Seanad Éireann debate -
Wednesday, 26 Jan 2005

Vol. 179 No. 1

Sugar Beet Industry: Motion.

Mr. Coonan

I move:

That Seanad Éireann acknowledges the tremendous contribution by the Irish sugar beet industry to the economic and social development of rural Ireland since 1926 and recognises the ongoing importance of the industry to Irish farming:

—regrets the recent announcement by Greencore plc to cease sugar production at the Carlow plant from March 2005 and calls on the company to reverse this decision and take no other such actions until the EU reforms concerning the Irish sugar quota are concluded;

—urges the Minister for Agriculture and Food to resist strongly any EU proposals which would threaten the long-term viability of sugar beet growing in Ireland.

I welcome the Minister of State at the Department of Agriculture and Food, Deputy Brendan Smith, to the House. It is the first time I have spoken in front of him and I wish him well in his new job. I also thank the spokesperson from the Labour Party who facilitated us with the time to move this motion.

We tabled this motion because of the tragic situation in which the workers of the Carlow sugar factory found themselves. We also wanted to debate the issue surrounding the proposed reforms of the sugar industry and its impact on Ireland and acknowledge the contribution sugar production has made to the economy since the 1920s. I thought this would be a unanimous motion and that there was a sense of agreement among the parties about it. However, now I find that there is an amendment to it. We will now have to be more political than we had intended to be.

The motion comes in three parts. The first part acknowledges the tremendous contribution of the sugar beet industry to the economic and social development of rural Ireland since 1926 and recognises the ongoing importance of that industry to the farming community. The second part regrets or even condemns the recent announcement by Greencore plc to cease sugar production at Carlow from next March. We call on the company and on the Minister to exercise her authority and to reverse the decision that has been made. The third part of the motion supports the Minister for Agriculture and Food and her Department, urging them to resist strongly any EU proposals which would threaten the long-term viability of the beef industry in Ireland. This is a matter of vital national importance and, as such, we urge the Minister to exhaust all procedures to ensure that the interest of the beet growers and of the farming community in Ireland is copper-fastened.

The industry is worth €80 million to farmers per annum and €140 million to the economy. There are 3,700 specialist tillage farmers involved in production and beet is the backbone of tillage farming. If the beet industry goes, tillage farming will go with it. There are 500 workers directly employed and up to 8,000 jobs are directly or indirectly involved in the industry. Towns like Carlow and Mallow were built on the foundation of a prosperous sugar industry, as were towns like Tuam and Thurles at one stage. Regrettably, they are in decline and have never recovered since the industry was closed in both of those towns. Despite a multitude of promises for Thurles, no industry has ever replaced that which was lost due to the closure of the factory there.

Everyone is aware that there is a challenge facing the sugar industry due to the EU reforms as proposed, as well as the WTO agreements. If the proposals as suggested by the EU were to be implemented, it would result in a 16% cut in quota for Ireland and a 37% cut in prices, which would be an absolute disaster for the industry and for the growers. The WTO talks are designed to placate the giant sugar cane producers like Brazil, Thailand and Australia. Since the announcements were made, growers, farm leaders, workers, unions, politicians and the Government have embarked on a significant lobbying campaign at EU and national level to ensure a fair deal for Ireland. The Greencore decision to close the sugar factory in Carlow has seriously damaged Ireland's negotiating position. The Minister for Agriculture and Food issued a statement saying that it did not damage our negotiating position. I do not go along with that but, more importantly, the Minister of State, Deputy Parlon, emphatically stated at yesterday's protest rally in Carlow that it does serious damage to Ireland's negotiating position. Perhaps the Minister of State here tonight might be able to explain where this has broken down because this is another clear example of a Government in disarray. There is no unity of purpose and no unity of policy.

