Seanad Éireann debate -
Thursday, 17 Nov 2005

Vol. 181 No. 19

Sugar Beet Industry.

Mr. Bradford

I thank the Leas-Chathaoirleach for allowing me to raise the important issue of the Irish sugar industry and I welcome the Minister of State at the Department of Agriculture and Food, Deputy Browne, who comes from a constituency where sugar beet is an integral part of the tillage industry.

The Minister of State knows how important the growing of sugar beet has been to Irish agriculture and how many thousands of people benefit annually from the production of the crop. I refer not just to those who grow the crop and the thousands of people who have worked in the factories over the years, but to all those employed in the associated industries such as transport and factory maintenance. Thousands of people depend on the sugar beet industry for their livelihood and are worried about the future of the industry arising from the proposed sugar reform measures being considered at European level.

In Mallow next Sunday, I expect thousands of people will protest to highlight their fears about the industry's future. The Minister of State is aware that next week there will be further discussions at European level on the current set of proposals. I need not tell the Minister of State that this set of sugar reform proposals would, if implemented, wipe out the Irish sugar industry.

We are aware that during the years there were many cases where negotiations and agreements made in Brussels produced difficulties, concerns and cuts in various industries and enterprises. However, never has there been a proposal which, as a single entity, would wipe out an entire industry. That is what the current proposed sugar regime cuts would do to the Irish sugar industry. It would literally wipe it out overnight. If what is being proposed by Brussels and what is on the table is implemented, we will not have a beet industry next year. That would be a tragedy for Irish agriculture. Beet production commenced here in the late 1920s or early 1930s with four factories and now there is only one factory. We want to protect that industry.

Greencore has become extremely efficient at sugar production. I am advised that the Irish sugar industry is one of the most efficient industries in Europe. It is in the top half of industries from the point of view of efficiency. A level of streamlining, cost-cutting and rationalisation has been carried out and no further such measures can be taken on board. It is a question of what progress we can make politically at European Council level to save this industry.

From the point of view of the World Trade Organisation talks and the arguments being made about liberalising trade, we must knock on the head the suggestion that in some way what is being proposed in Brussels concerning the sugar regime would be good for the least developed countries and that we have an obligation to take that on board. The least developed countries currently have access to the European sugar market by way of a special agreement with the European Union.

If what is being proposed is taken on board, Irish farmers will suffer and the sugar industry will close but the least developed countries will also suffer. The only groups which will benefit are the sugar barons of the world in Brazil and elsewhere. They will dominate the European sugar industry. They will be the beneficiaries plus a small number of European Union member states where a handful of wealthy sugar barons will rule the roost. That is what next week's talks are about, namely, to stem that tide and to try to reintroduce a balance.

I am very much aware of the difficulty of the task facing the Minister, Deputy Coughlan, the Minister of State and the Government. There is no point in our being unrealistic, but it is a battle we cannot afford to lose. I hope the Taoiseach will use his undoubted negotiating skills to impress directly on European Union Prime Ministers the need to set aside this set of proposals and to examine afresh the putting in place of a regime which will allow the industry to remain in place and our sugar industry to remain viable. We are not asking for the EU to subsidise an industry that is inefficient or to keep an industry alive that is loss-making. The Irish sugar industry is a profitable operation. It produces a crop that is required and used. There is also a major spin-off from the industry for rural Ireland and that has always been the case.

Of all the talks that have taken place at European farming level since Ireland became a member of the European Community in 1973, our biggest task will be faced next week. The talks may not be finalised next week but we will move some way towards a conclusion.

The stark reality of the current position is that unless we stem this tide and reverse the set of proposals on the table by Christmas of this year, the Irish sugar beet industry could be shut down. We cannot allow that to happen. Every political party on this island supports what the Government is trying to do. I hope we recognise the scale of the problem and that the Government's approach will stretch beyond the efforts of the Minister for Agriculture and Food, who will do her best, and reach prime ministerial level.

The days of being able to use a veto at European level are long gone but whatever political pressure we can impose and political demands we can make we must exercise them next week. We must ensure that sugar beet continues to be grown in Ireland, that the industry continues to flourish and that the thousands of people who depend on it for a livelihood will have a livelihood next year and beyond.

I look forward to hearing the Minister of State's reply and to receiving his support for what I have said.

Minister of State at the Department of Agriculture and Food (Mr. J. Browne)

I thank the Senator for raising this issue and for his offer of support to the Minister for Agriculture and Food next week in her discussions at European level.

