to provide a longer phasing-in period, as well as a number of options to enable the sector to adapt to the new regime. There will be a lower reduction in the support price of sugar than originally proposed — 36% instead of 39% — as well as phasing in of the corresponding reduction in the minimum sugar beet price over four years, instead of the two-step reduction originally proposed.
We also secured an enhanced compensation package. Beet growers will be compensated for up to 64% of the price reduction in the form of direct payments which will be worth approximately €121 million to Irish beet growers over the next seven years. A once-off payment of almost €44 million will also become available in the event that sugar beet production ceases in Ireland. In that event also, an aid package of up to €145 million becomes available for economic, social and environmental costs of restructuring of the Irish sugar industry involving factory closure and renunciation of quota. This would involve the submission of a detailed restructuring plan for the industry.
The reform agreement reached last November provides that at least 10% of the restructuring fund shall be reserved for sugar beet growers and machinery contractors to compensate notably for losses arising from investment in specialised machinery. This proportion may be increased by member states after consultation of interested parties provided that an economically sound balance between the elements of the restructuring plan is ensured. The entire compensation package has an estimated value in excess of €300 million.
The final legal texts giving effect to the reform agreement could not be approved by the Council of Ministers until the opinion of the European Parliament had been received. That opinion was delivered on 19 January and it is now expected that the legal texts, which are currently being discussed at technical level in Brussels, will be approved by the Council at its meeting in February. In parallel, the EU Commission is working on preparation of detailed implementation arrangements which can only be finalised once the Council texts have been adopted. Until all the various legal texts have been adopted, it will not be possible to finalise the implementation arrangements definitively but all parties concerned appreciate the importance of having this process completed as soon as possible.
The Minister and her officials have been keeping in close touch with stakeholders about these developments. One issue on which she hopes to decide shortly is the choice of reference year or years for determining an individual farmer's single farm payment entitlements. I am glad to have the opportunity to update the House on this important issue. It is up to the growers concerned and Irish Sugar Limited to make commercial decisions in light of the new regime. Teagasc, in accordance with its statutory responsibilities, is available to provide advice where required.
David Stanton (Cork East, Fine Gael)
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The Minister of State did not answer my question. Is the Minister for Agriculture and Food right or wrong? It is a simple "Yes" or "No" answer. It is disgraceful that the Minister of State did not answer my question. He knows what is going on and what is at stake.
Séamus Pattison (Carlow-Kilkenny, Labour)
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Deputy Stanton is using up the time available to Deputy Timmins.