JOINT COMMITTEE ON AGRICULTURE AND FOOD debate

Carlow Sugar Factory: Presentations.

Chairman

We are joined by representatives from Greencore, SIPTU and the IFA beet growers to discuss the closure of the sugar factory in Carlow. Does the committee agree to an allocation of 40 to 45 minutes for each group to make its presentation? Agreed. On behalf of the joint committee I welcome Mr. David Dilger, chief executive of Greencore plc, Dr. Seán Brady, chief executive of the Irish Sugar Company, and Mr. Marius Martin.

Before asking Mr. Dilger to commence his presentation, I wish to draw to the representatives' attention the fact that while members of the committee have absolute privilege, the same privilege does not extend to them. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way to make him or her identifiable. Mr. Dilger may proceed.

Senator Callanan

Is there a written submission?

Mr. David Dilger

I have copies of some notes which I am happy to distribute to the committee when I have finished.

Chairman

Thank you.

Mr. Dilger

I thank the committee for the opportunity to appear before it today. The Chairman has introduced my colleagues. Marius Martin is the group director of corporate strategy in Greencore.

The committee invited me to outline the rationale for our recent decisions about sugar production in Ireland. Those decisions represent a massive commitment by our group to the future of sugar production. We are confident and optimistic about that future. The decisions we have made represent the only way forward consistent with the industry's survival in this country. I am happy to share with the committee the basis for our rationalisation decision and the decision to concentrate production in one factory in Mallow and, regrettably, to close the Carlow factory.

Three key issues underline these decisions. One is impending sugar regime reform, the second is the competitiveness of our business versus the business of our major European competitors and the third is market and customer behaviour, particularly since the July 2004 proposals for sugar regime reform which were announced by the European Commission. Impending sugar regime reform and the lack of competitiveness versus our EU competitors go to the heart of the reason we need one factory, rather than two, in this country. However, the third issue — market and customer behaviour since the July 2004 proposals by the EU were published — goes to the heart of the need to advance that decision and its timing. I will deal with the three issues in turn.

Members of the committee may or may not agree with this and many might not be aware of it but the certainty of impending sugar regime reform and its effect on supply and demand for sugar in the EU necessarily meant that Ireland would always have to rationalise production on to one efficient site. That fact has been the subject of speculation for years and well before the July 2004 proposals were published. That reform is certain. There is no doubt that it will involve sharp cuts in both sugar quota and sugar price in Ireland and throughout the EU. The reason is that the EBA treaty, which is already in force, and the opening position of the EU in Doha make the outcome of both quota cut and sugar price cut inevitable. There is still much for which to negotiate. Successful negotiation is critical to achieving survival of the sugar industry. However, it would be reckless to pretend that life post-sugar regime reform in 2006 will even resemble what life has been like for all of the participants in the industry to date. The future will look nothing like the past.

The consequent increased competitiveness of the EU sugar regime and marketplace will see an enormous volume of the sugar previously exported by Europe swilling around the marketplace in Europe. This means sugar production in Ireland will have to radically alter its unit cost to compete with the ever increasing flows of imported sugar from its competitors. Those competitors have significant scale advantages over Irish Sugar, which in EU production terms is puny. It has 1.15% of total EU quota and is the smallest sugar company in Europe.

The Irish industry as currently configured, with its factories in Carlow and Mallow, would no longer be competitive in the rapidly changing world it must confront. Factory throughputs would not compete with those of our best competitors, whose throughputs and therefore efficiency levels are almost double ours, as the industry is currently configured. The Irish industry's campaign length, which is a significant factor for our growers, has become too short at 85 days, and with quota cuts would become considerably shorter. To become efficient, we must work our capital for more than 85 days. Greencore has significant capital invested in its sugar processing businesses but it works that capital for a mere 85 out of 365 days. If Greencore did not do what it has decided to do, any incremental capital it spent in a two-factory scenario would be increasingly thinly spread over two sites rather than focused on the creation of one world class sugar refinery with a much more competitive scale than at present.

I wish to focus on campaign length, which is a controversial issue. Our average campaign length is approximately 85 days. Our nearest and largest competitor, British Sugar, had an average campaign length last year, over all of its factories, of 154 days. Its longest campaign was 166 days at one factory. UK beet growers have been able to accommodate themselves to campaigns more than twice as long as our current campaign, and in excess of 60% longer than our proposed campaign length under the new one-factory regime.

What this means is simple. British Sugar, our nearest and largest competitor, has operated with just half of the sugar factories per tonne of output than Greencore has traditionally operated with. Put another way, the substantial fixed cost base of the British Sugar business per unit of output is just half our fixed cost base per unit of output, yet — it is important to remember this — the price Greencore and British Sugar receive for outputs will be identical in a single EU sugar market. Therefore, large-scale rationalisation of the Irish sugar industry has been inevitable for some time and has been planned by the business for some time, as our necessary response to likely regime change and the competitiveness issues which this is likely to bring.

However, to be fair, we thought this was somewhat down the track and would perhaps take place in the next two years. We did not envisage the immediate impact of the July 2004 EU proposals on our customers and competitors. Both groups, customers and competitors, have moved in advance of any final proposals from the European Commission. Both groups have already anticipated the outcome of sugar regime reform and have begun to reshape their businesses to better position themselves for the post-reform era. The lesson for Greencore and others is that markets and customers do not wait for regulators or final decisions; they move in expectation and anticipation of what the regulators will deliver. If Greencore's competitors and customers are completely reconfiguring their businesses to cope with the post-reform era, Greencore must do exactly the same to survive.

I want to focus in detail on what has happened in our customer and competitor environments. Many of our competitors, in particular the French and Germans, are campaigning vigorously for a much more draconian reform of the sugar regime than is at present proposed, particularly with regard to price. Their vision — we in Ireland need to be conscious of this — is that European sugar production will concentrate in just four or five of the 25 EU member states. Their vision is for very large-scale production with lower raw material costs and their perception, right or wrong, is that they can compensate for lower sugar prices by dominating the entire EU sugar industry. In other words, all EU sugar production could concentrate in four or five countries. That is their vision and why they are campaigning for a much more draconian regime. They do not say it but they want to see sugar production wiped out in between 15 and 20 European countries.

Those competitors have already destroyed the Italian sugar industry though we have not yet seen a set of final proposals from the EU. They exported a vast quantity — 1.3 million tonnes — of sugar into the Italian market in recent months, based on the perceived weakness of the Italian sugar industry and the perception that it would not be around for much longer post-reform. Competitors are taking share in advance of clearly anticipated change; this is happening at present in Spain and Portugal, the industries of which are also perceived to have relatively weak production bases.

In Ireland, imports of sugar have grown from 5,000 tonnes to 40,000 tonnes. More recently, in the past six months, almost every single industrial customer of Greencore's business has been approached by one or more of its competitors with very price-competitive offers to supply imported sugar. Part of the sales pitch is of course that sugar production will not survive in Ireland following reform in 2006.

To consider the position of Greencore's customers, who are looking on, trying to work out what will happen, they have noted independent agricultural economists, even those reporting to the European Commission, unanimously reporting that Ireland, among the other countries to which I referred, will not be able to survive post-reform. Two former Irish Ministers responsible for agriculture said the same thing. Irish beet growers have stated on many occasions they could not even think of producing beet at the prices proposed in the July 2004 Commission proposals. Without beet, there will be no sugar.

Those three things are happening. In addition, all of our significant EU competitors are wandering around the sugar-using industry in Ireland confirming to it that the Irish sugar industry cannot survive after 2006. Many people are saying the same thing, for whatever reason. For those reasons, many of our industrial customers — I am not in a position to be in any way critical of any of them — have taken the only decision open to them, namely, to examine carefully their import alternatives for Irish sugar. That is the context in which we operate. We are not operating in a regulated world but in a free market, and this is what competitors and customers are doing.

What was Irish Sugar to do? It had few realistic options. It could have done nothing and waited for reform to become somewhat clearer. However, by waiting, Irish Sugar would have inevitably, as night follows day, lost further market share. By the time a decision was made on what kind of production structure was needed in this country, it would not have been needed because there would only be enough sugar sales to fill one factory, not the entire Irish sugar quota. The market would have gone from underneath us.

By doing nothing, we could not send a clearer message to our competitors and customers that we feared for the future of Irish sugar production. The alternative, however, was to send a confident commitment to our customers and competitors about our optimism in regard to the future of sugar production in Ireland. This commitment would be to invest in the industry and create a cost-efficient, world class manufacturing platform in Mallow which can compete with the best survivors of sugar regime reform and ensure that every euro of capital investment is focused on creating a world class capacity rather than spreading it too thinly over two production sites, neither of which could have been remotely competitive.

Irish Sugar had to take a decision whether to move now, later or not move at all and it decided to move now. It decided to put a clear line in the sand for competitors and to say that the Irish sugar industry is here for the long term and that competitors had better look elsewhere to pick up market share. It decided to say to our customers that we are investing in this business, that we are optimistic about the future of sugar production in Ireland in the long term and that in order to ensure that we can continue to supply their requirements at much lower prices than heretofore, we are making a big investment in the future of this business.

Regime change is a huge factor in this area, as is competitiveness. That drove the decision to go from two factories to one, which I think most people in the room probably knew in their heart of hearts was an inevitability. The timing however was driven by market forces, by our customers and our competitors. Generically, that is why the decision had to be made regarding Carlow. The three reasons include the operating efficiencies likely to be achieved in either plant, the efficiency of the supply chain for the future and the cost of investment, i.e. the cost of bringing one or other of the plants up to the sort of capacity and quality we need.

I will deal with each of those in turn. In terms of operating efficiency we had what we believe is the leading, albeit German, sugar engineering consultancy in the world evaluate both our plants over 30 separate metrics including plant condition, process efficiency, environmental efficiency and capital investment — a huge range of metrics. The results of the IPRO study showed that despite our investment of €120 million over the past ten years in both of our plants, substantial further investment was required in both factories in order for either one of them to become a leading edge cost competitive manufacturing plant. Measured quantifiably across that range of 30 metrics, Mallow came out to be 20% better and 20% more efficient than the Carlow plant.

In terms of the supply chain, the rationalisation of sugar processing on to one site, wherever it was, would clearly involve a re-routing of significant tonnages of beet and would also necessarily involve some beet travelling further than previously. That is axiomatic. Mallow is at an existing railhead. It already receives significant quantities of beet from Wexford through the Wellington Bridge beet reception depot. Moreover, rail is, by a distance, the most efficient way to transport beet over long distances and Carlow does not have that advantage.

In terms of beet supply, the committee may be interested to know that County Cork is responsible for 33% of the entire beet intake of Irish Sugar. While it is not necessarily a fair comparison, that compares with 8% of our total beet supply coming from County Carlow. I acknowledge the difficulty in getting beet from Carlow to Mallow but it pales into insignificance compared with the issues which would be raised by getting beet from Mallow to Carlow.

Irish Sugar is making a very significant net investment in excess of €25 million to upgrade and increase the capacity of the Mallow factory. Incidentally, in terms of redundancy and write-off costs we are also taking a €65 million hit in our profit and loss account this year. We are not doing it for the good of our health. It is not a pleasant thing for us to do. However, it is clear that the programme to upgrade Carlow would have cost an additional €28 million in order to get it to the same level of capacity and quality as what we plan in Mallow by 1 October of next year.

Regrettably, having regard to those three key factors, it was patently obvious to Irish Sugar what needed to be done in order to put its business on a footing with its competitors. While the decision to rationalise production on to one site in Mallow and to close Carlow was painful, it was nonetheless straightforward. It was quite clear what the business needed to do to create a really competitive sugar industry capable of competing with its best competitors in this country.

That is the rationale for the decision. We are perfectly aware that there are consequences to that decision, some of which are significant and on which I will speak. There is a whole array of consequences arising from our decision to focus all sugar production on to a single plant in Mallow. It is perhaps best to look at the key consequences, stakeholder by stakeholder. The first stakeholders are our employees, particularly at Carlow. The majority of those employees are longserving and will regrettably lose their jobs. We will continue to operate our sugar store — our sugar packaging operations — in Carlow. We will continue to operate and lead the business from an albeit much reduced head office function in Carlow, which will result in 63 jobs remaining in Carlow. Nevertheless, 189 full-time employees and 137 campaigners will lose their jobs.

Irish Sugar has put in place an attractive redundancy and early retirement package involving enhanced pensions for the relevant employees. The terms are well above the national average. In order to give the committee a perspective on them I will compare them to the recently agreed package put together in the case of Aer Lingus, a package which is commonly acknowledged to be reasonably attractive and fair. If the Aer Lingus deal were applied to our departing employees, of whom there are 326, including full-time and part-time, 316 would do better with our package and in many cases substantially better. That simply gives a perspective. Nevertheless, Irish Sugar is in a negotiation process with its employees on these terms. Three full days have already been spent at the Labour Relations Commission and the matter is now being referred to the Labour Court for an early hearing. It would not be appropriate for me to comment any further on that because the process is ongoing.

On top of that, the business is doing what one would expect it to do in terms of the provision of a very wide range of supports to our people, who need those supports as they move from one career to another. They are designed to help our people maximise their value in the marketplace and maximise the value of their financial packages. That is important.

For beet growers, there are a number of significant consequences arising from our decision. The first, not to be overlooked, is very positive, because this decision gives beet growers an opportunity to supply beet to an industry which has a reasonable chance of surviving post-reform. That would not have been the case but for this decision. There are also some negative consequences for beet growers. They will have to accept much less for their beet under a reformed sugar regime than they have traditionally received. Everybody acknowledges that and it will be a challenge for many beet growers.

There will be significant pressure on the Government and on the European Commission to improve the present compensation proposals for our growers. They will have their incomes reduced as a result of both quota and price cuts. However, compensation is at least on the table for beet growers who lose income in this way. I remind the committee that there is or will be no proposal to compensate the processing industry for the same impact of quota cut and price cut, nor is there any help available to build the kind of world class capacity at Mallow which we have decided to do and which will be in place by 1 October 2005.

