Mary Coughlan (Donegal South West, Fianna Fail)

Tá lúcháir orm bheith anseo le cúpla focal a rá faoin tionscal siúcra in Éirinn agus faoin díospóireacht atá idir láimhe san Eoraip.

Sugar beet growing and sugar processing have a long tradition in Ireland dating back to 1926 when the first sugar factory was established in Carlow. The Government has always been very committed to the industry, both to sugar beet growing and sugar manufacturing. In 1933 the then Government acquired the Carlow factory and Irish Sugar came into existence. For many years Siúcra Éireann Teoranta, a semi-State body, was the only manufacturer of sugar in the country.

The manufacturing industry provides the essential outlet for the sugar beet crop which is a very important element in the agricultural economy and a valuable source of income to 3,800 farmers in the beet growing sector. On the manufacturing side, the industry has provided important employment opportunities at the sugar plants in Carlow and Mallow in addition to supporting employment in associated industries.

The most important element in the overall sugar sector is the EU sugar regime which underpins the entire sugar beet growing and sugar manufacturing industry in the community. The essential features of the regime are rules on prices and production quotas. The objectives of the current regime which has been in existence since 1968, long before Ireland joined the EU, are to guarantee a reasonable and secure standard of living and income to growers of sugar beet and sugar cane; to ensure a constant supply of sugar beet and sugar cane to the sugar manufacturing industry; and to ensure a continued supply of high quality sugar at reasonable prices to consumers, both industry and domestic.

Great credit is due to all involved in the industry in that they have consistently contributed to the delivery of all of these objectives. Growers receive a good return on their investment, the industry has a constant supply of raw material and the consumer has a guaranteed and secure supply of high quality sugar.

Under the EU sugar regime, Ireland has a quota for manufactured sugar of approximately 199,000 tonnes which amounts to roughly 1.1% of the total EU quota. The quota is available for use by the sugar manufacturing enterprises in the member state. In Ireland the quota is processed by Irish Sugar Limited, the only manufacturer of sugar in the country. Irish Sugar Limited places annual contracts with farmers to grow a specific tonnage of sugar beet sufficient to manufacture the quota. I compliment those involved in the industry on the fact that, in almost every year since we joined the European Union, the quota has been filled. There have been a few exceptions, mainly due to bad weather. This year, the 2004 harvest was very good and beet deliveries allowed for the manufacture of more than 220,000 tonnes of sugar, well above the quota.

Reform of the EU sugar regime is high on the EU agenda because of international pressures. These pressures fall under three main headings. The first is the WTO round. This will bring strong pressure on the European Union to allow increased access to our markets for all products including sugar. In addition, demands will be made to reduce the level of export refunds paid on Community products being exported to third countries. Second, Australia, Brazil and Thailand have taken a WTO panel action against the EU sugar regime on the grounds that there is cross subsidisation of EU sugar exports. The initial ruling is against the European Union. It has appealed the decision and the outcome of that appeal is expected in March or April 2005. An unfavourable ruling would have very serious consequences for EU sugar exports. The third heading is the Everything But Arms initiative which will allow sugar from the least developed countries, LDCs, to be imported into the European Union duty free from 2009 onwards. As the internal price of sugar in the European Union is considerably higher than the world price, the provision of unlimited access for cheaper LDC sugar will lead to a significant surge in imports, thus impacting on the production and price in the European Union.

The European Commission is expected to bring forward legislative proposals for reform of the sugar regime in May of this year. However, it outlined its broad ideas for reform of the regime in a communication to the Council and the European Parliament last July. These proposals include a reduction in two stages in the institutional price of sugar by 33% to €421 per tonne; a similar two-stage reduction in the price of sugar beet to €27.40 per tonne; partial compensation to farmers of 60% for the reduction in the price of sugar beet — the compensation to be part of the direct payment and subject to cross compliance; and in the case of quotas, a reduction of 16% across all member states is proposed. The transfer of quotas between member states is also envisaged.

It is generally acknowledged that reform of the EU sugar regime, which was not dealt with in the main CAP reform process in 2003 and 2004, is unavoidable because of developments at WTO level and other international pressures. However, the European Commission's initial reform ideas would, if adopted, have serious repercussions for sugar beet growing and processing in this country. I have made it clear in discussions in the Council of Ministers that the Commission's initial proposals are unacceptable.

Along with nine other EU member states, I signed a letter to the European Commissioner for Agriculture stating that the Commission proposals would have a devastating effect on farms and the industrial enterprises working in the sector. We accept the necessity to reform the existing regime but feel that the reform should aim at maintaining the existing distribution of sugar beet and sugar production in the entire EU territory. We believe that reform should be based on the following principles: an import system from third countries should be put in place which will ensure predictable and regular import quantities; the price reduction should be significantly less than what is currently proposed and should be implemented more gradually; the impact of the quota reductions should fall mainly on those member states that are net exporters of sugar; and the transfer of quotas among member states should not be allowed.

As I mentioned earlier, the Commission is expected to bring forward legislative proposals in May with a view to reaching agreement in the Council of Ministers before the end of the year. My overall objective in the forthcoming negotiations is to ensure the future shape of the EU sugar regime is consistent with the continuation of an efficient sugar beet growing and processing industry in this country.

I am conscious that the recent decision by Greencore to close its plant in Carlow, with the loss of 189 full-time and 137 "campaign" jobs, came as a shock to many people. I am obviously concerned about the personal impact these job losses will have on families. I have been in contact with my colleague, the Minister for Enterprise, Trade and Employment, Deputy Martin, and I am aware that Enterprise Ireland is actively looking at replacement jobs for the area. That said however, the decision to close the Carlow plant was a commercial decision taken by the company in light of the increasing competition in the sugar sector and taking account of the reality that changes will occur in the industry as a consequence of the reform of the EU sugar regime.

The trend towards rationalisation and increased productivity in the sugar sector has been evident throughout the European Union for some time, with the number of sugar plants decreasing by over 40% between 1990 and 2001. However, I am glad that Greencore's rationalisation programme involves an investment of €20 million to €25 million in Mallow, which clearly demonstrates a commitment to maintaining an efficient sugar processing industry in Ireland. I understand that work is to begin immediately on a substantial upgrading of the Mallow plant.

To facilitate the one factory operation, beet from the Wexford region will be diverted to Wellingtonbridge for transport to Mallow by rail. The company plans a new rail depot to be established in the Carlow region to assist beet growers make their deliveries. I understand that a planning application will be submitted to Carlow County Council shortly in this regard. I am confident that the company and the beet growers will be able to work out satisfactory arrangements to cope with this new situation.

As Minister, I hold a single special share in Greencore plc. That share has the same monetary value as any other share in the company. However, it has conditions attached which prevent the company from engaging in a number of activities without the prior written consent of the Minister.