Tom Parlon (Laois-Offaly, Progressive Democrats)

On behalf of my colleague, the Minister for Agriculture and Food, I welcome this opportunity to give Members an update on the implementation arrangements for the compensation package negotiated in the context of the reform of the EU sugar regime.

The new sugar regime comes into effect from 1 July 2006. The compensation package as a whole is worth an estimated €310 million to Irish stakeholders. The package is composed of three elements. The first element is the compensation to beet growers of up to 64% of the reduction in the minimum price for beet. This compensation, which is being incorporated in the existing single payment scheme and is payable from 2006, is worth approximately €123 million to Irish beet growers over the next seven years.

The second element of the compensation package is the restructuring aid covering the economic, social and environmental costs of restructuring the sugar industry, involving factory closure and renunciation of quota. In Ireland's case, this will be worth up to €145 million. The third element of the package is the diversification aid, which is worth almost €44 million in Ireland's case. This will be drawn down in the framework of a national restructuring programme to be elaborated in due course.

Currently, interest is focused on the second element of the compensation package — the restructuring aid — which is to be drawn down by means of an aid application to be submitted by the sugar processor following consultations with the beet growers. Following Greencore's decision to cease sugar production, it is anticipated that the company will submit an application for restructuring aid in the first year of the new sugar regime. The relevant Council regulation requires that such an application, including a detailed restructuring plan for the industry, must be submitted by 31 July 2006. A decision on the granting of the aid must then be made by the member state by 30 September 2006 at the latest. The timescale for implementing the restructuring scheme is very tight where restructuring takes places in the first year of the new regime, as in Ireland' s case.

The Government is committed to ensuring that the restructuring aid is implemented in a fair and equitable manner and strictly in accordance with the relevant EU regulations. The Government has appointed lndecon International Economic Consultants to provide it with independent expert advice on matters relating to the implementation of the restructuring aid. Last month the Department issued a public call for submissions from interested parties in regard to the implementation of the aid and these submissions will be subject to scrutiny by Indecon. The deadline for the receipt of submissions was 2 June.

The Council regulation provides that at least 10% of the aid shall be reserved for sugar beet growers and machinery contractors who have worked under contract with their agricultural machinery for the growers. That percentage may be increased by the member state after consultation with interested parties, provided that an economically sound balance between the elements of the restructuring plan is ensured. A decision on the percentage, taking account of all relevant factors, will be made in due course after the consultation process has been completed, the submissions have been examined by Indecon and following the adoption in the near future of the Commission regulation laying down the detailed implementation rules.

Senator Bradford raised the issue of the decommissioning of the Mallow plant under the terms of the EU package. He is aware that if the plant is not fully decommissioned, 25% of the aid will be lost. There is no consensus to the effect that this is the approach that should be taken.

While I have not been briefed, I am aware from my interest in alternative fuels that there is a question mark over the viability of sugar beet as a raw material for ethanol production. That is the reason we are losing our sugar industry. We had the option of continuing to grow sugar beet at the new price that would be available to us from the European Commission but it was deemed to be unviable by Irish beet growers. That is why major consensus was achieved in terms of adopting the package.