Many beet growers will in future have to transport their beet to our Mallow factory over longer distances than they have been used to. Some growers may ultimately choose to exit beet as a result of that. Some growers will encounter some sugar losses on a modest part of their total beet output as a result of the extension of the campaign in Mallow. Our plan is to extend the campaign to 120 days in 2005, which will reduce to about 100 days in 2006 and beyond. We acknowledge, as do our growers, that November and December are the optimum months in which to harvest beet. There is potential for sugar content to be reduced in beet which is not delivered until January.

All of those consequences are important to our growers. They are not as important, however, as the survival of the industry. Without the industry, they become irrelevant.

What are we going to do about the consequences to which I refer? The survival of this industry will be based on mutual respect between Irish Sugar and its growers. It will also be based on an agreement which will achieve a number of objectives for the industry and growers. The first of these is that Irish Sugar will cushion the blow of additional transport costs to its affected growers for a transitional period. The company is already committed to spend almost €5 million on a new beet reception depot and a railhead in the Carlow area. This investment has no function other than to reduce transport costs for our growers. In addition, the company is in negotiation with its growers with a view to helping them to defray, for a period at least, a significant proportion of the additional costs they will incur in transporting their beet over the additional distance.

Questions have been posed as to the viability of the transport plan. I will not deal with this in detail in this formal presentation but if members wish to ask me questions about it, that is fine. I will, however, leave the committee in no doubt that Irish Sugar will put in place an effective and efficient transport infrastructure to facilitate the transportation of beet to the Mallow factory.

The second objective is that Irish Sugar will recognise the possibility of sugar losses in January for its affected growers. That has always been an integral part of the pricing arrangements with our growers. We can argue about whether it is proper or full compensation, but the fact is that growers have always been compensated for delivery of beet in January. In the past and as many members will remember, there were campaigns — in Ireland, not the United Kingdom — which ran into February.

The third objective is that growers must recognise that the future of the industry is dependent on a cost-effective supply chain. Following the transition period to which I referred earlier, the sugar industry in Europe cannot afford to subsidise beet travelling long distances to any sugar factory because this takes away all the return. The traditional supply chain will, therefore, have to change and Irish Sugar will be obliged to enter into arrangements with its growers in order to enable the current beet model to be restructured and to allow, over time, beet to be grown closer to the Mallow factory. The latter is inevitable. Every business in the world is working on its supply chain and we can be no exception.

The fourth objective is that growers must recognise that they cannot be insulated from the dramatic reduction in market returns which has occurred during the past four years. Irish Sugar's profitability dropped by €14 million in that period. Market returns have fallen significantly at a time when payments to growers of beet have increased. We must recognise, whether we like it or not, that we are kept in business by our customers. Irish Sugar customers are paying less and growers will be obliged to accept less from the company as a result. Irish Sugar's record in cushioning growers against adverse market movements is outstanding. Growers will ultimately be obliged to acknowledge that a continuation of that approach would be inconsistent with even the medium-term survival of the business.

I cannot conclude my presentation without referring to our customers. They are the people on whom we are all reliant. Without them, we would have no business. Our customers can now be assured — to the best possible extent that we can provide such assurance — of a local source of high quality and, for the first time, cost-competitive domestic sugar. Our hope is that our ambitious plans for a highly cost-competitive Irish-based industry will help our customers to become confident and secure without the need to supplement their supplies with an ever increasing flow of sugar imports.

The communities in which we live will be impacted upon in many different ways by our decision. We hope Mallow will thrive as the home of a world-class sugar refiner, producing 100% of Ireland's quota. While Carlow will, on the other hand, retain almost all of the beet production to which it has been traditionally used, it will lose some of the significant contribution the factory has made to the local economy. Irish Sugar will work with the key interested parties in that local community in order to help support other forms of economic activity which could benefit the local economy and Irish Sugar.

Irish Sugar has taken a bold step to secure the future of the sugar processing and sugar beet growing industries in Ireland. It has put its money where its mouth is by committing to major investment in order to create a competitive business. The company will not be able to achieve its objectives by itself and will need the continued committed support of its employees and growers in an environment which will become much more constricted for everyone. The business has committed to dealing fairly with all of the stakeholders who were affected by the decision, which was regrettable but nonetheless necessary.

In no way have we underestimated the difficulties and discomfort caused by the requirement to radically change what has become a tradition in the Carlow area. The rationalisation decision, the investment and the commitment we announced on 12 January will not protect either the business or its growers from radically reduced returns and profitability in the future. They will, however, ensure that by becoming competitive we can survive. They will also ensure that the industry and its growers will make a much more modest but, nonetheless, reasonable return from their respective businesses in the long term.

Chairman

I thank Mr. Dilger. I will now invite questions from members and I ask them to be brief. I urge them to ask questions rather than make Second Stage speeches. As they are aware, two other delegations are due to appear before the committee and many members are offering.

Deputy Naughten

I thank Mr. Dilger for his presentation. He provided a good background in terms of what is happening at EU level. He appeared to state that the EU proposals, as they currently stand, will be accepted. There is a blocking minority in place at present. It seems Mr. Dilger has little confidence that the Minister will negotiate a decent deal in respect of this matter. The critical issue for many people is the timing of the decision by Greencore — particularly in light of the fact that the negotiations were taking place — which has really undermined the Minister's position.

Will Mr. Dilger clarify the position in respect of ownership of the beet quota? When was the Minister informed about the company's restructuring plans and the closure of the Carlow plant? As regards the issue of the golden share, there are two elements to the disposal of assets, namely: lands, property and premises; and machinery, plant and fixtures and fittings. What timescale is envisaged in respect of the disposal of either group of assets and what discussions have taken place with the Minister in that regard?

Why was the decision on the Carlow plant taken at this point? It appears the company took some time to decide on the question of Carlow versus Mallow but it took very little time to address the issue of transport, which seems to be a complete mess. There are major traffic management issues surrounding the transport of beet into Mallow and the transport of sugar out of Mallow to Carlow and Thurles which do not seem to have been considered.

What discussions have taken place with Irish Rail? Have a number of proposals been put forward? As regards the latter, a suggestion was made during the week in respect of Portlaoise. Rail freight costs have risen by one quarter since 1 January. What discussions have taken place with the Department of Transport regarding subsidies for the transport of beet by rail? There are subsidies in place in every other EU country. Transport costs place an additional €10 per tonne on the cost of beet. It seems little consideration has been given to that.

With regard to transport, Mr. Dilger has stated that the efficiency of the supply chain for the future was one of the issues considered. He said rail was the best way forward. What discussions have taken place with the Department of Transport in this regard? Is not the haul of beet into Carlow much shorter than into Mallow, even though Carlow is a small county, accounting perhaps for only 8% of the overall supply? However, the haulage costs involved there are significantly less than the proposed transport costs into Mallow. Will he clarify his statement that in the medium to longterm, production of sugar beet in Carlow, north Leinster and Connacht will be virtually obsolete and that Greencore wants to locate it in and around Mallow?

On this point, what discussions has the company had with the Department of the Environment, Heritage and Local Government as regards the proposed reduction in the overall level of sugar beet being grown and its concentration in a certain part of the country because that will have an impact on carbon emissions and the Kyoto Protocol? The company appears to have taken a great many decisions regarding which assets are going to go, but very little attention has been paid to transport and the other national implications of its decision.

Deputy Hoctor

I welcome the representatives of Greencore and Irish Sugar. However, I must be honest and say that Greencore's announcement of the Carlow closure was a devastating message for the farmers of Munster, particularly those in the north Tipperary region that I represent. This is a region of rich growth for sugar beet, with over 200 farmers specifically engaged in its growth and producing approximately 90,000 tonnes a year.

The question we all want to ask Greencore is: why now? The company said it was not going to wait until the EU proposals and negotiations were finalised. In view of the fact, however, that farmers have leased land and already ploughed some of it in anticipation of the year ahead, why could this decision not have been deferred for another year? The Minister for Agriculture and Food, Deputy Coughlan, has told the committee that she has met her opponents, in a manner of speaking, in France and Germany, among whom proposals for the future growing of beet in Europe is not compatible with what we want in Ireland. However, the initiative taken by what I must regard as her Irish opponents in closing Carlow has undermined her negotiating position at the European level. This is unfair, particularly on the farming community.

As regards the Greencore view on transportation, while we welcome the fact that the company has engaged in negotiations with Iarnród Éireann, that is not much consolation to people in north Tipperary given the future plans regarding the transporting of the beet to Mallow. I want to know the details of the negotiations between the company and the farming sector. Has it engaged with farmers who have been discommoded as a result of this decision on the question of transportation and other costs that will immediately impact on them?

While I welcome the delegation from Greencore to the committee, I am disappointed that the company has made no reference to the issue of malting barley and its decision to close the plants at Tullamore, Banagher and the Borrisokane depot, nearest to my home, which has a large annual turnover of high quality malting barley and is also hit by the Greencore decision. Again, farmers in these areas who have leased land for this year have been informed by the company that their relationship with Greencore is shortly to end. It is a poor example of public relations when this type of communication is made in this way by a company such as Greencore.

In view of the efforts made by the Minister to try to assess the storage capacity now needed in an emergency for the farmers this year, has the company assisted her in her efforts? What is it prepared to do for the farmers so badly hit in the Laois, Offaly and north Tipperary area? Where does the company suggest they go in the long term with their high quality award winning malting barley? It is not good enough to say it can now become feeding barley as the quota for this has already been reached in many of the co-ops such as Arabawn. It is devastating news. We are very disappointed and await the company's answers.

Deputy Ó Fearghail

I will be brief as I believe the key questions have been asked. I agree with my colleagues and thank Mr. Dilger for his clear presentation. He sets out starkly the company's position.

There are three principal issues involved. Mr. Dilger says in his presentation that change has been inevitable for some time in that Greencore had to decide whether to move now, later or not at all. I assume it would be much easier to move if everyone was on board. Why has there not been much more effective engagement by Greencore with its partners in the industry, the primary producers and its staff?

Transport is of key importance. Will Greencore give the committee some indication of its timescale for resolving the critical transport issues that arise? We understand it is looking at a number of locations in the Carlow area in which to base a depot. Does the company wish to elaborate and tell the committee where exactly it is looking and the criteria it is using as regards the selection of the eventual site?

Towards the end of Mr. Dilger's presentation, there appears to be something of a contradiction. He believes Carlow will retain most of its production for the future, but at an earlier point he said that it was almost inevitable that because of transport costs, production would, in fact, be concentrated closer to Mallow. Perhaps he can clarify this.

Many people are interested in the German consultancy report alluded to by Mr. Dilger. Does the company intend to publish it?

Deputy Nolan

I welcome the delegation from Greencore. It is the first time I have heard any type of detailed summary of the reasons the Carlow plant should be closed. Nothing I have heard persuades me to change my belief that the closure of the plant is totally premature. To base the closure on negotiations that will take place in Europe over the next eight months is foolhardy. The negotiations will not be completed until December, possibly, by which time the campaign would have been completed in both Carlow, if it was still open, and Mallow.

There are three aspects to be considered. Greencore has betrayed the farmers and the growers, who have contributed significantly to this industry for almost 80 years. It is sacrificing the workers in Carlow who have given long and loyal service to the company. Finally, it has undermined in no uncertain terms the negotiating position of the Minister.

I seek clarification on the Carlow Nationalist report today that the Minister knew of the proposed closure months in advance. Is it correct? The Minister attended this committee some weeks ago and when asked the question replied that her Department had been notified that it was an item on the agenda for Irish Sugar only two days in advance of the meeting that decided on the matter. In fairness to the Minister, whose reputation is being questioned in this regard, we should have clarification on that.

In his contribution Mr. Dilger said the source of sugar beet will eventually be closer to the refinery facility, namely, Mallow. He concluded by stating that it was his hope to keep Carlow and its beet production. There seems to be a conflict there and I would like clarification on that.

The workers were treated despicably in the way they were told about this closure. Does Mr. Dilger not have a statutory obligation to consult workers before announcing a closure in the way that he did? Members of the committee have also inquired about the transport arrangements. If a rail head is to be put in place, planning permission will be needed and that will take time. At this stage, we are hearing reports of a railhead being located close to Carlow and a railhead in Portlaoise. Mr. Dilger also claimed that one of the reasons the Carlow factory was to be closed was because Mallow had a rail line which went into the factory. There was a rail line to Carlow which was taken up some years ago. Would it be fair to assume that the decision to close Carlow was a fait accompli and was decided many years ago, not just in the last few weeks?

Mr. Dilger had a meeting with the Minister for Agriculture and Food last November. Did he give the Minister any indication at that stage that it was the intention to close one of the processing facilities? While negotiations are going on for a redundancy package for the workers, the farmers in Carlow are being left high and dry. They do not know what their future holds. Many of the sugar beet contractors have invested significantly in harvesters only in the last few months. What of their investment if it is the stated intention of Greencore to base the future of the Irish sugar industry with farmers around Mallow?

This decision is wrong. It is not too late at this stage for Mr. Dilger to change his mind. No dismantling of the facility and machinery in Carlow has taken place. In fairness to everyone concerned, but in particular to give the Minister a chance to negotiate a better deal for the industry, one more season should be given to Carlow.

Deputy Moloney

I do not want to repeat the points made by the other Deputies, but I share their concerns. The most important point has to be the undermining of the Minister's negotiating position. That will not be glossed over. Clearly, words used by Mr. Dilger such as "confident" and "secure" are not shared by the producers. I come from the constituency of Laoighis-Offaly. It is the first time I have heard of an air of confidence and security, but it is only coming from Mr. Dilger. I have to accept the economics of the business advice that Mr. Dilger received, but the timing is beyond any of us who are on the ground on this issue.

Mr. Dilger has rightly spoken about his customers. Our customers are the producers in Laois, Offaly, north Tipperary and so on. They feel that they have been short changed. While I can understand the need to be competitive in the sugar industry, the concerns of the producers should still have been taken into account. I do not believe that to be the case. We are not here to play to the gallery. We find this issue very difficult to explain to the producers, especially the timing of it and the fact that it came out of the blue.

