Thursday, 11 November 2010
EU Sugar Market Reform: Statements
The European Court of Auditors report on the sugar reform package of 2006 published yesterday was addressed directly to the European Commission. The report also contains a comprehensive 17-page response from the European Commission to the court's findings.
As the Commission itself explains in that response, the sugar reform was concluded against the background of the EU's Everything But Arms Initiative, EBA, in 2001 and the 2005 World Trade Organisation, WTO, ruling on the EU sugar regime. The EBA granted the least developed countries free access to the EU market, including sugar. The WTO necessitated a reduction of subsidised EU sugar exports. In response, the EU had to cut its sugar production to maintain the appropriate market balance. The combination of these factors led the Commission to bring forward proposals for the reform of the EU sugar regime.
As the Commission's own reply to the report points out, the reform was based on a voluntary system of quota renunciation underpinned in particular by a temporary restructuring fund as well as support price reductions. The choice of abandoning or keeping production was to be made by every sugar producing company bearing in mind that in future they would have to secure their long-term profitability in a situation of substantially lower institutional prices.
During the reform negotiations, my colleague, the Tánaiste and then Minister for Agriculture and Food, Deputy Mary Coughlan, strongly opposed the Commission's reform proposals and sought to have them modified in such a way that an efficient sugar industry might have been retained in Ireland. She led a group of 14 member states that opposed the proposals. In the end, there was insufficient political support for the Irish position and our efforts, towards the close of the negotiations, had to be redirected at achieving the best possible compensation package.
There have been some suggestions that out of date information may have impacted on the negotiations. Nothing could be further from the truth. The Commission explains the relevance of its impact assessment, stating: "This model does not require an analysis of the current profitability and prospects of every individual sugar producer in the EU. Therefore the Commission did not consider it necessary to collect such data on productivity for the model chosen." However, the Commission rightly points out it opted for a reform model where final decisions would be taken by individual sugar companies. At all stages during the negotiations we brought to the table the most up to date information about the position in Ireland, including the fact that there was only one sugar processing plant operating in Ireland. The Commission was well aware of the fact that the Carlow plant had closed prior to the publication of the Commission proposals.
Greencore plc, the sole Irish sugar processor and holder of the entire Irish quota allocation, decided to avail of the restructuring scheme. Accordingly, the company renounced the quota and dismantled the remaining Irish Sugar factory at Mallow in compliance with the conditions of the scheme. This brought the Irish sugar industry to an end. Ireland negotiated the best possible deal in the event of quota holder, namely Greencore plc, taking the commercial decision to exit the industry. While it is not appropriate for me to say why Greencore plc took the decision it did, I refer Deputies to the Commission response to what is obviously a reference to the plant in Mallow in paragraph 30 of the audit report. The Commission points out that sugar production can only remain competitive if both beet production and beet processing are carried out competitively and states: "It is also possible that performing industrial facilities were forced to close down due to the limited competitiveness of the beet grown in the surroundings. This appears to be the case described by the Court."
The sugar reform package that Ireland secured was, as a whole - that is, including restructuring aid, diversification aids and single payment - worth €353 million, of which €220 million went to beet growers, €127 million to Greencore and €6 million to machinery operators. The beet growers' share was made up of diversification aid, namely, €44 million, compensation via the single payment, which amounted to €123 million over seven years, and restructuring aid of €41million. The restructuring and diversification aids were paid out during 2007 and 2008.
To draw down the restructuring aid, Greencore plc, had to submit a restructuring plan, incorporating a social plan and an environmental plan; the plan did not apply to the Carlow factory, which had already closed prior to the reform of the EU sugar regime. The social plan provided for early retirement and redundancy packages as well as support services for the departing Mallow workers such as career counselling, financial advice including pension advice, pre-retirement programmes for those aged over 50 years, job-seeking support and "start your own business" programmes. The social plan was implemented in the first year of restructuring. The environmental plan will be finished at the end of this year.
As a result of the restructuring scheme the overall EU sugar quota was reduced by almost 6 million tonnes, of which the Irish quota contributed some 200,000 tonnes. Any proposal to re-establish a sugar factory in Ireland would, subject to the availability of quota, be a matter for commercial decision by interested parties. Any proposal to review the EU sugar quota would be a matter for the EU Commission. A quantity of sugar beet has been always grown in Ireland for fodder purposes and this continues. It is not affected by the EU sugar regime.
Much has been said in this House on the issue of the special share held by the Minister. I wish to make clear, and this has been confirmed by legal advice, that this special share does not empower the Minister to get involved in operational matters or business decisions made by the company.
I welcome the opportunity to discuss the findings of the European Court of Auditors report, even it was difficult this morning to secure an agreement to have a debate on it. It is regrettable that the Tánaiste who was Minister for Agriculture, Fisheries and Food at that time, is not here.
Facts are facts and questions still remain unanswered, with all due respect to the Minister's contribution. The facts of the dismantling of the Irish sugar industry are there for all to see but a number of questions must be asked. Did the Government and the Minister of the day carry out due diligence as the guardians of the public interest - notwithstanding what the Minister said about the legal opinion on the entitlement of the then Minister to get involved in operational matters - on the information submitted to the European Commission by Greencore? Was Ireland's unique position in that it had only one recently modernised plant on which the growers were completely dependent defended properly? Was that case made strongly or not at all? Was the fact that Ireland was going to become totally dependent on imported sugar for a strategic product for the agri-food businesses, chemical industries and as an ingredient in many feed products considered? Was the fact that sugar beet was a critical crop in the tillage sector considered, and in particular for malt barley producers, who faced challenges with the introduction of the nitrates directive which, thankfully, has been somewhat addressed? Was that case made both to Greencore and the European Commission? Was any consideration given at that time to the fact that there was a significant advantage to using sugar as a source of bioethanol, which would have placed further demands on supplies worldwide? In 2006 this was already well flagged and there was a spike in oil prices at the time. After Ireland renounced its entire quota for sugar production, the EU restructuring fund ended up benefiting mostly private industry shareholders. Unfortunately, this is a classic tale of Celtic tiger Fianna Fáil - the national interest, the growers and the workers were all abandoned in the interests of the enrichment of an elite few.
