Dáil debates

Wednesday, 21 March 2012

3:00 pm

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Question 5: To ask the Minister for Agriculture; Food and the Marine if he will provide a stimulus for the sugar industry here; and if he will make a statement on the matter. [14690/12]

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I do not need to read a script as I am very familiar with the sugar industry as it was and, I hope, as it will be in future. Last summer I had two professional feasibility studies done on the building of a factory and relaunching a sugar industry in Ireland. This would be a sugar and ethanol industry. The groups which financed and drew up the feasibility studies did a good job in progressing a serious discussion on this issue.

For the past 18 months the European Union has experienced a serious shortage of sugar. At one stage, the price of processed sugar reached approximately €800 per tonne or twice the level at which it stood when Ireland exited the sugar business at the time of the EU reform of sugar policy which has been subsequently proved to be flawed. The European Union's sugar quota system will remain in place until 2015 and Ireland has been compensated for staying out of the sugar business until that year. The Commission is proposing to abolish sugar quota from 2015 onwards, which would allow Ireland to recommence processing sugar if it was commercially viable to do so. The rule of thumb, as the feasibility studies show, is that the price of sugar on the European or global market needs to exceed €500 per tonne for processing sugar in Ireland again to be a commercially viable proposition. We would also need to invest €300 million or €400 million to build a processing plant. If the price were to fall below €500 per tonne, the numbers would be difficult to stack up.

It is important that we do not provide subsidies to start up the sugar industry again only to find we must continue to subsidise it to keep it alive. As someone who delivered substantial amounts of sugar to a former factory in Mallow, I hope we will re-establish a sugar industry in this country, but it must be a commercially sustainable business. I believe this to be a strong likelihood and I am strongly supportive of the proposals. The industry, however, must stand on its own two feet commercially.

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I am aware of the Minister's interest in sugar beet. I view this issue from the perspective of creating an infrastructure to support job creation. One of the groups to which the Minister referred maintains that up to 5,000 jobs could be created. In addition to producing 150,000 tonnes of sugar annually, the sector could also help Ireland to achieve its 10% target for bio-fuels by producing 50 million litres of ethanol annually. A notable change in recent times was the indication given by the European Commissioner for Regional Policy, Johannes Hahn, that the European Union could provide support to reopen the Irish sugar beet industry.

While I note the Minister's comments on the changes that may take place after 2015, it is vital that we are ready and at the starting gate by that date. Will the Minister progress the process by engaging in preparatory talks and work and seeking to attract interest in this exciting proposal?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I concur with the Deputy. If we can access funding to cover the capital costs of building an infrastructure that can facilitate a sugar industry, we should consider the proposal. My responsibility is to ensure that post-2015 Ireland will have the capacity, from a quota point of view, to produce sugar again if it is commercially viable to do so. This will be challenging. While the Commission is proposing the abolition of quotas for sugar in 2015 in line with the abolition of milk quotas, the proposal is not supported by the majority of member states, most of which are seeking an extension of sugar quotas until 2020. While I am a strong supporter of the Commission's proposal, I am also a realist who accepts that a compromise date of 2017 or 2018 may be agreed for the abolition of quotas. Ireland has been compensated for staying out of the sugar production business until 2015. If the sugar quota mechanism is extended beyond 2015, the quota will have to be increased to address the shortage of sugar in the European Union. I will, therefore, make a strong case for allowing Ireland to access quota from a production point of view post-2015. It will be a political challenge to do that, but we will endeavour to do it until quotas go altogether, which will allow us do as we please.