I do not wish to concede that Carlow should close, nor do I want to get into a situation of Carlow versus Mallow. However, Mr. Dilger made the point that the priority of the company was for an effective transport system to be put in place and I would like to hear more about that. In my opinion, that has been said for the sake of saying it in order that the company can get out of Carlow. For the time being, people can be appeased with that explanation but I cannot see how it can be put in place.

I wish to hear more about the €5 million railhead to be located at Carlow. I am also concerned about the added transport costs. It is difficult to put all of this in place and I believe it is a cop-out. I have also heard about the situation regarding Portlaoise. If we are looking at having just one factory in Mallow, I would like to hear how it is intended to transport significant tonnage. I have heard that a rail depot would be available in Laois, except that not enough has been done by the Government or the IFA. I do not buy into that. Is Greencore seriously looking at Portlaoise? Deputy Fleming and I would like to see it happening there. We believe that the infrastructure is there as it has a factory site.

I reiterate the point I made about the Minister's negotiating position being undermined. If the factory is to close, who will deal with the added costs involved? Let us hear specific facts on the transport that Greencore has in mind, especially regarding the rail head and the site in Portlaoise.

Deputy Fleming

I appreciate the opportunity to put questions directly to Mr. Dilger. What are Mr. Dilger's views on the Government's special share in Greencore? I understand that the Minister must give prior written consent to the disposal of 20% of the sugar beet processing assets. What is Mr. Dilger's understanding of that? When the agreement was drawn up, the beet processing assets were in Carlow and in Mallow. It has now been suggested that if Carlow is closed, it will not be a beet processing asset next year so the 20% issue does not arise in regard to the disposal of those assets. If Greencore decides to close the factory in Mallow some day, the logic is that it could dispose of the assets and claim that there are no beet processing assets there either. Government consent would therefore not be required for the disposal of the assets when they are no longer connected with beet processing. Can Mr. Dilger give the committee his understanding of the Government's special share? Does he require prior written consent from the Minister for the disposal of the beet processing assets that were in Carlow until now?

A number of locations in the midlands, including Portlaoise, have been mentioned as a possible location for a transport facility. One statement by Mr. Dilger on that issue seriously disturbed me. He stated that the new rail head would cost in the region of €5 million and that such an investment would have no function other than to reduce the transport cost to suppliers. Mr. Dilger is effectively saying that the €5 million would be the first draw from any transport fund for the farmer suppliers. He is really asking the suppliers to subvent that €5 million for the new rail head he mentioned. I was very disturbed when he claimed it was for the benefit of suppliers. He clearly means that if Greencore is putting up the €5 million, it wants to claw it back from them. He also stated that any such subsidy would be in existence for a transition period. Can he explain that to the committee? I have no doubt that a plc company like Greencore would be negligent if it had not done its projections without having a specific transition period in mind.

While I accept that the delegation will not wish to discuss details of the redundancy offer as negotiations are ongoing, I understand that the statutory entitlement is up to seven weeks plus two weeks of pay. How does that seven week provision compare to the package offered to the workers in Tuam and Thurles many years ago? I have been told the offer will be substantially the same as that made many years ago despite the fact that the company is now highly profitable. I would like to hear the views of the delegation to ensure that a dramatically improved offer is made to those who wish to avail of it.

Senator Browne

Mr. O'Sullivan, the chairman of Greencore, admitted at the company's annual general meeting that it would cost €7 million to keep the Carlow facility open for one more season. Greencore further admitted that the extra cost of transporting beet all the way to Mallow would be approximately €7 million. Greencore said all along that the growers would not have to meet the extra transport costs. In that context, how does it make economic not to mention moral sense to close the Carlow factory especially in light of the fact that a rail depot will not be provided this side of an election campaign? In fact, it is my view that a depot will never be constructed.

Can Mr. Dilger clarify what talks took place with Iarnród Éireann on the proposed rail depot? I seriously question Greencore's sincerity in relation to the depot given the fact that the obvious site at which to construct one is the Carlow sugar factory. Despite this, the company has for the last year been in the process of selling land there and will thereby compromise any railway facility.

Why would one spend €5 million on a rail depot in Carlow or the surrounding area when Greencore has no plans to have beet growers in Carlow, Laois, Offaly, Kildare or Wicklow in the next few years? While we know the sugar quota will be reduced, Greencore has shown no long-term commitment to beet growers. We have heard reports that 40,000 tonnes of the quota will not be availed of this year even though the sugar beet quota talks have yet to be held. Is that correct? What are Mr. Dilger's views on the use of the quota by another company if one were to make an application to the Government? Is it true that engineers were sent from the Mallow plant to ascertain what equipment would need to be moved from Carlow on the day of the company's annual general meeting while growers were protesting in Dublin?

On 17 November, Mr. Dilger met from the Department of Agriculture and Food the Minister, Minister of State, Deputy Browne, and Mr. Jim Beecher, assistant secretary general, to explain issues arising in the beet industry. According to the minutes, Mr. Dilger said it might be necessary to rationalise facilities, which clearly indicates an intention to close one of the two factories. On the Monday before the closure of the Carlow factory was announced, Mr. Dilger telephoned the Department of Agriculture and Food. Why did he telephone the Department to inform it of the decision and why did he tell Mr. Beecher that he would brief the Minister before the following Wednesday if required?

According to a handwritten note to the Minister, Mr. Beecher and another official met Enterprise Ireland to which the Irish Sugar Company had also spoken. When did the Irish Sugar Company speak to Enterprise Ireland?

Deputy N. O’Keeffe

I declare an interest in that my family has been growing beet since the 1930s. We must be realistic and face up to the challenges ahead. The issue before is how to save the industry given the looming crisis of the negotiations. We have seen quotas and restrictions imposed on all agricultural commodities in Europe since the 1970s. Does Mr. Dilger believe rationalisation and cutbacks based on the proposal before the WTO will secure the long-term future of the industry? What is happening in France? While the French have always supported us in agricultural negotiations in the past, they have left us aside this time. I understand the Danes have done something similar and that we have linked up with a small number of member states to try to secure the best deal possible.

To turn to the issue of transport, today's NRA announcement of the approval of substantial investment for the N72 and N73 is a major boost for Cork. The N72 and N73 are the roads along which beet will be transported to the Mallow plant. We are making too much of an issue of transport. October to January tends to be a period of low haulage activity as milk and grain are not being transported. I have land beside one of the roads in question and reside nearby and I do not consider that there will be an issue with it. The only problem with transporting beet to Mallow will involve tractors which can form obstructions due to their slowness and cause convoys of vehicles following behind.

When the Irish Sugar Company was privatised in 1989 under the then Minister, former Deputy Michael O'Kennedy, I understood the golden share to have been vested in the State. People have asked a great many questions about the share recently. I understand the company has no control over that share. Can the chief executive of the Irish Sugar Company and the Greencore representatives clarify the matter? The Government has for some reason sought legal opinion on the matter. The Minister continues to do a great deal for the industry, but all she can really do is act as a go-between. She has no statutory function in the running of Greencore as she told the committee clearly. Any information she receives is provided on the basis of goodwill, which is a matter she is negotiating with Mr. Dilger. To be fair to the Minister, I will move on to another matter.

I listened intently to Deputy Hoctor who has great knowledge of and a feel for agriculture. She used the word "devastation". I have seen devastation in Irish agriculture on many occasions. Only yesterday, the announcement at Castlemahon raised the question of where people are supposed to sell their chickens. I have been approached about it.

Chairman

We must keep to the Carlow matter.

Deputy N. O’Keeffe

There are 3,700 growers. Can Mr. Dilger tell the committee what percentage of beet is transported by rail to Wellington Bridge? By what percentage can this amount be increased? I understand Wellington Bridge is only 50 miles from the Carlow plant. When the plants at Tuam and Thurles were closed, the sky did not fall.

Deputy Upton

My apologies for being late. I may beg the Chairman's indulgence to come back in later on. Can Mr. Dilger or Dr. Brady tell the committee what discussions, if any, they had with the Minister prior to the announcement of the Carlow closure?

Senator Callanan

Almost everything there is to say about the matter has been said. I was very interested in Mr. Dilger's presentation, a script of which was unfortunately not available to which to refer with accuracy. I will play the Devil's advocate and refer to statements that everybody had been aware for some years of a requirement for some efficiencies in processing. It is rather strange that shock was felt when what would happen became more defined. Without wishing to cause offence, can Mr. Dilger state how inefficient a company was being run that all of a sudden one plant had to close? Despite knowing for a number of years what needed to be done, the Irish Sugar Company continued to run two plants. It is only a few years since there was conflict between growers and the company about pricing structures. Farmers had to go on strike to get satisfaction from the company.

What is the company's view on who owns the quota? Does it intend to engage in asset stripping? Why has it not engaged with farmers given the difficulties with the announcement, which is final, regarding the closure? At the time of the announcement of the closure, the company also announced there would be a siding in Bagenalstown. Why the sudden change of mind? Why had the company not made plans? Can delegates tell me why, as a competent company, it waited until the 25th hour to seek somewhere to locate a siding?

Deputy O'Keeffe lives in the Mitchelstown area, and I also pass through it on the way to and from here every week. Mitchelstown is a difficult town to get through. Transportation of the crop by road from north Leinster would have a massive impact, not alone on traffic jams which we recognise will occur but also in terms of damage to the roads. Will Greencore pick up the cost factor in that regard, if there is to be subsidisation of the cost of transport by rail and road? Damage to roads is a factor, and one can see that anywhere.

Chairman

Does the Senator want the plant at Mallow to be closed and moved back to Carlow?

Senator Callanan

No. Nobody here would want that to happen. However, we would like for the company to have made proper and suitable arrangements ahead of the announcement. The fact it did not suggests massive failure. Will the company survive under that level of competence?

Mr. Dilger

I am grateful to the committee for its perception of my powers of recollection, but I will try to recall. There are a number of themes here, and I will take questions under those I can remember.

It is untrue to suggest the decision of the company to rationalise sugar production, making it efficient and equal to our best competitors in Europe in order to protect the sugar industry in Ireland has undermined the Minister's negotiating position. It is not possible that any action taken in order to support the survival of an industry could actually undermine negotiations geared at protecting that industry. I remind the committee that the action we have taken supports the continued production of 200,000 tonnes, which is our full sugar quota in this country. There is no suggestion that we will reduce that figure to 100,000 tonnes. The action we have taken protects the ability of this country to produce its full quota of sugar at the most effective and efficient possible cost. It is not remotely conceivable that it would undermine the Minister's position.

The opening position of the EU at Doha, together with the Everything But Arms treaty, which has already been entered into for some four years, will become increasingly effective in the sugar industry from 2007 and means that the sugar regime as we know it is now over. Free access to the EU has been granted to 58 of the least developed countries. There will be unlimited access after 2009.

The sugar regime is over. It is not a question of which regulators negotiate. I tried to let the committee know that customers and competitors have quickly moved well in advance of regulation. I wish we could rely on regulation to protect our industry, but unfortunately we cannot. Competitors and customers have moved, and customers have indicated their preference to secure their position by sourcing imported sugar where previously they were happy to rely on Irish sugar. This is not an issue of regulation; it is an issue of market forces and any company which does not react and respond to them in a positive manner has a short life.

We have not undermined the ministerial position. Since our announcement of 12 January one of our competitors in Holland has closed one of its two factories. We are not the only people in Europe and we are not living in cloud cuckoo land. Many of our competitors have already done what we are planning to do.

Senator Callanan asked an insightful question regarding whether the business is as inefficient as I described and what that might indicate about the way in which it has been run. All stakeholders in the Irish sugar industry have been fortunate up to now to live in a protected cocooned environment. This meant the industry as a whole, rightly or wrongly, could afford to operate in a scenario whereby we had more sugar factories than we needed.

Senator Callanan

I asked whether the company knew of the events coming down the road.

Mr. Dilger

All of us in the sugar industry have been cocooned in an extremely protected regime where consumers in the EU paid for sugar at three times the world sugar price. The company, growers and every stakeholder benefitted from that cocooning and protection. Those days are over. It is not anybody's fault; it is reality. We must move the business with the times and in accordance with the way of the world and in the direction our customers are going. I make no apology for that.

This has not undermined the Minister's position, rather it has given her an industry whereby successful negotiation in the latter part of this year has a chance of protecting the industry and giving it long-term survival. If we did not move, it would not matter what the Minister negotiated because the game would be up. It is important the committee understands this.

The committee has continually asked about the dialogue between the company and the Minister in the latter part of 2004 and early 2005. I had a wide-ranging discussion with her on 17 November principally with regard to sugar regime reform, what our competitor countries are doing and what we as an industry are doing in association with some of the competitor countries with which we share a common cause. Regrettably, we do not share a common cause with the majority of EU countries, but we do with some. It was important that I had dialogue with the Minister in respect of that. We did not speak about upcoming rationalisation of the Irish sugar industry or the closure of the Carlow plant.

Senator Browne

It is in the minutes.

Mr. Dilger

We did not speak about the closure of the Carlow plant. For that reason I telephoned the Minister's office on 10 January in order to say there would be an Irish Sugar board meeting the following Wednesday, 12 January, during which management would put forward proposals to the board for rationalisation, a concentration of manufacturing on one site and a proposal which would consequently result in the closure of the Carlow factory. I informed the Minister's office that this proposal was on the table and I said that I felt the probability was that the proposal would be carried. I also recollect informing the Minister's office that I was not absolutely certain of that fact and that no decision had been made, or could be made, until the Irish Sugar board had considered the issue. That courtesy was afforded to the Minister on 10 January 2005. That is my position regarding discussions with the Minister.