The closure, as proposed, is premature. The chief executive, Dr. Brady, has admitted that the reforms coming from the EU are at least 18 months away. This means these reforms would not take effect before the end of 2006. I believe that the decision was taken solely in the interests of the company and certainly not in the interest of the country, the growers or the workers in Carlow sugar factory. Is this the new version of socialism as outlined recently by the Taoiseach? Is this the impact it will have on the people? There was absolutely no consultation involved. I am not aware of any consultation between the company and the growers, the farm leaders, the workers or the unions. Was there consultation with the Department and the Minister and, if so, when did this consultation take place? When was the Minister of State informed of the decision? What has he done since? Will he outline his programme of action and tell Members the reason for this closure? Nobody seems to know the reason.

It is time for action. We have lost valuable ground and we need to take immediate action to ensure that this decision is reversed. I understand the Minister has contacted the Office of the Attorney General for advice on the ownership of the quota rights. What was the response of the Attorney General? More important, what is the Government's opinion on who owns the quota rights established with the various factories or with the sugar company?

What is the situation with what is known as the golden share? Is it the Minister's intention to use that golden share, which gives her the authority to defer any decision taken by the company? We also wish to know more about the timing of this closure. Did the Minister know about the closure or did the company capitalise on the fact that the Minister, the Taoiseach and other members of the Government were part of a significant trade delegation to China? If the Minister did not know, it appears the company was trying to pull a fast one and hoped to get away with it. However, it should be made clear that the farming community and the beet growers will not allow the company to pull the wool over their eyes.

This closure is driven by greed. The company made a profit of €20 million last year, €10 million of which was from the production of sugar. This occurred at a time when 25% of the sugar consumed in this country was imported. It followed recent unsuccessful Greencore investments in the United Kingdom and the United States. The company lost €71 million in the United States on an investment with Imperial Sugar. In the United Kingdom, the company lost €51.4 million in companies such as Rathbones Bakeries and James Budgett Sugars Limited. Are these bad investment policies by the company management to be paid for by the sugar producer, the farmers and the workers in the industry? They are not; it is time for the Minister to take action on this issue.

This company is putting profits before people and wallets in pockets before jobs. That is clearly illustrated when one sees that the five executive directors of the company pay themselves €2.58 million. The managing director of Greencore, Mr. Dilger, receives €861,000. Admittedly, he has taken a big wage reduction of €100,000 from the previous year. That amounts to €2,500 per day or €17,500 per week. That is obscene at a time when he proposes to kick the workers out of the sugar factory in Carlow.

I urge the Minister of State to take immediate and urgent action. He should talk to the senior Minister, Deputy Coughlan, and ask her to discard her aura of beauty and charm.

Mr. Callanan

Never.

Mr. Coonan

We want to see the beast in her. We want her to take action and show her steel. It is time she represented the farmers, the beet growers and the workers of this country by taking on the big companies which put their own interests and gains before the interests and well being of the country and its farming community.

Mr. Browne

I thank the Labour Party for agreeing to switch its Private Members' time to facilitate this important debate.

There was great anger in Carlow at the announcement two weeks ago concerning the closure of the sugar factory. People in Carlow are realistic and are aware there are choppy times ahead for the sugar beet industry. However, it is hard to understand a company that made €10 million from sugar beet processing in Carlow deciding to close that factory, especially when vital talks are due to take place in the EU concerning the sugar quota. That action has weakened the Minister's hand.

I am severely critical of the Minister for releasing a statement last week in which she said that Greencore's action did not weaken her hand. Nobody believes that. The statement was undermined yesterday in Carlow by the former president of the IFA and current Minister of State, Deputy Parlon, when he clearly said that the company's action did weaken the Government's hand. It is outrageous that Greencore took this action in advance of the decision being taken at EU level which, as my colleague mentioned, could be 18 months hence.

The annual report from Greencore last year showed that profits before tax increased by 8% and that net debt had been reduced. One section reported on steady profitability in sugar which was driven by an excellent processing campaign, increased quota and cost control. Carlow sugar factory has done excellent work in terms of reducing soil intake when taking in the beet crop. It has done a huge amount of work in the environmental area. The factory has been reducing costs consistently. I presume the same applies in Mallow. The reduction in soil intake means the factory has to deal with less soil, stones and so forth.

