JOINT COMMITTEE ON AGRICULTURE, FOOD AND THE MARINE debate -
Tuesday, 10 Jul 2012

Redevelopment of Sugar Beet Industry: Discussion

Chairman

We are in public session. I ask all present to turn off their mobile phones completely as they interfere with the transmission broadcast system, which is quite a nuisance. We would all be grateful if people would oblige.

I welcome Mr. Michael Hoey, chairman, and Mr. Chris Harmon, Mr. Brian Arnold, Mr. Jim O'Regan, Mr. Pat Cleary and Mr. Simon Cross from BEET Ireland and thank them for coming before the committee today to brief it on the potential redevelopment of the Irish sugar beet industry.

Before we begin, I draw to the attention of the witnesses the fact that they are protected by absolute privilege in respect of the evidence they give to the committee. However, if witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I ask Mr. Hoey to make his opening statement.

Mr. Michael Hoey

On behalf of BEET Ireland, I welcome the opportunity to make a presentation to the joint committee. The BEET Ireland team has a broad range of experience in primary agricultural production including sugar beet, fresh produce and value-added food production, sustainable energy production and agricultural machinery manufacture, including beet machinery. Most of all, it has experience in retail markets, finance, business planning and management consultancy. We believe this broad range of experience and expertise is a key factor for the redevelopment of the Irish sugar industry and we are proud to bring this vision to the committee today.

I know members are familiar with the background to the loss of the sugar beet and sugar production industry from Ireland in 2006 and we do not intend to go over old ground. However, I note that the timeframe for the EU sugar reform regime covers the period 2006-15. If Ireland is to regain this sector of Irish agriculture and value-added food, establishing a policy framework for the redevelopment of the Irish sugar industry is currently a top priority.

Food Harvest 2020 maps the current policy framework for the Irish agri-food sector. It takes a broad view of the industry from primary agricultural production to the value-added food and marine sectors. The one gap in the policy document relates to tillage and the sugar industry. We must consider the role that the redevelopment of the sugar industry can play in the broader agri-food policy framework.

The redevelopment of the sugar beet industry in Ireland will complement the overall targets which have been set for the development and expansion of the Irish food sector. The Irish food industry is currently on a growth trajectory due to its strong competitive advantages in terms of quality and branding. By 2020, the Irish food industry is targeting growth of in excess of €1 billion across the dairy, beef, pig, sheep and poultry sectors. The redevelopment of the Irish sugar industry, in addition to recapturing the domestic Irish sugar market and developing a new bioethanol industry, will also help to supply the animal feed demands of a growing agri-food sector.

In the context of the broader value-added food industry, guaranteeing the security of supply of Irish sugar will deliver synergistic benefits for existing and future enterprises that have sugar as a key ingredient in their production processes - for example, confectionary, chocolate and drinks manufacturers. As members know, at present every grain of sugar used in Ireland is being imported at a cost of approximately €200 million annually.

We believe the redevelopment of the sugar industry can play a key role in Ireland's national recovery. It is clear there is a current requirement to stimulate sustained growth in the Irish economy and, in this context, this project presents a unique opportunity. The impact of the project will be spread over a large geographical area as sugar beet will be grown in many counties. The project is clearly rural in nature. From a farmer's perspective, sugar beet can play a critical role in crop rotation, leading to improved cereal yields as well as providing additional animal fodder in the form of beet tops and beet pulp, which is a by-product of the sugar production process. From a services sector perspective, the industry requires significant logistics inputs, mainly in the transport of beet to processing facilities and the delivery of beet pulp back to farms for animal feed.

On the value-added side of the industry, an Irish supply of sugar will provide a secure and cost-effective supply of sugar to food and retail enterprises in Ireland. The link that Irish customers had with this most fundamental of Irish products will be re-established and we believe it will lead to new food enterprise opportunities. Overall, investment in Irish sugar production will have a strong multiplier effect for the domestic economy. Once re-established, it will provide a stable industry that will not readily exit the country again.

The 2013 CAP reform negotiations will provide the opportunity to create a new European policy framework for sugar production. Planning for the redevelopment of a sugar-bioethanol industry by the private sector requires enabling policies by the Government to open the door to the redevelopment of this industry. While the closure of the Irish sugar industry took place in 2006 over a very short timeframe, the redevelopment of a new industry will take many years of planning and co-ordination.

For over two years, Country Crest and BEET Ireland have been actively working on the feasibility of redeveloping the Irish sugar industry. Ongoing implementation of the BEET Ireland project must be undertaken in tandem with the EU negotiations on the future of the sugar industry in Europe and on the assumption that Ireland will be allowed re-enter sugar production. The comments of the EU Agriculture Commissioner, Dacian Ciolos, that he wished Ireland well with any eventual bid to revive the sugar industry, adding that market indications were that a competitively priced sugar product could be successful, provide a positive outlook in this respect. In addition, we know that we need the cross-party support of this committee to sow the policy seeds for a new sugar industry in Ireland.

Our project plan is based on a best practice food and energy business model. The plan leverages the many benefits which will flow from the reintroduction of the industry, for example, employment, exports, reduced imports, food security, bio-fuel supplies, and synergistic links with other food businesses. The plan recognises that sugar is a key food ingredient across the food and drinks industry, and can play a strategic role in the development of the agrifood sector. The development of an Irish sugar processing facility for this strategic food ingredient will have long-term beneficial effects for Ireland's food industry.

Our business philosophy sees growers as having a key role and stakeholder status in the value added sugar and bio-ethanol industry. In 2010 and 2011, we organised a series of grower meetings in three former beet production areas of the country, with a view to testing grower interest in the redevelopment of the sugar industry in Ireland. Grower response was unanimously positive and this provided the impetus and background for undertaking a feasibility study. A technical feasibility study was commissioned and funded by Country Crest and Cross Engineering. The technical feasibility study was undertaken by the PM Group, a company with extensive global experience in the design and construction of food manufacturing facilities, including sugar manufacturing facilities. The PM Group feasibility study was completed during the first half of 2011 and this provided the necessary manufacturing costing for the preparation of a feasibility business plan for the project. The technical feasibility study and feasibility business plan provided the business case for the redevelopment of the sugar industry in Ireland. In September 2011, this plan was presented to the Minister for Agriculture, Food and the Marine.

The proposed project represents a significant capital investment of €400 million. It is estimated that 2,000 growers will supply sugar beet to the facility. The employment benefits accruing from the project will include 250 direct operational staff in the processing plant, another 500 staff during the construction phase and 2,000 indirect jobs in service sectors such as transport and logistics, machinery manufacture and so on.

We recognise the important role that this new joint committee can play in the redevelopment of the sugar industry for Ireland. There are three simple recommendations that we make to the joint committee today: that the joint committee will ensure that Ireland's restrictions on sugar beet production for the purposes of sugar production are removed within the ongoing CAP negotiations; that the joint committee undertake a review of Food Harvest 2020 to ensure that sugar beet and tillage form a central role in post 2015 agrifood policies; and that the joint committee works with the Joint Committee on Jobs, Enterprise and Innovation to ensure a seamless policy framework, spanning primary agriculture right through to value added food enterprise.

Once again, I thank the committee for allowing us to make our presentation and we would be pleased to answer any questions that committee members may have.

Chairman

Thank you for the presentation and the summary of recommendations made to the committee. I propose to take spokespersons from each of the groups. There are a significant number of committee members with an interest, so we will take three or four at a time before going back to the witnesses.

Deputy Michael Moynihan

I warmly welcome the representatives of BEET Ireland to the committee and I thank them for the detailed presentation, along with the amount of work they have been doing behind the scenes in the last few months on trying to get the beet industry back up and running in Ireland. Mr. Hoey has neatly condensed the recommendations of the group and what it wants from this committee. The issue will be about trying to ensure at European level that we have the framework to get back into sugar production. I know that the group has done much work on the feasibility of the business side and on the agricultural side. Has the group been in contact with beet organisations in other European countries about this?

The Commissioner indicated in January that he would like to see us re-entering the sugar production industry, but other information from Europe seems to suggest that they are pushing the date out from 2015 up to 2016 or even 2020, but there may be a compromise on that. The committee will have to make a major political effort to speak with one voice to try to get the message across that there is a big appetite in the country for re-entry into beet growing and sugar production. Perhaps the witnesses can tell us about the discussions they have had and the indications they are getting from beet producers in other European countries and feedback they are getting from farming organisations in those countries. The major emphasis will have to be on the date. There should be no stone left unturned in making sure that the date is not pushed out further.

We may not have the richest land for growing beet, but we certainly had a huge input into the staffing of the sugar factory in Mallow. In the greater Duhallow region, there is not a family that would not have had at one stage a family member working in the factory. It has been a loss to the rural community and in any efforts being made to reintroduce sugar production, we will try to help in any way, shape or form that we can. I thank the witnesses for the work their group has done to date. Fundamentally it is about Europe and we want to make sure that we get across that bridge as best we can.

Deputy Michael Colreavy

I welcome the witnesses from BEET Ireland. While this is a brief document, I know that it has been distilled from much detailed work done over the last few years. As a committee, we appreciate the work that has been done. There is certainly cross-party support on this committee for any proposal that would benefit 2,000 beet growers, 500 people engaged in construction and 2,000 indirect jobs. There will be cross-party support for any project that has a realistic chance of bringing this to fruition. I have not seen figures on imports coming into the EU. Perhaps the witnesses could advise the committee on the matter. I note the reference on page 3 of the presentation to exports. Does the business plan include a proposal that this country would export sugar products to the EU?