Ireland is now importing €99 million worth of sugar, which does not includemolasses and other sugar by-products for the chemical industry, in contrast to six years ago when we were an exporter of sugar products. The question remains as to who were the main beneficiaries of the EU compensation fund of €145 million, though the Minister has broadened that out to include other factors. Why did the Minister for Agriculture, Fisheries and Food decide not to defend the national interest and the tillage farmers in the sugar industry and allow the closure of all the sugar processing plant capacity in Ireland?
My final question relates to the European Court of Auditors report. Has the reform of the European sugar market achieved its objectives? For the European consumer the answer has to be 'No'. Point 63 of the report states that most of the cost savings due to price reductions will be added to the profit margin of industrial producers. For the developing world producer, the answer to the question I posed is 'No'. For Ireland, the answer is definitely 'No'. As I said at the outset, spin is spin but facts are facts.
I call on the Minister for Agriculture to revisit this issue and initiate an investigation with the Commission with a view to re-establishing the sugar industry in Ireland. When we consider all the facts and the changed circumstances surrounding our competitiveness, the Irish Government and the European Commission owe this much to the growers and to the people involved in this industry.
An article written by Dr. Martin Thelen from Bonn some years ago states:
What are the perspectives for the future?
... there will still be opportunities for European sugar production if every available means is used to compensate for the disadvantages associated ... In a global comparison, the European sugar ... [industry have] considerable ... and significant competitive advantage. ...
Moreover, the movement towards renewable resources could prove particularly interesting for the European sugar beet industry, opening up perspectives, for example, in the cultivation of sugar beet as a raw material for ethanol production.
These are not my words but the words of an objective observer.
There is no reason we cannot re-establish the sugar industry. It was re-established previously when Siúcre Éireann was established in the 1920s. That was not the first establishment of the sugar industry here. It can be re-established again, reconfigured for today's environment and competitive considerations. There is nothing to stop us having a sugar processing plant and a bioethanol production unit on the one site. We have a biofuels obligation of 3% or 4%, which is currently constituted of imported bioethanol. It makes no sense not to have a sugar industry when we could have a thriving one.
We imported €99.9 million worth of sugar into Ireland last year and €76.4 million worth the previous year. The price of sugar on the world markets has never been higher - there is a shortage of sugar. We have gone from being a country that exported sugar to one that is totally dependent on foreign imports. We have also lost an industry and the Minister knows better than anybody else, or he should know, how important that industry was for farmers.
I come from the Midleton area of east Cork, which is known as the Paris basin of Ireland due to the quality of the land in the area. Most of the sugar beet produced was grown around Midleton. The loss of that industry was major. It is alarming that the decision made at that time, which destroyed the industry, was based on out-of-date information. That is what the European Court of Auditors has said. It comes down to that in a nutshell. Where was the then Minister at the time? Why did she not ensure the figures were updated and upgraded? Why did she and the Department not ensure the information on which the decision was based was up to date? The European Court of Auditors, an independent respected body, has made a definitive judgment and we have to take it seriously.
I will call on the Minister to come before the Joint Committee on Agriculture, Fisheries and Food to engage in a proper, interactive debate on this issue.
As Deputy Doyle stated, it is crucially important that we factor into this debate the issue of ethanol production. Ethanol is being imported into Whitegate, which is just down the road from Midleton and the east Cork area. The factory in Mallow should never have been closed. It was convenient for Greencore that the Carlow plant had closed previously as it allowed the company to go to Brussels with only one factory in the bag, as it were. Only three countries in Europe ended up without a sugar industry. Even Nordic countries such as Sweden and Finland retained a sugar industry. Surely Ireland, which is further south and warmer, is in a better position that these countries to grow sugar beet.
The sugar industry was a profitable industry which paid for Christmas in many agricultural homes across the country. Contractors, hauliers, factory workers and farmers depended on the sector.
The decision to close the Mallow plant was taken very quickly. I recall being in the House at the time and trying to obtain information about the closure because it took place virtually overnight. Much more investigation of this matter is required.
It is unfortunate that the House is discussing this issue. The sugar industry was taken from farmers by the Government, although the ultimate decision was taken by the Council of Ministers. The Tánaiste rather than the Minister for Agriculture, Fisheries and Food, Deputy Smith, should be before the House because she sat on the Council of Ministers which made the decision that resulted in the closure of the Irish sugar industry.
The loss of the sugar beet industry resulted in farms in County Wexford becoming less viable and dealt a severe blow to the local economy, including agricultural contractors, suppliers and hauliers. As a result, it has become less viable for young people to remain in the farm sector. The beet industry was one of the most profitable and viable industries in the agriculture sector. Farmers did not want compensation; they wanted to continue to grow beet.
The Minister has many questions to answer on behalf of the Government. Is it true that the European Commission was using out-of-date information? The answer is either "Yes" or "No". The Tánaiste, who was the Minister for Agriculture and Food at the time, must have been asleep at the relevant meetings of the Council of Ministers. Was she properly informed about the position at the time?
The Government must urgently consider the possibility of beet being grown again for use as an alternative energy crop. Coming from a northern county, I am not sure the Minister is aware of the importance of the beef industry to the south. This is a major issue and the Government must take heed of it. The Minister is part of the Government which got rid of the sugar beet industry.
I express solidarity with the workers and growers in north Cork, the area with which I am most familiar, who fought tooth and nail and through thick and thin to try to keep the sugar factory in Mallow operational. They were given a clear indication that the factory had a viable future if efficiencies and changed work practices were introduced. Having agreed to the changes, the workforce was sold out by the Fianna Fáil Government.
The Tánaiste, who was the Minister for Agriculture and Food at the time, made the following statement to the House this morning:
Second, as then Minister for Agriculture and Food, I opposed the Commission's proposals, as the Members will be aware and led the group of 14 in its opposition to that reform. I led that opposition with a number of other colleagues in the European Union.
There is a disparity between this statement and the minutes of the meeting of the Council of Ministers of 20 February 2006, which state:
The Council successfully adopted by qualified majority the three Regulations on the reform of the sugar sector as set out in documents 5588/06, 5589/06, 5590/06. The Greek, Polish, and Latvian delegations voted against.
