Vol. 474 No. 4
18 Mr. Lawlor asked the Minister for Agriculture, Food and Forestry if he has satisfied himself that the monopoly enjoyed by Greencore in relation to the processing of sugar beet is not being used to the disadvantage of farmers. [3154/97]
20 Mr. Lenihan asked the Minister for Agriculture, Food and Forestry if he has satisfied himself that the monopoly enjoyed by Greencore in relation to the processing of sugar beet is not being used to the disadvantage of farmers. [3155/97]
24 Mr. Hyland asked the Minister for Agriculture, Food and Forestry if he has satisfied himself that the monopoly enjoyed by Greencore in relation to the processing of sugar beet is not being used to the disadvantage of farmers. [3152/97]
52 Dr. McDaid asked the Minister for Agriculture, Food and Forestry if he has satisfied himself that the monopoly enjoyed by Greencore in relation to the processing of sugar beet is not being used to the disadvantage of farmers. [3156/97]
70 Mr. Killeen asked the Minister for Agriculture, Food and Forestry if he has satisfied himself that the monopoly enjoyed by Greencore in relation to the processing of sugar beet is not being used to the disadvantage of farmers. [3153/97]
I propose to take Questions Nos. 18, 20, 24, 52 and 70 together.
Ireland has a total sugar quota of 200,200 tonnes which is administered by the Greencore Group, the sole manufacturer of sugar in the country. Under the quota arrangements Irish Sugar plc., a subsidiary of the group, places contracts with farmers to deliver agreed tonnages of sugar beet. In purchasing the beet, the company is required to pay at least the minimum price specified by the EU, which is set annually. Payment above this is a matter for negotiation between the company and the growers' organisation.
In this context, I recently met representatives of both the beet growers and Irish Sugar. I understand that the price agreed in 1996 was above the minimum prescribed price and compares favourably with the price paid in competitor member states.
I take it from the Minister's answer that he is aware of the grave difficulties between the beet growers and the company, and that a "grow no beet" strike is more imminent every day. Does the Minister agree that this would be a disaster for the economy and the 25,000 people involved in beet growing? What was the result of his meeting with the growers and the company? What are his proposals? Does he intend to intervene in this substantial dispute?
The difficulties between the growers and Greencore are not new and relations have probably deteriorated. The growers' representatives have stated that their disquiet relates to the substantially increased profits of Greencore. They say that because of technological developments the company can now achieve higher sugar extraction rates. The company extracts sugar from tops, but excludes tops in declaring the weight of delivered beet, and the growers are looking for extra compensation for these factors.
I understand that there was a conference in Cork on 23 January where these points were forcefully made to the managing director of Irish Sugar. The company position is that its profitability has increased because of substantial investment in plant and productivity. It says it has a requirement for reinvestment to secure the future viability of the industry, that it must compete with UK and French companies and that it must remain competitive. The role of the Government is quite clear. It is no longer a shareholder of Irish Sugar. This is, therefore, a matter for free collective bargaining.
I have also raised questions about rumours and disquiet because of the level of subletting of quota. This is not allowable, and quite intricate arrangements seem to be in place. I am anxious that a system be put in place for a reserve to allocate that. My job as Minister is to ensure that the sugar company complies with EU regulations. I do not, therefore, have a legal case to oblige the Irish Sugar company to pay more, but I would like to see this matter resolved in an amicable way.
I am disappointed that the Minister chickened out of going to the national conference in Cork.
I could not get a pair from Fianna Fáil.
The Minister should not blame Fianna Fáil. He could have travelled by air.
The Minister was able to be there without travelling at all.
The golden share is vested in the Government, in the Minister's department. That is part of the problem where the quota is not transferable. If the golden share is vested in the Department, why should it not shed that responsibility and give it back to the growers to whom it lawfully belongs?
There are major problems as a result of two devaluations in the green pound in recent months in respect of which farmers have not, to date, been compensated. If the Government can find £100 million to compensate farmers in respect of all other commodities, including sugar beet, the row with the sugar company and Greencore will be put to bed, but not until then. The Minister is aware that beet prices dropped substantially this year, and the new harvest will be in serious difficulty because of the revaluation. Beet growing will become practically uneconomic if there is not an adjustment in the price.