There is no certainty about the date because there seems to have been some shifting of the ground on 2015. Some commentators have suggested that it could be moved out as far as 2020. It is still up for negotiation. What impact would a change in the date have on the business plan that has been prepared if it goes to 2016, 2018 or 2020?

At one stage the Minister also spoke about the need for broad cross-party support for the re-establishment of the sugar beet industry and that co-operation was readily forthcoming. He indicated that one of the strengths of this country's entry position was that there was a unity of purpose in terms of the promoters of the project. I am not sure whether the unity of purpose still exists. There may be unity on the objective but not on the means by which to achieve it. I would like the witnesses to tease that out with us. To one who has not been deeply involved in the discussions and negotiations, it would make sense that there is a unified approach both within the committee, the broader political system and the promoters of the project. I am concerned that a lack of unity might be a weakness that others who might not want the project to succeed would exploit. I would welcome a comment in that regard.

Deputy Martin Heydon

I thank the representatives of BEET Ireland for addressing the committee and providing a detailed outline of the project. I am on the record of the House as speaking on the sugar beet industry in the Chamber. It is something I felt passionately about before I was elected to the House. We can talk about the smart economy, cloud computing and a range of things that will get this country back on its feet but we do not need to reinvent the wheel. We must get back to what we were good at, namely, industries in which we have expertise, climate and soil type. We have expertise not just in terms of farmers who can grow the beet but also those in manufacturing who can make the machinery, those in industry who know about processing and the added value dimension that ethanol brings into the mix.

On the cost of sugar to the food industry, there is a real benefit for consumers and people employed in the agrifood industry. The food industry is now one of our leading lights yet we have companies in this country whose main produce is agrifood and not only are they paying through the nose for sugar but a more serious problem is the quality of sugar they are getting and the fact that the supply is not guaranteed. I have spoken previously to industry representatives who told me that it is bad enough to pay a high price for sugar but the one thing that will drive them out of this country is if they are not guaranteed a supply.

From a farming point of view the beet industry is crucial. I grew up snagging my uncle's beet for years and I know the important role beet played as a break crop for him as a tillage farmer in south Kildare. One only has to look at the CAP proposals going into the next term and all the talk about the greening method and rotation. We are at risk. The farming industry in this country misses sugar beet as a break crop. Our soil type is being damaged because of it. That is another factor to add to the mix.

From a consumer point of view when people buy a bag of Siúcra they think it is Irish and that they are supporting Irish industry. They do not realise that there is absolutely no connection to this country anymore. That should never have happened but it is the position we are in. It is one of the reasons we must get back to growing beet.

The third point in the recommendations is that the joint committee would work with the committee on jobs, enterprise and innovation to ensure a seamless policy framework. Given the potential for ethanol production the Department of Communications, Energy and Natural Resources also has a role to play. The Minister indicated in the past that we are restricted in terms of funding for the re-establishment of the industry but when one considers the strict targets we must reach by 2020 on the production of 20% of energy in this country, the bioethanol aspect of a return to the sugar beet industry has much to offer. We must investigate the potential for financial supports. The group should examine that in addition to the proposal to work with the sub-committee on jobs, enterprise and innovation.

We have a body of work to do. The Commissioner was before the committee in January and he stated clearly that it was the Commission's proposal to abolish quotas by 2015. We indicated our support for that. My view is simple, namely, there are plenty of countries that do not want the abolition of quotas by 2015. That is a battle we might not win. What we have been clear on all along and on which we must continue to be clear is that if quota remains after 2015, so be it, but we must be able to access quota. We are not involved until 30 September 2015 but after that if quota continues there is no reason we cannot have access to it. In many respects that could be to our benefit rather than it being a free-for-all with every country accessing it. That is clear from our point of view.

The points on Food Harvest 2020 are interesting. I would like someone to expand on them to ensure that sugar beet and tillage form a central role in the post-2015 agrifood policies. Perhaps the witnesses do not believe that is adequately reflected at the moment.

I commend the group on its interaction in recent times with former growers and potential new growers. That has been beneficial because if the industry is to return it will need that level of buy-in. A big investor is required to come up with the money. We must find out what the investor needs to get the project over the line. What is required is someone who is willing to put money at risk to back it and we must support that person.

I commend the group on the work it has done with the PM Group and how it has managed to raise finance to get to this point because it has not been easy. Great credit is due to the group for having pushed things this far. It is our role as politicians to support them in every way we can in order to get the sugar industry back into this country. It is in everyone's interest in this country that we get the industry back.

We do not wish to dwell on the past and I am conscious that all-party support is evident for a return to the industry. There is a saying that one should look at the past but one should not stare at it. One should always learn from the past. We must be mindful of the mistakes that were made in the past and how we lost this industry. That should never have happened. I am interested in hearing the views of witnesses on how we can set up the industry to safeguard it from the mistakes that happened in the past and avoid them happening again, allowing for the fact that we will do what we can at a political level and that we get a big investor who is willing to re-establish the industry.

Deputy Michael McNamara

I thank the speakers for attending. As has already been outlined the current quota system is due to expire in 2015. In the event that it does, we would hope to be in the market straight away. In the event that it does not, and it is pushed out beyond that, this country has a compelling case, which is already being made by the Department to get a share of the quota should it be extended. What is the lead-in time? Are BEET Ireland and the beet producers treating 2015 as the date on which effectively they must bring sugar beet to the markets? What is the lead-in time for the 2,000 growers to be able to produce beet in sufficient quantity to take a sizeable chunk of that quota in 2015? Second, what is the lead-in time for developing a facility? I note Mr. Hoey mentioned the direct employment of 250 operational staff in the processing plant, as well as the creation of 500 jobs during its construction phase. What length of time will such development take, including planning? While sugar beet production has been carried out at some sites in the past, one cannot assume it will resume on one of those sites and consequently, there also would be planning implications. What would be the time period required?

Senator Mary Ann O’Brien

I thank the witnesses for doing an incredible amount of work, for their feasibility study and for their presentation. For the benefit of the joint committee and the witnesses, I refer to a tiny business in Newbridge which employs 100 people, with a probable potential for 20 or 30 more jobs in the next two years, which is directly related to this industry. Our little company has had two tenders on its desk in the past week, one from the world's favourite airline in England and the other from Qatar Airways, both of which require 50 tonnes of sugar. The tenders are for desserts, with the one from London being for 8 million or 9 million desserts. The tender document I was reading this morning referred to food security and security of supply, provenance and price. My intention has been to outline to members a real-life case pertaining to sugar and to small Irish industry. My 100 staff know about this tender. While we already have the British Airways business, the tender includes five European companies, two English companies and ourselves, and we are up against it. However, were that raw material in this country, what a difference it would make to me?

Chairman

I should have allowed the Senator to summarise at the end, as that contribution was very important. I thank members and will revert to Mr. Hoey for his response.

Mr. Michael Hoey

On Deputy Moynihan's question as to whether we have been in talks with other European countries, the answer is "Yes". One country with which we think we can work very well is Slovenia. We met its farmer group in recent weeks and its representatives flew over to meet us subsequently. They wish to redevelop their own sugar industry there. I emphasise that all we seek to do is to bring back sustainability in sugar to this country, just as do our Slovenian counterparts. They are not interested in buying sugar from large countries within the European Union that are taking a monopoly position in this regard. As for Senator Mary Ann O'Brien's comments, she is at the coalface of this industry, just as are we. We experience these problems every day in that we are being held to ransom for sugar supplies, which is no longer good enough. Ireland can produce some of the best sugar beet in the world but that is not being done. Many countries want to retrieve the right to so do. They want the rope to be cut from behind their backs to free their hands again to be able to do what should be a given right for them, that is, to produce their own food. This is the type of conversation we are having with people from other countries at present.

Because so many powers want the quota system to be extended beyond 2015, it probably will be. However, in BEET Ireland's discussions with the Minister, he has been highly sympathetic in this regard. All we seek is a small derogation to allow Ireland back into this industry. Another question concerned the ramping up of this proposal and how our timelines would fit in. Our business case and process allows for a three-year ramp up to full production and in consequence, we will not hit full production in year one. Moreover, that would be the wrong thing to do because as everyone knows, if one is being pushed to the limit, everything that can go wrong will go wrong. We seek a three-year ramping up. As for the current figures within the European Union, my understanding is the European Union is approximately 75% self-sufficient in white sugar. What we are seeking from the entire cake is very small and hopefully this qualifies that point. Perhaps Mr. Arnold will answer the question on the two groups.

Mr. Brian Arnold

Deputy Colreavy mentioned there is cross-party support, about which we are delighted. We consider that for a project as big as this, which involves bringing back a new industry to Ireland, it is a good thing that there are a number of people examining it. In itself, that provides confidence. As for the fact there have been a number of feasibility studies to prove the case, we do not perceive that to be a negative but a very strong positive. Reference was made to whether there was a proposal for exports. While the Irish market is obviously the key market, within our own business plan we envisage a scenario in which there would be exports from the country. In addition to import substitution, we envisage the generation of new export markets, possibly within and possibly outside the European Union. Such an export drive probably would target similar areas to those considered by the Food Harvest 2020 strategy in respect of beef and milk products.

Mr. Michael Hoey

One comment made by Deputy Martin Heydon pertained to the Food Harvest 2020 strategy. I do not know how many members have read the strategy document but there is a huge emphasis on animal production. The authors of Food Harvest 2020 appear to have disregarded the entire tillage sector. In the first instance, one must question how all these animals will be fed. Thereafter, one must question the rotational process of the crops that will feed such animals. I am fortunate enough to have been on the steering group of Teagasc in recent years and as a body, we consider it necessary to have a strong policy on tillage within Food Harvest 2020 to provide those cereals and whatever else. Within that policy, in tandem with the existing greening and rotational policies, sugar and sugar beet should be reintroduced because one will complement the other and we will have created a virtuous circle. If one reads Food Harvest 2020, it appears as though a large piece of the circle is missing. This is something BEET Ireland would like to re-establish.