The sugar factory has also put much effort into traffic management in Carlow. Last year's campaign was good. It started on time even though it coincided with the opening of the National Ploughing Championships. People feared there would be chaos on the roads but there was none. Everybody involved in the campaign, including the factory staff, growers and hauliers, co-operated excellently with the gardaí and ensured a smooth start to the campaign, which ended on target before Christmas.

It beggars belief that Greencore would make this decision in the first week of January without consulting the workers, the IFA, the beet growers and the hauliers and without giving consideration to the impact it will have. There are issues, which must be resolved with regard to the Carlow factory. Even if the factory there were to close tomorrow, transporting the beet from Carlow and surrounding counties to Mallow will be a major difficulty. Greencore suggested building a new rail depot in Bagenalstown but that has not even reached planning application stage. There have been no discussions so far with the local authority. The local road infrastructure will not be able to cope with the extra traffic. Some people believe the rail depot could take four years to complete. I hope it will not take that long but severe difficulties lie ahead.

Any such planning application will require an environmental impact study and a traffic impact study. Obviously, the local community will also be involved in the planning process. There are major issues of concern in this regard. There is also the problem of extra transport costs for growers in Carlow and surrounding counties who are furthest away from the Mallow plant. They have not been given any assurances with regard to those extra costs.

A few years ago I was involved in a protest campaign with Carlow sugar factory about beet prices. The former president of the IFA and current Minister of State, Deputy Parlon, was involved in that campaign during which there was a major stand-off. Finally, the company backed down and the beet prices were agreed. The farmers and the growers campaigned together and won the day. I hope the same will occur in this case.

I regret and resent the fact that an amendment has been proposed by the Government to this motion. The motion was deliberately non-contentious and simple. It merely sought to recognise the huge contribution the beet growing industry has made to rural Ireland, both socially and economically. It also seeks to put pressure on Greencore to immediately reverse the decision to close the factory in Carlow from 2005 and to take no further action until the EU discussions regarding sugar quota are concluded. That was a fair and reasonable request and it was made, loud and clear, yesterday by all the parties, including that of the Minister of State, and by Deputy Nolan when speaking in front of 4,000 people in Carlow. The president of the IFA, the beet growers and everyone involved in the industry made the same request.

It is regrettable that the Government has decided to amend the motion. In my view, it has turned its back on the factory in Carlow. It has raised the white flag, accepted defeat and is stating that the Carlow factory cannot be kept open for even one further season. This is despite the fact that the EU discussions are a long way from completion and that the necessary rail depot might not actually be in place in time for the autumn campaign in seven and a half months' time. I regret that the Government has thrown in the towel in respect of this issue.

It is time the Minister for Agriculture and Food, Deputy Coughlan, abandoned her "Mary from Dungloe" approach and got tough with Greencore. She should ask the executives of the company what they are playing at, take them on and ensure that the sugar quota is returned to the ownership of the beet growers of Ireland. In my opinion, Greencore cannot be trusted.

The difficulties experienced in Carlow during the past two weeks may also be experienced in Mallow in a few years' time, particularly if Greencore decides to import sugar cane from abroad. Senator Ulick Burke will later relate the experience in Tuam. Senator Coonan already referred to what happened in Thurles, namely, that when Greencore pulled out, the town was devastated and no substitute industry was put in place.

It is a matter of concern that Greencore obviously had a plan to develop the Carlow site, which is extremely valuable. However, it could be in for a shock. At recent meetings of Carlow County Council and Carlow Town Council, members gave clear indications that they will not co-operate with any rezoning to make the land more valuable for development, that they want it to remain zoned for industrial use and the creation of jobs and that they will not play into the hands of Greencore. That message should be broadcast loud and clear to the company. There is existing infrastructure at the plant which could lend itself to the creation of future jobs in the area of biotechnology. However, Greencore has not even considered this fact.

