Friday, 1 July 2005
Sugar Beet Industry.
I wish to share my time with Senator Callanan. I thank the Chair for affording me an opportunity to speak on the crisis facing the Irish sugar beet industry, and the need for the Minister and her Government colleagues to ensure the strongest possible case is made to the Commission to secure this fine native industry.
I am glad the Minister is here to respond directly to this crucial issue. The sugar beet industry has helped to sustain Irish agriculture, particularly the tillage industry, since the late 1920s or early 1930s. At one time there were four sugar beet factories in Ireland. Now, as a result of the decision by Greencore to shut down the Carlow plant, only one such factory will remain, in Mallow. This afternoon I speak not only of a factory or those who work there or otherwise depend on it; I speak also of the broader industry and the interests of the Irish tillage sector. As the Minister well knows, if the proposals that have been put forward for the reform of the sugar beet sector are enacted, they will shut down the Irish sugar industry and bring the growing of sugar beet and the production of sugar in this country to an end.
I am aware that on 14 July the Minister will have her first set of discussions or negotiations in Brussels on this issue with her fellow European Agriculture Ministers. I demand, plead and confidently expect that she will fight the good fight at that level to have the initial Commission proposals rejected. There is no need for me to remind the Minister that if the proposals, with their substantial price cut and inadequate levels of compensation, are put in place, the Irish sugar industry will die. With it will go not just the livelihoods of the 4,000 or so growers but thousands of associated jobs in transport, factories and distribution. The tillage industry itself, with its whole basis of rotation, will be affected.
There has been talk of compensation, and the early figures being put forward by Brussels are entirely inadequate. However, even if we have the best compensation package available, I hope the Minister will put at the top of her shopping list during the talks the retention of a viable industry in this country. Compensation is but a short-term solution. We need a long-term plan for the sugar industry and must ensure the Irish agriculture sector continues to benefit from growing sugar beet in the future. I ask the Minister to put all her efforts and those of her Department into this project. In that sense, will the same level of political input at ministerial and prime ministerial level be required as with the milk quota negotiations of 1983? I ask that she use her resources to save the Irish sugar beet industry and keep sugar beet a part of Irish agriculture.
I thank the Chair for the opportunity to speak on this issue. I will allow Senator Callanan a moment or two to speak.
I thank Senator Bradford for agreeing to share time. I do not want to add much. Yesterday I asked for a postponement of this debate. I am glad that everyone agreed, since we must have a substantial debate in the fall of this year when the Houses return. I do not think there will have been a decision. We are aware of where the Government and the Minister stand, and we support that stance. In particular, I support what Senator Bradford has said, so there is no point in my expanding on it.
I am sad as a beet grower — I acknowledge my personal involvement — to see the farmers so divided. It is a great pity that the Irish nation is not united behind the effort for which the Senator has called and for which we know the Minister and the Government are working. We are not only talking about reform of the sugar industry. If we take into account Mr. Blair's campaign regarding the Common Agricultural Policy, we realise that we do not know the implications, if any, regarding sugar reform.
I asked for a postponement yesterday until October, and I hope the Minister will facilitate a debate at that stage. We will have more information, and the Minister will have come through the Council of Ministers. One hopes she will have met the farmers and hammered a little sense into them, as well as Greencore. We will be able to have a more informed and better debate. I ask the Minister to put that in her diary.
I thank Senator Bradford and wish the Minister well, since she is in an impossible position, perhaps the toughest that she will ever be in as Minister. I repeat that and call publicly for beet growers to unite.
I thank the Senators for affording me the opportunity to say a few words on this matter. I am encouraged by Senator Callanan's comment that this will be my toughest fight; I have not shirked my responsibilities thus far. I addressed the House on reform of the sugar regime last January. I am glad to have this opportunity to return to the subject in light of the Commission proposals.
The arrangements for the common organisation of the market for sugar have worked well. Since the regulation specifies, among other things, an intervention price for white sugar and a minimum price for sugar beet, it has provided a good basis for a successful and profitable enterprise for both growers and manufacturers. Industrial users have a constant supply of raw material, and the consumer has a guaranteed and secure supply of high-quality sugar.
