John Paul Phelan (Fine Gael)
Link to this: Individually | In context

With your permission, a Leas-Chathaoirligh, I wish to share time with my colleague, Senator Bradford.

Paddy Burke (Fine Gael)
Link to this: Individually | In context

Is that agreed? Agreed.

John Paul Phelan (Fine Gael)
Link to this: Individually | In context

The purpose of raising this matter on the Adjournment is to get further information on the current position vis-À-vis compensation, primarily for producers but also for contractors, for the sugar beet sector. We have had many debates and arguments in this House about how the Irish sugar beet industry ended up going into decline and closing, and we on all sides of the House very much regret what happened.

It was disclosed a few of months ago that a number of funds would be put in place for distribution from the European Union to those who were involved in the sugar beet industry in this country. There is a fund of in excess of €140 million for restructuring which includes a proviso that a minimum of 10% be given to producers and contractors, and a €45 million fund for diversification. In addition, of course, the single farm payment applies for producers into the future.

Those involved, as farmers in producing the crop and as contractors in extracting and transporting sugar beet from different parts of the country to the two last plants in Carlow and Mallow, have a considerable interest in knowing how exactly those two funds will be distributed. The Minister for Agriculture and Food, Deputy Coughlan, has tried to say that she is not in full control of this matter but my understanding is that the final decision rests clearly with her. I have been told that in late summer or early autumn a decision will be made and that at present she is in receipt of representations from different interested groups and parties.

It is my firm view that virtually all of both funds should go to the producers and the contractors rather than to Greencore, which appears to have an entitlement to the restructuring fund of over €140 million. It would be a travesty if the company which has played a major part in the downfall of the sugar industry in this country were to be the main beneficiary of the restructuring fund. I urge the Minister to ensure that is not the case, and that the primary producers and contractors would benefit most from any restructuring fund when it is eventually disbursed.

Paul Bradford (Fine Gael)
Link to this: Individually | In context

I thank Senator John Paul Phelan for sharing time with me. I share the sentiments he has expressed in terms of how the compensation should be allocated. The Minister has advised that decisions may not be made before the autumn. The one issue that was clarified by Brussels is that a minimum of 10% of the restructuring fund must be given to producers and contractors. We certainly want to see that 10% more than exceeded and the closer the figure is to 100%, the better.

I seek clarification from the Minister of State on one issue. The Minister spoke on this point previously, as did the EU agriculture Commissioner when she addressed the Dáil some weeks ago. Under the disastrous agreement signed in Brussels to shut down the Irish sugar industry, we also appear to have agreed to a provision whereby, if the Mallow plant is not physically razed to the ground, the €145 million restructuring fund will not be paid in full and a deduction would be made from it. This is inexplicable and the matter requires to be urgently reviewed

A declaration was made at the last EU summit by the Taoiseach, Deputy Bertie Ahern, and his colleagues across Europe that one of their political and economic priorities for the current year would be the support of alternative energy projects. While that statement was laudable, it appears that European Ministers for agriculture have signed up to an agreement to the effect that farmers in the State would be penalised if we tried to use our decommissioned sugar factories for the purpose of producing alternative energy. We could validly ask if some derogation could be provided from this agreement. The majority of the fund of €145 million must be paid to the farming community which produced the sugar beet and the contractors whose livelihoods have been ruined.

The Mallow plant could be used for the production of alternative energy. This possibility is now being examined by Cork County Council. The IFA has also set up a committee to investigate alternative energy projects. All of this is welcome but it is impossible to defend the decision that in order to claim the full amount of compensation we must not just decommission the factory in Mallow — which has already happened but raze it to the ground and return the area to a greenfield site. I urge the Minister of State, Deputy Parlon, to use his good offices and that of his senior Ministers to try to bring about a change of heart in the European Commission in terms of that particular decision.

The Minister of State is aware from his current and former jobs that the aim of the sugar proposals was to reduce the production of white sugar in Europe. Ireland is now reluctantly playing its part in that respect. We will no longer produce white sugar and our sugar industry is, effectively, finished. The factory has been decommissioned for the purpose of processing white sugar but it defies logic that a factory which with a certain degree of modification could lead the production of biofuels in this country must be knocked to the ground in order to qualify for full compensation. I ask the Minister of State to reflect on this matter and see if we could make some sense out of that nonsensical provision.

Tom Parlon (Laois-Offaly, Progressive Democrats)
Link to this: Individually | In context

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.