Deputy Michael Colreavy

In response to Mr. Arnold, I understand his point and of course it can be useful to have two technical studies or two feasibility studies. However, there comes a point beyond which one is translating from a study into an actual proposal to develop something. I retain serious concerns that two approaches to develop the business will weaken the overall proposal and will provide an opportunity to knock this proposal to those who are and will be opposed to the re-establishment of the sugar beet industry in this country.

Mr. Brian Arnold

We see this in two completely separate zones. We are addressing the policy issue today because if the door is not opened by the Government in terms of negotiations in the EU there will be no industry. It is as simple as that. Different people are looking at options for the industry, which we see as a strength. The growers of Ireland will make the call on what project they want to support.

Mr. Michael Hoey

I ask Mr. Chris Harmon to give a breakdown of the business model and how we see the shareholding being made up.

Mr. Chris Harmon

Grower participation is fundamental to our business model. This has been widely communicated. Growers will have a significant stake in the new industry. It is an attempt to rectify the wrongs of the past and there is also an appetite among growers to ensure the industry, if it comes back, is firmly rooted in Ireland so that growers have a say in the future development and success of the industry. We met many growers through the various workshops we have carried out in recent years. There is an investor element because we will not be able to raise all of the money from growers. Banks also have a role to play. There is a troika required for finance for the new beet industry. We believe it will be a successful model but, as pointed out by Mr. Hoey and Mr. Arnold, a clear message from the Government that it supports the initiative is key to its success. If we do not get that clear message through the joint committee, no beet grower or bank will put money on the table. The destiny of both groups is in the hands of the Government. I hope I have answered the questions.

Deputy Tom Barry

I welcome this policy discussion on the future sugar industry. I welcome the witnesses and congratulate them on their efforts. I know many of them very well. If there is one matter that has galvanised political unity, it is the sugar industry. My views on sugar are well known and I do not intend to revisit the past. We should never have left the sugar industry but unfortunately we did. I congratulate the European Court of Auditors, which published a report that kickstarted meetings I held in late 2009. People came out with a natural goodwill to recreate an industry. It was dumbfounding. From going around the country, we knew there was an interest. From that, we saw BEET Ireland, with Michael Hoey, coming on board and other tillage groups and people such as Alan Navratil, who travelled a lot with me. It is great to see this major level of interest.

As an island nation, we have enough transport cost impediments and we do not want a playing pitch that is not level. The reform of the sugar industry promised cheap sugar for businesses such as that of Senator Mary Ann O'Brien and Mr. Michael Hoey. We had cheap money and look where that got us. We were promised cheap oil and look where that has gone. We will certainly not see cheap food. It is like a spring. The price of food has been held down for years. All of a sudden, the spring has broken and we do not know where it will end or when it will reach its natural level. Security of supply is critical. The presentation referred to the six benefits – employment, exports, reduced imports, food security, bio-fuel supplies and synergy of links. Other benefits include foreign direct investment, which will come into this country when there is a surplus of supply of sugar. I am not as clued in as the witnesses but if we were to build the plant suggested in the morning, it would take 60% of our home production, leaving a 40% surplus. That would not be a problem because companies would come in and lap up the surplus as a secure supply of sugar into the future. We must treat this as an industry. There must be tie-in with industries here. It also benefits small companies. I established a small company many years ago on the back of the sugar industry and I am proud to have done so. The company of Mr. Simon Cross is a world leader in its field and is still there after the sugar industry. Burnside Engineering is another example of a company that got involved because of the sugar industry. These will be the unsung heroes doing their own business.

As a former beet grower, I know this project must pay its way. There is no way I will be out producing beet unless it pays me to do so. The challenge lies before both groups. It is good to have competition and to have it teased out properly. I do not want to produce something at a loss because I have done that for long enough in farming. We want a viable industry created but it is crucial that today's discussion is about policy and allowing the potential of getting back into the industry. The challenge for people promoting it, like the witnesses, is to ensure it pays its way for farmers such as me.

Other members referred to the fact that the last system was far from perfect. As a young farmer, I could only get ten acres of beet while I was growing 600 or 700 acres. That there was no system to bring in young farmers and leave old farmers retire with some comfort is one of the reasons we left production. Quotas were dragged into an older farming sector and, when compensation arrived, many of them thought it was a good handshake. I am not criticising them. We cannot allow that to be replicated. I am not criticising any Government; it happened because of the dynamics of finance. I am also on the steering group of Teagasc with Mr. Michael Hoey. The Harvest 2020 document has a serious lack of measures to deal with tillage. I discussed this with officials of the Department of Agriculture, Food and the Marine and they are receptive to it. We need to bolt on the tillage aspect, part of which is beet, because it is very important. From that, we want to link to enterprise because this whole point spans beyond agriculture. I will do anything I can to help on that point.

On the noticeboard in my office, I have pinned a bag of sugar I purchased from a multiple in Ireland. The multiple will remain nameless but the witnesses can see for themselves tomorrow. The bag suggests it was produced in Ireland but neither the plastic nor the sugar was produced in Ireland. That is a challenge we face. Why should we try to nurture a business in this country when the playing pitch is uneven? We do not give the consumer a proper, fair decision-making process and the chance to buy what is intrinsically Irish. That is a discussion for another day.

I thank the witnesses for the presentations and I am aware of the countless hours of work they have put in. They are all coming from different aspects of the industry – with Mr. Jim O'Regan and Mr. Pat Cleary from the farming side. It is good to see that sugar is not going away even though people thought it was dead in the water six or seven years ago. Sugar will be here until this is sorted out and hopefully we will all earn a few quid. Sugar will be one of the industries to pull this country out of the economic turmoil and give companies, such as that of Senator Mary Ann O'Brien, peace of mind and security of supply. That is what it is all about.

Deputy Pat Deering

I welcome the witnesses and compliment them on the work they have done to bring the matter to this stage. Carlow, from where I come, has suffered as a result of not having the sugar industry. The sugar factory in Carlow is synonymous with the many side effects of this. Carlow has not recovered since the sugar factory was closed a number of years ago. This is an appropriate and timely debate. There has been much talk in recent years of the need to provide a stimulus for our economy. There is no doubt a revival of the sugar industry would be the ideal stimulus. Agriculture has been a good news story in recent years. Prior to that, the emphasis was on the construction industry, with agriculture being seen as second class. Now it is sexy again, and a return of the sugar industry is undoubtedly an aspect of the sector that is worthy of support.

Deputy Michael Colreavy referred briefly to the fact that the existence of two groups advocating for a revival of the industry shows the degree of interest. The focus in this regard inevitably must be on making the case to Brussels, where all such decisions are made. We must ensure we have a common theme and that everybody is on the same wavelength if we are to achieve our common objective of restoring the sugar industry in this country. No single player is bigger than the industry itself. Have the delegates done any work with the Irish Sugar Beet Bio-Refinery Group in terms of devising a common strategy? The delegates have clearly done a great deal of work in bringing forward their proposals and I expect we will find the same is true of the other group. Where do we stand in terms of the two groups pulling together to achieve their common objective?

The price of sugar has never been as high as it is now. What figures are we looking at in the future to ensure a revival of the industry in this country is sustainable? There is no guarantee that prices will be as good in three or four years' time when we are looking at a return to production. Do the delegates have a baseline in terms of what is sustainable and viable for the future? Have transport and other costs been factored into the equation?

The grower is crucial to the entire process. With all due respect, the compensation schemes that were introduced in the past applied largely to an older generation of farmers. As we have seen in recent years, however, more and more young people are seeking to return to farming and the agricultural colleges are filled to capacity. I am concerned at detecting a degree of reluctance within certain farming organisations to the notion of a return of the sugar beet industry. Have the delegates met with representatives of those organisations to push their agenda and to ensure everybody is on side? We must not have sniping on the sidelines which might prevent progress in this area. The delegates indicated that a revival of the industry will require 2,000 growers. What type of acreage would be involved to ensure the project is viable for the future?

I compliment the delegates on the work they have done and assure them of our cross-party support. Nobody in this room is opposed to the revival of the industry. As I said, it would be an ideal stimulus for the broader economy.

Senator Pat O’Neill

I welcome the delegates. Some of my questions might require a degree of medium to long-term forecasting. I accept the delegates are not fortune tellers, but everybody involved in business has a dream and that involves a degree of forecasting. We have seen the sugar beet industry in this country move from State control to private ownership before subsequently being shut down entirely. The delegates envisage an industry operating under a private company, which means that global prices will dictate business. How can security of supply be ensured in that situation? Given that prices are currently very high, it seems viable to envisage the potential for export into international markets. One must, however, take into account the effect of the ending of quotas post-2015 on world prices. Do the delegates expect that countries currently engaged in sugar production, such as England, Poland and Finland, will increase production rates? Or is it possible they will seek to contract beet growth to countries such as Ireland for export to their plants?

