EU compensation looks sweet for sugar processors but not farmers

Analysis: They were already calling it the "dead march" in farming circles last week as the IFA applied pressure on its members to turn up at Mallow to protest at the reform of the sugar sector at Ireland's last remaining sugar processing plant.

For even the 3,700 sugar beet producers left in the State who grow 1.3 million tonnes of beet which is turned into 199,000 tonnes of sugar by Greencore, are deeply divided over what should be done now.

With an EU reform package on the table which will mean that farmers will be asked to produce beet at €25 a tonne, at least €6 lower than the production cost, many of the farmers are seeking to grab compensation and exit the industry.

The only problem is that they do not own the beet quota which the EU has said is a market control mechanism and belongs to no one, a view confirmed by the Attorney General in Ireland, Mr Rory Brady, to the Government recently.

But the main crux of the problem is that the other part of the reform package offers a huge incentive to sugar processors, to shut down their plants and take a compensation package which could prove irresistible to Irish Sugar, which is controlled by Greencore.

While it has said it is committed to processing sugar beet in Mallow, it may be hard to resist a package which could be worth over €145 million, to cease production, look after the workers and turn the site into a green field again.

That package, offering €730 per tonne of sugar taken out of production if the plan is implemented next year and falling to just over €420 in year four, may prove far too attractive to a private company especially when the growers do not have to be compensated.

The sugar beet growers from the Midlands and East who traditionally supplied the Carlow Sugar factory say it will be totally impossible for them to operate at the levels of return given the transport costs involved in getting the beet to Mallow.

They are angry that they are being forced out of the business without any hope of compensation and that the factory will not have to compensate them for the loss of the crop which has been the most lucrative of the tillage crops grown here.

Tomorrow, the EU farm ministers meet to vote on the package which has been put forward by the Commission which already has an impact report which said the sugar industry would find it difficult to survive in Ireland if the reforms go through.

But for once, Ireland, is without its old protector, France, which has joined with Germany and Britain to force the reforms through before the WTO talks.

Final agreement in Brussels is expected on Thursday and few expect good news for Irish beet growers by then unless a proper compensation package for farmers opting out of the industry is agreed and that is unlikely.