If the Greek, Polish and Latvian delegations voted against the so-called reforms, only the Tánaiste, who was a party to the discussions in the Council of Ministers and claims she opposed the proposals, is in a position to describe what occurred at the meeting. Why is she not present to clarify the matter? She owes an explanation to the growers of north Cork and elsewhere in the country as well as the workers who lost their jobs as a result of the decision taken by the Council of Ministers.
I remind the Minister that some of the same workers had to wait for more than 12 months for redundancy payments. I was a councillor at the time and had to seek supplementary welfare payments on the behalf of workers at the Mallow plant, pending the outcome of negotiations with Greencore, a company that had received millions of euro from the compensation fund. That story was never told because we were in the midst of the Celtic tiger and the Government side did not want to hear it.
The bottom line is that the former Minister shifted her position from one in which she was in a blocking minority with other countries to one in which she accepted the compensation package. She owes it to people in north Cork, all those who grew beet and everyone else who was affected by the decision to explain the reason she shifted her position. That is the least the House deserves in terms of the history of this episode.
In 2005, I stated that if Ireland was to stop producing sugar, the perfect place to start producing ethanol was either Carlow or Mallow. Ethanol is now being imported into Whitegate. The Labour Party tabled an amendment on the biofuels Bill providing for the imposition of a tariff on ethanol imports to stimulate local production. Despite the presence of the Green Party in government, this measure has not been taken. If we are not to produce sugar again, we should at least produce ethanol locally to meet the requirements of the biofuel obligation. The Government must explain the position it took on this matter.
I take issue with some of the remarks made by the Minister. As a former employee of the sugar company, I suffered a double whammy when the sugar factory in Carlow closed. Following the closure the then Government created a great deal of hope in the area when the Progressive Democrats Party promised that train stations would be built all over the place to collect beet to transport to Mallow. The rug was quickly pulled from under that idea, however, and those who suffered were the large number of people who benefited from the sugar industry.
While the Minister indicated that the Government made a strong case, the facts available to us suggest that was not the case.
I note, however, that members of the Committee of Public Accounts accept that the Office of the Comptroller and Auditor General will have processed each item of the agenda it puts forward. Is it not a fact that the auditors had all the information available to them to make this decision? Consequently, must it not be a fact that if the European Court of Auditors stated that Ireland's data were out of date and that information was unavailable, this is what was put before it? Therefore, must it not follow that Ireland's case was weakened because it could not put the proper facts to those who sought to support us because our data were weak, out of date and did not reflect what we had done?
One also could question what we did because I have grave doubts about Greencore's intentions when it closed the Carlow sugar plant. Was it forward planning or simply plain greed? I believe it was the latter because the company closed the plant to make the lands available for development. This was proved subsequently by the speed with which the company moved in to eradicate the plant. This was its scheme and plan, after which it moved on and it was only a matter of time before the company adopted the same process in respect of Mallow. It drew the rug from under the people there and destroyed an industry that had supplied this country from 1926 onwards. It destroyed an industry that had provided so much employment for so many people and which had been one of the main makers of an industrial background here through the provision of apprenticeships and so on.
The Government has let the people down badly in its defence of this point. As assertion in this House that the European Court of Auditors is wrong when it had all the facts before it constitutes misinformation and the Minister should rectify this point. The report states the papers show that Greencore justified its point in respect of a risk and not on a fact. The company made its decision "due to the risk of lower prices", and so closed Mallow upon a risk. It did not even wait to ascertain what would happen as the risk of lower prices was enough for it to pull the rug and move on, as it perceived it, to the Celtic tiger and the development of Carlow and Mallow to make more money for its shareholders. As Deputy Sherlock has rightly stated, it forgot the people who had put the industry there as well as all those who had supported it, including farmers of all sizes.
It is a disgrace and I ask the Minister to be honest with Members. He should not state in this House that the report is wrong because I believe what the European Court of Auditors has put in front of Members. It is the job of the court to do the right thing, to examine everything in front of it and to put it forward in an honest and truthful fashion. To suggest this report is wrong is a major mistake on the Minister's part. It certainly will be noted nationwide by those who lost a major part of their lives, financial security and the industry they supplied throughout an era in Ireland.
From Wexford to Louth and from Wicklow to Offaly, Leinster was the home of sugar beet production and Deputy Nolan and I attended meetings in Carlow at which thousands of farmers turned up to make their protest. Today, however, the Government is trying to hide behind a statement to the effect that the auditors' report was wrong. I ask the Minister to retract his statement because it is erroneous and will reflect badly on him as Minister for Agriculture, Fisheries and Food in this ongoing debate.
When the draft European Union sugar proposals were outlined in 2005, the Minister was not in his present portfolio. His colleague, the Tánaiste and Minister for Education and Skills, Deputy Coughlan, was then Minister for Agriculture and Food. In the Dáil on 2 May 2005, she blamed the decision to close the Carlow factory on the likely consequences of reform but assured Members at the time that Greencore would keep Mallow open. Of course, it decided to close the plant anyway, a decision that again was blamed on the European Union. The European Union Court of Auditors, however, have now informed Members that the closure was unnecessary, that Greencore had decided to close it before the reforms were in place and that there was no valid commercial reason for the company to close that factory.
This was a profitable company, like many others the Government has allowed to close, such as SR Technics or the glass bottle companies, because according to the Government, ultimately the market is king. In this instance, however, it was not the market but speculators who appear to have been king. Major questions remain outstanding regarding the role of Liam Carroll in this debacle. It is a pity the Tánaiste is not in the House to answer questions on how Mr. Carroll's investment in Greencore came about. What did he know beforehand? In other countries, it is called insider trading when someone knows in advance what a company is doing and buys out a huge number of shares. These questions have not been answered and the only people who suffered because of it were the Irish people and, in particular, the workers and farmers who worked, supplied and depended upon both the Carlow and Mallow factories.