The committee has asked a significant number of questions about the timing of the decision and has also raised a number of issues concerning the deferral of the decision for one year. I want to try to make it clear that the timing of the decision was not affected by the sugar regime reform in particular. It was not affected by our competitiveness agenda but it was affected and impacted predominantly by the fact that our customers were being assaulted with very competitive offers of sugar from our foreign competitors. I want to remind the committee that, given all the expert opinion we have read about from agricultural economists, two Irish Ministers for Agriculture, the IFA and many others, we have to look at the context which was spoken about, that post-reform Ireland would have no sugar industry. That is what our customers were faced with and that is what their competitors and independent agricultural economists were telling them. That, indeed, is the position of a substantial number of people who work for the commission and who have studied the proposals. Therefore, we were and continue to be on an uphill path as regards our ability to persuade our customers that we are there for the long term, even in a one factory scenario.

This committee should not feel that survival, let alone prosperity, is a certainty after this decision. All we have won and all we have bought is a chance to survive.

As regards the powers conferred on the Minister by the special share in Greencore Group plc owned by the Minister for Agriculture and Food, I have to confess to the Deputies and Senators that I am not a lawyer and I have no intention of playing that role. I have a copy of the articles of association of Greencore in front of me and I intend to leave it with the committee. Any Senator or Deputy who is interested should feel free to read it. The powers conferred on the special shareholder are written clearly and neither I nor anybody else can change them. They are what they are. As regards what I think of them, how I interpret them or what will happen in future in relation to them, Deputies and Senators are far better qualified than I am to work that out. If I may, I will leave the articles of association there for Deputies and Senators to study.

Chairman

Can we give the members a copy?

Mr. Dilger

Absolutely, Chairman. Regrettably, I only have one copy of the articles. I neglected to bring as many as I should have done. Can I talk about the issue of transport?

Chairman

Go ahead, Mr. Dilger.

Mr. Dilger

We have identified a number of alternative sites to Bagnalstown and we have not withdrawn our interest in Bagnalstown in any way. We have identified a number of alternative sites which would be suitable. It is still our intention to invest and have that railhead up and running before the next campaign. However, I have to accept — because there are planning issues involved, and people other than the company have influence here — that it is conceivably possible that we will fail to have that objective met by 1 October. I am hopeful that we will not fail but it is conceivable that we will. If we do, the company has a well thought through, plausible and highly workable plan B to ensure that beet will get from the Carlow area to Mallow by road, for one year only. This is not a permanent feature — rail is a vital component of efficient transport to Mallow in the long term. If that road option is needed for one year, campaign 2005, because of our ability to increase the utilisation and capacity of Wellingtonbridge, moving a lot more beet through there than we have done traditionally, and because of the longer campaign, the consequences for traffic would be a 7% increase per day in the number of transport loads to Mallow. That will be the result of the backstop option which Irish Sugar will opt for if it has to and fails, for whatever reason, to put in place what it is determined to put in place, which is a successful and well-invested railhead in the Carlow area.

We have an extraordinarily detailed transport plan and neither the committee nor myself have the skill to go into it. We are not able to engage with you today, Chairman, concerning alternative sites. Neither are we able to engage with the committee on where the sites might or might not be located. I hope the committee will understand that we need to get all our ducks in a row before we announce what is going to happen on the second occasion.

Another theme I would like to pick up on is the suggestion that this company has failed in its obligations — perhaps legal, and certainly moral — as regards consultation with affected parties. I wish to address that point. For the past two and a half years, Irish Sugar has consistently briefed every single employee of its business on market conditions, competitiveness, costs, economics, profitability and market returns. Over the past two years, up and down the country, Irish Sugar has briefed those growers who were interested to come along and who were invited. I have the dates, times and places but I suspect the committee is not really interested in them. We have briefed growers on market conditions, competitive conditions, what is going on with their competitors, lengths of campaign, efficiency, extraction and all the factors which drive success or the lack thereof in the sugar industry. The business has consistently sought to keep its stakeholders up to speed with the key driving forces that contribute to success or failure in our industry.

I accept that the business did not engage with either employees or growers specifically on the decision to close, because of course the decision to close had not been made. The business has more than satisfied all its obligations in terms of real levels of consultation and real levels of communication on the things that matter to the business and to the stakeholders on a consistent and constant basis over a two or two and half year period.

If I am correct, the decision to close was made by the Irish Sugar board at about 2.30 p.m. on 12 January, and within 45 minutes every employee was briefed on a face-to-face basis on that decision; why it had happened, how it had happened and more importantly our view of the future of the business, their future and what we were going to do about it.

Another theme was raised that was not all that widespread. Deputy Hoctor raised the issue of malting barley. Much and all as I would be delighted to address the issue, I was specifically asked here today to deal with, and only with, the rationalisation decision in regard to Irish Sugar. I am happy to talk to her or her colleagues but I do not think this is the place to do so when I have been invited specifically to address one and only one issue.

Chairman

Perhaps Mr. Dilger will correspond with Deputy Hoctor or any other Deputy.

Mr. Dilger

I would be delighted to do that.

Deputy Naughten

With the committee.

Chairman

Yes, with the committee. Is that agreed? Agreed.

Deputy Nolan

I have a question on the transport railhead.

Chairman

I will allow the Deputy to come back in with a supplementary question. Otherwise we will not get through all the items on the agenda. Two other important delegations have still to appear before the committee.

Mr. Dilger

I am just trying to pick up on some other themes. The ownership of quota is a difficult and complex issue. As I said, I do not have any particular legal expertise but I will try to help the committee as best I can. The concept of EU sugar quota is not one which is easily capable of definition in terms of our traditional understanding of the word "ownership". It is not easy to understand ownership in regard to EU quota. EU quota is a conceptual notion developed by the Commission and allocated to Ireland and all other countries in the EU. As with every other country, Ireland is obliged to assign that sugar quota to the sugar producers in the State. That is what the State must do. It is a conceptual notion. It is allocated to Ireland and has become our national quota. That national quota is assigned to Irish Sugar because Irish Sugar is the only sugar processor in the State. I am not capable of letting the committee know whether that assignment is the same as ownership or is similar to ownership in part or in whole. I am afraid the committee will have to look elsewhere for a more legalistic definition. I am not capable of letting the committee know where the concept of ownership fits in with the EU sugar quota. It is quite clear that it is completely different from milk quota ownership which is much easier to understand.

I will take a break and ask Dr. Brady to pick up on some themes which I have not dealt with.

Dr. Seán Brady

Mr. Dilger has done a great job and covered them all.

Mr. Dilger

I am sure I have not. Another theme that emerged is negotiations with growers, and when we will engage with them. Irish Sugar has engaged with growers on a fairly consistent basis since 12 January. That was scaled up a bit starting last Wednesday, this day week, when a delegation from Irish Sugar, which included me, met representatives of beet growers and the IFA, including the president. We laid down a modus operandi for how we would approach the key issue. From the growers’ point of view that related to transport and sugar losses in January and from the company’s point of view it related to how to put in place a sustainable long-term efficient and economic supply chain. Those are the interests of both parties and each party is interested in both areas. Since that date, all day last Friday, all day last Monday and all day yesterday the team from the company and the beet growers representatives have engaged in detail on perhaps not all but almost all the issues that are critical to the future of the company and growers. That is a very responsible process which is ongoing and will continue.

I am reasonably confident it will produce a result which will be acceptable to growers and acceptable and economic for the company. The negotiations will have to deliver on both of those objectives or else an agreement will not be reached. However, I am confident there will be agreement. That is the level of engagement with growers.

The last theme which emerged was an apparent contradiction, for which I apologise, between my short-term confidence that almost all beet growers from Carlow, Kildare, Laois, Offaly or wherever those growers who have typically delivered their beet to the Carlow plant, would continue to profitably grow beet. We are doing everything we can to support those growers to continue with their enterprise in which most of them have been involved for a very long time. I contrast that with a vision of a future competitive sugar industry in Ireland which will not, whether we like it, allow beet to be transported for the same distances as historically has been the case. Many of our competitor countries draw beet from very close to their factories. It is very important for a successful and healthy industry that the suppliers to that industry make good money and good returns and that the industry makes reasonable returns on capital because if it does not do so it will not survive. The market has a funny way of making that happen. It is really important that every single stakeholder in the industry does all right from that industry. That is the kind of industry we have to create here.

That will be the case over the next three years, at least according to my judgment, for the traditional growers that have supplied to the Carlow factory. In the long term, the industry will not be able to support beet being taken long distances. I did not mean there to be an apparent contradiction and if there was, it was a difference between what my anticipation is over the next three years and a ten-year time horizon when I do not expect beet to be dragged remotely close to the distances in the way that has happened to date.

They are the key themes I can identify. I have tried as best I can to deal with them.

Chairman

I invite members to ask a few short supplementary questions.

Deputy Naughten

If we can come back to the transport issue again, first, we accept the point Mr. Dilger made regarding the Mallow plant. Is it possible to furnish the committee with some of the deliberations in regard to the backup support?

In regard to Carlow, is it not a fact that within a 30-mile radius there is a greater percentage of suppliers there than in Mallow? The company will now have to try to replicate what is in the vicinity of Carlow in the Mallow area. Is that not correct? Second, what discussions have taken place with Iarnród Éireann in regard to an alternative for a railhead and with the Department of Transport in regard to rail freight subsidies, which are common practice throughout the rest of the European Union, and which could help to sustain the viability of farmers outside the immediate vicinity of County Cork and the Mallow region?

Deputy Upton

I wish to address a slightly different aspect of this matter. The bottom line is that some 300 jobs are being lost in Carlow. Mr. Dilger stated that he does not foresee that the long distance transport of beet will be viable in future. In that context, what consideration has the company given to alternative uses for beet which would allow the beet producers to continue to produce in the area and create job opportunities?

Deputy Nolan

Mr. Dilger gave the impression that sinister forces were at play in regard to the proposed railhead in Bagenalstown. Having lived in Bagenalstown for a number of years, I am more familiar with that location than most. For the benefit of members, the company's proposal was to run a railhead in Bagenalstown and have 300,000 tonnes of beet transported past five housing estates and a primary school at the worst time of the year, namely, November, December and January. That proposal was not acceptable to the people of Bagenalstown and would not have been acceptable to planners in Carlow County Council. Had the company appealed to An Bord Pleanála, it would have been laughed out of court.

Senator Browne

I concur with the points raised by Deputy Nolan. Greencore had no pre-planning meetings with the local authority. It appears to have had no meetings with Iarnród Éireann and Mr. Dilger completely ignored the questions posed to him by numerous members. The rail head is a figment of his own imagination and no preparatory work was done on it. Will he publish records of any meetings with Iarnród Éireann if he negotiated with them, although I suspect he did not? The company should now publish the famous consultant's report, as I have requested before.

In November, the company had a meeting with the Minister for Agriculture and Food, the minutes of which are before us, indicating that it planned to rationalise facilities. It indicated closing one plant but not when it would happen. However, Mr. Dilger telephoned the Minister two days before the board meeting. What would have happened if the Minister had said: "No, you are not allowed to close it"? Was she in a position to do so? Would the company have taken any notice of her or would she have been treated with the same contempt which has been shown to the workers and the beet growers? Did the Minister react? I am aware she was on a trade mission but I am sure she was contactable through modern communications. Did she indicate she was happy with the decision or that she had a problem with it? Did she have concerns about the longer-term implications for beet growing?

I do not share Mr. Dilger's view about the long-term future of growers in the Carlow area. There is no way people from, for example, Deputy Glennon's constituency who travel to the Carlow sugar factory will be able to travel to Mallow. It is impossible. When the factories in Tuam and Thurles closed, the number of beet growers reduced substantially. Unfortunately, I predict the same will happen in the Carlow area. The company should examine the Carlow site as an ideal location. It has all the infrastructure in place and it can cope. With minimal work on rail lines it could work and could be in place by October.

Public representatives in Carlow have every entitlement to speak up for their community and point out infrastructural problems and they are correct in this case. If the company had done any homework on this issue, it would not have got itself into the mess in which it now finds itself and has landed the beet growers.

Deputy Kehoe

I apologise for being late as I had another meeting.

I take Mr. Dilger to be a well educated man but he makes sound very simple the decision which has been taken. I often wonder whether Mr. Dilger was involved in politics since he was able to apply such spin to this story over the past few weeks. He spoke about the Minister's golden share and the ownership of the quota. When did the company first seek legal clarification on this matter? I have been a Member of Dáil Éireann since May 2002 and this is an issue which I have encountered again and again. If I had a company and thought someone else was a shareholder, I would not be long finding out whether I was wrong or right. It does not take two years to find out who owns the beet quota unless one has been through many different solicitors and legal representations and become tangled up in the issue. When was the first time the company sought legal advice?

I come from County Wexford where beet is one of the most important crops. I was not impressed that neither Mr. Dilger nor his company showed up on the day the IFA held its march in Carlow. Perhaps he was afraid he would receive a frosty reception, as he did this morning, although I suspect it would have been more frosty than today. Did the company communicate with Wexford County Council when it planned to bring most of the beet crop in Wexford into Wellingtonbridge? I do not know if Mr. Dilger has been to Wellingtonbridge. Does Greencore intend to build a bypass or a flyover? What plans does it have for traffic management? Has it spoken to any of the farmers or residents there or to Wexford County Council? I am sure Mr. Dilger has been in Wellingtonbridge when beet is at its heaviest throughput. I know the period will be extended and that extra trains will be used but the road infrastructure where I live is not great. It is totally different from that in Carlow — there are no roundabouts. If Mr. Dilger has not been to Wellingtonbridge in some time, it would be worthwhile his visiting to see what traffic management will be entailed there.

A Carlow newspaper ran a story today which used the Freedom of Information Act to reveal that the Minister was well aware of the closure of Carlow sugar factory. Senator Browne is one of those who obtained the information. Does Mr. Dilger have any comment on that matter?

Deputy Hoctor

Mr. Dilger stated that he had no intention of reducing Ireland's 200,000 tonne sugar quota. Can he not envisage the closedown of sugar production in a number of counties, particularly in the midlands, in view of the fact that the cost is approximately €2 per tonne to transport the beet to Mallow from the midlands region? I would welcome the opportunity to meet with the Greencore executive group about the malting barley issue.

