Seanad debates

Wednesday, 2 November 2005

7:00 pm

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
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I welcome the Minister of State, Deputy Browne, to the House. Coming from Wexford, he is familiar with the problems that have developed over the last number of years in the sugar beet sector. Many producers in his neck of the woods in Wexford and in my area of Kilkenny and Carlow, have been affected by these problems, not least by the closure of the sugar factory in Carlow.

There are a number of important issues that must be resolved as soon as possible. The Government retained its golden share in Greencore after its privatisation in early 1990. My understanding, and that of most farmers at the time, was that the share was kept as an insurance policy, to influence the future direction of the company and to ensure that sugar beet production remained a profitable and important part of the agricultural sector. However, it became clear, following the announcement of the closure of the factory in Carlow, that the golden share had no real effect in terms of influencing the decision made by Greencore. Why was it necessary to keep the golden share if it did not have any bearing on the outcome or, if it did have some bearing, why did the Minister for Agriculture and Food not use her position to ensure that the plant in Carlow remained open? It is clear that it was a profitable business which had an important economic impact on Carlow, its immediate surroundings in the south east and, indeed, further afield. In fact, it was also important for beet producers throughout the northern part of the country.

The ownership of the quota is an issue which has still not been resolved. It is an issue that must be resolved urgently and as favourably as possible, vis-À-vis the producers. It is apparent to me and to all sugar beet producers that the ownership of the quota rests with them. However, there is a question over whether the Government, Greencore or the producers own the quota. Approximately four years ago, a scheme was introduced whereby people purchased quota from those who wished to get out of sugar beet production. At that time, a number of people sold quota, received payment and paid tax on the earnings from the disposal of their quota. Following from that, it seems clear that the quota is an asset that belonged to those producers. It is important that it is sorted out, for once and for all, and that the ownership of the quota resides with the producers and not with the company.

Another area of concern is the World Trade Organisation talks, which will resume shortly. It was reported in the media yesterday that, rather than seeking a 39% price cut from producers, the European Commission will set a new target of a 50% price reduction, as part of the WTO negotiations. Whatever about production continuing with a 39% drop in price, it is obvious that if prices drop by 50% the sugar beet sector in this country will disappear completely.

The major problem I have with the decision to close the Carlow plant is that it was taken prematurely. It was taken before the sugar beet proposals had been finalised. In effect, Greencore held up the white flag before those talks were concluded. In doing so, it has put the sector and the producers on the back foot. The Minister of State will be familiar with the situation that has arisen from the plant closure. Producers are being forced to transport sugar beet themselves from the point of production to Mallow, which is a considerable distance from where I come in south Kilkenny. I spoke to a contractor yesterday who told me that he and his son drove from the village of The Rower in south Kilkenny to Mallow, on tractors, with a load of sugar beet each and returned that night. That is an uneconomic prospect for producers in that part of the country. It is an extremely long round trip to undertake.

The Government must be under no illusion about the significance of this sector and the urgent need to answer the vital questions still hanging over the heads of the producers.

Fergal Browne (Fine Gael)
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I thank Senator John Paul Phelan for raising this matter and am pleased to have the opportunity to clarify several issues.

The Minister for Agriculture and Food holds a special share in Greencore PLC. That share has the same monetary value as any other share in the company but has conditions attached which prevent the company from engaging in a number of activities without the prior written consent of the Minister. In summary, the purpose of the special share is to prevent the disposal of the controlling interest in Irish Sugar Limited, or a certain percentage of the sugar assets, and to prevent a single shareholder or group of shareholders from gaining control of Greencore PLC.

Under the EU sugar regime, each member state has a quota for manufactured sugar. There is no quota for sugar beet. The EU regulations stipulate that the quota must be made available to the sugar manufacturing enterprises in the member state. Accordingly, in Ireland the entire sugar quota is processed by Irish Sugar Limited, which is the only sugar manufacturer in this country. Irish Sugar Limited places annual contracts with farmers to grow a specific tonnage of sugar beet sufficient to manufacture the sugar quota.

Ownership of the sugar quota had never been an issue in the past because the relevant EU regulations do not provide for the buying and selling of quota. Speculation about quota ownership only arose when the Commission, in July 2004, raised the possibility of cross-border quota mobility, in the context of its initial thinking on reform of the EU sugar regime. Several member states, including Ireland, voiced strong opposition to the idea of cross-border mobility and I am pleased to say that it does not form part of the Commission's legislative reform proposals, which were published in June. In any event, the European Commission has confirmed, in the context of the proposals for reform of the EU sugar regime, that the quota is not an asset owned by the member state or any other party but is simply a mechanism for regulating the market.

The Commission's proposals for sugar reform were discussed at the Council of Ministers meeting last month. Ireland is among 11 member states that have major difficulties with the proposals and, in this context, we submitted a joint ministerial letter to the Commission in advance of the formal discussion at last month's Council meeting, setting out our objections to the proposals. Negotiations will become more intensive over the coming weeks and the proposals will be considered by the Council again later this month. Given their severity, it is clear that the negotiations will continue to be difficult but the Minister will resolutely pursue our overall objective of achieving a more balanced agreement which will take Irish interests into account.

Photo of John Paul PhelanJohn Paul Phelan (Fine Gael)
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I accept that the Minister of State may not be in a position to respond on behalf of the Minister for Agriculture and Food but I feel that the presence of the golden share gave her an opportunity to become more involved on the issue of the closure of the plant in Carlow and to ensure that the sector remained viable, rather than raising the white flag, which is what happened with the plant's closure. I urge the Minister to maintain the pressure and up the ante in this regard.

This product goes right back to the foundation of the State. The people who originally set up the sugar industry had a vision to try to develop agriculture in this country. This was a success from the time the sector began in the 1920s. It is still a big part of the business activities of a large number of farmers. We cannot lose sight of the fact that the interests of these people must be protected at all times. I urge the Minister to maintain the pressure on her colleagues in Europe to ensure production in this country is secured into the future.

Fergal Browne (Fine Gael)
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As someone who comes from one of the great beet growing areas in the country, I attended many meetings with the Minister. These included meetings with Cork beet growers, Wexford beet growers, south-east beet growers and the IFA regionally and nationally. The Minister is very aware of the importance of the sugar beet industry to farmers generally, the beet growers, which is a viable industry, to workers, contractors and hauliers. It is a unique industry in that whatever negotiations the Minister concludes in Brussels, which I hope will be in the best interests of Ireland, she must take into account all the different sectors involved in the industry.

I appreciate the Senator's support and I assure him that the Minister will be fighting on behalf of the Irish beet growers and farmers on 22, 23 and 24 November.