Brendan Smith (Cavan-Monaghan, Fianna Fail)

I thank Senator Bradford for raising this important issue and for his considered contribution to the debate. This is the third time I have addressed the House on this issue in 2005. On the first occasion Senator Mansergh made an important contribution. This is a matter which has understandably exercised the minds of Oireachtas Members of all parties during the year.

The recent agreement by the Council of Agriculture Ministers on the reform of the EU sugar regime was the culmination of a protracted and difficult negotiating process. The outcome, from Ireland's perspective, was the best possible deal in the circumstances.

The reasons reform of the sugar regime could no longer be postponed are well known. As well as the increasing internal EU pressures to bring sugar into line with the other agricultural sectors, there were also huge international pressures. These fell under three main headings, the everything but arms agreement, EBA, the WTO Doha Round of trade negotiations and the ruling by the WTO panel against aspects of the EU sugar regime, following a complaint by Brazil, Thailand and Australia. The recent decision by the WTO arbitrator that the EU must implement the panel ruling by next May added to the pressure for early action. There was also considerable support for the ambition of the UK Presidency to achieve political agreement ahead of this month's WTO ministerial meeting in Hong Kong.

The sugar regime in its current form expires at the end of June 2006 so an early decision was needed on future arrangements to avoid a legal vacuum from next July. While it is over a year since the Commission first outlined its thinking on the future shape of the sugar regime, the formal legislative proposals only emerged at the end of June 2005. These proposals turned out to be even more severe than anybody had anticipated and they went even further than the Commission had initially envisaged.

From the outset, the Minister for Agriculture and Food, Deputy Coughlan, availed of every opportunity to highlight the serious repercussions that the reform proposals would have for the Irish industry. Beet growing has long been a valuable cash crop for Irish farmers, as well as playing an important role in the tillage cycle as a break crop. In Brussels, Ireland played an active role in a group of 11 member states which had common cause in opposing the Commission's proposals. Along with her ministerial colleagues from these countries the Minister made joint submissions to the EU Agriculture Commissioner, the most recent one just before the formal discussions of the proposals at the October Council of Ministers meeting. Furthermore the Minister engaged, as did our officials, in an intensive round of discussions with the European Commission, the Presidency and other member states with a view to modifying the proposals to take account of Ireland's particular circumstances. Throughout this period, the Minister kept in close contact with the representatives of the Irish sugar sector, at both production and processing levels.

On 24 November, after three days of intensive negotiations in Brussels, the Minister for Agriculture and Food, Deputy Coughlan, had to make a judgment on what was the best possible deal for Ireland, taking account of the negotiating positions being adopted by other member states. The outcome of the negotiations represents the best possible deal that could have been achieved and is a considerable improvement on the Commission's initial proposals of last June.

From Ireland's perspective, the main features of the agreement, as already announced, are a lower reduction in the support price of sugar than originally proposed, 36% instead of 39%; a phasing-in of the corresponding reduction in the minimum sugar beet price over four years, instead of the two-step reduction 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 once-off payment worth almost €44 million exclusively for beet growers in the event that sugar beet production ceases in Ireland; and an aid package of up to €145 million for the economic, social and environmental costs of restructuring the Irish sugar industry involving factory closure and renunciation of quota. In the event that sugar production ceases in Ireland, a once-off payment of almost €44 million would be available for growers. The restructuring fund of up to €145 million would also become available to provide compensation for the economic, social and environmental costs arising from factory closure. The agreement provides that at least 10% of the fund shall be reserved for sugar beet growers and machinery contractors to compensate notably for losses arising from investment in specialised machinery. This amount may be increased by member states after consultation with interested parties as long as the financial breakdown of the elements of the restructuring plan is kept balanced according to a sound economic proposal.

The 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. Pending the publication and adoption of the European Union relevant regulations, it is not possible to provide any further information but as with the earlier phases of CAP reform, the Department of Agriculture and Food will make timely arrangements for implementing the new regime in due course.

I assure Deputies Bradford and Mansergh and other public representatives that the Minister for Agriculture and Food, Deputy Coughlan, and the Minister of State, Deputy Browne, have had numerous detailed meetings with representatives of the various organisations with a stake or interest in this industry. The Minister has met the main farming organisations since the Council of Agriculture Ministers, as has the Minister of State, Deputy Browne. I know this is an important issue in a number of counties. Senator Bradford requested that the Minister and Minister of State should maintain contact with all the stakeholders and he can be assured that, despite the busy diary and schedule of commitments which the Minister has, she will continue to consult with all the relevant players in this important matter.