Greencore is a huge company and sugar production is only a small element of its activities. It could consider locating another aspect of its business at the Carlow factory in order to ensure that jobs are not lost in the town. I cannot overemphasise the fact that people in Carlow are extremely annoyed about the behaviour of Mr. Dilger and the executives of Greencore who decided to announce this decision to the Stock Exchange before consulting anyone else involved. This is not a simple matter of closing the factory in Carlow, building houses on the site, making a fortune and moving on. Major issues will arise in terms of the development of the land and the decommissioning of the site. There could be soil contamination and the lagoons and swamps might not lend themselves to development is the context envisaged by Greencore. There are also issues involving planning, particularly in terms of transport and the railway depot at Bagenalstown.

One must question Greencore's long-term plans for the sugar beet industry. During my lifetime, the number of sugar beet operations has been reduced from four to two and now down to one. Where will it end? I hope people in Mallow will not in the future experience the difficulties currently being faced by their counterparts in Carlow.

I have great pleasure in seconding the Fine Gael motion. I hope the Minister will, as a result of this debate, come to the conclusion that there is a need for steely resolution on her part in terms of taking on the Greencore executives on this issue, in respect of which they are blatantly wrong. These individuals were proven wrong a number of years ago in respect of beet prices and they backed down. I am of the opinion that they should again back down and take no further action until the EU discussions are concluded. That is a fair and reasonable request, particularly when one considers that Greencore made a €10 million profit from the Carlow plant last year.

Mr. Callanan

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

—acknowledges the tremendous contribution by the Irish sugar beet industry to the economic and social development of rural Ireland since 1926

—recognises the ongoing importance of the industry to Irish farming

—notes the recent announcement by Greencore Group plc to consolidate sugar processing in one plant, and

—supports the Minister for Agriculture and Food in her ongoing efforts to ensure that the future shape of the EU sugar regime will be consistent with the continuance of a competitive sugar beet growing and processing industry in Ireland.

I have particular pleasure in welcoming the Minister of State, Deputy Brendan Smith, on the occasion of his first visit to the House. I am glad he was appointed to this portfolio because he is a person of tremendous competence and I welcome the fact that this has been recognised.

The similarity between the motion and the amendment is apparent. One could ask why an amendment was tabled. I had contemplated tabling a motion similar to that under discussion. Be that as it may, however, we are dealing with a motion and an amendment thereto. I recognise the sensible approach taken by the proposer and seconder of the motion.

I am as shocked as anyone regarding the sudden announcement about the closure of the Carlow beet plant. One must be surprised by the fact that it has come at this particular point. My reasons for highlighting the latter may be different from those of others. I do not entirely support those who state that it could undermine the Minister in terms of her negotiations with Europe. If we adopt that defeatist attitude from the outset, we are saying to the Minister that she will not achieve anything and that the sugar industry here will disappear.

Mr. Coonan

In that event, the Government had better sack the Minister of State at the Department of Finance, Deputy Parlon.

Mr. Callanan

Greencore is a private company. While ownership of the sugar quota being produced has not yet been established, the fact is that if we commence with a defeatist attitude and state that the Minister will not be able to achieve anything in the negotiations as a result of the closure of Carlow, it will merely be a sign that we are throwing in the towel. If people say that the closure of Carlow is wrong, I will agree with them. I will not formally state that, however, even though I have indicated my agreement.

It is right and proper that Greencore should take a responsible attitude in terms of the future. What is the nature of such an attitude? Before I attempt to answer that question, I must state that I am somewhat surprised by the timing of Greencore's announcement. I say this because, like everyone else, I am aware of the challenge posed by European sugar producers such as the French who are dying to enter the Irish market. If we do not consolidate and improve the situation here, we will not be able to meet that challenge.

I may be the only Member present who has a direct interest in the growing of sugar beet. Some may state that I am making my remarks from a Cork perspective but that is not the case. However, I am making them from the perspective of my direct interest in the industry. The sugar industry in this country could well be lost unless we are prepared to meet the challenge we face and to change. There is no doubt that change will occur. The Minister's greatest task will be to minimise the effect of that change and protect the Irish industry.