In July 2005, the then Minister, Deputy Coughlan, completely rejected the European Union reform proposals as an attack on the Irish sugar industry. It is a pity she did not continue with this line. On 17 November 2005, the then Minister of State in the Department of Agriculture and Food, Deputy Browne, told the Seanad that from Ireland's perspective, the proposals were unacceptable, that the Government would defend Irish sugar and that he was confident the sector would be saved. Greencore obviously had a different plan and different ideas because it was planning to get out of sugar production. What then persuaded the Minister to change her mind and to support Greencore and argue the position she took only one month later? In December 2005, before the European Union had formally ratified the reform agreement, Deputy Coughlan justified the closure in Carlow and referred to what she foresaw as a possible total closure of the sugar industry as a consequence of the European Union's actions.
It always has been very easy for the Government to blame the European Union for everything because it lacks the guts to stand up to the European Union or even to examine or challenge its directives. The Government has been a willing partner in most of the crimes in respect of closures but has blamed the European Union. Did the Minister know in December 2005 that Greencore was about to close the Mallow plant? I believe so and this is a charge against the then Minister that she should be in this House to answer. Even though Members have been told that no one seemed to know and that there was no plan, I encourage the Garda Síochána fraud squad to examine the records and the meetings that Greencore held at that point to ascertain what it was planning, because it is fraud.
In December 2005, the then Minister, Deputy Coughlan, promised that in the event of what only she and Greencore foresaw as an inevitability, namely, total closure, handsome compensation would be available. Greencore certainly benefited and received its compensation to the tune of €100 million. The company then had to be dragged into the courts by the workers to secure their redundancy payments. The European Court of Auditors now states that it cost more to close the Irish sugar industry then it would have cost to keep it alive. When my colleague, Deputy Ferris, questioned the then Minister, Deputy Coughlan, on the generous handout to the Greencore chancers, it emerged that Greencore also received more in compensation than it would have done had it decided to go into bio-fuel production, which would have been an alternative use of the facilities, saved many jobs and helped the farmers in the region.
In addition, in Carlow, inspired by that genius of the property market, Liam Carroll and his companies decided that it would be best to build apartments on the site rather than facing the prospect of keeping hundreds of people in employment and giving work to thousands of farmers. It was always worthwhile destroying the livelihoods of many to benefit property speculators.
In reply to my colleague, Deputy Ferris, on 24 October 2006, the then Minister, Deputy Coughlan, again blamed the closure of the plant in Mallow on the European Union. In the light of the auditors' report, does she accept that this was not an accurate claim? It was not the fault of the European Union but the fault and responsibility of the then Minister and stemmed from the greed associated with speculation on property and sites for apartments and the like. If it was not the European Union's fault, why did the Minister defend the Greencore speculators' decision to destroy one of the most successful industries in the country and the livelihoods of hundreds of people who worked in and supplied that industry?
The then Minister also waffled about the EU plan requiring restructuring of the sugar industry. What part of restructuring an industry involves selling the plant, destroying the buildings, sacking the workers, leaving farmers with no one to buy their beet and, worse again, incompetently attempting to cash in on a dying property market by planning, in the case of the plant in Carlow, to build apartments there?
Returning to the Greencore restructuring plan, did the then Minister or her officials go to the trouble of examining the EU proposals and their consequences? They were still only proposals when Greencore decided to close the plant in Mallow, with the then Minister's support. Did she and the officials who advised her just take what Greencore had stated at face value and swallow its lies hook, line and sinker? Greencore and its friends are the ones who have destroyed the economy, the consequences of which the Minister, Deputy Smith, his Government colleagues and the rest of us are having to deal with. Was the then Minister, Deputy Coughlan, totally and utterly incompetent, as has been shown in other cases? Was she, as the Minister with responsibility for this successful industry, simply hoodwinked by Greencore? This was a public company before it was sold to failed compulsive gamblers. This is the consequence of selling public companies which are profitable. We all make mistakes and can be duped from time to time. If that is what happened, the then Minister should have the courage to come to the House and admit to the hundreds of former workers now living on the dole that her decision was wrong, rather than hide behind the mythical claim that the European Union was responsible.
Yesterday Deputy Rabbitte compared the last days of this Government to the last days of the Roman Empire. They are more akin to the last days of Al Capone and Owney Madden or Lucky Luciano. That would be a better analogy, given what has emerged time and again in this House-----
The consequences of the Government's actions are greater than any actions taken in any other country. What is happening in Italy is in a small place by comparison.
Tá ceisteanna eile le cur agus leanfar á gcur go dtí go bhfaighimid freagra, nó gheobhaidh an Rialtas an freagra nuair a bheidh toghchán ann.
I have to advise the Deputy that making serious fraudulent allegations against a company without being able to substantiate them in the Chamber and without it having an opportunity to defend its position is singularly inappropriate. I ask him to reconsider.
Let me refer to what the Minister said in his opening remarks. He said that, even though the Government held a special share in Greencore following its establishment in 1991, the Minister of the day had had no say in operational matters. Given all that has been explained today, what was the value of having a special share if the Minister was not allowed to defend the strategic importance of a sector or industry? In view of this and on foot of the independent report which poses serious questions, is the Minister prepared to sit down with the European Commission and re-evaluate the sugar beet industry?
I totally reject the argument that every effort was not made to protect the Irish sugar industry. Every effort was made. Greencore made the decision to renounce the quota, not the Government.
To answer Deputy Doyle's first question, the special share in Greencore did not allow the Minister, acting on behalf of the State, to contribute to the decision made by Greencore on the renunciation of the quota. The proposed actions by Greencore that required the Minister's consent under the terms associated with the special share were related to any changes to certain specified articles of the articles of association; the voluntary winding up of Greencore; the sale of more than 49% of Irish Sugar plc, a subsidiary of Greencore; and the creation of a new class of shares in Greencore. Legal advice obtained at the time was that they did not include provision for the Minister to direct Greencore in relation to the sugar quota. Greencore was the holder of the entire Irish sugar quota.
I have just read them out for the Deputy. They applied to any changes to certain specified articles of the articles of association of Greencore, the voluntary winding up of Greencore, the sale of more than 49% of Irish Sugar plc and the creation of a new class of shares in Greencore. At the time the Government obtained legal advice on its ability to participate in the decision made by Greencore. The decision was entirely one for Greencore. The Government had no competence, acting as the special shareholder, to make or contribute to a decision on the renunciation of our sugar quota.
