Benefits of sugar deal questioned

THE benefits of a strategic alliance between Greencore’s Irish Sugar subsidiary and a French-based co-operative were questioned yesterday.

It followed reports that Greencore was in advanced talks with Sucre Union, a Swiss-owned co-operative, which is believed to have about 15% of France’s sugar quota.

Sucre has a quota of 800,000 tonnes per annum, four times that of Greencore, and a turnover of €500 million.

According to reports, Greencore would effectively get a 10% stake in the French company, which would take a similar stake in Irish Sugar.

A spokesperson for Greencore declined to comment on the reports yesterday, but the company previously stressed Irish Sugar was not for sale.

Goodbody Stockbrokers said it was unclear how an alliance between Sucre Union and Irish Sugar would fundamentally improve Greencore’s position in the EU sugar market.

Other sources suggested, however, that a sale of its sugar and malt divisions would reduce Greencore’s debt of over €500m, a legacy of acquiring Hazlewood Foods in 2000.

They claimed this would make Greencore more attractive for a takeover, with Kerry Group being mentioned as one possible buyer.

Almost 4,000 growers supply the Irish Sugar plants in Carlow and Mallow with around 1.3 million tonnes of beet grown each year. The overall value of the crop to farmers is about €62m.

Irish Sugar has 450 permanent staff with 200 temporary staff employed for the annual beet processing season.

The industry is, however, facing major challenges, as Trade and Commerce Minister Michael Ahern outlined at the IFA sugar beet conference in Cahir, Co Tipperary, earlier this month.

He said world trade talks will bring strong pressure on the EU to allow third countries increasing access to its markets for all products, including sugar.

In addition, demands will be made to reduce the level of export refunds paid on EU products being exported to third countries.

A new EU sugar regime must also be negotiated and put in place by mid 2006.

A three-year cycle of winding down the import duties for sugar from the 49 Least Developed Countries under the Everything But Arms Agreement will also begin that year.

Mr Ahern said the review of the sugar regime, recently commissioned by the EU, is also expected to report in the immediate future.

He said Ireland will continue to strenuously defend the sugar regime because it recognises the value of the industry and its contribution to the agriculture and business life of all EU member states, including Ireland.