If the price of milk continues to rise and world sugar prices remain as they are, the abolition of quotas in 2015 could well lead to a land war in regard to input costs. Land is the basic requirement for any type of production and we all know the sugar beet industry in this country was one of the driving forces in conacre. The rotation system meant that people were always looking for better land to grow beet and in locations closer to factories. I recall the dread I felt as a child on being told by my father that I had to start on a drill in the morning and keep going until I got to the top of it. That was the less pleasant aspect of beet growing, when weeding and so on had to be done by hand. Do the delegates see the possibility of a reduction in global prices after 2015 which might make it no longer viable to grow beet? Do they see the danger of a land war between dairy farmers and tillage farmers? There is a limited supply of land in this country and the amount of good tillage land on which beet can be grown is further limited.

This committee is in favour of a revival of the sugar beet industry. I would go further and say it should never have never been shut down in the first place. My main concern is that a private company cannot guarantee security of supply from local growers in a situation where we are operating on world markets. I would particularly appreciate the delegates' view on whether countries like England might begin importing sugar beet from other countries after 2015.

Senator Michael Comiskey

I welcome the delegates, including my former colleague from my IFA days, Mr. Jim O'Regan. Their proposal is entirely deserving of our support. It is a dreadful loss to the country that we cannot grow sugar beet. In County Leitrim we would not have land good enough to grow sugar beet, but we certainly used a great deal of the beet pulp in difficult times. We are currently enduring a particular difficult harvest and it would be very useful if there was an ample supply of beet. The figures show that we spend €200 million annually on sugar imports, as against an outlay of some €400 million to set up a plant. On that basis, it makes sense to proceed with efforts to restore the industry.

Will the delegates indicate whether they envisage that a greenfield site will be required? Are the four former sugar factories dismantled at this stage?

Senator Susan O’Keeffe

I thank the delegates for their presentation. Are they geared for the eventuality that the 2015 deadline does not materialise and progress is delayed as far ahead as 2020, for example? They have not indicated where they propose to locate the facility and Senator Michael Comiskey asked whether a greenfield site would be required. Perhaps this is something the delegates do not wish to disclose at this point. Would an environmental impact survey be necessary in respect of the facility given the difference between how beet is currently processed and how it might have been done in the past? Will the delegates confirm they are proposing a private company as opposed to a co-operative?

Chairman

I remind members that we are operating under a time constraint and that a second delegation is waiting to address us. I thank Deputies Jack Wall and Noel Coonan for waiting their turn as non-members of the committee.

Deputy Jack Wall

I congratulate the delegates on the tremendous work they have done to bring the project to its current state. As a former employee of the Irish Sugar Company, I had the benefit of visiting the four original factories, in Tuam, Thurles, Mallow and Carlow. I worked in Carlow for many years and saw the benefit of the industry to the Irish economy. Some 1,500 people worked in the factory in Carlow and that did not include Erin Foods, which was attached to it. This was a huge industry in rural Ireland and its benefit could not be overstressed.

I am not a member of this committee but I believe it has a huge part to play in moving this forward. I was in Paris recently and met the agriculture attaché in the Irish embassy. He told me up to 17 countries are looking to retain the quota system. This committee must visit those countries and talk to its counterparts in the other parliaments in order to put our case. The loss of this industry was a disgrace - the biggest one we have seen in the past 25 years. It is unbelievable for somebody who was employed in the sugar factory in Carlow to see nothing left but the lime kiln. It was a disgrace that the company did this to the Irish people.

I mention Senator Mary Ann O'Brien's company and other companies. There is an onus on this Government and on political parties to ensure guarantee of supply to such industries and to ensure there is a future for them. I hope the committee links up with countries which believe the quota system should be retained and that Ireland is allowed in. We must be allowed in. We are an island nation and we are entitled to be allowed in.

The figures from Europe determined the loss of this industry. There was much misinformation in respect of the figures and so on. This committee must play an active role. From talking to this committee and to other Deputies who are interested in the issue, I know the Minister is sympathetic in this regard but we must support him. I hope we will see delegations visit other countries to put the Irish case and ensure we are not hindered in any way if they succeed in holding on to their quotas and that we get a share of the quota.

Deputy Noel Coonan

I thank the Chairman for allowing me to speak at the committee, even though I am not a member of it. I compliment the witnesses on their presentation and the work they are doing. They have my full support and I think I can say the same of the entire committee. It is vital for the country that they are successful in what they have set out to do, namely, revive the sugar industry. We will play a full role in that. An old saying, which is probably more related to the dairy end of things, is that long churning makes bad butter. In the interests of the witnesses and of the producers, some form of visible progress is needed for those who will support this industry.

The witnesses' first recommendation was that the joint committee ensures the restrictions on Irish sugar are lifted. I understand they have had a series of meetings with various Ministers and opposition leaders. Are they satisfied with the response they have received to date? Will they update us on progress made?

It has been mentioned that this might drift out to 2020. Would the witnesses be able to hang on until then? If we are successful in 2015 with the quota restriction and if we get the go ahead to produce sugar in this country, will the witnesses be in a position to meet that target because 2015 is rapidly approaching? What is involved in getting to that stage? I understand a €400 million or €500 million investment is required. Are the witnesses depending on the Government for that investment or are they and other investors raising it? How close are they to identifying a site? Producers need some form of assurance that progress is being made and that a site has been identified. Planning permissions, zonings and so on can be very time consuming. I would like a comprehensive update on what is happening. In so far as the witnesses can, will they outline the progress made to date and when they expect to reach their targets?

One of the essential elements is the primary producer, namely, the grower. We often take the growers for granted and expect them to put on the green jersey and do it for the sake of Ireland. They must receive a guaranteed profit from their venture. That is important. They want to know how much they will get paid per tonne of beet. Has any research been done on the beet crop over the years so that it would yield better results, a higher tonnage or higher percentage of beet? Have the witnesses put that into the equation?

I wish the witnesses every success and say to them to keep up the good work.

Chairman

I will not comment until the end because I do not want to repeat myself. Some of the questions asked of this group will be asked of the other one.

Mr. Michael Hoey

I will address a couple of questions while Mr. Jim O'Regan will address questions from a grower point of view. One of the first questions was whether we had talked to grower organisations. There seems to be much talk that grower organisations are opposed to beet being grown again. We have had many meetings with the hierarchy in the IFA. Through our own business, we frequently must meet them. They have given us their blessing on this initiative and have said they will stay to one side and allow it to happen. They will not oppose it in any way. They are there for the good of agriculture in this country and if sugar fits into that and if it does not cause hassle, they will not oppose it.

The question of this being a private company and of vested interests being involved was raised. Perhaps members are misinformed on that point. This is not a private company. We want grower involvement, which is core to this. The model we have put together has grower involvement and the growers will have a blocking share in this company. It will be a sort of co-op model but it will be a private company with many shareholders. That is how it will be made up.

Growers will be on the board of the company. From the results of British Sugar, which were published in the last couple of weeks, one sees that profits are heavily weighted towards British Sugar. The growers get very little. I am a farmer and most of us here are farmers or take our living from the land. We would not be here today if we thought growers would not get a return. That would not happen.

We were asked about grower numbers. We are talking about 30,000 hectares of beet. That will take roughly 2,000 growers. It might be fewer if some growers have more acreage, but we are looking for 30,000 hectares of beef to produce 1.8 million tonnes of sugar.

The question of competition for land and what will happen when quotas come down was mentioned. We must realise that the population of the world has never been as high as at present. There are 7 billion people on the planet, compared with 2.5 billion in 1950. All of those people must be fed. Everyone in this room remembers the European food mountains of some years ago. Today, they are gone. Food is in suspension. The planet produces the same tonnage of food now as it did ten years ago. Improvements in agriculture, including genetic modification, have not led to a rise in tonnage. I do not believe there will be surpluses of anything when quotas come down. The mechanisms are not there to make that happen. Farmers will have many different avenues of food production in the future. There will not be a rush into sugar production.

Those are the points I wished to address. Mr. Jim O'Regan may give a grower's perspective.

Mr. Jim O’Regan

Thank you, Chairman, and I thank the committee for allowing us to address you today. Some members of the committee have mentioned the formation of a private company. I can say, as a growers' representative, that there will be strong grower involvement. The fact that we have held a series of meetings around the country over a two year period indicates that we are keen to have grower involvement in the redevelopment of the sugar beet industry. There will be grower directors of the company. This will protect the interests of growers. What happened in the past must never again be allowed to happen. The industry will not be swept from under our feet, whether by the EU, the Government or private enterprise. That is not on our agenda.

The EU is now approximately 80% self-sufficient in sugar production. When we exited the industry in 2005-06, the EU had a surplus production of about 25%. At that time, EU officials predicted that world sugar prices would collapse and that Brazil would flood the world with sugar. Has it happened? It has not. Brazil has gone back to producing ethanol from much of its sugar cane and is now in a sugar production deficit. The EU is now importing sugar from elsewhere in the world. At the time, non-governmental organisations made much of the harm EU sugar policy was doing to Asian and Pacific countries. In fact, the EU sugar regime was giving those countries an industry. Everything the EU predicted at that time has been proved wrong.

When Ireland exited the industry we were producing 1% of the EU sugar quota. On a number of occasions when we met the Minister for Agriculture, Food and the Marine, he made the point that pressure is coming from bigger countries, such as France, Germany and Holland, to retain the present quota system. I can see where they are coming from. They want to protect the gravy train they are now on. The Minister has said he will seek a derogation for Ireland so that, if the bigger countries want to protect the quota system until 2020, we will be allowed to produce our national quota. That is hugely important and we ask the joint committee to support the Minister in that.

It was prophesied at that time that farmers would never again grow beet in Ireland. We are still growing 25% of the beet acreage of 2005 and 2006. We do not have a processor, but we are still growing that amount of beet. We grow it for a few reasons. Senator Michael Comiskey referred to the use of beet pulp. It is grown as a feed product. Farmers grow beet for income and for rotation. Beet is hugely important as a rotation crop for seed barley. It was hugely important for malting barley in the past. However, income is the more important reason for growing beet.

