Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

That is history, but that compensation was paid for the remainder of the current sugar regime which ends in 2015.

The Commission proposal as part of the CAP reform is that we will abolish sugar quotas in the EU after 2015. That would leave Ireland, or anybody else who wants to process sugar, free to do so and take their chances on the open market. That will not happen, however, because there are very powerful countries in the EU which want to see a continuance of sugar quotas beyond 2015. As a realist I believe that is likely to happen, perhaps until 2017 or 2018, and therefore I have made the case, both on and off the record, to the Commissioner in Council meetings and outside them that if we are to move a sugar quota regime beyond 2015 countries like Ireland, which is trying to put a case together for processing sugar again, should be facilitated in doing that if there is to be an increase in EU sugar quotas, which I believe there must be because there was a big sugar shortage last year.

In terms of the calculation for the people who are trying to put this case together and who have gone a long way in terms of getting investors, picking a suitable site and talking to farmers about their capacity for producing sugar, a great deal of work has gone on in this area and much credit is due to a number of people, in particular Michael Hoey from Country Crest and others who have shown leadership in this area. They need to know that Government is supportive of them in terms of trying to access quota for them but, ultimately, they will have to make the numbers add up in terms of making this work. That is possible. The rule of thumb is that if the price of processed sugar globally remains over ¤500 a tonne, the feasibility studies suggest that this is a viable proposition even given the capital expenditure that is required to build that processing facility.

The judgment call that must be made, however, is the impact on world sugar prices when quotas are lifted in the EU, potentially after 2015, 2017 or 2018, and whether there will there be a significant increase in production of sugar across the European Union which may reduce the actual price of processed sugar internationally because it is very difficult to compete in Europe with sugar that has been processed from sugar cane in Brazil, for example, just as it is difficult to compete with sugar cane on a series of other levels from an ethanol perspective as well.

My view is that my job is to be supportive of the people who are working hard to make a business case for a sugar processing and ethanol and biofuel operation around that and to support them in that but also to ensure that if and when that happens, it is built on solid foundations that will last for decades rather than being an industry that starts with a lot of positivity but cannot keep going because it is unable to compete with other parts of the world. There is a series of issues at play here but the fact that we are even talking about this and that people have put a significant amount of time and money into putting together very credible feasibility studies is a significant step in the right direction.