The Irish sugar quota is 199,000 tonnes, just over 1% of the total EU quota. In almost every year since we joined the EU the sugar quota has been filled, and great credit is due to all concerned. The industry here has made an important contribution not only to the agriculture sector but also to rural development generally. We currently have approximately 3,800 sugar beet growers and one sugar manufacturing enterprise — Irish Sugar Limited. Approximately 800 people are employed in sugar manufacturing and associated industries.
As Senators are all aware, major challenges face the EU sugar regime. First, a new EU sugar regime must be negotiated and put in place by the middle of 2006. Of course, 2006 also marks the beginning of a three-year cycle of winding down the import duties for sugar from the 49 least-developed countries under the Everything But Arms agreement. Then there is the new WTO round. That will bring strong pressure on the European Union to allow increased access to our markets for all products, including sugar, to third countries. In addition, demands will be made to reduce the level of export refunds paid on Community products being exported to third countries.
Against that background the Commission outlined its broad ideas for reform of the regime in a communication to the Council and the European Parliament last July. Those initial reform ideas would have had serious repercussions for sugar beet growing and processing in this country. I made clear in discussions in the Council of Ministers at the time my opposition to the Commission's approach. Since then I have forged alliances with many like-minded member states. With nine other EU member states, I signed a letter to the EU Commissioner for Agriculture stating that the Commission proposals would have a devastating effect on farms and the industrial enterprises working in the sector.
While we accepted the necessity to reform the existing regime, we made clear that reform should aim at maintaining the existing distribution of sugar beet and sugar production in the entire EU territory. We expressed the view that reform should be based on the following principles: an import system from third countries should be put in place to ensure predictable and regular import quantities; the price reduction should be significantly less 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.
The situation worsened with the recent ruling by the WTO appellate body. It found that, although exports of non-quota sugar, known as "C" sugar, do not receive export refunds, those exports are cross-subsidised through the high prices paid for "A" and "B" quota sugar. The WTO ruled that exports of "C" sugar, together with the re-export of ACP sugar, must be counted against the EU WTO limits on subsidised exports. That ruling has significant implications for the export of EU sugar.
In very round figures, the EU produces 20 million tonnes of sugar annually and imports 1.9 million tonnes under preferential agreements with the African, Caribbean and Pacific countries. EU consumption is approximately 16.5 million tonnes. That means that, on current production, the EU needs to export around 5.5 million tonnes of sugar a year. The recent WTO ruling means in effect that the EU can export up to 1.27 million tonnes a year only.
In January I advised the House that the Commission's formal legislative proposals were expected in May. Those were published on 22 June 2005. While it was generally accepted that the WTO ruling on subsidised exports would mean that more radical reform proposals would be put forward by the Commission, the proposals are even more severe than anticipated. The main elements are as follows. There would be a reduction of 39% in the price of sugar and 42% in the price of sugar beet. That would bring the price of sugar to €385.5 per tonne and the price of sugar beet to €25.05 per tonne. Compensation for farmers would be set at 60% of the drop in the support price and be paid as part of the single farm payment.
While no compulsory quota cuts are proposed for four years, and the cross-border transfer of quota has been dropped, a new element in the proposals is the concept of a voluntary restructuring scheme. Under the scheme, funding is proposed for factory closures and the renunciation of quota.
The scheme is to run for four years and provides a high degressive per tonne aid for factories wishing to cease production. The scheme will be resourced from a central fund to be provided by levies on all sweetener quota, that is, all quota for sugar, isoglucose and inulin.
The proposals are totally unacceptable in their present form. It is unprecedented for the Commission to make proposals which could lead to the demise of an entire sector in a number of member states including Ireland. The level of price cuts proposed are such as to make sugar beet production uneconomic. The restructuring scheme is inequitable. It is not sufficiently recognised that the closure of a sugar factory would have huge implications for sugar beet growers. Apart from running counter to the expressed views of many member states, the proposals for price reductions have not found favour with the least developed countries.
I expressed these serious concerns about the proposals when I met Commissioner Fischer Boel on 23 June, the day following their publication, during her visit to Ireland. Negotiations will commence in earnest when the proposals are presented to the Council of Ministers later this month and will continue over the coming months. My overall objective is to ensure the achievement of a more balanced agreement which will take Irish interests into account. There is no doubt these will be difficult negotiations given the severity of the proposals and the pressures for reform.