Chairman

We will organise that meeting.

Deputy Hoctor

We can organise it through the farming representatives.

Senator Bradford

I welcome Mr. Dilger to the meeting. I do not wish to comment on what has been said by my colleagues. Usually in politics there are political divides, but on this occasion it is more a geographical divide. I will not waste the committee's time by rehearsing the history. What has happened has happened and we must decide how to move forward. I was interested in Mr. Dilger's view about the unsustainability, in three or four years' time, of the transportation of large quantities of beet from all over the country to Mallow.

The Government at national level, in conjunction with Greencore, will fight a strong battle to secure as much of our present national quota and I hope it will be successful. However, in five, six or seven years' time, the company and the State will require a significant increase in the output of beet in the Cork region. In implementing whatever policy decision which will be taken at the time to allocate new quotas, will the company not just examine increasing the current quotas but also avail of the opportunity to bring new people into the industry? Members who represent rural constituencies often make representations to Greencore — generally unsuccessfully — seeking quotas for new and young farmers. If there is any light at the end of the tunnel for the farming community in this affair, it should be the prospect that we will be able to allow into the market a reasonably significant number of new young trained growers. When Greencore inevitably makes decisions in three or four years' time to allocate additional quota to the southern region, will it ensure a decent proportion goes to new young farmers? Beet growing is a great skill and a rewarding agricultural activity compared with others. For the first time in probably ten years we will be in a position to give quota to new entrants. I hope we take advantage of this.

Deputy N. O’Keeffe

If the proposal, as it stands, goes through, what will be the consequences for the Irish sugar beet industry? We have the worst growing climate in Europe, lowest sugar rates and probably a very good beet price. Beet is a profitable crop, next to dairying. It will be a major loss to the farming community. Where will the negotiations on the current proposals go from here? If the proposals go through in their entirety — they are likely to be pushed through by the CAIRNS group and developing countries — what will be the consequences for us?

Deputy Fleming

Can Mr. Dilger outline the tonnage transported by road to Carlow? It will have to be transported by some other method to Mallow.

I thank the representatives for circulating the document about the memorandum. Mr. Dilger did not answer the question but said members could read it themselves. However, Greencore made a statement to the Stock Exchange on this issue on 12 January. Its representatives must have legal advice as to what it means.

To tell members of the Oireachtas committee that they can read the document on whether the Government has to give written consent in respect of the disposal of the assets in Carlow — there is an issue as to whether it is no longer involved in the processing industry — is a little strange. The representatives must have examined this issue before speaking to the Stock Exchange, which happened some time ago. I am surprised Greencore does not have a view on what the document means.

Deputy Glennon

It is only recently that the production of sugar beet has become an issue in my constituency. I have two questions.

I am interested in Mr. Dilger's explanation of his concept of the quota. How real or conceptual is it? Is it included, for example, as an asset on Greencore's balance sheet? If not, why not?

There are commercially sensitive discussions and negotiations taking place. I am not at liberty to answer the question for one primary reason: under the regulations in which our industry operates it is not Irish Sugar's responsibility but that of growers to transport beet to our sugar factories. We play a large part in helping with that job and it is in our interests to do so. However, the primary contractual relationship is between the growers' representatives and Iarnród Éireann. For this reason I am not at liberty to comment on what that relationship is or what it is likely to produce. I am not a party to it.

Chairman

On behalf of the committee, I thank Mr. Dilger, Dr. Brady and Mr. Martin for attending the meeting and responding to questions raised by members.

Sitting suspended at 4.34 p.m. and resumed at 4.36 p.m.

Chairman

I welcome the SIPTU representatives: Mr. Mike Jennings, Mr. Michael Browne, Mr. Pat McCarthy, Mr. Pat Guilfoyle, Mr. Derek Tracey and Ms Marie Kearney. Before asking Mr. Browne to commence the presentation, I draw to the delegation's attention the fact that while members of the joint committee have absolute privilege, the same privilege does not extend to witnesses.

Mr. Michael Browne

Our presentation will be brief for two reasons: first, we understood we should keep it brief, and, second, the issues we are raising in our submission are clear and concise. There are no issues we wish to hide behind. There are no complications that we will raise with the joint committee. We hope that when we conclude our presentation, it will be clear about the difficulties we have faced as a result of the way in which the company has acted, not alone in the decision it has taken but also with regard to the procedures it has used.

The statement issued following the decision by the board of Irish Sugar to close the factory at Carlow contained the following: "In order to protect its business in anticipation of the impending sugar regime reforms, the company is to close the Carlow sugar factory on 11 March 2005." To take such a devastating and far-reaching decision for the workers at the factory based on proposals not yet negotiated to a conclusion but in anticipation of proposals is not acceptable to the workforce we represent. It should not be acceptable also to the Government.

Prior to this decision, we were aware of difficulties at European level because of the proposed changes in the sugar regime. We were on top of this because, in line with both the farmers' representatives and, as we understood it, the company representatives, we were engaged in a lobbying process with a view to changing the proposals emanating from the Fischler proposals. We were given comfort by the company in its meetings and lobbying that the proposals would change.

We understood from our discussions that one of two things would happen — either the quota would change or the timescale for implementation of the proposed changes would lengthen — the more likely outcome. Notwithstanding this, as worker representatives, we were not consulted. The point keeps coming across from the company that we were. We were not consulted, nor were we given any opportunity to have an input into the decision.

I wish to outline for the committee what actually happened. Following its decision to proceed with the closure, the company circulated a document entitled, Rationalising to Survive. Our understanding is that this document was printed in the UK, which gives an indication of the covert way the company was going about its business. It states that closure of the Carlow sugar manufacturing facility, together with certain other rationalisation measures which had been agreed with the union, would result in the loss of 189 full-time jobs and a further 137 seasonal campaign jobs. The document, therefore, states that agreement had been reached on this matter. When we took issue with the company on this and, despite great difficulty, we finally succeeded in obtaining a letter in which it conceded that it did not consult the trade union or any workers representatives during the decision-making process.

We are here as a SIPTU delegation representing the general workers at the plant. However, also present are Mr. Pat Guilfoyle of the TEEU and Mr. Derek Tracey of AMICUS. These trade unions also represent people at the plant. The company has continually stated, to the press and anyone else who will listen, that the unions were consulted on this and that agreement had been reached. That is not the case and we need to nail that lie once and for all.

Due to the fact that nine other EU member states are opposed to the proposed reforms, there is no doubt that amendments will take place. In this regard, we have continued to call on the company to at least defer its decision. The Irish sugar quota remains unchanged at present. In 2005-06, the company will produce the same quantity of sugar that will be produced in 2004-05. The proposed costs surrounding the transportation of sugar beet from Carlow to Mallow in a closure situation would be more than adequate to ensure a successful and profitable processing campaign at Carlow this year.

The company has spoken about the need to be cost-effective. We know that, regardless of who is obliged to pick up the tab, it will cost more to transport the raw material from Carlow and surrounding areas to Mallow than it would cost to keep our members in employment and a profitable sugar plant open for at least another 12 months. We have tried to engage with the company to negotiate how best the industry could be restructured to facilitate the change coming from Europe. We are not Luddites, we understand that the change will come. However, we want an input into the process but, to date, there has been an absolute lack of consultation on this issue.

The company sent a letter to me on 13 January in which it requested that we attend a consultation meeting concerning the redundancies arising as a result of the decision to cease production in Carlow. Who requests serious consultation with any group of representatives when a decision has already been taken and when that group can have no effective input in respect of or influence in that decision?

The company defends its decision to close Carlow on the basis of the report of the consultants, IPRO. The workforce was never made aware that such consultants had been engaged and, therefore, obviously had no input into the report. We have requested to see the report but without success. This point has been belaboured by members of the committee but a reply is still not forthcoming. The report is the linchpin in the rationale employed by the company in terms of closing a profitable sugar company. We cannot rationalise for our members why they and their families will lose the incomes they earn at Irish Sugar because we have not received — it does not appear that we will do so without assistance — justification from the company as to why this should be the case. In any civilised relationship between trade unions and a company, when that company finds itself in difficulties or wishing to rationalise, the first thing it must do is embark on a series of consultations to justify the reason for its adoption of a particular course of action. We have received no justification.

Our members have asked us how we can justify what is happening in Carlow in order that they can explain to their families why they are losing their jobs. They ask us to provide a rationale but we cannot do so. The company continues to arrogantly refuse to provide the information we have requested. Members saw earlier the type of thing with which we have had to deal.

We believe that the closure of the Carlow factory is more about the realisation of the value of the Greencore site on which it is situated than about cost-competitiveness or EU proposals. We understand that the site is valued at in the region of €90 million. Greencore cannot be allowed, because of greed, to close a profitable manufacturing plant with the loss of 300 jobs. The Carlow factory generates in excess of €8 million annually in wages. In 2004 the plant injected a further €22 million into the Carlow economy through capital spending on indirect labour, materials and supplies. In addition, a €10 million profit was generated by the plant last year.

Another argument advanced by some commentators is that the reform of the European sugar industry will benefit the sugar producing Third World countries. This is completely untrue and is unsupported by the facts. For example, Brazil, with which we have connections through our trade union comrades there, is one of the low cost sugar producing countries lobbying for access to the European market. The sugar industry there is controlled by land barons who, with the support of private militias, evict families from their lands to make way for sugar cane plantation. Those working in the industry are brutalised with the full knowledge of the local judiciary and are ensnared into slave labour. Surely the EU must address such issues prior to opening up the market to these producers.

This is one of the issues we wished to explore when lobbying at EU level in respect of the proposed changes that are being sought. It is completely unfair to expect workers in Carlow to accept that the loss of their livelihoods can in some way be seen as favouring the improvement of the terms and conditions of unfortunate workers in the sugar industry in other parts of the world. That is a fallacy. Workers in other parts of the world will not benefit unless the discussions at EU level encompass the social aspects of those workers' lives. However, that is a much greater issue than can be addressed at this meeting.

There are two main points to our submission. The first of these relates to the lack of consultation. We have shown, without a shadow of a doubt, that despite Mr. Dilger's protestations that discussions have been ongoing about various matters during the past three years, there was no consultation with the trade union movement in respect of the closure of the Carlow plant.

We also have lack of justification. How can a company be allowed to move forward without consulting people while still expecting them to co-operate without a scintilla of justification? The company is not prepared to come to the table to justify what is happening. Its response to the union representation to meet its representatives was to put in place a team of human resources personnel with a view to negotiating a redundancy package. There was absolutely no discussion; neither were we given access to modify the secret IPRO report. It is absolutely top secret and the company is opposed to giving us access to it.

We seek political intervention to ensure Greencore suspends its closure decision and allow dialogue to take place with the trade unions and other interested parties in the industry to reach a mutual agreement on the preservation of the sugar industry. I do not wish to labour the issue of prior consultation but the company is complicating it by hiding behind proposals that have not been negotiated to a conclusion. Its representatives keep telling us about the effect of the EU decision.

Recently, the European Court of Justice ruled that redundancy must be construed as meaning dismissal and that notice must be given accordingly. Therefore, the obligation on employers to consult and notify representatives arises prior to a decision by the employer to terminate contracts of employment rather than after the decision has been made. We are putting together grounds for a formal complaint to the Minister for Enterprise, Trade and Employment on the basis that there has been no consultation on any level.

Deputy Naughten

I thank Mr. Browne for his interesting presentation. He referred to his colleagues in Brazil and their evidence about the treatment of workers and farmers there, which forms part of the basis for restructuring. While this is not central to the debate, it is a critically important issue. Has SIPTU come across Oxfam which is supposed to support such workers but is facilitating this process?

Mr. Browne made a request for political intervention. Despite the State's share in the company, the Minister has made it crystal clear in the Dáil on a number of occasions that she is not prepared to discuss with Greencore a delay in implementation of the wind-down of the facility in Carlow. What is Mr. Browne's reaction to this? Despite the State's share in the company, it was only given two day's notice of the closure, even though company representatives met senior officials in the Department two months prior to the decision. Will Mr. Browne comment on this?

I refer to the discussions between SIPTU and the company. Was there prior indication of the decision? I understand discussions took place with management last autumn during which reassurances were given. Will Mr. Browne outline them? Following publication of the reform proposals by the European Commission, did discussions take place between the company and the union about the their implications for the sugar processing industry in Ireland? Will he comment on the current redundancy talks?

Deputy Upton

I thank Mr. Browne for his presentation and succinct summary. I refer to a joint committee meeting on 1 December 2004 at which it was stated, "Publication of these proposals will, it is anticipated, be the start of a long and difficult negotiation process." That suggests time was on everyone's side and a decision was not imminent. I am surprised, therefore, that there was no opportunity for open and full discussions with the employees on the decision taken.

Has the trade union group been given an opportunity to meet the Ministers for Agriculture and Food and Enterprise, Trade and Employment, given that they should have a central role? The sugar processing industry will be reformed but it is a matter of how far and how quickly. Issues relating to developing countries must also be taken on board.

The current issue relates to the 300 jobs in Carlow. Have substantial proposals been made regarding alternative employment opportunities to sugar beet processing? I asked Mr. Dilger the same question but did not get a reply. The question is based on a doomsday scenario of sugar beet processing ceasing in the Carlow factory. Greencore must have a responsibility to consider alternative productions options. For instance, bioethanol has been put forward as the basis of a proposal. Will Mr. Browne comment on this?

Deputy Hoctor

I welcome the SIPTU members to discuss this pressing issue. Mr. Jennings was recently reported in the Nenagh Guardian decreeing that Greencore was in breach of its statutory obligations by not consulting the trade unions on its decision to cease operations at Carlow. What steps has he taken to follow up this declaration? SIPTU is seeking political intervention to suspend the closure decision until the trade unions have engaged in proper negotiations. Mr. Jennings was present in the Visitors Gallery when the Greencore representatives appeared earlier? What hope does he hold regarding suspension of the closure?