I welcome the fact that the motion and the amendment state that the House should give every support to the Minister in her endeavours to protect the sugar beet industry. If significant changes cannot be achieved under the Fischler proposals in May or June, Ireland will lose the industry. It does not matter whether the Mallow or Carlow factories or both remain open, there will be nothing. We should adopt a cautionary, responsible attitude. It is easy to criticise Greencore but I am doing so because they are closing the factory so suddenly and Senator Browne raised a number of questions deserving of consideration. The House should call on Greencore and Irish Sugar to put what is required in place.

Senator Browne referred to the loading bay at Bagenalstown. Will it be in place next September? If Greencore is given an excuse, what will it say or do? Laois beet growers rightly say they need a connection to Mallow. If a climate of doubt, dispute and tardiness is created, Greencore will say the Government and the taxpayer should pick up the tab because the company wanted to do it. I am surprised at the attitude of Carlow County Council and Carlow Town Council. If one is to take a sensible approach, the survival of the industry is critical and it requires us to put our shoulders to the wheel together and I hope we can do so.

I refer to the golden share. There is ambiguity regarding who owns it. There are special conditions under which Greencore cannot dispose of the controlling interest in Irish Sugar Limited, its sugar assets or the sugar quota without the prior written consent of the Minister. The Minister is not empowered to become involved in operational matters or ordinary business decisions made by the company. We, the growers, own the quota and if there is a doubt about that, the Minister and the Department should legislate in this regard because there will not be asset stripping and our rights will not be abolished.

Is the European Union serious about the ACPs or poorer countries when it says they can import everything except arms? Will developing countries be held back? The World Trade Organisation and wealthy countries such as Brazil seek to stop the provision of funds to the ACPs and allow slave labour to continue. Let us reach out with the hand of friendship and help to poor, developing countries.

Mr. Ryan

Everybody with a heart and a sense of compassion and justice will be concerned about the workforce of the Carlow sugar factory, which is located only 12 miles from my home town. It was recognised as a serious, secure but difficult employment for full-time workers and people travelled in significant numbers during my childhood from Athy to work in the factory. The sugar company was a considerable achievement on the part of the State and it will forever be associated in my age group's mind with Lieutenant General M. J. Costello, a classic example of a public sector entrepreneur who was never short of ideas.

However, it was a different world then and the motion and the amendment raise an unanswered question. Let us consider what has happened in Ireland over the past 40 years. Significant textile, footwear and car assembly industries have almost disappeared and, while we still have a major information and communications industry, sections of it that were located in the State ten or 15 years ago are gone. When Seagate in Clonmel closed, I suggested, with my tongue firmly in my cheek, that the State should buy its surplus product and sell it at a subsidised price in the developing world. While I was joking, there were parallels between that and the defence of agriculture that I often heard in the House at that time, which comprised the belief that a tide could be held back.

The debate should address the tide that is impossible to hold back. The two largest political parties in the State have served farmers poorly by pretending to them that if we keep our eyes shut and our hands over our ears and avoid everything, like the famous ostrich burying its head, nothing will happen. If we say "Boo" in the dark, it will all go away. However, that is not the case and the job is to manage the transition.

I am not impressed by what I have seen so far. A serious strategy involving Government, Greencore and other agencies to manage the transition has not been devised. Greencore has made a brutal decision in the interest of no more than short-term viability. The conditions that have forced the company to consolidate at one site will lead in the medium term to a decision that the indigenous sugar industry is non-viable. For example, I do not know whether specific speciality brands of sugar could be produced only from domestic beet. It is a great tragedy because the sugar company is extraordinary and unique in terms of its capacity for technological and product innovation and its capacity to extend itself.

However, its looks increasingly likely we will not have to deal with a determination to say, "No, it will not happen", but to manage a process, the outcome of which none of us can forecast. I do not know whether we can put together a beet-based sugar processing industry which can compete with international imports. I agree with Senator Callanan on this matter. I received a firm reprimand from a senior representative of a Third World country. One of our jobs is to ensure that wherever we have free trade — and we should have it — those who work to produce should operate according to standards that are decent in their own country. I do not want to tell people they must be paid as well in Brazil as here in Ireland. However, by the standards of their country they ought to have the freedom to join a trade union. If we are endeavouring to import from countries where those rights do not exist, it is our Government's job to negotiate a deal though the World Trade Organisation. However, I do not believe there is a long-term future for a viable, commercially independent sugar beet industry even if that were done.