The Irish Tillage and Land Use Society made a tour of Denmark at the end of June. I am a member of the society but I was unable to attend the tour. Our members reported that the price of beet in Denmark is exactly the same as in 2005. We hear, from time to time, that beet cannot be produced for this or that figure. That kind of commentary is made by people who want to do down the industry. Members of the committee who read the Irish Farmers’ Journal will have seen Matt Dempsey’s report that British Sugar made £172 million in 2011, off the backs of the sugar beet industry in Britain. Sugar beet was a hugely profitable industry for growers and processors in Ireland. In the last years of processing, approximately €25 million went to the growers and €25 million to the processor. We can see how profitable an industry it was.

I was national chairman at that period and my strong recommendation, as Deputy Tom Barry and those who know me will remember, was to continue growing. The tide was turning on the sugar industry in Europe. However, the industry had got into the hands of some older growers and the promise of big compensation lured them to get out of the industry. It was a disastrous mistake. Wherever I go in Ireland, even urban people tell me the loss of the industry was a disaster for Ireland. I fully agree with that.

Two thousand growers were involved in the industry. The spin-off benefitted agricultural and haulage contractors, suppliers and numerous others. I never realised sugar beet was so important to the livestock sector until the industry ceased and many dairy farmers told me how much beet pulp they used. They fed their animals cheaply off the beet crop. They benefitted and we benefitted.

A committee member asked about acreage. An average of 40 acres would be needed to produce a beet crop. Beet yields across Ireland and Europe have increased substantially. Countries with far lower beet yields than Ireland are still producing sugar beet. Finland and some other Nordic countries, with a far less favourable climate for producing sugar beet, still retain their sugar industry. They are producing beet at lower yields and are still competitive.

With regard to the 2020 harvest, a lot of farmers are concerned that not enough emphasis is being placed on tillage. All of the focus is on dairy and livestock farming. They are hugely important sectors and we fully support them but we ask for even a little corner in the document for tillage farmers.

I thank members of the committee for their attention.

Mr. Michael Hoey

We will have one last comment from Mr. Simon Cross before concluding.

Mr. Simon Cross

I wish to fill members in on the direction in which Europe is going.

I travel throughout Europe selling machinery to beet farmers, predominantly in Germany, France, Denmark and Italy. In the past year, 7,500 anaerobic digestion, AD, plants have been constructed in Germany, predominantly fed by sugar beet. Many of them started with maize but when they realised the value to be had from sugar beet, they switched. Now approximately 15% to 20% of the feed stock is used in the AD plants.

Someone asked where the price of sugar is going and whether other European countries could export to Ireland. In fact, they cannot produce enough for themselves, never mind exporting to other countries.

Senator Pat O’Neill

Will they contract people from across Ireland to grow beet?

Mr. Simon Cross

Cost is an issue. There is one major difference between us and most other European countries. We are not directly linked to Europe. There is a big lake of water between us and the rest of Europe and it costs a lot to get across it. However, we do foresee enormous development potential for sugar beet for the AD plants across Europe.

I want to refer to land prices and to the dairy industry. I travelled to New Zealand last year and saw how Fonterra took over the whole dairy industry there. I do not want to see that happening in Ireland. I remember when foot and mouth disease hit Ireland. That was connected to animals but everyone closed down. Surely we should spread our risk across a variety of farming sectors. My biggest fear is that if the dairy sector grows too fast, we will suffer severe consequences. If we rely too heavily on dairy farming and it is struck by something like foot and mouth disease, we will have a serious problem. If we have beet, we can at least reduce the risk.

I employ 30 people at the moment, predominantly to make beet equipment for Germany. The Germans are not too worried about exporting sugar because they cannot produce enough for themselves and what they produce, they use in their AD plants. If sugar beet production resumes in Ireland, I could guarantee another 50 jobs, even though I am only a small player in the industry.

Chairman

I thank Mr. Cross for drawing our attention to the bigger picture, namely, the creation of jobs in the sector, both direct and indirect. There are a number of points regarding Europe that we will discuss later. Delegates are welcome to sit in the Visitors' Gallery for the remainder of the meeting but I am anxious to allow the next group in. I thank delegates for attending and thank members for their engagement.

In terms of this committee being of assistance, politically, the three recommendations from the delegation are very helpful to us in plotting our course. There are some things that we cannot do and there are things that we cannot compel them to do. We do accept, however, that there is a business case to be made, as has been made clear by Mr. Cross, Senator Mary Ann O'Brien, Mr. Hoey and others. Other issues are also at play, however, which we must take into account, particularly with regard to Europe and co-decision making, an area in which we may have a strong role to play.

I will now suspend the meeting to allow the members of BEET Ireland to withdraw and the witnesses from the Irish Sugar Beet Bio-Refinery Group to join us.

Sitting suspended at 3.55 p.m. and resumed at 4 p.m.

Chairman

I welcome the representatives from the Irish Sugar Beet Bio-Refinery Study Group, Mr. Chris Comerford, chairman, Mr. Michael Kelly, Mr. Vincent Grogan, Mr. Alan Laverty, Mr. Eamon Collins and Mr. Seán Gannon. I thank them for attending the committee. Although they were present in the Public Gallery for the previous presentation by the BEET Ireland group, Standing Orders dictate that I must re-read the regulations concerning privilege.

Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee However, if they are directed by the committee to cease giving evidence in relation to a particular matter and continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. The witnesses are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

I hope I do not have to reiterate that parliamentary practice to members of the committee.

I now call on Mr. Comerford to make his opening statement.

Mr. Chris Comerford

I thank the Chairman and other members of the joint committee for their invitation to attend this meeting to discuss the findings of our recent study on the establishment of an integrated bio-refinery plant for the production of sugar and ethanol from sugar beet and grain.

The study's findings show that the project would generate sustainable profitability and positive cash flows. In addition, it would create significant job opportunities and provide new income possibilities for tillage farmers, while eliminating imports of up to €200 million per annum. It would also enhance security of sugar supply for food processors and consumers.

The plant would be located on a new site in the south east, at the centre of the sugar beet growing region. It would have a capital cost of €350 million of which approximately €200 million worth of contracts could be supplied by Irish contractors.

It is envisaged that 30% of the required finance would come from equity investment and the balance of 70% as debt which would be repaid in full over the initial years. The study group is confident that the profitability of the venture would make it attractive to investors, including in particular, participation by sugar beet growers, other farmers and lenders.

The feasibility study was drawn up by the Irish Sugar Beet Bio-Refinery Group. The expert group included former senior executives in Irish Sugar and Greencore, leading scientists in University College Dublin and Teagasc, and farmer representatives. A list is attached. The entire report was reviewed and the financial figures were verified by an international consultancy firm, PwC, which also provided the financial model.

I will now provide an outline of the business. The bio-refinery plant would process 10,000 tonnes of sugar beet per day and have an annual production of 154,000 tonnes of sugar and 50 million litres of ethanol. This would be produced from 1.2 million tonnes of sugar beet, of which 1 million tonnes would be used for sugar production and 0.2 million tonnes for ethanol production. A further 56,000 tonnes of grain - as well as molasses, which is a by-product of sugar processing - would be required to produce the annual target of 50 million litres of ethanol.

Based on a yield of 60 tonnes per ha, or 24 tonnes per acre, there would be a requirement for 20,000 ha, or 50,000 acres, of sugar beet. At an average of 10 ha per grower, this would involve around 2,000 growers. The grain requirement would come from some 7,000 ha of wheat. Our research confirms that available tillage hectares and the commitment of growers in the south-east region could exceed this requirement.

As regards prices, the study states that growers would be paid €40 per tonne for sugar beet at 16.5% sugar content, delivered to the plant. This is based on an ex-factory sugar price of €570 per tonne for bulk sugar which, based on current sugar prices of over €770 per tonne, is a conservative figure.

If average sugar prices are higher than €570 per tonne for bulk sugar, growers would get a 40% share of the increase. If current sugar prices were to apply in the future, this formula would ensure a sugar beet price in excess of €50 per tonne. It should be emphasised that the market price for sugar will be the determinant factor in the price that can be paid to growers for sugar beet. The study proposes that farmers supplying wheat for ethanol production, given current market conditions, would be paid a price of €175 per tonne.

I will now deal with the question of employment. According to the study, the plant could be constructed within two years of EU approval being granted for the revival of sugar production in Ireland. Up to 500 jobs would be created during the construction phase and the plant would directly employ 200 people. There could be approximately 5,000 jobs in total, including those created on farms, in agricultural contracting, haulage and the ancillary service industries.

The study shows that the establishment of a joint sugar-ethanol plant is critical to the financial viability of the project. The proposed annual output of 154,000 tonnes of sugar is close to the total imports into the 32 counties of circa 160,000 tonnes annually.

As Ireland surrendered its sugar quota in 2006, a new Irish sugar plant will require EU approval. The proposal to abolish the EU sugar quota regime in October 2015 opens a real opportunity to re-establish sugar beet processing in Ireland. Planning for the new industry needs to begin immediately as there is a minimum lead-in time of two years.

I will now deal with sugar beet yields. We are confident that with improved technology and a dedicated group of skilled growers, yields well in excess of 60 tonnes per ha, or 24 tonnes per acre, can be achieved. This makes Irish sugar beet production profitable and competitive. Research by Teagasc and Professor Jimmy Burke of University College Dublin has shown that these yields and higher can readily be attained in this country.