Deputy Fleming

I thank the delegation for appearing before the committee. Mr. Browne may be surprised by my approach but I am extremely disappointed with his contribution as a representative of the employees in Carlow. I represent County Laois where many of the sugar factory employees reside. The decision was announced six weeks ago and no trade union representative has contacted me or other Members from the surrounding counties on the issue. Today, for the first time, SIPTU is seeking political intervention. Where was Mr. Browne for the past six weeks? The sugar factory is located in Carlow but he must know that many of the employees do not live there.

Many of them live in the Graiguecullen, Killeshin and south Laois area. I am very disappointed. I have heard more concern expressed by the witness about workers in another continent than I have about the workers who are losing their jobs in Carlow. I thought the witness's job would be to negotiate. While the witness is debating these lofty issues of lack of consultation and lack of justification, the clock is ticking down to the middle of March. The witness heard what company management said today. On behalf of my constituents who are members of SIPTU in the Carlow sugar company, I would like to see more focused attention on what is facing them in a few weeks time.

The Government has increased the amount payable as statutory redundancy. However, individual employees who happen to be members of SIPTU, but not representing SIPTU, have come to my clinic and informed me of what is on offer extra to the statutory redundancy and which was on offer in Tuam and Thurles many years ago. Greencore is a highly profitable company. I would have expected that the trade union would have been able to obtain a higher redundancy package, given that the company is profitable. Is the call for political intervention to defer this closure representative of the views of the majority of SIPTU members in Carlow? Some of them acknowledge it will happen and others might not like it to happen.

I ask the trade union to address the following question on behalf of its members because those who came to me had no knowledge of the issue. From the point of view of the trade union, what is the state of the pension fund? A number of these employees have contributed to a pension fund over the years. Will the pension fund be sufficient to pay them their pensions? I assume it will be. As employees have contributed to the pension fund, is there a surplus in the fund as a result of contributions by the union's members? If so, what efforts are being made by the union to put a value on the amount and to ensure that its members will benefit from any surplus rather than it going into the coffers of Greencore plc? Some employees have expressed to me their dissatisfaction with the trade union's representation of their interests.

I had hoped to hear more detail of the work undertaken by the trade union on behalf of its members. This contrasts with the suppliers who were well able to contact every Deputy in the directly affected neighbouring counties. The IFA made representations on behalf of its members who are the growers.

Deputy Nolan

It is not too often that I differ with a colleague but in this case I wish to defend the representations Mr. Mick Browne, in particular, made on behalf of the workers who are likely to lose their jobs in Carlow. I have had both formal and informal contact with the trade unions concerned. Last week, both Senator Browne and I and the representatives from Carlow Town Council and County Council met a group of workers. We had a full and frank discussion about the closure of the sugar factory. I had an informal meeting with Mr. Pat McCarthy in the car park of a supermarket at Christmas. Mr. Mick Browne, in particular, has been doing his work in keeping the Oireachtas Members, the public representatives and the officials of Carlow County Council informed on a regular basis.

This is a very delicate time and it is not for the trade union representative to make public statements and deal with the issues over the airwaves or in the newspapers. However, I reiterate Mr. Browne has kept me and my party colleagues updated and informed on every development since the announcement on 12 January and before that date also.

I welcome the delegation. What, if any, negotiations took place with senior management of Greencore? What foreknowledge did the worker directors have of the impending announcement of the closure? What, if any, negotiations have taken place with Greencore to find a substitute industry for the facility in Carlow? Can the delegation enlighten the committee on any proposals it may have in that regard?

Deputy Sargent

I apologise for my late arrival. I was present for Mr. Browne's presentation and I thank the delegation from SIPTU for their attendance.

Mr. Browne stated in his submission that he believed the decision was motivated by the real estate value of the factory. This follows a pattern seen in the sale by Premier Dairies of its milk bottling factory in Rathfarnham and the proposal to relocate Mountjoy Prison which may have something to do with realising the value of a site in the centre of Dublin city. Is there any evidence of this thinking, such as a valuation of the site? If political intervention is required, every piece of information is valuable and essential.

Deputy Upton referred to alternative uses for the plant and this is also an interest of the Green Party and of mine. There was reference to ethanol production. Has this issue been raised with management or is the trade union waiting for the Government to address the issue of excise duty, as is the case in other EU countries? The Government has not proved helpful but that is a matter for another day. I raised the issue during Leaders' Questions in the Dáil. Has any initiative been taken at local level to explore the possibilities, given that the raw material is eminently suitable for ethanol production?

Senator Browne

I concur fully with the comments made by Deputy Nolan. I thank SIPTU for its help, co-operation and advice given to me as a public representative on this and other occasions. I refer to the case of Comerama where the Government and the current Tánaiste gave the workers a raw deal.

I suggest to Deputy Fleming that he should not shoot the messenger and should make all efforts to make constructive comments. I hope he will play an active part in securing a meeting with the Minister for Enterprise, Trade and Employment and the Minister for Agriculture and Food. His Government colleague in the constituency, the Minister of State, Deputy Parlon, is telling everyone that Deputy Fleming is an accountant and does not know anything about farming. I suggest he should aim his fire at him and not at SIPTU, which is unfortunately under severe pressure because of Braun and many other companies in the Carlow-Kilkenny area who have let workers go in the recent past.

I support SIPTU in its efforts. A constructive and rational meeting was held in Carlow last week. I hope we can advance the cause of the workers in the sugar factory by means of such a forward-looking approach. I am surprised by Deputy Fleming's outburst. The committee has seen for itself today how difficult it is to deal with the Greencore management. Even though we asked many questions, unfortunately we got very few answers. I do not envy SIPTU in its work in that area.

Mr. Browne

There are a number of ways to consider whether people are disappointed with us. I would be disappointed if any members of the union are channelling their disquiet over lack of information through a third party when we have a very efficient and effective mechanism for reporting back under which all our members are requested to attend. At these meetings we debate and feed back information on the status of our attempt to keep the plant open. With regard to his disappointment in me personally, unless Deputy Fleming is a card-carrying member of SIPTU and wishes to process a complaint through that channel, I can really give him no satisfaction on the matter.

I will deal with the positive issues raised. We are aware of the organisation Oxfam. There is a difficulty in this whole debate. Obviously it is very benevolent in its views as to what should happen. However, unfortunately it is in conflict with the people on the ground. The conflict is that these markets cannot be opened until a social structure is introduced that protects the people who will produce the product. That is not a lofty position; it is a question of people who are in the sugar industry being brutalised. We have evidence of people who have been tortured and put to death because of the control that private land barons have. This debate is taking place through a specific committee in the Irish Congress of Trade Unions. While we are aware of it, difficulties exist. I hope that answers the question.

Obviously we are extremely disappointed in the Minister's position on the matter. Are we disappointed because the Minister is not getting involved or supporting what is still a profitable industry? Our biggest disappointment is that in 1991 we engaged in an agreement with the then Government and Greencore to privatise this industry. Our members experienced considerable pain as a result of that privatisation. Greencore has profited substantially since the introduction of that privatisation agreement. Ingrained in that agreement is a clause that guarantees our members continuity of employment with the company, which is where the big disappointment lies. Having signed up to the agreement and having had it endorsed by the then Taoiseach, who, I believe, was Mr. Haughey, Kieran Mulvey from Labour Relations Commission and ourselves, we now find that we cannot give our members satisfaction on the agreement.

We are at a loss over the issue of the special share and we cannot get a straight answer from the company. At this point it is a very relevant issue and will become more relevant in the event that the company decides to move the share into another European processing company, which, as we understand it, would give it access to massive funds from the European Union for decommissioning the plant and allowing the quota to go.

On the redundancy negotiations, there is no agreement between the group of unions at Irish Sugar and the Sugar Company for the closure of the Carlow plant. A long-standing agreement is in place, which we have used in recent years to facilitate voluntary exit of people from the plant. It consists of a package of five weeks pay per year of service plus the State statutory entitlement. We are awaiting a hearing of the Labour Court in pursuance of our claim to increase those terms. We do not need to be told how to conduct our business in this regard; we are well aware of how profitable the company is and the miserable treatment it is attempting to mete out to our members. This is not a road we want to take because we do not want redundancy and want to maintain this plant as a viable profitable plant. We must represent our members' interests and in the event of the company deciding to issue the statutory RP1s to our members, we cannot have our members left high and dry without anything to fall back on.

Questions were asked about the haulage of sugar beet. I am not an expert on the tonnage that is available in the area, but I am sure SIPTU's comrades in the IFA will give the committee some information in that regard. It is obvious that we raised with the company the failure to put in place a procedure for the transport of 750,000 tonnes of raw product from Carlow to the processing plant in Mallow. The union understands that there are no tangible plans in that regard. The last time SIPTU representatives spoke to the company about the matter, it dismissed us by saying it would transport the product by road if it could not reach agreement on rail transport. If I recall correctly the calculations we did in that regard, we worked out that in excess of 20 loads of bulk sugar per day would be sent back by road from Mallow in such circumstances. I had better get the figures right — I know we did some work on the matter. Approximately 400 loads of beet would have to be transported every day from Carlow to Mallow. A load is the volume transported by articulated lorry or tractor-pulled trailer. While Mr. Dilger spoke of shortening campaigns, to increase production in Mallow will require the stretching of the campaign length to 120 days. This will be the period over which traffic to the factory will be on the road. I defer to the next delegation in terms of the provision to the committee of the precise details.

Chairman

I call Senator Browne.

Deputy Naughten

Senator Browne is climbing up the ladder as we speak.

Senator Browne

The Chairman will make Deputy Nolan very nervous. Great traffic management work has been done in Carlow in recent years thanks to beet growers, transporters and staff at the factory. The problem of an odour from the lagoons was also rectified. The Carlow plant won an award recently for an initiative to reduce the amount of soil intake per load, which reflected very well on workers and growers.

Mr. Browne touched on the important point that goods would not only be transported to Mallow, but pulp will have to come back from there. The management of Greencore did not address that issue today. As AA Roadwatch will be very active from next September, the Cork politicians who are gleeful today may have a different outlook next winter when they receive complaints from constituents about poor road infrastructure. The road from Mallow to Dublin is atrocious and its use by 400 lorries per day will be chaotic.

Deputy N. O’Keeffe

How many man days were lost over the past five years at campaign time? Were there difficulties with strikes or management problems?

Mr. Browne

No days lost were lost through industrial disputes over the past five years.

Mr. Jennings

I intended to discuss earlier an issue which might be inferred from Deputy Ned O'Keeffe's line of questioning. Half of our delegation today comes from Cork. It is important to avoid the appearance of a division or the idea that SIPTU seeks the closure of Mallow and the continued operation of Carlow or vice versa. The union contends that both plants should remain open until, if ever, it is inevitable that one must close. The day it is inevitable that one must close, the decision must be taken on a rational basis and allow adequate time for the provision of alternative employment. That is what we mean when we refer to “alternative product”.

The committee should understand that the issue for us is not one of Carlow versus Mallow. We would like the committee to recognise in its deliberations that the unions are united in their opposition to the decision. The union position is that if an employer can get away with a closure of this magnitude based on such little evidence, the likelihood is that it will do the same again. If the Carlow factory is closed on the basis of such a flimsy argument, our colleagues in Mallow would be wise to be nervous about working for the same employer.

Mr. Pat Guilfoyle

As regional secretary with national responsibility for the sugar industry with the TEEU, I agree with Mr. Jennings. We represent the position of workers in the Irish Sugar Company and in our endeavours to save the jobs at Carlow, we have the full support of our colleagues in Mallow. Deputy Ned O'Keeffe should take note of that.

I am sure Deputy Fleming would have said something else to us had we breached the terms of the Industrial Relations Act 1990 and taken action against the company on the basis of what it was trying to do to us. In one breath we are expected to adhere to industrial relations legislation and in the next we are taunted about compliance. Deputy Fleming should talk to people in his party about what is required of trade unions. It may be open to our colleagues in the IFA to do things differently, but we are pushed into a position in which we must comply at all times with legislation.

Mr. Dilger referred to political intervention this morning. The quota is a national asset and should remain one. Irrespective of the result of the current process of restructuring, when it comes to determining who owns the quota, former and current employees from Carlow and Mallow should not be forgotten. If Deputies Fleming and Ned O'Keeffe have the best interests of the workers at heart going forward, they should keep an eye on the ownership of the quota. I hope they will act on our behalf when the time comes.

We came here to make our case and welcome the opportunity to do so. We did not expect to experience the hostility we have from Deputies Fleming and Ned O'Keeffe. It is not the unions that are closing the Irish Sugar Company factory at Carlow, it is the board of the company and Greencore. That should not be forgotten.

Ms Marie Kearney

Mr. Tracey

It states there will be hard and painful decisions and the company will do what it must in order to retain the business. It will focus sharply on the survival of the sugar industry. Signed by Dr. Seán Brady, chief executive of the Irish Sugar Company, it continues, "I would like to wish each and all of you and those close to you a very happy Christmas." That was the extent of consultations before the closure.

The behaviour of Greencore as regards the pension scheme was raised. While I understand the pension scheme is reasonably healthy, I do not know how long that will continue to be the case. I will give an indication of how well Irish Sugar employees have behaved in industrial relations terms. A ruling issued by the Labour Court two years ago that death in service benefit should be extended from three to four years has still not been introduced for Greencore employees. I do not know what are the circumstances of widows of employees who died subsequent to the ruling. I would hazard to guess, however, that they would more than welcome an enhanced package of four rather than three years' benefit. Greencore is a public limited company which likes to portray itself in a certain light. I will quote from its literature.

Chairman

I have given Mr. Tracey latitude. He should be brief.

Mr. Tracey

It states, for example, that we have fun, enjoy the work we do and treat one another with respect and dignity. Individuals at all levels of the business, it continues, feel valued and valuable.

Individuals in the company feel vulnerable. I thank the Chairman for his patience.

