The Irish sugar industry looks set to close within two years following a deal agreed by EU agriculture ministers yesterday to reform the European sugar regime, writes Jamie Smyth in Brussels.
Irish sugar beet farmers and Greencore, the firm which owns the last remaining sugar factory in the State, stand to share compensation worth €310 million under the reforms, which will cut the support price of sugar by 36 per cent over four years.
Minister for Agriculture Mary Coughlan described the three days of negotiation on the deal as "very difficult" but said the final compromise proposal agreed would provide crucial options for the sugar industry in terms of managing change.
"We don't see a complete [ industry] meltdown right away but a more structured approach and compensation if it doesn't go well," said Ms Coughlan, who added that it was possible that some farmers may feel able to continue growing at the new prices.
However, the Irish Farmers' Association said the deal was totally inadequate for the 3,700 sugar beet farmers in the Republic and questioned the Minister's assertion that farmers would be able to continue to grow sugar beet viably for even two more years. IFA president John Dillon said the Minister had failed to secure proper recognition for Ireland's unique situation where the entire industry would be shut down. He also criticised the high level of compensation that will be due to Greencore from the reforms.
Under the compensation pack- age agreed by Ms Coughlan, growers will be eligible for a special €44 million once-off payment if sugar beet production ceases in Ireland. They will also receive €121 million in direct aid over the next seven years to compensate them for the cut in EU sugar prices, even if they exit the industry.
An additional aid package worth €145 million is available to Greencore, of which at least 10 per cent will be paid to the farmers. The rest of the money could be used by the company to pay for the closure of its factory in Mallow, the retraining of workers and any environmental costs associated with cleaning up the Mallow site.
The Government may become involved in future negotiations between the farmers' lobby and the company to decide whether more than 10 per cent of this fund can be allocated to beet growers, according to Ms Coughlan, who switched Ireland's negotiating position from seeking smaller price cuts for sugar, in an attempt to enable the industry to survive, to negotiating for the largest possible compensation package for growers in the EU negotiations yesterday.
Under the qualified majority voting rules that govern decisions at the EU Council, it was always likely that the group of 11 countries initially opposing the sugar reform would split and cut their own deals.
Ireland was among several countries, including Italy, Sweden and Austria, that won specific concessions for its sugar industry. However, diplomats said that Greece and Poland, two of the countries most opposed to the reforms, were the main losers as they had not managed to negotiate concessions.