The ethanol production component of the project would also make an important contribution to achieving the 10% bio-fuel substitution target by 2020. To be economic, ethanol production must be undertaken on a large scale basis, which necessitates a large capital investment and takes many years to establish. Support measures, therefore, need to be long term if they are to provide the reassurance needed to secure investment in the sector. As with the other transport bio-fuels, an obligation system sensitive to the needs of Irish bio-fuel producers is critical.

There would be several benefits to the development of an integrated sugar and bio-ethanol bio-processing facility based on tillage crops such as sugar beet. In addition to providing the sugar needs of Ireland for the consumers and industry, the ethanol component would aid the security of fuel supply and diversify the market for Irish tillage crops. The construction of a combined bio-processing factory in the south east would facilitate an eventual move to a cellulosic ethanol plant, which could readily be built onto an existing first generation plant, such as that proposed in this study. The construction of a combined sugar beet and bio-ethanol facility would, as outlined, earlier have many advantages in terms of import substitution, employment and rural development.

In summary, this study demonstrates that the plant can generate sustainable significant profits and cash flow; produce sugar and bio-ethanol competitively and replace imports; meet virtually all of Ireland's requirements for sugar; help meet Ireland's bio-fuel targets from indigenous resources; generate significant employment; support the rural economy in a sustainable and environmentally-friendly way; provide export opportunities within three years of production and produce more food and bio-fuels than any other crop. We believe this study, together with the BEET Ireland report, provides the Minister with the necessary mandate to build a sustainable case for the restoration of an Irish sugar quota from October 2015.

We welcome that another group, under the guidance of Michael Hoey, independently found that a viable and profitable sugar industry can be re-established in Ireland. We have expressed our willingness to work and share information with BEET Ireland, while fully recognising that there can be only one production plant ideally located and capable of producing sugar to supply the Irish market. This remains our position to date.

My colleagues and I are pleased to be present here today to partake in this debate and will be happy to answer any questions which members may have on this matter.

Chairman

I thank Mr. Comerford for his presentation.

Deputy Michael Moynihan

I, too, thank Mr. Comerford for his presentation and compliment the group on its work heretofore on the re-establishment of the Irish beet and sugar industry. I welcome Mr. Comerford's commitment to work with BEET Ireland. It is vitally important and in the national interest that both groups work together as one to ensure everything is done to allow debate in Europe on Ireland's re-establishment of a beet and sugar industry.

I would like to put to Mr. Comerford the same questions which I posed to previous groups. A major issue arises in the context of the EU deadline of 2015 for the lifting of the sugar quotas. The possibility of a derogation for Ireland has been mentioned. What contacts has the group had within the wider European Union on this issue and what feedback has it received in that regard? The number of speakers who have contributed to this debate during the past couple of hours indicates there is huge support and need for re-establishment of the industry. What information has the group received in the context of the discussions on the lifting of quotas in 2015 and in regard to whether a derogation is possible? Information suggests that the powers within the European Union want to push this out to 2016, 2018 or 2020.

I again compliment the group on its work in the context of the study before us which indicates there is a viable industry to fight for going forward.

Deputy Michael Colreavy

I, too, thank the group for appearing before us today and for the information with which they have provided us. The group has spent a great deal of time and money on the study.

It is heartening to note that two different studies support the re-establishment of a sustainable sugar industry here. While the groups have suggested two different approaches, they both conclude that given the right conditions such an industry could be sustainable. Mr. Comerford referred to dependence on support. I do not understand what he means by that. In this regard, Mr. Comerford stated: "Support measures, therefore need, to be long term if they are to provide the reassurance needed to secure investment in the sector." Perhaps he would elaborate on whether he is speaking in that regard of Irish, EU, financial or political support.

It is envisaged that 30% of the required finance would come from equity investment. Have players involved in equity investment in other sugar markets been identified? Mr. Comerford also stated that the balance of 70% would be repaid in full over the initial years, which appears a little heavy. Mr. Comerford did not indicate over what number of years that repayment would be made. The group's commitment to beet growers is not as strong as that given by BEET Ireland in the context of growers, in the form of a co-op private company, being allowed to sit on the board of that company. What influence would the growers have in the scenario outlined by Mr. Comerford, in particular would they face having the industry pulled out from under their feet once again? What leverage would they have?

As I stated to the previous group, there is cross-party support on this committee for the re-establishment of a sugar beet industry in Ireland. It is heartening that two studies indicate such to be a feasible industry. Ethanol would appear to be a logical add-on. Are there industries in existence which operate ethanol production separately but linked to beet processing? If so, how do they work? My final question is one I have also posed to other groups. The year 2015 is not a given. The relevant year may be 2016, 2018 or 2020. They can seek, and would have our full support in doing so, a derogation for the Irish industry, assuming we get the green light for the project. If we cannot hit 2015, would that be a fatal impediment to the group's proposal?

Deputy Tom Barry

Once again I welcome the witnesses and thank them for the effort they have put in, which all bodes well. I agree with Deputy Colreavy. If the policy is right and if we can do our job on the policy side, it is good to have two groups agree that sugar production is viable. It would be considerably worse if one group were saying it was not viable and the other were saying it was. That is a very good start.

A price of €175 a tonne for wheat was mentioned. Is that green wheat or dried wheat? One of the witnesses referred to a 40% share of the price increase above €570 a tonne. I suggest a sliding scale because as Mr. Comerford knows the relationship between the beet growers and the previous company was at times fraught. We have a real opportunity now to agree the ground rules and to quit spending energy on fighting when we should be looking for new opportunities. It is a pity Professor Jimmy Burke is not here today - I have worked with him extensively in the past. Irish yields in recent years were hidden because so much of it went into the feed industry. Irish producers produced their beet but did not dump it into beet sugar but sold it to cattle farmers etc. So we always produced our quota but nobody ever knew how much went into the feed industry. As was mentioned earlier, its loss was discovered only afterwards. In fact the sheep industry in our part of the country collapsed, as did the industry supplying medicines into the sheep industry because they used to be fed the beet tops. Their entire food structure was gone. The effects were devastating for numerous people.

When the witnesses are considering growers, I hope it will be based on the farmer's own production unit as it is and not going out looking for new conacre. Two people cannot make a living out of the one acre and to encourage them to do so would be reckless.

It is good to see Mr. Navratill here today. I thank him for his energy when he travelled the country with me attending meetings in 2009 and 2010. He is probably the most factually accurate person when it comes to sugar. While I do not have the figures before me, what percentage of the European quota did Ireland have in 2006? What percentage of the European quota did we have when we entered the EEC in 1973? I believe there was a big discrepancy between the amount Europe produced and the amount we had.

Have the witnesses fully considered the horticultural industry, for example producing tomatoes with the by-product of high-carbon dioxide coming from a plant? Have they considered the possibility of producing a carbon-neutral bio-plastic from beet, which would be fabulous given the number of plastic bottles in use today? I know it is a minor thing but it is another angle. I again thank the witnesses for all their efforts. Having met them in the past I know their commitment is as strong as ever and I am glad to see them here today.

Deputy Pat Deering

Like previous speakers I also welcome the witnesses and compliment them on the work they have done. I know they have put considerable energy and enthusiasm into the project so far. I am very encouraged by the group's willingness to work and to share knowledge and expertise with BEET Ireland. We all want the industry to come back to the country and it is just a question of how to achieve that. Pulling everything together is very important in that regard.

What discussions have the witnesses had with the growers - the beet farmers - who are the main players? Have there been discussions with them on potential future contracts? The presentation refers to the south east of the country. What work has been done in that area on identifying sites? Given that the south east area is mentioned on a number of occasions, it would suggest that considerable work is being done in that area at the moment. On what is that based?

I appreciate that the presentation is summarised into six or seven points at the end. It is important that both groups have come to the same conclusion that it is a viable proposition from an economic point of view. It will generate and create considerable employment which is what we all want. I again thank the witnesses for their work.

Deputy Noel Coonan

I welcome Mr. Comerford and his team and thank them for the presentation. It is welcome that both groups see a positive future for production of sugar beet and bioenergy. I am pleased the witnesses are willing to work and share information with BEET Ireland. I ask them to give an example of how this has happened to date. In what manner have they shared this information and what conclusions have they reached together? I hope this can continue.

I am concerned about the location of the site. They have referred to the south east as the main centre of beet production. What about the south and midlands? On the basis of the tonnage that can be achieved in the south east, it may be that the rest of the country will not be required for this. What have the witnesses done about selecting a site? BEET Ireland was not anxious to disclose if it had a site or where it was located. The witnesses said it was a greenfield site. Have they pursued planning permission and do they envisage difficulties with it?

The closure of the beet industry in Ireland left a bad taste in many people's mouths. Has Mr. Comerford learned from that as swiftly as he did from his role in Greencore? What assurances can he give me that history will not repeat itself? Once he has set up this industry and taken profits from it, what assurances can he give that he will not close it down again and to hell with the farmer and the country as happened before? Many people are concerned that this group is really a front for British Sugar. Does that have any credence or can Mr. Comerford deny it?

Beet Ireland said there would be a significant role for the growers as shareholders in its company. Can the witnesses give similar assurances in respect of their company? What role do they envisage for the grower in their set up? Having listened to the previous presentation by BEET Ireland, do the witnesses believe they could come together after this session and work with a united front to re-establish the beet industry in Ireland? If not what impediments do they envisage?