Chairman

On behalf of the committee, I thank Mr. Browne and his colleagues for attending this meeting and for the manner in which they responded to questions raised by members.

Sitting suspended at 5.42 p.m. and resumed at 5.43 p.m.

Chairman

I welcome Mr. Rory Deasy, vice president of the IFA, Mr. Michael Berkery, general secretary, Mr. Jim O'Regan, chairman of the beet section and Ms Elaine Farrell, executive secretary. Before asking Mr. Deasy to commence his presentation, I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to the delegation. I apologise to Mr. Dillon. If I had known he was about to leave the meeting, I would have said goodbye.

Deputy Hoctor took the Chair.

Mr. Rory Deasy

I thank the Chairman and members of the joint committee for their interest in this matter and apologise on behalf of the president for his absence. This is one of the few times I have been required to deputise for him but my head will not swell as a result of being in the presence of Deputies and Senators.

This is a difficult time for farming and agriculture, as it is for industry. I appreciate the interest the joint committee has taken in hearing from all sides in this debate, the trade unions, management and the beet growers. Members listened to Mr. Dilger put a professional spin on his company's decision to close the Carlow plant. Farmers view the closure in a different light. Greencore has made substantial profits from sugar, including more than €20 million last year and in excess of €30 million in other years. The Carlow factory processes half of the company's sugar output and made a profit of more than €10 million. It is not, therefore, in deficit.

Mr. Dilger sees storm clouds coming and has decided to batten down the hatches and run for cover. His decision was premature and undermines the Minister's negotiating position in Brussels by conceding that the quota will be smaller and the sector will consolidate. He also stated the price will be cut. What is the company doing? It wants to retain its profit margin all the way to the bank and leave workers and farmers to carry the can. This attitude has created distrust and malaise because it is not sustainable.

The alternatives were not spelt out to the joint committee. Why has the company not invested in adding value to its sugar? Mr. Dilger's answer is to cut 300 jobs and transport 700,000 tonnes of sugar production to Mallow. The unions and beet growers are at one that the company's decision is premature and have asked that it be deferred until everything is explained rationally and logically. Our argument makes perfect sense.

As was the case with the trade unions, no discussions were held with the beet growers who were presented with a fait accompli. Irrespective of what we do, the company’s plans will have major implications. By extending the timescale — when weather gets bad and sugar contents fall — farmers will incur much greater losses.

I have worked as a farmer in the developing world. Having taken part in the Department of Foreign Affairs bilateral aid programme in Zambia, I have seen both sides. I saw sugar cane production in Mazabuca where people work ten hours per day in conditions akin to slavery for less than a dollar. It is proposed that the European Union accede to having world prices and dismantling its entire sugar regime in world trade negotiations. Under the current regime, the 49 most fragile economies in the African, Caribbean and Pacific, ACP, countries have access to 1.8 million tonnes of sugar at the EU price of €615 to €650 per tonne.

This price is put in two ways. The first is by having an import tariff of €415 a tonne on top of the world price of €200, which gives the EU price of €615. If we allow 1.8 million tonnes at this higher preferential rate, we are, in effect, giving those fragile economies an extra €750 million. If we dismantle the EU regime they will have to supply it at the world price. That is fundamental to the matter. It is one of the points that has to be made.

I have heard the calls from Archbishop Martin, Justin Kilcullen from Trócaire and Oxfam. This defies logic. I have seen what happens with my own eyes. I do not have a problem.

We have a quota situation in Europe. We are not allowed to produce at will. We can only produce up to the quota. The negotiations are ongoing. The decision was premature. We sought a one-year deferral from Irish Sugar so that we would have time to make plans. With the indulgence of the Chairman I will call on Mr. O'Regan, the chairman of our sugar beet section. He knows more about the matter.

Deputy J. Brady took the Chair.

Mr. Jim O’Regan

I thank the committee for inviting us to make a presentation on what is effectively the closure of the Carlow sugar factory. I will briefly outline the importance of the crop and the number of people involved in it. Sugar beet is traditionally grown in the tillage areas of Ireland. It is of great importance. It would be correct to say that it is the backbone of the tillage industry. There are 3,700 growers but outside of these, an additional 5,000 people are employed in the industry from factory workers, the haulage sector, agricultural contractors and suppliers. This sector of agriculture has given significant employment for the past 80 years. It is worth €80 to the farming community and €140 million to the economy. The countryside buzzes with activity during the beet harvesting campaign. We cannot stress too strongly the downstream employment provided by the beet industry.

From day one we disagreed with Greencore's decision taken on 12 January 2005. Since the EU announced its proposals on 16 July we mounted a vigorous campaign nationally and across Europe to defend the sugar beet industry. We have stressed the importance of the industry. We have built alliances across Europe. I accept that the Minister and the Department of Agriculture and Food have also been active in this area. To date, ten countries are involved in an alliance to oppose the cuts that are being imposed. The cuts remain at the proposal stage.

It was a bit like the first round of the championship. Five minutes into the first round of the championship Greencore decided to go off the field and go home. In effect, that is what it has done. In doing that, it undermined our campaign in Europe and that of the Minister and the Department.

David Dilger made an excellent but flamboyant presentation here today. If one was to judge it on flamboyancy, it would win. However if it was to be judged on fact it would be seen to contain many holes, which we would hope to expose before our presentation is concluded. The best approach would have been for Greencore to join with us and the Minister and her officials in opposing the cuts proposed by the EU. That would be the best service Greencore and Irish Sugar could have rendered. However five minutes into the first round of the championship they decided the game was not on for them and they went home.

The decision was taken on 12 January. As previous delegations have outlined, no consultation whatsoever took place. We met with Irish Sugar on 17 December. We had heard rumours that such a decision might be taken. We spent hours inquiring about the matter from various angles. We made the point that many farmers take out conacre for the growing of beet. Farmers need to make plans in that regard. We explained that we needed answers for our members. We left the meeting as wise as when we went in to it. We did not get an indication that such a decision would be taken. I heard the news at 2.55p.m. on 12 January, soon after the Stock Exchange had been informed. We have fought the campaign since.

The decision should be deferred for 12 months until such time as a proper plan is put in place to get an orderly transfer from having two factories to one factory. To date our calls have fallen on deaf ears. From what we can see there is no plan in place. We were told within 24 hours of the announcement of Greencore's decision that a plan was in place, but from what we can see the plan is unravelling by the hour if not by the minute.

We were told a rail depot would be put in place in Bagenalstown. A negotiating team which included the beet section of the IFA met representatives of Irish Sugar at the other end of this city one night. At the end of a five hour meeting we were guaranteed that a plan was in place and that the rail depot would be up and running by mid-September. That plan had unravelled within 24 hours. First, Bagenalstown was mooted as the location of a rail depot; then it was to be a former Bord na Móna site in the Bog of Allen. Following that, Portlaoise was mentioned as a possible location but that changed to the Curragh of Kildare. I question if there is a plan. I do not think there is one. We have met Irish Sugar for the past three days and, frankly, it appears that no plan is in place, nor are any transport arrangements in place.

David Dilger commented earlier that they have been in constant negotiations and discussions with the farming community outlining the seriousness of the situation. We invited——

Chairman

I apologise for interrupting Mr. O'Regan. There is a vote in the House. I believe Deputy Naughten is paired. I suggest that Deputy Naughten chair the meeting while the vote is taking place. Is that agreed?

Deputy Hoctor

Will anybody be left?

Chairman

Senators will still be here. Mr. O'Regan can continue to make his presentation.

Deputy Hoctor

The other option is to suspend for ten minutes.

Senator Callanan

All members would like to hear the presentation.

Deputy Hoctor

Otherwise we will miss whatever is said.

Chairman

The committee will suspend for 15 minutes until the vote is over.

Sitting suspended at 6 p.m. and resumed at 6.15 p.m.

Chairman

Mr. O'Regan, I ask you to continue.

Mr. O’Regan

I was making the point that David Dilger made a comment during his presentation to the effect that Greencore has been in constant consultation with growers on this issue. The company's handling of the closure has been nothing short of a disaster. It did not consult the partners in the industry, bearing in mind that we are partners. Four or five nights after the closure, we held a public growers' meeting in the Dolmen Hotel in Carlow, which was attended by 1,000 concerned growers. We invited the management of Irish Sugar to the meeting to outline why it took the decision at the time in question and why the market was regarded as so bad. We went to each tier of Irish Sugar and Greencore, up to the highest level in the latter organisation, to try to get management to attend. However, management did not turn up.

The matter has been handled disastrously. Since the meeting, the process has gone off the rails and into the quagmire. We met Irish Sugar and it assured us it had a great plan to get the beet to Mallow. Every time we meet the company, the plan is changed to include Bagenalstown, then Portlaoise, the Curragh and back to Carlow. I do not where it is at this juncture. I do not think there is a plan. In the part of the country from which I come there is a saying, "If you do not plan, you plan for failure". What has happened in this instance is that the company has planned for failure.

Irish Sugar and Greencore claim that there will a cost saving to them of approximately €7 million from closing the Carlow plant. That may well be the case for them but what is the cost to our members? The cost to the growers to transfer the approximately 670,000 tonnes of beet to Mallow is an additional €10 per tonne approximately, which comes to €6.7 million in total. However, the costs do not stop there; they include the length of the campaign being extended from 80 to 120 days. Mr. Dilger made the point that he wanted more efficiency from the plant and its capital and so opted for the 120 day campaign. That may be fine for him and for efficiencies at Greencore and Irish Sugar but, from our side, changing from an 80 to a 120 day campaign has serious cost implications for growers.

It has cost implications because the ideal time to harvest beet is between 1 October and mid-December. Once one harvests later than the date at which the crop is mature there will be harvesting losses much like a late cereal harvest. We calculate those harvesting losses at €100 per acre. Moreover, if one decides to harvest at the opportune time and store the crop, one will accrue storage losses which could be even higher. This means one is damned if one does and damned if one does not. Therefore, while there are efficiency bonuses for Greencore in operating a 120 day campaign, serious costs are incurred by growers.

A major concern of growers concerns the plan to transport the beet to Mallow. Our calculation is that it has gone out the window and that the company has no real plan in place. I do not believe it will be in place for the 2005 campaign. This is why we have called for the deferral of the decision until a proper plan can be put in place with all the partners in the industry.

A member of the committee asked what effect this will have on road transport. If one cannot transport the beet by rail — there is no railhead there — our calculation is that, excluding the north Wexford beet, which will go to Wellingtonbridge and accounts for approximately 200,000 tonnes additionally, approximately 500,000 tonnes of product will have to be transported by road. We have calculated that this represents almost 150 trucks travelling through Mitchelstown and Mallow every day. I know Mallow and Mitchelstown. This figure is additional to what is already transported through the towns. There will be 300 truck movements per day through Mitchelstown and Mallow. Over a ten hour day, this represents 30 extra truck movements. What will that do? It is a notoriously bad road. As the Mallow factory is at the opposite side of Mallow town, all the trucks have to pass through the town.

We have heard a great deal about the golden share. Members of the committee have asked numerous questions about it today, as have we for some time. We want the Minister to come out strongly. She has a strong role to play in this matter. Given that the Minister holds a golden share in the asset of Irish Sugar, the Carlow factory cannot be dismantled until a well-documented and orderly plan is put in place to transfer the beet from the Carlow area to Mallow. However, that plan is not in place.

The value of the site was mentioned earlier. We believe the real reason the decision was taken has to do with the value of the site. There are 316 acres of prime development land, which I heard has been valued at €90 million. No consultation has taken place with the partners. We met Irish Sugar on 12 December and pressed for a decision but we could not get one at that stage. Some 40% of the beet of Ireland is grown on conacre and people take conacre on an 11 month system, which has implications if it continues into the second year. We stated that we needed answers but were unable to get them.

We have heard a great deal about the profitability of the industry. However, Irish Sugar has bailed out Greencore investments in the past on more than one occasion. Up to a year ago, Irish Sugar, while it was accounting for approximately 33% or 34% of the turnover of Greencore, was contributing 40% to the profits. Irish Sugar has been a very profitable enterprise for the Greencore Group.

Mr. Dilger commented that two Ministers and the IFA organisation had accepted that there would not be a sugar beet industry after the EU reforms. However, we have never conceded that and we never will. We have conceded that the proposals as outlined yesterday would mean there would not be an industry in Ireland. However, these were the proposals. If Greencore had stayed with us, along with the Minister and her officials, our job was to overturn those proposals. We have a good record and various Ministers and officials have had a good record of overturning proposals and having them tailored to suit Irish conditions.

What we should have done is stay together as a unit and fight the proposals. Had we done so we would have been left with a viable beet industry. However, one partner in the industry decided to walk off the pitch after five minutes, effectively throwing in the towel to the EU and giving the impression that we are not really serious about the industry. I wish to make it clear that we are serious about protecting the beet industry and we will fight across the country and Europe for its protection.

Mention was made that we are in discussions with the company. This is the case. We spent last Friday, Monday and yesterday in discussions but we do not have the price of what is involved. Moreover, there is a huge additional cost. Nothing has been agreed and this closure is causing a huge financial shortfall, which is a huge cost to the growers. At this stage, this cost has not been addressed.

This decision was taken in haste and without consultation with the partners. If it had been taken in consultation with all the partners, we would have a different plan. I urge the company to defer the decision for 12 months and put in place a proper plan which will work so that we will have a viable industry for many years to come.

Deputy Naughten

I asked Mr. Dilger about the issue of transport. It seems Greencore has to date not had any extensive discussions with Iarnród Éireann about the provision of rail transport to Mallow. It also seems that Greencore has not discussed the issue of rail freight subsidies with the Department of Transport, which is a very basic issue. Many of the company's competitors throughout the EU have such a subsidy scheme in place, for example, the UK has one. He appears to have thrown the issue back to the IFA and the growers but where does the buck stop for the provision for transport services? Mr. Dilger thinks the IFA is responsible, not Greencore.

What discussions have there been with the IFA's sister organisations throughout the European Union and what indications are coming back from those discussions or from discussions with the Commission's officials on a possible compromise? What impact will taking the beet sector from the arable sector have?