I attended a World Trade Organisation parliamentary assembly in Geneva two years ago. Delegates were talking about the changes that had been agreed in the area of sugar production. It was a slight relief for Irish parliamentarians because the reiterated complaint of the parliamentary representatives of the developing world was that, on the issue of agriculture, Ireland and France were holding back progress within the EU. In their view, Ireland's rhetoric and acknowledged generosity were tainted by the Irish determination not to allow them to properly and fairly use their comparative advantage in many areas of agriculture to access one of the two biggest markets in the world. It was not just an Ireland and EU issue; it was a complaint against the EU and the United States. These Third World countries were aware France and Ireland were the culprits. Many of them could say that if France did not have Ireland, it would not in many cases be able to stop it on its own. They saw it as a political combination of a big and a small country.

It is a great pity that we only discuss issues such as this in the middle of a crisis. As such, it is very easy to say we should act like King Canute and stand in front and say, "Go back". This will not go back. We are misleading both the workforce in the two factories and those who produce sugar beet if we tell them it will. We can only manage the change; we most assuredly cannot stop it. It is high time we began to talk about a future for all agriculture and food industry based on the reality that within five, ten or 20 years it will be based on a free trade arrangement where the only boundaries to trade will be issues of quality in terms of human safety. To pretend otherwise to farmers or people who work in the food industry is to mislead them.

Mr. Scanlon

I welcome the Minister for Agriculture and Food, Deputy Coughlan, to the House and am delighted to have an opportunity to speak on the amendment.

That the motion and amendment are compatible reflects the seriousness of the situation. I am aware of a farmer in Portarlington who grows 30 acres of sugar beet with a quota of 440 tonnes. From the planting of the beet until it comes out of the ground, it costs €14,000. His quota is worth €22,000 which represents an approximate profit of €8,000 when it is taken to the factory in Carlow. As a result of the decision to close the Carlow plant that farmer is well and truly out of business because there is no way in the world he can transport his sugar beet from Portarlington to Mallow.

I ask the Minister to use her influence whatever way she can to ensure facilities are put in place for the farmers of the general midlands area who are growing sugar beet to take the beet by rail to Mallow, as proposed. Can she also ensure that such facilities are put in place before the factory closes to facilitate those farmers? Otherwise, farmers in the midlands who grow sugar beet will be out of business. At this stage they have no way of obtaining entitlements on their land for the reference years 2001 and 2002. They have no way of being compensated for having to stop growing sugar.

I have no doubt the Minister will do her utmost in the coming talks to ensure these farmers are looked after. Many speakers have suggested that the decision could perhaps be deferred for one year. This would allow people more notice and time to try to resolve their personal situations with regard to the growing of sugar beet.

Greencore is a private company and must live within the boundaries of the global business market. However, perhaps its decision was premature and it should have waited. I am giving the Minister the opportunity to make the best case for Ireland at the WTO talks. We all know there is a problem within the industry, that the market must be opened up, that there will be a 16% reduction and that the Irish sugar beet industry will face tough times. However, it would have been better if Greencore had deferred its decision and given the Minister every opportunity to fight the best case.

I hope the Minister is successful for the sake of the farmers in the Midlands and the workers employed in the Carlow factory.

Minister for Agriculture and Food (Mary Coughlan)

Tá lúcháir orm bheith anseo le cúpla focal a rá faoin tionscal siúcra in Éirinn agus faoin díospóireacht atá idir láimhe san Eoraip.

Sugar beet growing and sugar processing have a long tradition in Ireland dating back to 1926 when the first sugar factory was established in Carlow. The Government has always been very committed to the industry, both to sugar beet growing and sugar manufacturing. In 1933 the then Government acquired the Carlow factory and Irish Sugar came into existence. For many years Siúcra Éireann Teoranta, a semi-State body, was the only manufacturer of sugar in the country.