Deputy Martin Heydon

I thank the group. As they were in the room when I spoke previously, they will have heard my sentiments about needing to see the industry return, which apply equally to this group as they did to the previous one. I thank them for their presentation and acknowledge their point about being willing to work with the previous group. I acknowledge the group's bona fides in wanting to see the sugar beet industry back in this country. I would like to put a question to the group that I also put to BEET Ireland. Most of the points I wished to make have been mentioned. Many members of the group have experience from the old regime and I would like to hear their views on how can we learn from the mistakes of the past and ensure that they do not happen again.

In light of the fact that there are differences, it would be the preference of this committee that there would not be two groups or two reports. The point was made earlier that British Sugar made a profit of €172 million in six months and in Britain there is poor participation. What is the group's view on BEET Ireland's proposal in regard to a 30% share in respect of growers? Does it consider that is workable? It is not a measure that is in the group's proposal. If it considers there are difficulties with its proposal, can it outline what they are? I would like to tease that out with the group.

Chairman

With respect, I am not sure that we want to tease out the internal negotiations between the two. An overview on the concept of grower participation would be appropriate.

Deputy Martin Heydon

Yes, the general premise of it as opposed to the finer details.

The group made numerous references to the south east as the potential location. Is that preference based on data collated over time or was that location the group's starting point ?

Mr. Chris Comerford

I will deal first with Deputy Coonan's point. We are not a fund for British Sugar or for anybody else. Nobody on this side of the table was involved in the closure of the industry in 2006. I admit that I was involved in the closure of the sugar factory in Thurles and it was necessary at the time as otherwise we would not have been competitive.

Deputy Noel Coonan

Many people would disagree with that.

Chairman

We are dealing with the revitalisation of the sugar industry.

Deputy Noel Coonan

I do not accept that it was necessary at the time.

Chairman

That is fine. The Deputy can make his point on that.

Mr. Chris Comerford

It is important if it is possible that we would get the quota restored in 2015. The longer it is extended, the more difficulty that will cause. Even though 25% of sugar beet is still grown here, the technology, machinery and various other factors in the industry are disappearing. Therefore, it is important that the quota be restored. We have talked to various people and our information is that those engaged in the industry in France, Germany, the UK and Poland strongly favour the extension of the quota to 2020. We would like the quota not to be extended and if it were not extended we would like Ireland to get a derogation because our production is 200,000 tonnes. Some 18 million tonnes were produced in the past and 13.5 million tonnes are produced now. Therefore, the level of production is small.

A point was made about our commitment to the growers. Of course we are committed to the growers. We would like to see the growers invest as much as possible for a number of reasons, the most important one being that if they have invested in the company, we can be sure that they will supply beet. There would be no doubt about that. Also, it would help in ensuring, as somebody said, that the industry would not close again. I do not believe what happened previously will ever happen again. That is not a risk about which anyone considering setting up in the industry should be concerned.

We are committed to having growers involved. We would like them to have an equity in the project and hopefully they would put up some of the money. However, we do not see them putting up the amount of money that is required either in equity or to cover the total cost of the project.

We are quite happy to work with the other group. It was useful to have two groups originally. The fact that we have two reports and both indicate that this is a viable proposition is very good. It is also reassuring for the Minister and this committee. However, as we go forward, we would foresee difficulties in having two groups. Our case can be made much stronger with one group. However, we are willing to co-operate and it will be up to Mr. Hoey and his people if they are willing to co-operate. We are quite happy to do that and to share information because there can only be one factory. There is not the space for two, nor for two groups.

As regards our emphasis on a location in the south east, we believe that beet must be grown as near as possible to the factory. A mistake was made in the past in that this factor was not sufficiently taken into consideration. If one looks out the windows of factories of the very successful industries on the Continent, one will see a great deal of the beet is grown close to them. The reason for the emphasis on the south east is that we believe that is the area from which we will get the most beet. It would involve a short haulage journey to the factory and haulage and transport costs are major factors. It is necessary that we would have our factory located in the most convenient area close to where the beet is grown to ensure transport costs are reduced as much as possible. Those were the main points raised. I am not sure if my colleagues may wish to comment on any other point.

Deputy Tom Barry

I want to know if the price given for wheat is when the wheat is green.

Mr. Chris Comerford

When it was green.

Chairman

Did Deputy Colreavy have a supplementary question?

Deputy Michael Colreavy

I asked two questions to which I do not appear to have got an answer. I asked whether investors in terms of a 30% equity investment have been identified and whether the investment would include players in the sugar industry outside of Ireland. I asked if the proposed 70% debt was a little high for a start-up or restart industry and what timescale envisaged in the phrase "initial years". I asked whether ethanol was produced anywhere as an independent industry alongside a production plant. I asked also, with regard to page 4, what form of long-term support measures will be needed if they are to provide the reassurance necessary to secure investment in the sector.

Chairman

Could Mr. Colreavy confirm that is to do with ethanol production?

Deputy Michael Colreavy

Yes.

Mr. Chris Comerford

PricewaterhouseCoopers came up with the 30% equity figure. It told us that 30% equity and 70% debt was sustainable. Obviously, if we had more equity it would make the project easier because there would be less debt to carry but-----

Deputy Michael Colreavy

The group has not identified investors in this project.

Mr. Chris Comerford

We have not identified any at the moment. We would first like to get as much money as possible from the growers but apart from that we have not identified any investors.

On the question as to whether there are other ethanol plants independent-----

Deputy Michael Colreavy

Which are operated as a separate industry, so to speak, beside the big production plant.

Mr. Chris Comerford

Yes.

Deputy Michael Colreavy

Does that work?

Mr. Chris Comerford

There are separate ethanol plants. An Irishman opened one in Hungary in the past month, which is producing 200 million litres of ethanol per annum and he plans to build another plant shortly.

Chairman

To clarify, that is being sourced through beet.

Mr. Chris Comerford

No. It is based on corn.

Chairman

Deputy Colreavy is asking if there is an ethanol production sourced from beet.

Mr. Eamon Collins

Yes. There is a south German sugar plant owned by-----

Mr. Chris Comerford

The other aspect is that the support mechanism is for ethanol production. In other words, a gene that has been introduced in Ireland does not compare with the ones used in countries like Germany and therefore it is not easy to produce ethanol for the home market on a profitable basis. That support for that needs to be re-examined.

Chairman

REFIT 3 is what that refers to.

Deputy Tom Barry

To come back to a question I asked Mr. Comerford earlier, he clarified that the wheat price was for when the wheat was green.

Mr. Chris Comerford

Yes.

Deputy Tom Barry

That is important. I ask Mr. Comerford to comment on the suggestion that just a 40% increase for farmers on the price of sugar indefinitely is a bit of a crude instrument and maybe there should be a sliding scale. Have bio-plastics and other horticultural possibilities for the use of sugar been considered?

My final question is directed at Mr. Navratill. I have the impression that the Irish percentage share of the European sugar quota in 1972 compared with the percentage when Ireland left the market diminished rapidly. It shows how our quota was ridiculously small and how it got even smaller. EU policy has not worked and in fact it has worked against Ireland in the case of sugar. I ask for those figures if they are available.

Mr. Chris Comerford

It is very difficult to compare the quotas because a number of countries came into the scheme after us. Originally Ireland had 200,000 tonnes and this dropped slightly. The quotas increased as each new country joined. I do not think the percentage varied that much. Relative to the UK and other countries our quota did not change.

Deputy Tom Barry

The UK was putting sugar into the B quota as well whereas Ireland was just producing our A quota. My point is that we were allowing increases in production in Europe. We were not allowed any extra production. What is Ireland's percentage of the total European quota?

Mr. Chris Comerford

It is 1%.

Deputy Tom Barry

It is absolutely ridiculous for all the commercial reasons we discussed earlier that we cannot get a derogation nor are we allowed to re-enter sugar production. Not many people are aware of this and I want to put it on the record of the House.

Chairman

That is a fair point.

Mr. Chris Comerford

The question of the 40% is something that has to be refined. There could be a sliding scale going up or down; it works both ways. The investors would prefer a downward sliding scale and farmers, I presume, would prefer an upward sliding scale so there is room for manoeuvre. Perhaps Mr. Navratill may wish to speak about the quota.

Mr. Alan Navratill

As I see it, the main principle is that we get our quota back. We are showing tremendous cohesion in our views here and this is very welcome. We recognise that the farmers are an essential part of any future industry. It is no secret that we would prefer to see 51% of farmer equity participation and then it would be entirely in their hands as to how the industry would perform in the future. However, we must be realistic and we based our figures on what we think might be possible. Given the sugar price model which we used, we believed we could work with a ratio of 30:70. However, we would much prefer if that were reversed or even if all the equity were provided by venture capitalists or farmers or whatever it takes but preferably with a high percentage of farmers.

We have considered bio-plastics but not in great detail. We know it is technically feasible and it will form part of the next model which will be a business plan for the future. I hope this answers the Deputy's question.

As for the 40% and the variation in beet price, I do not think anyone would deny that we cannot set up an industry by waving a magic wand in the morning and set up a sugar-producing business based on sugar beet. The sugar beet price will have to be in line with the cost of sugar beet from our competitors in Europe. If it is out of line with them, we are on a hiding to nothing and we will not get the investors. This is a sine qua non.

In reply to the question from Deputy Barry about the difference in the percentage figures between 1972 and 2006, I am sorry but I do not know the exact percentage but I can say that Ireland had a quota of 200,000 tonnes out of a total production of some 13.75 million tonnes in 1972. However, the EU was a smaller unit at that time. When everything was done and dusted and when we surrendered our quota, we had zero and Europe was producing 20 million tonnes. I agree with Deputy Barry that it is an absolute farce and it should never have happened. Brussels did not consider that we were an island. As an earlier speaker said, we have a completely different dynamic to the rest of the contiguous countries of Europe and to Britain, which is more or less self-sufficient, apart from imports of cane sugar.