What are the envisaged additional costs to farmers for the transport of sugar beet from the Carlow and north Leinster area to Mallow? How will growers address the estimated loss in the quality of sugar, and the lower return from it, resulting from the longer processing season? What response has Greencore given on the scale of compensation it will provide?

Have discussions begun between either the Department of Finance or the Department of the Environment, Heritage and Local Government and Greencore on the use of beet as an alternative energy source in light of the huge implications of the Kyoto Protocol and the impact sugar beet and the arable industry could have on that?

Deputy Upton

The only group with answers to these questions is Greencore but the questions that are of concern to us, SIPTU and the IFA did not get a response. The company's negative attitude is disappointing.

Mr. Deasy said that adding value to sugar had not been looked at. Have there been any discussions about putting something viable in place to make sugar into an added value product? The removal of the beet crop will have an impact on the sector. Is any viable alternative crop that could be considered in a doomsday situation? What about the use of sugar beet as a biofuel? This is an important issue that we will have to address because we will have to replace 2% of petrol and diesel usage with renewable fuel sources by the end of 2005.

Deputy T. Dempsey

There are two sets of victims in this. SIPTU represents the first set, the workers, many of whom live in the Bunclody area. I feel sorry for them, they are losing their jobs through no fault of their own or of their union. The second victims are the growers, 1,016 of whom are in Wexford. The county is the largest beet grower per head of population. The economic sense behind the closure of the Carlow factory has been debated ad infinitum but I agree with the IFA that in the interests of a smooth transfer of business from Carlow to Mallow we should debate this in depth.

Have alternative uses for beet been considered? There must be a depot somewhere for north Wexford growers. The IFA told me that Bagenalstown is being considered but farmers in Wexford consider that unsuitable. Does the IFA have a view on where the depot should be? Have negotiations been concluded with Irish Sugar about increased transport costs? I have been told there is a loss of sugar content in the beet after Christmas.

Deputy Fleming

Before the break, the SIPTU delegation asked for the political intervention of the Oireachtas committee. I spoke with the Minister for Agriculture and Food during the vote in the Dáil and she is happy to meet the trade union delegation as soon as a date can be arranged.

Farmers who have spoken to me feel aggrieved. A dairy farmer has a financial beneficial right if milk quota is sold, transferred to the national reserve or migrates from Leinster to Munster. Mr. Dilger's long-term view is that is how it will be. That is not necessarily the case but what can the IFA do to push this case? This is a different quota but it appears unjust from the farmers' point of view that they have been the sole producers and suppliers of the product for so long but the contract can be taken away on a whim and they receive no compensation.

Deputy Nolan

What does the IFA think of Mr. Dilger's stark remarks about the Irish sugar industry and his unguarded comment that he sees a future for sugar beet production in Leinster and the midlands as a "short-term" industry, with possibly a cluster of producers around Mallow? That will have serious applications for growers in the midlands.

Senator Browne

The depot in Bagenalstown is a non-runner. We must all sing from the same hymn sheet and ensure it is located in the Carlow factory site that is currently owned by Greencore. It has all the road infrastructure in place and only a minimal rebuilding of the railway line is needed. We can make progress if we stick together otherwise we are playing into the hands of Greencore and it will ultimately suit the company for the rail depot not to go ahead. It will claim to have made every effort but was blocked so we must put pressure on it. I get the feeling, however, that Mr. Dilger is receptive to that idea. In connection with the board meeting on Wednesday, 12 January, is there a member of the IFA on the board of Irish Sugar?

Mr. Michael Berkery

Not directly. There is an IFA——

Senator Browne

Perhaps Mr. O'Regan can clarify that later on. I understand that person voted in favour of the closure of the factory. Did the IFA nationally back that vote? Mr. O'Regan might clarify the position of that person on the board, and state whether he had advance notice of the meeting and advance approval to vote the way he did.

Deputy Hoctor

I welcome the IFA representatives. Mr. Dilger expressed short-term confidence that the transition from Carlow to Mallow could be achieved. In the long term does he foresee our being able to reach the 200,000 tonne sugar quota in view of all the difficult circumstances presented here today? I support the idea of energy crops which we must consider in the long term to keep ahead of the issues presented.

Deputy Ó Fearghail

I echo my colleagues' support for the IFA presentation and the SIPTU delegation. We need more clarity on the critical issue of transportation. In the initial stages Greencore-Irish Sugar actively advocated a depot in Bagenalstown.

At the end of his contribution Mr. Dilger seemed to back off from the company's responsibility for transport and place this on the shoulders of the producers and the farmers. How have the negotiations between the two groups progressed on that issue? Who will take responsibility for solving that problem if the Carlow factory is closed?

Senator Callanan

I thank the Chairman for allowing me to comment, particularly as Mr. O'Regan is from the parish next to mine. I welcome everybody today.

I was extremely disappointed with the Greencore presentation and responses, despite their veneer. We would do the sugar industry some justice if we invited Greencore back soon.

Transport is a very important issue. Mr. Dilger said there were several meetings last week and this week. Will Mr. O'Regan say what these achieved? He said the success was minimal. What type of issues were discussed? Does Mr. O'Regan's negotiating body for the beet growers intend to drag this out to the point where contracts are negotiated, implemented and crops sown, then take what they get? Is that the story?

Mr. O'Regan referred to the profits of Irish Sugar supporting the company at large. Does he consider that Greencore-Irish Sugar is managed well?

Deputy Wilkinson

Many of the questions I wanted to raise have been asked. Mr. Dilger's long-term forecasts startled me. The effect of the loss of the beet industry, and the crop with its general value to tillage, have not sunk in to the working people and farmers of Carlow. Greencore suggested that it foresaw beet being grown around the Mallow area. Imagine the loss and change that will cause in the agricultural pattern of the Carlow area. It did not see a good future for the beet industry, which is surprising news. The case put by the IFA made sense. It is important to defer this for a year to give the Minister and the country a chance to negotiate this properly.

I am not optimistic about this matter but I was taken aback at the coldness of Greencore's presentation and its attitude to workers and farmers who have served the company for decades. Some of those people have had beet contracts for generations, going back to a time when it was not as easy to produce beet as it is now. It was very clear that for Greencore profit is the bottom line and it does not care about anything else.

Mr. Deasy

I shall try to field as many of the questions as possible and then hand over to Mr. O'Regan. Deputy Naughten asked whether we had discussions with Irish Rail about transport and a rail freight subsidy. The Minister for Agriculture and Food should be involved in that as she would have some influence on the Minister for Transport. We have not had such discussions.

Transport charges will cost an extra €10 per tonne and there are losses of over €100 an acre. As for energy crops, we do not manage the company but we can think laterally and see that there must be solutions other than those the company proposes. We would not strip the assets but would look at it in a positive light and seek solutions that keep the business going, the workers employed and have a long-term State benefit. Mr. O'Regan will deal with the questions about the negotiations in Brussels as he is attending them.

This is one of the first industries created by the State. Tuam, Mallow, Thurles and Carlow were the first places to benefit from this and it is sad to see the business cutting back to one plant. We concur with the unions that there is no gain for Mallow because that plant is only one step away from being closed too.

All farmers, whether from Carlow, Wexford or Cork, are united in this. We do not see the logic of this decision. The alternatives have not been properly explored. The Minister has the power to make the company profitable by removing the tax and it is her job to explore this.

Deputy Upton asked about my comments concerning adding value to the sugar. Those were broad comments that I would use in any business, even in farming. Producing any item at world prices is not a viable option. One has to add value to it, which is why farmers see it that way. Irish Sugar should be doing likewise.

Deputy Tony Dempsey said closure of the factory should be deferred for one year. He also asked if we have an alternative and where the depot should go in Carlow. We want a deferral of closure for one year. In Mr. O'Regan's view it will not be viable or up and running in a year. Farmers have experience of delivering to Carlow and it would be our preferred railhead. Deputy Fleming wanted control to be taken of the quota. The question of who owns the quota has been discussed. I heard David Dilger claiming he owns it. ICTU stated the unions should not be left out of it The Minister has a duty to sort this out. Our bottom line is that we want an industry maintained. The IFA does not have a board member on Greencore.

Senator Browne

Will there be unanimity on the issue of the Carlow site?

Mr. Deasy

Discussions are still ongoing. However, there are many rumours as to where it is going. I am being pragmatic and honest on the issue. My preferred choice is Carlow because it would be catering for people as it was before.

Senator Callanan asked if I was of the opinion that Greencore was being run properly. Over the years there have been extraordinary losses and write-offs, such as €71 million with the Imperial Holly Corporation and €53 million with another bakery. These are serious amounts of capital to be haemorrhaging and this probably explains the asset stripping that has occurred. Deputy Wilkinson put his finger on it regarding the role of the Minister for Agriculture and Food, with whom we had a meeting on 9 February. She has a key role to play in this matter and we would like to see her more involved.

Mr. O’Regan

Deputy Naughten asked about the position on the transport subsidy. It is difficult to know where one is with transport if there is no depot in place. One cast iron assurance we received was that Bagenalstown was to be the site of the proposed depot. However, this fell apart after a few days. Our preferred option is Carlow. People have drawn sugar beet to Carlow for the last 80 years. If the factory remained open for the next ten years, they would still be happy to draw it there as people are accustomed to using the site. There is a rail line already on the Carlow factory site, running close to the Armer Salmon division of Irish Sugar which was sold one year ago.

There is an additional cost of approximately €6.7 million to transport the sugar beet from Carlow and Mallow. If Irish Sugar and Greencore close the plant to save €7 million, why should they then ask the growers to pick up the transport tab? We have rejected this because it is Greencore's responsibility. Further costs will be added by late harvesting and sugar content. These issues must be addressed.

We have not received answers in three days of negotiations. The negotiations were in effect meaningless. At lunchtime yesterday, we decided there was no point in carrying on this fruitless exercise. We have made it clear to Greencore that it needs to re-think the whole episode and come back with realistic figures or defer the closure of the factory.

There will be a large impact on the tillage sector since sugar beet contributes a tonne to the acre in cereal rotation. Take the engine out of the car and one is left with a damn bad car. Sugar beet is the engine in the car, so to speak. It contributes one tonne to the cereal industry, not alone in yield but quality.

We are in favour of a biofuel industry alternative. To be viable it will require an excise concession, which the Government must consider. The impact of late delivery on sugar content is an issue of concern to us. Clarifying quota ownership is vital, as was seen during the closure of Banagher Maltings. The quotas on malting barley growers of counties Laois and Offaly were lifted overnight. The same company can do the same overnight. This is why the quota ownership is vital. The Minister for Agriculture and Food must decide whether she or the IFA has quota ownership.

We are not happy with the three year commitment to the Carlow sugar beet growers. Irish Sugar and Greencore must give a solid commitment through a long-term agreement that will protect sugar beet growers in Leinster. Beet is grown in the Chairm an's constituency of Meath by some of the best tillage farmers. Those men have a right to survive in the industry. I travel from the Old Head of Kinsale or very near it to Deputy Hoctor's constituency and everywhere in between. That is our role and we will perform it.

Senator Browne mentioned the Carlow rail site. We believe it is the ideal site. People have drawn beet to it for 80 years and I am sure if the factory were open for another eight or ten years they would be delighted to go on doing so. It is the most suitable site into which to draw the beet. That is our position.

In response to Deputy Hoctor, we could and have reached the 200,000 quota and have exceeded it in some years. We want to grow it. There is one important element here. David Dilger and Irish Sugar would contend that it is the marketplace that counts, and I agree. However, there is another side to the coin. If one wants to protect one's margin for the shareholder, then between that and the marketplace one has to squeeze either the grower or the worker. Who then are Irish Sugar and Greencore trying to squeeze? They are trying to squeeze the workers or us to protect a margin for the shareholder.

Deputy Ó Fearghail mentioned transportation. We have made it clear that there is no plan in place. That has been the cornerstone of management failure in all of this. Elaine Farrell was part of the team yesterday and one thing in particular struck us when different issues arose. It seemed to us that no cost analysis was done regarding the cost of transporting beef either from Carlow or Portlaoise. That gets back to what we have been saying. We ask to see the plan, and that the decision be deferred until discussions are held with people who can properly plan it out.

In response to Deputy Wilkinson, sugar beet is the backbone of the tillage industry whether in Kinsale, Carlow or north County Dublin. Sugar beet is the engine of the tillage industry and we must fight to keep it. We intend to do that in Europe and we are damn disappointed with Greencore's decision to blow out the cornerstone from under the campaign we were conducting in Europe.

Chairman

On behalf of the committee, I thank Mr. Deasy, Mr. Berkery, Mr. O'Regan and Ms Farrell for attending today. It was a long and hectic day. We look forward to meeting the IFA soon again. I ask the IFA representatives to relay my apologies to their president. If I knew he had to leave, I would have gone out to greet him.

I will suspend the meeting for two minutes as we have some legislation to pass and I ask the committee members to remain to do that. It will not take long.

Sitting suspended at 7.03 p.m. and resumed at 7.10 p.m.

JOINT COMMITTEE ON AGRICULTURE AND FOOD debate - Wednesday, 23 Feb 2005

Carlow Sugar Factory: Presentations.

Mr. David Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Dr. Seán Brady

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Dilger

A Deputy

Mr. Dilger

Mr. Dilger

Mr. Dilger

Mr. Michael Browne

Mr. Browne

Mr. Mike Jennings

Mr. Browne

Mr. Browne

Mr. Browne

Mr. Browne

Mr. Jennings

Mr. Pat Guilfoyle

Ms Marie Kearney

Ms Kearney

Ms Kearney

Ms Kearney

Ms Kearney

Mr. Derek Tracey

Mr. Tracey

Mr. Tracey

Mr. Rory Deasy

Mr. Jim O’Regan

Mr. O’Regan

JOINT COMMITTEE ON AGRICULTURE AND FOOD debate -
Wednesday, 23 Feb 2005