The Deputy and others mentioned the possibility of recommencing the industry here. I quickly went through the report earlier today. The Commission, in its response to the European Court of Auditors' findings, mentions the court's finding that there is stability in the sugar regime and it appears to have no appetite for revisiting the issue of quota. Greencore, the quota holder, renounced Ireland's quota allocation and compensation was paid to the stakeholders in the industry. If the Commission was to entertain the idea of a quota allocation for this country, the question of the compensation paid on the renunciation of the quota would arise. The establishment of a sugar industry in Ireland would be the subject of a commercial decision. We have received no indication that any company or enterprise is interested in establishing such an enterprise. We have no indication that any particular company is interested in establishing such an enterprise in this country.
That is on the basis that it is for sugar production only. The price of sugar has spiked and sugar production in Brazil is at an all time high at the cost of our rain-forests and when we could be producing it. The auditors' report states that limiting to 85% of EU demand places a constraint on a strategic product, one that goes beyond just sugar. I challenge the Minister to revisit the matter with the Commission. The same situation obtained in the case of Mulder milk. The Minister should revisit the scenario.
Previously, money was paid out that did not preclude an issue from being revisited. The circumstances in this case have changed entirely. Will the Minister examine the auditors' comments on the 85% acting as an inhibitor in many ways? This issue goes beyond sugar production, although that element is important in its own right, given the prices.
Regarding the night of 20 February 2006, I understand the difficulty for the current Minister for Agriculture, Fisheries and Food in needing to account for a decision taken in 2006 at a meeting at which he was not present. Therefore, he is reliant on the officials. Ideally, the then Minister should be in the Chamber so that we could have a full and frank account of what occurred at the meeting.
Why did the Government shift its position? While we were considering the matter from the perspective of Mallow and the protection of jobs and a viable national industry, there were grounds for hope because of the blocking minority. The Tánaiste stated it was a group of 14 member states. I understood that, under the old regime, a blocking minority consisted of nine member states. Why did the Government shift its position from a blocking minority of nine to acceding to the cessation of trading as an industry? Something must have happened. Perhaps a vested interest intervened because it wanted to take the compensation. This could have been a minority group of larger growers, the Government or even Greencore, which might have decided that it was going to get out of the industry and applied political pressure on the Government to that effect.
The question of the golden share and related responsibilities comes into play in this respect. I understand that the 1990 legislation makes provision for the Minister for Agriculture, Fisheries and Food to acquire a special share in the holding company and to exercise the rights attached to that share. However, the Minister stated that he had no rights in the context of the share. Forgive me, as I am not a lawyer or a solicitor, but if the Minister is telling the House that we had a golden share with no rights attached to it in terms of the performance of the company, why did we have a golden share in the first instance? What was its purpose if we could not influence internal Greencore decisions on the compensation package and the industry's future in Ireland?
I will tell the House the reason. The Government did not care about the future of the industry. Vested interests had sufficient influence in Government circles to tell it to adopt the new negotiating position of taking the money and running. If we had the support of the other member states, we could have retained a blocking minority. If the contrary is the case, then the Minister should tell us.
I refer to the stand-alone paragraph which stated that we had a proficient factory - this is obviously a reference to the Mallow factory in point 30 as the Minister has stated. Has the Minister been in contact with the Commission regarding that specific point of the report? What has been the Commission's response to the Minister on that matter and on the report in general? Deputy Jack Wall has already stated that the decision had not been justified on the risk of lower prices reducing the supply of sugar beet to an uneconomic level. We did not really know what the true market would be, post-restructuring. My information in 2005 was that Greencore was going to proceed with production and move into a post-quota scenario and then see how the market would pan out. This was the impression given to me by senior people within Greencore at the time. In other words, even if the quota regime was not in place, the industry might survive for a year or two in a new market scenario. If after that time the industry did not survive, there might be a possibility it could diversify into ethanol and other such products. I ask for the Minister's view at this stage. Will I be allowed make another contribution later?
I utterly reject some of the argument put forward by Deputy Seán Sherlock. The Government was not influenced by any outside forces in its negotiations leading up to the decisions made at the end of November 2005. Ireland opposed the Commission's proposals in regard to the sugar regime. The Tánaiste, the then Minister for Agriculture and Food, Deputy Mary Coughlan, led a group of 14 member states who worked together and opposed the Commission's proposals. Not alone did the Tánaiste participate in the group, but she also chaired it. To my recollection, the group initially comprised 14 members, 13 others plus Ireland. Subsequently, it reduced to eleven member states, Poland, Italy, Spain, Hungary, Greece, Ireland, Finland, Lithuania, Portugal, Latvia and Slovenia. Coming to the time the decision was made, that group number had reduced very substantially. Deputy Sherlock recognised in his contribution that, at the time of the Council meeting, we did not have a blocking minority. The group had not stayed together. That was the position. The then Minister for Agriculture and Food was strongly opposing the Commission's proposals. In view of the fact that the Commission would have a majority to put forward its proposals, in the event of the Irish quota-holder renouncing Ireland's quota share, the Minister had set about getting the best possible compensation package for all stakeholders in the industry in this country. That is how the package was negotiated. It was obvious we did not have the support we needed to oppose and defeat the Commission proposals. That decision was a Presidency conclusion and there was not a formal vote as such. One or two member states may have indicated that they were opposed to the proposal. However, the majority were in favour of the Commission's stance. It is not recognised that the European Commission was obliged, as a result of decisions taken by the WTO and subsequently by a panel appointed thereby, to reform its sugar regime and that a quantum of 6 million tonnes of sugar had to be removed from the European production system.
No one is questioning the efficiency of the Mallow plant. If I am correct, I understand Greencore had made a substantial investment in the plant not long before the period in question.
In the background to the discussions in question is the fact that the protected price that was available up to the point to which I refer would - on foot of the WTO panel ruling and the European Union's obligations under international trade rules - no longer have been available. Greencore took a commercial decision to renounce its quota. When it did so, the then Minister, Deputy Coughlan, quite understandably, expressed her regret at the company's decision to close the factory. If I am correct with regard to the timeframe, this occurred very late in the season when farmers would have been making preparations in respect of the following season's crops.
In the negotiations relating to the compensation package that were under way at that time, the then Minister obtained a proviso that Ireland - if it availed of said package and if Greencore, as the quota holder, was to exit the industry - could still produce sugar for the following two years. Greencore chose not to take up that option.