The manufacturing industry provides the essential outlet for the sugar beet crop which is a very important element in the agricultural economy and a valuable source of income to 3,800 farmers in the beet growing sector. On the manufacturing side, the industry has provided important employment opportunities at the sugar plants in Carlow and Mallow in addition to supporting employment in associated industries.

The most important element in the overall sugar sector is the EU sugar regime which underpins the entire sugar beet growing and sugar manufacturing industry in the community. The essential features of the regime are rules on prices and production quotas. The objectives of the current regime which has been in existence since 1968, long before Ireland joined the EU, are to guarantee a reasonable and secure standard of living and income to growers of sugar beet and sugar cane; to ensure a constant supply of sugar beet and sugar cane to the sugar manufacturing industry; and to ensure a continued supply of high quality sugar at reasonable prices to consumers, both industry and domestic.

Great credit is due to all involved in the industry in that they have consistently contributed to the delivery of all of these objectives. Growers receive a good return on their investment, the industry has a constant supply of raw material and the consumer has a guaranteed and secure supply of high quality sugar.

Under the EU sugar regime, Ireland has a quota for manufactured sugar of approximately 199,000 tonnes which amounts to roughly 1.1% of the total EU quota. The quota is available for use by the sugar manufacturing enterprises in the member state. In Ireland the quota is processed by Irish Sugar Limited, the only manufacturer of sugar in the country. Irish Sugar Limited places annual contracts with farmers to grow a specific tonnage of sugar beet sufficient to manufacture the quota. I compliment those involved in the industry on the fact that, in almost every year since we joined the European Union, the quota has been filled. There have been a few exceptions, mainly due to bad weather. This year, the 2004 harvest was very good and beet deliveries allowed for the manufacture of more than 220,000 tonnes of sugar, well above the quota.

Reform of the EU sugar regime is high on the EU agenda because of international pressures. These pressures fall under three main headings. The first is the WTO round. This will bring strong pressure on the European Union to allow increased access to our markets for all products including sugar. In addition, demands will be made to reduce the level of export refunds paid on Community products being exported to third countries. Second, Australia, Brazil and Thailand have taken a WTO panel action against the EU sugar regime on the grounds that there is cross subsidisation of EU sugar exports. The initial ruling is against the European Union. It has appealed the decision and the outcome of that appeal is expected in March or April 2005. An unfavourable ruling would have very serious consequences for EU sugar exports. The third heading is the Everything But Arms initiative which will allow sugar from the least developed countries, LDCs, to be imported into the European Union duty free from 2009 onwards. As the internal price of sugar in the European Union is considerably higher than the world price, the provision of unlimited access for cheaper LDC sugar will lead to a significant surge in imports, thus impacting on the production and price in the European Union.

The European Commission is expected to bring forward legislative proposals for reform of the sugar regime in May of this year. However, it outlined its broad ideas for reform of the regime in a communication to the Council and the European Parliament last July. These proposals include a reduction in two stages in the institutional price of sugar by 33% to €421 per tonne; a similar two-stage reduction in the price of sugar beet to €27.40 per tonne; partial compensation to farmers of 60% for the reduction in the price of sugar beet — the compensation to be part of the direct payment and subject to cross compliance; and in the case of quotas, a reduction of 16% across all member states is proposed. The transfer of quotas between member states is also envisaged.

It is generally acknowledged that reform of the EU sugar regime, which was not dealt with in the main CAP reform process in 2003 and 2004, is unavoidable because of developments at WTO level and other international pressures. However, the European Commission's initial reform ideas would, if adopted, have serious repercussions for sugar beet growing and processing in this country. I have made it clear in discussions in the Council of Ministers that the Commission's initial proposals are unacceptable.

Along with nine other EU member states, I signed a letter to the European Commissioner for Agriculture stating that the Commission proposals would have a devastating effect on farms and the industrial enterprises working in the sector. We accept the necessity to reform the existing regime but feel that the reform should aim at maintaining the existing distribution of sugar beet and sugar production in the entire EU territory. We believe that reform should be based on the following principles: an import system from third countries should be put in place which will ensure predictable and regular import quantities; the price reduction should be significantly less than what is currently proposed and should be implemented more gradually; the impact of the quota reductions should fall mainly on those member states that are net exporters of sugar; and the transfer of quotas among member states should not be allowed.

