Darragh O'Brien (Fianna Fail)
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I thank the Minister for being present today as I am aware he is under pressure and has a series of meetings.

Simon Coveney (Cork South Central, Fine Gael)
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That is okay.

Darragh O'Brien (Fianna Fail)
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I will not detain him. I apologise for the mix-up that occurred previously. The Minister is familiar with the plans and proposals on the rejuvenation and re-establishment of the Irish sugar industry and its potential for jobs.

Most independent people believe there is the possibility of creating 4,500 jobs over time in this industry time. We import 80% of our sugar from British Sugar. The Minister is entering into a phase of serious negotiations on the Common Agricultural Policy, CAP, reform. As the compensation scheme is due to end from 2015 I ask the Minister to give me an update on whether the Government is seeking 1% of the quota for Ireland. I read with concern today in the farming supplement in the Irish Examinerabout a decision made by the European Union Commission to reduce the maximum target for crop-based biofuels and bio-liquids to 5%. Will that have any effect?

I heard the Minister say on RTE radio recently that he is broadly supportive of this move. It is a major opportunity for us. Thousands of people here are interested in it. It would provide an additional line to our farmers and those involved in tillage also, particularly in the event of inclement weather which we have experienced recently. We have grown sugar beet here. It can be done, and it would have the effect of reducing costs for many companies here that use sugar as a main part of their ingredients, both in the drinks industries and others, which import from other countries. I am interested to hear the Minister's views. Will this be part of the Government's negotiations on the CAP? I thank the Minister for attending.

Simon Coveney (Cork South Central, Fine Gael)
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I thank the Senator for raising the issue because it is relevant. There are many interests that for some time have been discussing whether it is possible for Ireland to start processing sugar again from sugar beet. As somebody who has driven many tractors and trailers with sugar beet into what was previously the Mallow factory, when I worked on a farm in Mallow, and on our farm at home for a while I have a good appreciation of how important the sugar industry is for the tillage sector as a break crop, a cash crop, a crop that does not rely on any payments and a crop that produces cash at a time of year when farmers want it, which is in the autumn in the build up to Christmas.

I have been as supportive as I can be of both feasibility studies that have been put together in the past six months from two different groups, both with a view to exploring the possibility of growing sugar beet for sugar processing in Ireland and putting a business case together for the redevelopment of a sugar processing sector. Both of those feasibility studies were impressive, and I spent quite some time talking through them and so on with both teams.

It is important for me to emphasise that if we are to have a sugar industry re-emerge here we must ensure that it is an industry built on solid foundations in terms of the financing of it and the business plan for it. It is something I would really like to see happen but the business case is the most important issue. My job as Minister for Agriculture, Food and the Marine is to ensure that if a business case can be made for spending the guts of ¤200 million or ¤300 million on putting a new processing facility in place Ireland has a quota to be able to produce sugar, if there is still a quota regime, or that we can move away from the limitations of a sugar quota regime within the European Union as soon as possible.

In 2005, when there was a fundamental change in EU sugar policy, Ireland got out of the sugar processing business and significant compensation was paid to encourage us to do that. I not want to go into the history of that but I had a big problem with it at the time.

Darragh O'Brien (Fianna Fail)
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Me too.

Simon Coveney (Cork South Central, Fine Gael)
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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.

Darragh O'Brien (Fianna Fail)
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I thank the Minister for his commitment to this issue and I know he will be open to any further queries or ideas we may have on it. It is clear from his comprehensive response that not only does he fully understand but he fully appreciates the potential for jobs within this industry and for a reduction in costs. I thank him for taking the time out of his schedule today to come here; I know he had to leave a meeting to attend. I look forward to talking to him about it again in the very near future.

Simon Coveney (Cork South Central, Fine Gael)
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I will keep the House updated if there are any significant changes in policy.