It is important to reiterate that at every meeting which took place with the Council of Ministers, the EU Commission and the Presidency during the period in question, the then Minister and her officials made available the most up-to-date facts.
The Deputy is absolutely wrong. I reject that type of nonsensical remark. Such remarks are not worthy of a Member of this House. The Deputy should withdraw that baseless comment.
Deputy D'Arcy's comment is baseless in nature and he should withdraw it. Greencore made the decision to exit the industry. The then Minister fought for a good package for the various stakeholders in this country.
So the Deputy is stating that the beet growers of County Wexford should not have been compensated. I am surprised that a Deputy who represents the county would make such a statement.
Greencore held the quota share. I am sure no one is going to seriously suggest that it was not in possession of up-to-date information in respect of its activities. The situation was changing because the protected price would no longer be available as a result of the WTO's ruling. I reiterate that the then Minister and her officials had made available the most up-to-date statistics and data relating to the industry in this country before the relevant Commissioner, the then Presidency and the relevant Commission officials at every opportunity.
Deputy Sherlock inquired with regard to the special share. I must inform him that it is not a golden share. That phraseology is incorrect - it is a special share.
Deputy Doyle inquired about the powers conferred on the then Minister at the time. What was agreed did not confer on her the power to stop Greencore renouncing its quota and exiting the industry.
Will the Minister comment on the moot point which has been brought to our attention by the Court of Auditors - this relates to the period prior to the negotiations on compensation - in its special report? It is stated in the relevant part of the special report that "the impact assessment merely referred to studies which have ranked the sugar-producing regions according to the combined profitability of growers and producers, categorising the regions as: low, medium and high". The report further states:
The ranking was based on 2001 data for the EU sugar industry. However, the data had not been updated when the Commission made its proposal in 2005, notwithstanding that certain significant changes had taken place, such as increases in sugar beet yields in Spain and the United Kingdom and producer consolidation/rationalisation in Ireland.
This goes to the nub of the issue. Will the Minister comment on this matter? Is he stating that the Court of Auditors is completely wrong in its observation that the initial decision was based on out-of-date information? The decision to which I refer established the conditions in which all subsequent decisions were made and actions taken.
I wish to pose two further brief questions. Deputy Ned O'Keeffe stated earlier today that it would cost in the region of €40 million to establish a new plant. Does the Minister agree with that assertion? Will the Minister comment on the cost of importing sugar into this country? I understand that last year approximately €99 million worth of sugar was imported. Costs relating to molasses, transport and possibly ethanol are not included in that figure. Has the Minister given consideration to this aspect of the matter? My main question, however, relates to whether he agrees with the findings in the special report.
I am replying. Deputy Stanton cannot ask a question and then seek to answer it as well. I wish to quote from the reply by the Commission to the findings of the special report of the Court of Auditors. The Commission stated:
For reasons of efficiency and transparency, the Commission opted for a reform model in which the final decisions for keeping, reducing or abandoning production would be taken by individual sugar companies, against the background of a future characterised by substantially lower prices.
I referred earlier to the protected price regime and the fact that it was to be abolished on foot of the WTO decisions taken at the time and international trading obligations. The latter were agreed and the European Union was involved in the process relating to them. In its reply, the Commission also states:
Moreover, such an analysis would concern confidential aspects of private business, and comparisons between companies based thereon would not be exempt from controversy. The gains in competitiveness of the EU sugar industry after the reform are incontestable since operating companies now have to maintain profitability in a scenario of substantially lower institutional prices.
Again, this relates to the protected price.
I did not hear the comments made by Deputy Ned O'Keeffe on the news earlier today. I stand open to correction but I understand that when Greencore decided to renounce the quota the then Minister and the Department put to the company the proposal in respect of the possible establishment of an ethanol-processing facility at the site in Mallow. It was Greencore which decided not to proceed with such a project.
The decision on the part of Greencore to close the plant in Mallow was a massive blow to local farmers, the employees at the plant and the wider community. Greencore refused to make redundancy payments to the employees and developed a plan to build, on the site of the plant, what would ostensibly have been satellite town adjacent to Mallow. It was as a result of what it proposed in this regard that the company closed the factory.
When Greencore exited the industry in 2006 and closed the plant, there was a great deal of discussion regarding the establishment of another industry on the site. It was suggested that instead of producing sugar, the plant would be used to process a different product from sugar beet. There has been a great deal of discussion on local radio and elsewhere today with regard to the possibility of establishing another industry at the site. Is there any truth to what has been stated in this regard? Does such a possibility exist?
There is a great deal of misinformation abroad with regard to what happened and what decisions were taken during the discussions which took place at European Commission level prior to the negotiations to which the Minister referred. The Minister stated clearly the decisions which were taken and the information which was put on the record of the Commission by the Tánaiste and her officials. It will be very helpful for everyone to have the information about the arguments which were put to try to ensure Ireland continued to produce sugar on a long-term basis. Based on what the auditors came out with in recent days, irrespective of where we are, if the correct information had been available, would it have made a substantial difference to the decision to cease production of sugar in Ireland and wipe out an industry which had been of major benefits to communities in north Cork, Carlow and elsewhere over the years?
In regard to the latter part of Deputy Moynihan's question, one of the responses of the Commission on the auditors' report states:
The total level of quota renunciation estimated by the Commission is not based on the analysis of the profitability of individual companies but the result of the new macroeconomic conditions prevailing in sugar economics and the European Union, namely, the WTO panel decision and the increased access granted to certain sugar exporters.
The regime that existed at the time in regard to the sugar industry was put in place in 1968. The sugar quota was in existence before the milk quota. I do not know whether other quota regimes were introduced subsequently. The milk quota regime was introduced in 1984-85. Considerable pressure was put on the European Union to rationalise or reorganise the sugar quota regime prior to the discussions at the WTO at the end of December of that year.