As I mentioned earlier, the Commission is expected to bring forward legislative proposals in May with a view to reaching agreement in the Council of Ministers before the end of the year. My overall objective in the forthcoming negotiations is to ensure the future shape of the EU sugar regime is consistent with the continuation of an efficient sugar beet growing and processing industry in this country.

I am conscious that the recent decision by Greencore to close its plant in Carlow, with the loss of 189 full-time and 137 "campaign" jobs, came as a shock to many people. I am obviously concerned about the personal impact these job losses will have on families. I have been in contact with my colleague, the Minister for Enterprise, Trade and Employment, Deputy Martin, and I am aware that Enterprise Ireland is actively looking at replacement jobs for the area. That said however, the decision to close the Carlow plant was a commercial decision taken by the company in light of the increasing competition in the sugar sector and taking account of the reality that changes will occur in the industry as a consequence of the reform of the EU sugar regime.

The trend towards rationalisation and increased productivity in the sugar sector has been evident throughout the European Union for some time, with the number of sugar plants decreasing by over 40% between 1990 and 2001. However, I am glad that Greencore's rationalisation programme involves an investment of €20 million to €25 million in Mallow, which clearly demonstrates a commitment to maintaining an efficient sugar processing industry in Ireland. I understand that work is to begin immediately on a substantial upgrading of the Mallow plant.

To facilitate the one factory operation, beet from the Wexford region will be diverted to Wellingtonbridge for transport to Mallow by rail. The company plans a new rail depot to be established in the Carlow region to assist beet growers make their deliveries. I understand that a planning application will be submitted to Carlow County Council shortly in this regard. I am confident that the company and the beet growers will be able to work out satisfactory arrangements to cope with this new situation.

As Minister, I hold a single special share in Greencore plc. That share has the same monetary value as any other share in the company. However, it has conditions attached which prevent the company from engaging in a number of activities without the prior written consent of the Minister.

Mr. Callanan

That will not be given.

Mary Coughlan

In summary, the special share prevents the disposal of the controlling interest in Irish Sugar Limited or the sugar assets and prevents a single shareholder or group of shareholders acting together from gaining control of Greencore plc. The special share does not allow me to interfere in the commercial decisions of the board.

The issue of the ownership of the quota has been raised in the context of the Commission's proposal to allow the possibility of cross border quota mobility. Several member states, including Ireland, are opposed to this idea. The Commission has indicated that if the proposal on quota mobility is maintained, it will propose appropriate rules to deal with that situation. In the meantime, I have sought the Attorney General's advice on the issue. I am aware that the ownership issue is unclear throughout the European Union.

In facing the future, I anticipate that there will be difficult and protracted negotiations on the reform proposals. As I stated earlier, my overall objective in these discussions will be to protect the viability of sugar beet growing and processing in this country. I will work vigorously in common with like-minded member states towards that end.

Following debate there were views that my position at negotiating level within the European Union would be undermined as a consequence of the decisions made by a private company. My view, and that of those I have spoken to and from whom I have taken advice, is that this in no way undermines, from a sugar beet point of view, the negotiations that will take place. The situation is difficult. The negotiations will be protracted. We do not have, in the political sense of the Council, support from the large players. However, we have a blocking minority. In any further discussions with the Commissioner, whom I met before Christmas, and working with our officials at Commission level, we will do all we can to support the sugar beet industry here.

To reiterate, for the many concerned elected Members in the House who represent constituencies that are affected, replacement jobs should be a priority.

Mr. Browne

The same was said in the case of Tuam and Thurles, but it never happened.

Mary Coughlan

Moreover, for the facilitation of farmers in the area represented by the Senator, I urge the holding of discussions between the community and the factory to ensure that the collection process and the transportation issues are dealt with to the satisfaction of the farming community.

Debate adjourned.