The Deputy is being overlong.
The Government must rescue our farmers and put compensation in place for the green pound revaluation which has occurred because the Government tracked the wrong currency.
I certainly do not agree that sugar beet growing is uneconomic. All the studies I have seen show it is the second most profitable form of agricultural production.
It used to be.
If anyone wants to get out of sugar beet production I know many people who would take up their contracts overnight.
I know a few myself.
That is a flippant argument.
The position on the revaluation is that there will be detailed compensation across the agri-commodity sectors, as provided for in the agri-monetary rules. That sum is currently in the process of being negotiated by my officials. Obviously, given the difficulties of the beef sector, I am looking at the question of further resources being made available, along with the BSE compensation, as I am very anxious to put together a comprehensive package of compensation based on the development of prices over the coming months. However, there will be no unnecessary delay and, of course, those beet growers will have their proper entitlement back dated. There was no question of chickening out.
The Minister referred to beet tops, from which I assure him sugar has always been extracted. I agree with him there is now a greater extraction rate because of technology. Does he agree that some payment should be made to farmers for sugar extracted from the tops? No such payment is being made. Does the Minister accept he has a legal right and obligation to ensure farmers are paid for that commodity?
In case the impression is given that this is greed on the part of farmers because they see a company making more money and want to get a slice of the action, that is not the case. Has the Minister been told that the costs of sugar beet production have increased substantially? Farmers feel that if profits increase they should, at least, have their costs covered, which is why they are asking for an increased payment. I accept what the Minister said about how there are people at the moment seeking contracts. What are his concerns in relation to the 25,000 people involved in the industry?
My understanding is that there are some 5,000 beet growers.
I am talking about the people in the wider industry, not just sugar beet growers.
I meant growers.
A former colleague of the Minister, Liam Cosgrave——
Let us hear the reply, the Deputy has had a good innings.
That was a while ago.
I am quoting from good sources.
The Deputy raised the point that I had a legal obligation to ensure farmers got a fair return vis-à-vis the tops of sugar beet. My information is that the sugar company is complying with all its legal and EU requirements. I want to make it clear that there is no legal obligation on me.
The Minister is dodging.
In 1994 Greencore's pre tax operating profit was £48.6 million and after tax it was £39.6 million. The sugar activity accounted for more than half of that amount. During the debates in this House when the sugar company was privatised into Greencore — a decision which we did not oppose — the concept of a golden share was not there to act as an arbiter on price.
I never said that.
None of my predecessors, including Deputy Joe Walsh and Deputy O'Kennedy, who have operated since it was privatised have seen their role as arbitrating on price. Essentially, we have no statutory function in that regard. The role of the golden share is in relation to an overseas acquisition and the mobility of the sugar quota out of the country. The golden share is to protect the national sugar quota of A, B and C sugar. However, the sugar quota is managed by Irish Sugar, not by me. I want to make that clear. The situation is similar to that in other member states.
The quota is vested in the country.
The difference is that there is more than one sugar manufacturer in other member states whereas Greencore has an effective monopoly in this country. The management of Greencore have an obligation in a monopoly situation to do everything in their power to deal with the real and perceived difficulties of growers.
The disadvantages caused to farmers because of Greencore's monopoly have been mentioned. Has the Minister addressed the disadvantages it causes for consumers? Will he indicate the difference in prices in Ireland, Britain and the other EU member states? It is the consumer who will lose or gain at the end of the day.
The price of sugar to the confectionery industry and consumers is dictated by the EU sugar regime rather than by the profitability of Irish Sugar. There is no doubt that we have a strictly protected and artificial regime to protect the sugar production industry in Europe. In that regard, there is no competitive disadvantage between the price of Irish sugar relative to that of the UK or France.
However, there is no doubt that the world price of sugar is a great deal lower. It is the consistent policy of the Irish and other Governments to restrict imports to the EU of sugar cane and other produce, simply because of the economic and social factors involved in supporting our indigenous industries. That is a deliberate political choice, but is a matter of Europe versus the world rather than variations on sugar prices within the EU. We are competitive within the EU.
Written Answers follow Adjournment Debate.