It was the decision of individual companies to renounce the quota. The Commission did not decide it. Greencore made the decision to renounce the quota. In all the contributions made by the Tánaiste, who was the relevant Minister at the time, she outlined very strongly the history of the sugar industry in this country, its contribution from the point of view of farm incomes, the fact that it was an important crop from an agri-economic point of view and that it provided very valuable employment for those employed directly by the sugar company. Every aspect of those arguments were put as forcefully as possible to the Commission in Ireland's opposition to its proposals to restructure the quota regime.
As I said to Deputy Sherlock, when decision time came at those Council of Ministers meetings, we did not have enough people with us to have a blocking minority. The decision was going ahead. When a decision is going to go against one, there is a time to negotiate to get the best possible package put in place in the event of the quota holder renouncing the quota. Subsequently, Greencore renounced the quota. Built into the potential compensation package was the fact that it would be available for a further two years but production was still possible after that date.
A number of Deputies wish to speak and I am trying to call on everyone. There is limited time and I will call the Minister with five minutes of the debate remaining. I ask Deputies to keep questions short and park the preambles.
This issue centres on whether we accept this report. The Minister said the Tánaiste worked on it. Let us leave that to one side. Was the whole situation not flawed regarding Ireland's fight on this if the information provided was out of date? Surely if that was the case, we were going nowhere from the start. We could not win or get friends if that was the situation because obviously we were in a negative rather than a positive situation which weakened our case. I give the Minister the benefit of the doubt. I respect his honour. I ask him to go back to the Court of Auditors to determine the situation regarding the information being out of date and report back to us.
When did Greencore decide that was it and that it was not going any further? Did the Tánaiste know that before she went to Brussels? Was it decided during the visit? When was it decided? Is that the decision the Tánaiste had to renegotiate when she got the information? Did Greencore have to make a decision when all was done and the package was in place whereby it had to decide to continue on the other side? Did it make a decision before the final negotiations were finished?
I may have said "The Council of Ministers at the end of 2006", but I should have said "the end of 2005". The Tánaiste did not know what decision Greencore would take in advance of it announcing its decision. That is the factual position.
The compensation package which the Tánaiste negotiated very successfully for the country was put in place in the event of the quota holder deciding to exit the industry. In regard to Deputy Wall's point, the Court of Auditors report is not about Ireland's role in the sugar quota regime or the rationalisation or restructuring of it, rather it is about the Commission. It is not directed at us.
I will repeat again that the most up-to-date information was available to the Commission. It was submitted at every Council of Ministers meeting and meetings with the presidency and the relevant Commissioner at the time. In fairness, none of us would have had time to examine the auditors' report in detail as we would have liked to have done. There seems to be a view in the House that the Commission should have collected data on the productivity of the 200 sugar factories in existence at the time and picked out the least productive. That was not the approach taken by the Commission. It was a voluntary restructuring.
It was a voluntary restructuring approach. The approach involved the individual producer, that is, the processor or company, rather than the farmer. They are referred to in the report as "producers" whereas we would call them a processor or company. On Deputy Wall's question, which he has raised twice, I want to quote the response of the Commission to the report of the auditors. It is very important from the point of view of efficiency, profitability, etc. I want to put on the record of the House the success of the industry and the commitment of individual farmers, workers and the different processing plants over the years. There were plants in places other than Mallow which, unfortunately, closed.
The Commission stated:
For reasons of efficiency and transparency the Commission opted for a reform model in which the final decision for keeping, reducing or abandoning production would be taken by individual sugar companies, against the background of a future characterised by substantially lower prices. In addition, a financial incentive was provided by companies that decided to surrender quota. This model does not require an analysis of the current profitability and prospects of every individual sugar producer in the EU. Therefore, the Commission did not consider it necessary to collect such data on productivity and efficiency for the model chosen. Moreover, such an analysis would concern confidential aspects of private business and comparisons between companies based thereon would not be exempt from controversy.
It then goes on to refer to as incontestable the gains in competitiveness of the EU sugar industry after the reform. That is the reply of the Commission in response to some of the comments of the Court of Auditors.
Many of us here were brought up on farms and dealt with beet since the day we were born. We understand the importance of it to the local economy. We fought every way we could to ensure that Mallow would be kept open.
I am afraid, and I agree with the prognosis, that Greencore decided that it wanted to get out. When the subsidies went and Carlow was gone, Mallow was too far away from farmers and it was not profitable to do it.
There is a need for an explanation of what the Court of Auditors has done, and the Minister is doing that. It needs to be explained clearly that a mistake was not made there that resulted in what they did.
On 14 March 2010, a Deputy colleague of mine, not Deputy Stanton or Deputy Sherlock, on Cork local radio claimed that I signed off on the sugar industry in Cancun in 2003, along with the former Minister, Mr. Joe Walsh, and Mr. John Dillon.
I stated when Carlow sugar factory closed down, and when Mallow closed down, that it was a disaster. It was wrong for the country. It was wrong for the farmers and for the families of the workers. This was an industry that gave thousands of families and individuals work on a seasonal basis.
The elephant in the room is Greencore. It is not the Minister or the Government. If Fine Gael was in Government, I would be saying the same.
At the time, the Tánaiste, who was the Minister for Agriculture, Fisheries and Food, put on the record a clear explanation of how it went. Greencore are the mercenaries in this; the company decided it was getting out. It decided to get out because it wanted compensation but then greed took over. It saw an opportunity in Carlow. It brought up this grandiose planned called Gateway, and it did the same in Mallow. Not alone was it gilding the lily, but it was getting its compensation. It put Irish farmers and workers out of a profitable industry and denuded the country of a good rotation crop. It got greedy, and that is where the blame should lie.
Does this report give us any scope to go back to the Commission to get a quota and find those, be they farmers and whoever else, who would come into what is a profitable industry and start again in this country? I think we would find interest in it.
One of the matters I want to inform the Minister about is that no decision was made at the stage that Carlow was closed down regarding the decision of the Commission. The reality is the former Minister for Agriculture, Fisheries and Food said within a couple of days of her entering that Department that the decision on Carlow would have no impact on the closure of the industry. When Carlow went, the industry was gone. It does not matter whether the Minister likes that or not.
I agree with some of what Deputy Nolan said. In my view, however, there was a conspiracy because Greencore saw dollar, euro and pound signs. The company got the compensation and the then Minister facilitated it. She made it easy for it to put the steps in place. With Carlow gone, the only thing left to go was Mallow and that was easy. Greencore got the money and ran. The company was going to build towns and all the Government saw at that stage was the tax take from construction and development, and capital taxes and all that goes with it.