I welcome the opportunity to inform Members of the current state of play regarding the discussions on the proposed reform of the EU sugar regime which will be the main item on the agenda of next week's meeting of the Council of Agriculture Ministers in Brussels.

While it is over a year since the Commission first outlined its thinking on the future shape of the sugar regime, the formal legislative proposals only emerged at the end of June 2005. In the meantime, the proposals have been discussed at Council and in the European Parliament and the UK Presidency is striving to achieve political agreement before the WTO ministerial meeting in Hong Kong next month. The sugar regime in its current form expires at the end of June 2006, therefore, there is a need, in any event, for a decision on future arrangements to avoid a legal vacuum from next July.

Everybody is familiar with the reason reform of the sugar regime is currently high on the EU agenda. As well as the internal EU pressures to bring the sugar sector into line with other agricultural sectors, there are also international pressures. These fall under three main headings — the Everything But Arms, EBA, agreement, the WTO Doha Round of trade negotiations and the ruling by a WTO panel last April against aspects of the EU regime, following on a complaint by Brazil, Thailand and Australia. The WTO arbitrator recently decided that the EU must implement the panel ruling by 22 May 2006, which adds to the pressure for early action.

From the outset, we have highlighted the serious repercussions that the reform proposals would have for the Irish industry. Beet growing has long been a valuable cash crop for farmers, as well as playing an important role in the tillage cycle as a break crop. Currently, we have 3,700 beet producers and there are about 1,000 people employed in the sugar processing sector and ancillary activities.

Soon after the Commission's initial ideas were published, the Minister, Deputy Coughlan, made a joint submission with ministerial colleagues from nine other EU member states to the Commissioner for Agriculture pointing out the devastating effect the proposals would have on producers and industrial enterprises in the sector. While all ten Ministers acknowledged the need to modify the existing regime, they also argued that the reform should aim at keeping the existing pattern of sugar beet and sugar production across the entire EU territory.

The legislative proposals which emerged in June of this year turned out to be even more severe than anybody had anticipated and they went even further than the Commission had initially envisaged, not least because of the WTO ruling in April 2005 against aspects of the EU regime. There were two key differences — the price cuts were deeper and the proposal for compulsory quota cuts along with the proposal to allow quota mobility between member states was dropped, being replaced by a voluntary restructuring scheme for factories. The Commission's stated objective in presenting these particular proposals is to develop a sustainable future for the EU sugar industry by enhancing competitiveness and, at the same time, to attain a sustainable market balance between domestic production levels and international commitments.

The key elements of the proposals are a 39% price cut in the institutional price for sugar, a corresponding reduction in the minimum price for sugar beet and 60% compensation to farmers for the price cut. A voluntary restructuring scheme is proposed to encourage factory closures and the renunciation of quota.

From Ireland's perspective, the proposals are completely unacceptable in their current form. The price cuts proposed are so severe as to make sugar beet production in a number of member states, including Ireland, uneconomic. As Senator Bradford pointed out, it is unprecedented for the Commission to make proposals that could lead to the demise of an entire sector in a number of member states. The restructuring scheme, as proposed, is inequitable since the closure of a sugar factory would have major implications for sugar beet growers and this is not sufficiently appreciated. Apart from going against the expressed views of many member states, the proposals for price reductions have not found favour with the least developed countries either.

During the first political debate at the July Council meeting, the Minister, Deputy Coughlan, argued strenuously that the price cuts proposed are too severe and that the reforms should be based on a longer lead-in time for the Everything But Arms agreement. She has kept in close contact with like-minded ministerial colleagues in other member states who are also opposed to the proposal. In this context, a further letter from a group of 11 member states, that is the ten who signed the initial joint ministerial letter plus Poland, was submitted to the Commission in advance of formal discussions at last month's Council meeting, setting out the objections of the group to the proposals. The Minister for Agriculture and Food, Deputy Coughlan, also met the Commissioner for Agriculture and Rural Development on a number of occasions to voice Ireland's strong reservations.

Meanwhile, there has been ongoing contact at official level with other member states and the Commission in regard to reform proposals. A high level working group of officials has been engaged in extensive discussions in Brussels in advance of next week's crucial ministerial meeting.

Given the severity of the Commission's proposals, we are under no illusions about the challenge facing us as the negotiation process moves into a critical phase next week. I assure Senator Bradford and the House that we will remain resolute in pursuing our overall objective of achieving a balanced outcome that will take Irish interests into account.

The Seanad adjourned at 1.20 p.m. until2.30 p.m. on Tuesday, 22 November 2005.