Sour taste for beet growers
Greencore cannot be blamed for looking after the interests of its 11,200 shareholders, when it announced the May closure of the Mallow factory, bringing 80 years of sugar processing in Ireland to an end.
But, at the very least, farmers should have been kept better informed.
Some farmers were said to still preparing the ground for a final season of beet growing when the factory closure was announced.
Considering that Greencore’s decision was emphatic in the end, farmers (and workers) can be justified in feeling they were led up the garden path unnecessarily for several weeks, and given false expectations.
Beet growers have now been left with no plans for up to 90,000 acres.
If stronger indications were given at an early stage, better decisions could have been made by farmers.
As it is, Ireland’s fledgling biofuel industry, for example, has been held up by dithering over the fate of the sugar industry. While Ireland was agonising over the fate of its most profitable tillage farming enterprise, several other member states have been announcing plans for huge biofuel plants.
Stockbrokers had been predicting Greencore’s decision to close Irish Sugar for months.
Agriculture Minister Mary Coughlan seemed to accept Greencore’s commercial decision to discontinue sugar production in Mallow, albeit with regrets. Perhaps she could have tipped off farmers, if she had any inside knowledge on the big decision making.
Enterprise Minister Micheál Martin seemed surprised, expressing deep disappointment at the “devastating” news for workers. But, in the end, Greencore was clear that it would incur unacceptable financial losses if it processed sugar again this year.
Admittedly, it had to postpone a final decision until March 3, when the temporary EU sugar quota cut of 11.6% was confirmed, which would escalate Greencore’s predicted sugar processing losses. But the size of that quota cut has been fairly accurately predicted for weeks beforehand. Even more significant - but also predictable - was the February 22 announcement by the European Commission of the €25 million restructuring levy.
According to Greencore, these developments were too much, against the background of a sustained deterioration of EU industrial sugar markets, and continued uncertainty over the availability of a full beet supply, so it’s hoped for ‘one more campaign’ was not feasible.
However, it is somewhat surprising to hear of the company’s plan to continue to supply Irish industrial sugar and retail customers, even after the company’s existing stocks of sugar run out next November. This indicates that Greencore still sees life in the sugar market in Ireland, even if it will supply it with imported product.
The company also disclosed in its Irish Sugar closure statement that an EU sugar regime reform has always had the potential to threaten sugar industries of relatively small scale, especially where there is a reliance on sugar beet that for climatic and other reasons was uncompetitive in a EU context.
Perhaps it only waiting for an excuse to shut down processing, even at the cost of foregone profit from the sales of seed, chemicals and fertiliser to farmers for another sugar beet crop.
With 11,200 shareholders to answer to, Greencore has to keep a close eye on its profitability, and it has apparently played safe by deciding to close down Irish Sugar. Its shareholders will thank it for that.
But it could have picked a better time to leave 3,700 growers in the lurch than in March, one of the busiest months of the year for tillage farmers.
What to do with 90,000 acres of beet land is now the farmer’s dilemma.
The loss of beet will have far-reaching consequences, all the way down to the loss of useful home-produced livestock feeding, from beet tops and pulp.
Agriculture Minister Mary Coughlan had no suggestions for growers, as she accepted the sugar industry’s closure.
Nor did she give away any clues as to how she will respond to Greencore’s application for the €146m restructuring aid package (a decision she needn’t make until September).
But farmers shouldn’t bank on a big share of the money. There is no doubt that Greencore has properly checked out its entitlements from the EU restructuring aid. It has admitted there “some risk” to the level of aid that the Government will award to it, but nevertheless has assured shareholders that it is entitled - on the basis of independent legal, economic and financial advice - to 90% (€131 million) of the restructuring fund, with the remaining 10% (€15 million) going to Irish beet growers and machinery contractors.
Farmers expecting a bigger compensation bonanza should bear in mind that a public company does not lightly give such assurances about multi-million euro sums to its shareholders.