I am a beet producer who got compensation. It worked out at less than two years' profit and in the scheme of the things, it was nothing. The report asked if the reform of the sugar market has achieved its main objectives. The answer to that is "No", according to the Court of Auditors. I ask the Minister not to sell out other sectors of Irish agriculture in the same way as he, and his predecessors, sold out the sugar beet industry.
I will try to be brief. The Minister mentioned the special share. What was the purpose of that? Was it merely window dressing to justify the decision in the first place to sell a profitable public company?
Given that Deputy Nolan called Greencore mercenaries, and others have made similar allegations about conspiracies, does the Minister accept that the whole saga of the closure not only of Mallow, but also of Carlow, and the involvement of property speculators in that company at key points prior to closure decisions being taken needs a fuller and more detailed investigation than the time that was given to it today?
Would the Minister agree it is quite ironic that the destruction of the beet industry has ultimately resulted in a site that is either in NAMA or part of the reason the taxpayer must recapitalise the various banks, and that all we have left in Carlow today is a high chimney stack on a rather ugly-looking site? The best area in the country for growing beet was abandoned. Would the Minister agree that the alarm bell should have gone off at that stage with his relevant predecessors and some action should have been taken to ensure that the industry was preserved? Will this also be a lesson for Government in the future in that there must be a relationship between it and important industries?
Can the Minister give any hope to farmers in the Wexford, Carlow, Wicklow, Kilkenny and Kildare areas that they might be going back to dealing in a crop that was successful for a few generations?
The Everything But Arms Initiative was something of a fallacy in terms of a justification for the Government's position on the loss of an industry which goes back to the foundation of the State. The Minister, in his justification, weakens his own argument because the Everything But Arms Initiative and the ACP countries have not found the foothold in the European markets that they were supposed to get as a result of the restructuring of the sugar industry. The bottom line here is that what was a sustainable industry has been sold down the river but it was let go too easily.
This is a simple question. The answer is either "Yes" or "No". Does the Minister agree with the auditors' that the ranking, the Commission's decision made in 2005, was based on out of date data? Does the Minister agree with that statement, "Yes" or "No"?
Paragraph 91 of the auditors' report states that, although designed to be budget neutral, significant costs have arisen. The sugar reform was designed to be budget neutral, but the overall cost to the EU budget after the reform for the period 2007–13, which we are half-way through, is likely to be €1.2 billion higher than before the reform. Therefore, it has failed. It has not achieved its objectives for the consumer, the developing world producer or the Irish economy.
Most of the points raised cross over.
I stated at the outset that the EU was obliged to reform the sugar regime because of a WTO decision and, subsequently, a WTO panel decision. Europe was required to take a quantum of sugar production out of the system. That is the background to the Commission driving forward the programme of rationalisation and reorganisation.
The Commission, in its reply to the Court of Auditors, states that it takes the view that the new sugar market balance emerging from the reform, including the level of EU self-sufficiency, is in line with treaty provisions, that the treaty does not stipulate that the EU should necessarily be self-sufficient with regard to every agricultural product and that certain instruments built into the sugar regime would enable the EU to deal with situations of under supply. The Commission also goes on to state that it considers that the reform's objective of reducing the sugar price has been met. In the background is the decision in WTO, and the subsequent WTO panel decision.
I have heard Deputies Michael Ahern, Nolan and Moynihan speak often, as other Members of the House have spoken today and on many other occasions, about the importance of the particular industry not only to their own regions, but to the country in general. It is very important to reiterate that the quota was not renounced by Greencore - it was the quota holder - and compensation was fully drawn down for all the stakeholders. There is no mechanism for quota reallocation, even if the compensation issue was addressed if that arose. This is referred to in the Commission's comments also.
It is important to bear in mind that the reform was based on a voluntary restructuring approach by each sugar company. Greencore went ahead and participated in that restructuring. With regard to the WTO participation, the area of protected price had changed for the marketplace for the future-----
The Minister, Deputy Coughlan, succeeded in getting further additional compensation for our stakeholders. I am glad Deputy Sherlock reminded me of that initiative that benefited many people in his constituency, with the additional compensation that arose.
From the third year onwards, the key modifications were made to the overall 6 million tonne target and it was largely achieved, although a significant portion of quotas were also abandoned by producers who were not in the least competitive areas. That is the point.
The reform of the EU sugar regime was a difficult process for all concerned resulting in the closure of a traditional agriculture sector. It has unfortunately become the subject of this type of debate, much of which is ill informed. The purpose of the special report of the European Court of Auditors is to consider whether the reform of the sugar market had achieved its main objectives. As an eminent economist publicly stated, the Court of Auditors criticised the design of the reform on a number of grounds, but to conclude that the Irish industry could have remained viable in this scenario is an exercise in escapism. That is what an economist stated today following the report.
When the political support opposing the reform dissipated, Ireland secured the most advantageous support package possible. It has to be borne in mind that the package for all stakeholders was negotiated in the event of a decision being taken by the company involved to exit sugar production. The decision to cease sugar production was a commercial decision taken by Greencore plc. It is very important to put that on the record. The implication that seems to have been drawn is that the Irish plant had the misfortune to be hit by the approach of the Commission. The situation is - and it is very important - that it was a voluntary scheme and Greencore made the decision to exit the industry-----
-----and the protected price would no longer exist. I have clearly stated that the choice of exiting or staying in production was the decision of each sugar producing company. Obviously, it was for each company to take that commercial decision. Earlier, I dealt with the issue of the relevance of the impact assessment carried out by the Commission. I make it clear again that the Commission had the most up-to-date information on the position in Ireland throughout all of the negotiating process.
I dealt earlier with the issue of the relevance of the impact assessment carried out by the Commission. The Commission had the most up-to-date information about the position in Ireland throughout all of the negotiating process.
Ireland achieved the best possible outcome at the time, including a support package which was later availed of by the industry, including significant compensation to the sugar beet growers, as was needed by all of the people who worked in that industry. At the time, the Minister, Deputy Coughlan, did everything to support the industry.