Mr. Chris Comerford

At one stage, both seed sugar and beet sugar were produced here and so we produced above our quota for a number of years and we exported to the world markets.

Mr. Eamon Collins

When other countries joined the EU they were given quotas. The six countries which joined on 1 May 2004 were given quotas and our quota was not increased at that time.

Deputy Tom Barry

I wish to ask a supplementary question. I refer to the amount of grain on the world market. If we produce just what the world requires the price of grain remains strong but if we over-produce by 1% or 2% the price collapses. The model we are discussing is a production for the home market. The problem arises when extra production is dumped on the world market and the prices fluctuate. I presume both groups are looking at linking up with companies, agreeing a price for the future in order to avoid these price fluctuations and so that the price of beet can be guaranteed for the farmer and also the long-term profitability of the plant. Even though we like to talk about the world market, only a small percentage of the total sugar or grain influences this dynamic and it helps neither the producers nor the farmers.

Mr. Chris Comerford

There is deficit of 3 million tonnes in the EU and hence the price of sugar is very high. The ex-factory price is €750 euro per tonne and the landed price here is €780 to €800 per tonne. The surpluses are gone so we are looking at a deficit situation here and we do not see that changing very much in the foreseeable future because the world market for sugar is increasing by more than 2% per annum and it has done so for the past 50 years and it will continue to do so as the population grows. We do not see prices dropping very much in the foreseeable future.

Mr. Alan Navratill

If I may reply for completeness on a couple of issues. Deputy Coonan asked about the use of ethanol elsewhere and he is right to ask. I believe there are a number of facilities in Europe, one being in Belgium. There may be others. We did not carry out any research about location but it is easily done. The other facility is in our nearest neighbour where ethanol is produced in a plant at Wissington. However, it should be noted that this is a very flexible plant and if ethanol is cheap and sugar is dear, it will not make any ethanol and the opposite also applies. This is an important adjunct to processing sugar beet.

On the point about world prices, there are two prices and nobody should be under any illusion about this fact. There is a world price and a European price and there is a big disparity between the two. Imports into Europe carry a penalty of an import duty. This is the de facto situation and it will obtain for quite some time, in our view.

I wish to elaborate on the 40% price of beet which was supposed to be linked to sugar prices. This could be done in a number of ways. There is an alternative method which may be a better method but it is difficult to quantify and that is why we did not do it that way. The issuance of loyalty shares would put the farmer in pole position so that the more the farmer participates with us the longer he is with us, the more he will benefit.

Deputy Tom Barry

I have one final issue to raise. There are different methods for the extraction of sugar from beet. I am not an expert but it was brought to my attention that one of the major drinks companies would have preferred the sugar from Mallow than from Carlow or vice versa because the taste was essential for its product. If we have to go around the globe getting sugar from this and that country, how can people who require sugar, such as Senator O’Brien, be guaranteed consistency in the taste, which is crucial for product sales and development? The witness used the word “provenance” earlier, which is important.

Mr. Sean Gannon

There is very little difference between the sugars from two different plants in terms of purity. The biggest difference that arose between Carlow sugar and other sugar was when there was a refining operation in Carlow. When one is talking about cane sugar refining, one is talking about highly pure cane sugar being brought in and reprocessing that. There would be very little impurities with that. In the case of beet, there would also be very few impurities but there would be a tinge of an odour that would not be present with cane sugar, and some people would compare that.

With regard to beet sugar, there is very little difference. There might be a small difference in colour depending on the processing technology used. However, if one takes a blend of ethanol and sugar together, one can ensure the optimum quality of sugar is achieved because one can process the ethanol from the lower purity streams. That would leave the higher purity streams for processing into sugar.

To comment on the question of operating a beet sugar plant on its own, it would be almost impossible to set up a new plant based on beet because of the cost of the plant. The entire beet intake system would have to be installed. Even in operating a plant that would be already depreciated without producing sugar there would be huge operating costs associated that would not obtain where there was a joint operation. With the synergies between ethanol and sugar one can optimise the cost and have the lowest possible costs in both cases.

Mr. Vincent Grogan

Deputy Barry asked a question about conacre. Conacre has been a bone of contention in the sugar business for many years. We have looked seriously at it and our aim is to increase the individual acreages grown by growers or the contract size. Before Irish Sugar closed it ranged from 16 to 17 acres per man. As our chairman said, we hope to get that up to at least 25 acres. We are hopeful that we could improve the conacre situation from the research we have carried out over the last number of months, but it does not appear that it will be possible to get away from it completely. However, we are optimistic that we could reduce it substantially.

Senator Susan O’Keeffe

I have a brief question. My apologies for my absence earlier. I was at another committee meeting. I thank the witnesses for their presentation. They said they did not have the money lined up but I take it they have been talking to people to gauge the interest, because they could not have left it that late. Are they at liberty to tell us what the response was when they talked about it? Ultimately, the tipping point as to who succeeds in this business will be who can get the money first.

Mr. Chris Comerford

Obviously we have spoken to people and have received expressions of interest. However, it all boils down to whether we will get a quota and whether we will be able to do it. It is like the chicken and egg question. One will not get definite commitments about money until one knows one will get a quota. That is where this committee fits in. It is very important that every effort is made at political and EU level to secure the restoration of a quota, that is, either have the quotas removed or secure a derogation for Ireland.

Mr. Alan Navratill

I forgot to mention one matter relating to Deputy Coonan's question on ethanol. The support mechanisms we spoke of-----

Chairman

It was Deputy Colreavy.

Mr. Alan Navratill

I apologise. The support mechanisms which we referred to also include mandated inclusions of bio-fuels into petroleum gasoline and a mandated requirement for fuel stations above a certain size to be located throughout the island of Ireland. If one does not have that geographical spread, there are technical reasons somebody cannot use the mixed fuel with confidence. That is one mechanism that costs nothing, but requires legislation. We would love if we could be given excise remissions, but we did not ask for them.

Chairman

You are talking about creating the ability to create a market. I thank Mr. Comerford and his colleagues. I hope both groups considered this exercise worthwhile. You have certainly given the committee a clearer insight. What is agreed on both sides is that it is critically important to the Irish economy. Food Harvest 2020 is a key component of it. Deputy Barry spoke about 1% of the overall sugar quota or 200,000 tonnes out of 18 million tonnes and the importance of that for this country as a food exporting country. The cost of the manufacturing base is key. The points that were made in the recommendations by Sugar BEET Ireland and where the committee might concentrate form a good basis for that as well. It is interesting, however, that the COPA-COGECA group in Europe is not recommending any change and would like to see the current regime extended to 2020. There is a role for the farm organisations in that, because they are members of that group, to allow room for Ireland whether by way of derogation or amending the regime. Any compensation that was paid was paid for that period. The account is cleared on 30 September 2015.

A couple of points must be borne in mind. CAP negotiations will probably not conclude until this time next year or, hopefully, during the Irish Presidency, so the lead-in time is quite tight. The year 2016 for a definite answer, unless it is agreed well in advance which is difficult to envisage, might not be as bad as first thought, not that we wish to concede on that. The Commissioner is quite adamant that it will end in 2015. However, the Commission and the rapporteur, Mr. Dantin, have effectively proposed the maintenance of the sugar regime until 2020. The Commission versus the European Parliament and co-decision is where this committee has a key role to play, to work with our European colleagues from all parties to secure agreement that the rapporteur's report, which was open to submissions until 9 July, will be considered by the political groupings within the EU. Deputy Moynihan and I were briefed on that last week when we were in Brussels. That is a role for the committee.

A couple of key themes have arisen. If one is to get financial commitment, whether it is from equity or investors, there must be certainty that the business will continue, that no rug will be pulled from under it again as happened before and that there will be a margin for everybody, that is, those who produce and those who process. If it was 50:50 in the past, as somebody mentioned in an earlier presentation, that model can work. Certainly, we should not say that everything in the previous sugar regime was faulty. Food Harvest 2020 and the CAP reform proposals identify the need to keep land, in all its guises, in production, in the control of younger people and to keep rotating that. I believe this will be a key issue, especially for outside investors looking at who will be producing it and who will be controlling the sugar industry in this country. It is certainly will be for foreign direct investment into manufacturing and for the development of indigenous manufacturing. When one looks at the figures what is necessary is the 200,000 tonnes or 1% of quota. This has been mentioned by, among others, Senator O'Brien, Mr. Cross and Deputy Barry. It is the key to this. The committee, Government, Department and Commission must be fully supportive of the reintroduction of sugar production in this country on that basis. There is an economic argument to be made for the Irish model. While the models presented today are not dissimilar, they are not the same and will need to become so in time. Ensuring that there will be an industry will be as important to growers as anything else. There is a body of work to be done in this regard, in respect of which the committee cannot be of assistance. We would help if we could but we cannot. It is an issue that will have to be addressed by the two groups.

With regard to the draft report to the European Parliament, we will make the case for why, if the regime is to continue until 2020 - we would prefer if that were not the case - a derogation should be given to Ireland.

I thank all members for their considered questions and observations on this process. For the sake of the country it is good that two groups have reached the same conclusion and that there is all-party support for this. I believe the Commission and our MEPs will also support us. We have a job of work to do with the European Parliament.

I thank everyone for attending the meeting.

The joint committee adjourned at 5.05 p.m. until 2 p.m. on Tuesday, 17 July 2012.