Greencore says no: ethanol and sugar plants 'not viable'

GREENCORE WILL not get involved in sugar or ethanol production at its former Irish Sugar plant in Mallow, its chief executive Patrick Coveney told the Joint Oireachtas Committee on Agriculture, Fisheries and Food yesterday.

“We cannot envision a basis in business, financial or economic terms that could enable a new sugar industry to emerge in Ireland,” he told the committee in a lengthy and detailed statement.

“It comes back to one simple reality – beet growing in Ireland remains uncompetitive on an international basis.”

According to Mr Coveney, the institutional price of sugar beet across Europe is €26.30 per tonne while the cost of growing beet in Ireland is at least €30 a tonne.

“Only fractional amounts of sugar beet can be profitably grown in Ireland at a price that competitive beet growers in other EU countries can accept,” he said.

Mr Coveney also noted that Ireland had surrendered its sugar quota in 2006, which is another hurdle to restarting the industry.

A proposal to produce ethanol at the Mallow plant was rejected.

“Regarding ethanol, Irish sugar beet would be an uncompetitive substrate for ethanol production,” Mr Coveney said, citing research that a subsidy of 26 cent a litre would be required to make ethanol competitive with an imported product or petrol.

Mr Coveney outlined the background to Greencore’s decision to close Irish Sugar in 2006. This formed part of an EU-wide reform of the sugar regime that sought to reduce production and cut the generous subsidies paid.

He said Greencore had invested €25 million in its Mallow plant in 2005, following a decision to close its Carlow factory to achieve cost efficiencies by concentrating its activities at one location.

Closing the Mallow plant resulted in asset write-offs of €116 million; redundancy and pension costs of €40.5 million; and environmental clean-up costs of €12.45 million, he added.

Mr Coveney said the decision to close Irish Sugar was ostensibly a political one taken at European level as part of the reform regime.

He said the Irish Farmers Association also chose to pursue compensation for members rather than fight for higher prices.

Mr Coveney challenged recent analysis regarding a report from the European Court of Auditors, which suggested that Mallow need not have closed.

He said the report “did not question or criticise Greencore for taking this decision, given the reality of circumstances facing many Irish growers and the company itself”.