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Stanton Raises Sugar Industry Shutdown in Dail

Following the European Court of Auditors (ECA) report, last week, on the failures of the EU sugar industry restructuring, Cork East TD, David Stanton secured a Dail adjournment debate on the matter.  The report said that the decision to shutdown the Irish sugar industry was taken on out of date information.

 “Having participated on the statements on the Irish sugar industry reforms on Wednesday, I was delighted to get the chance to debate this very important on Thursday.  I was disappointed, however, that neither the Tanaiste, Mary Coughlan TD who agreed to the European Commission’s sugar restructuring plan in 2005 nor the Minister for Agriculture were present at the debate.

 “The Court of Auditors report raises some very serious questions about the success of the EU sugar restructuring package. Clearly it has been very bad for Ireland, we lost a viable sugar industry which had been operating successfully for 80 years.  Last year we spend €99 million on sugar imports when we used to be self-sufficient in this area.

 “From the report it looks like the restructuring has not necessarily been good for Europe either.  The Court of Auditors note that the sugar industry has in fact become less, not more, competitive as a result of the restructuring.  They also not that price decreases have not been passed on to the consumer.

 “In light of the report findings, I believe that the Government and European Commission should look at reinstating a sugar quota here. The EU biofuels directive mandates that member states begin replacing fossil fuels with biofuels. A sugar industry here could be used for ethanol production and help meet our biofuel targets. It has also been suggested to me that it could also be used for electricity production and a district heating system

 “I believe that a feasibility study of the possibility of re-opening the sugar industry here should be conducted. If this is viable then Europe could be approached regarding a quota reinstatement.


Note to Editors: Transcript of Adjournment Debate follows:

Adjournment – Sugar Beet Industry

Thursday, 18 November 2010

Deputy David Stanton: I wish to thank the Ceann Comhairle for allowing me to raise this matter on the Adjournment. At a time of high unemployment and emigration we should examine every single possibly of increasing employment. The closure of the sugar beet industry occurred a number of years ago and there were reasons for that. Last week, however, the European Court of Auditors issued a report which, to say the least, raised questions about how the decisions were taken. Ireland ended up as the only member state with just one factory to close and consequently our 80-year-old industry was shut down.

A number of people have approached me recently to suggest that we should examine the possibility of re-establishing the sugar beet industry here. This time, they suggest, that such a plant could be linked to the production of ethanol, electricity and a district heating system.  The European Court of Auditors’ report was highly critical of the initial decision, saying that the information was out of date. The report also said that overall sugar production has become less competitive as a result of the reforms and that price cuts have not been passed on to consumers. The Minister of State may be interested to note that the Siúcra brand is now owned by a German company.

The price of sugar on world markets has never been higher, as there is a global shortage. This presents an opportunity for Ireland given the current huge unemployment and mass emigration. Let us therefore examine this proposal and discuss it to see what the potential is. For instance, the EU biofuels directive advocates that member states replace petrol and diesel transportation with biofuels. To that end we should produce more ethanol. There is a major opportunity to do this if we linked ethanol production with sugar production.

The report of the European Court of Auditors also said that the Greencore plant was large, modern and potentially efficient. The ECA report also maintained that sugar production is now controlled by a very small group, with some 75% of EU production currently accounted for by six industrial groups. There are all sorts of reasons Ireland should reopen this debate on sugar beet production. This is especially so if we can prove that the original closure decision was flawed. The ECA report maintains that it was based on outdated information.  The ECA report said that there was no follow up on the impact of the closures of this industry on local communities. There are many recommendations in the report that should be followed up. The Government should establish a study group on this matter and invite experts to make submissions to it. Let us have an open discussion on this suggestion to ascertain its feasibility.

Other things could flow from this proposal also and the last debate on horse racing was relevant in this respect. The importation of pulp for animal feed is all important now, although there was a time when we were self-sufficient in that regard. That is another reason we should reopen the debate on sugar beet production. There are many other reasons we should examine this plan, so I will be interested to hear what the Minister of State has to say about it.

Last year, we imported €99 million worth of sugar, and in 2008 we imported €77 million worth. Surely that is a reversal of what we should be doing. Up to a few years ago, we used to export a small quantity of sugar and were self-sufficient in supplies. Meanwhile, the ECA report stated that no reductions in bulk sugar prices have been passed on to consumers. Nobody has benefited therefore and the country has lost out hugely. Farmers have lost out, as have contractors, former sugar plant workers, consumers and the economy generally. There is an opportunity here for us to resume sugar production.

We currently import ethanol from Brazil, so any plan to resume domestic production would be a win-win situation. The Government should examine this matter. It should go back to Europe and explain that this decision was flawed initially. For the good of the nation, let us revisit the decision and see if a resumption of sugar production is feasible. I am not calling for it to be done immediately, but I want a study to be undertaken to see if it would be feasible for the sugar beet industry to be reopened and remodelled to include ethanol, electricity and pulp production, as well as possibly providing a district heating system through surplus heat from such a plant.

Deputy Áine Brady: I am responding on behalf of the Minister for Agriculture, Fisheries and Food. I am pleased to address the House on this matter. As part of the reform of the EU sugar regime in 2006, a temporary restructuring scheme was introduced by the EU Commission with the aim of reducing EU sugar production in order to comply with WTO and other international obligations. The scheme provided an incentive for sugar processors to renounce sugar quota and dismantle the associated sugar processing plant and it provided compensation for affected stakeholders. Greencore plc, the sole Irish sugar processor and holder of the entire Irish quota allocation, decided to avail of this restructuring scheme. Accordingly, the company renounced the quota and dismantled the last remaining Irish sugar factory at Mallow in compliance with the conditions of the scheme.

This brought the Irish sugar industry to an end. As a result of the restructuring scheme, the overall EU sugar quota was reduced by almost 6 million tonnes, of which the Irish quota contributed some 200,000 tonnes. At the time of the reform negotiations, the Government made strenuous efforts to have the Commission’s reform proposals modified in such a way that an efficient sugar industry could have been retained in Ireland. In the end, there was insufficient political support among our EU partners for the Irish position and our efforts had to be directed at achieving the best possible compensation package.

The sugar reform package was secured as a whole. Restructuring aid, diversification aids and the single payment was worth approximately €226 million to Irish beet growers and contractors. The restructuring and diversification aids were paid to stakeholders concerned in 2007 and 2008. Greencore plc received €127 million, giving a grand total of €353 million of aid to Ireland under this package.

Following the restructuring of the EU sugar industry, sugar production is now concentrated in 18 member states, as opposed to 23 before the reform, which enjoy favourable agronomic conditions and over 75% of production is accounted for by seven of these member states, namely France, Germany, Poland, UK, Netherlands, Belgium and Italy. There is no mechanism under the current regulations that allow for the re-instatement of the sugar quota for the growing of sugar beet in Ireland for the sugar industry. Any proposal to review the EU sugar quota regime is a matter for the EU Commission in the first instance and any proposal to re-establish a sugar factory in Ireland would, subject to the availability of quota, be a matter for commercial decision by interested parties. At the time of the closure of Mallow, Greencore plc was approached about the possibility of producing ethanol there but it was not considered to be a viable proposition.