Revived Irish sugar sector could create 5,000 jobs, says study

A REVIVAL of the sugar sector could sustain up to 5,000 jobs, according to a feasibility study produced by an expert industry group and verified by PWC.

The report suggests that a dual sugar and ethanol plant, probably located in Kilkenny, would be profitable from its first year. The €350m start-up cost would be 30% funded by investors and 70% via bank loans, to be repaid within 15 years.

PWC’s calculations verify the profitability analysis of the Irish Sugar Beet Bio-Refinery Group (ISBRG), an expert group including former senior executives in Irish Sugar and Greencore, scientists in Teagasc and University College Dublin and farmers. The study was part-funded by Carlow County Enterprise Board.

Ex-Irish Sugar and Greencore CEO and ISBRG member, Chris Comerford, said: “The proposal to abolish EU sugar quotas in 2015 opens a real opportunity to re-establish sugar beet processing in Ireland. As Ireland surrendered its sugar quota in 2006, a new Irish sugar plant will require EU approval. Planning for the new industry needs to begin immediately.”

At farm level, the technology is already in place, with farmers still producing about 25% of prior beet levels, though primarily for animal consumption. In the revived model, Irish farmers would produce only 60% of the sugar beet levels of 2006.

Ireland imports all of its sugar needs for food production — 70% from the east coast of England, 30% from France and Germany, incurring transport costs of around €40 per tonne.

The ISBRG bio-refinery plant would deliver 154,000 tonnes of sugar a year, plus 50m litres of ethanol. This would sustain 2,000 growers, plus 3,000 people working in processing. The ethanol would ensure that people would have work at the plant all year around.

Prof James Burke, head of Crop Science at UCD and ISBRG member, said: “The EU has set a reasonable target for Ireland of sourcing 10% of all fuels from renewable sources by 2020. This means Ireland has signed up to use 142m litres of bio-fuels by 2020 for inclusion in all petrol sold in Ireland.

“That can either be imported or produced at home. Bio-ethanol will become more expensive as we approach 2020. Carbery ran a pilot project in Cork a few years ago producing 10m litres of ethanol from whey. It can be done. I am really excited about this proposal.

“This plan underpins the tillage sector, it is a cash crop paid for before Christmas, and it is another rotation crop. Malting barley has been suffering due to low proteins and I am convinced that this is from the absence of what sugar brings to the soil.”

Prof Burke said the revived sugar industry might need two large scale bio-ethanol plants. This ISBRG view might well please the Cork-based Beet Ireland group, which has produced a separate revival plan.

Agriculture Minister Simon Coveney has welcomed the proposals, and suggested a willingness to push the sector’s cause at EU level.

The plant could be built within two years of the EU granting approval for sugar production in Ireland to be revived. The ISBRG group say investors and the banks are fully behind the drive.

Global sugar prices have doubled since the closure of the industry in Ireland in 2006. The EU is already experiencing an annual shortage of 5m tons of sugar. Sizeable profits are guaranteed, with demand set to continue growing.

The study states that growers would be paid €40/tonne for sugar beet at 16.5% sugar content, delivered to the plant. This is based on an ex-factory sugar price of €570/tonne which the study states is a conservative figure.

If average sugar prices are higher than €570/tonne, growers would get a 40% share of the increase. If the current high sugar prices were to apply in the future, sugar beet would fetch over €50/tonne.

The study proposes that farmers supplying wheat for ethanol production would be paid a price of €175/tonne.

The ISBRG’s bio-refinery plant would have an annual production of 154,000 tonnes of sugar and 50m litres of ethanol. This would be produced from 1.2 million tonnes of sugar beet, of which one million tonnes would be used for sugar and 200,000 tonnes for ethanol.

A further 56,000 tonnes of grain, as well as molasses, a by-product of sugar processing, would be required to produce the annual target of 50 million litres of ethanol.

Based on a yield of 60 tonnes/ha (24 tonnes/acre), there would be a requirement for 20,000 hectares (50,000 acres) of sugar beet. At an average of 10ha per grower, this would involve 2,000 growers.