Beet’s gone, mind the beef
With Irish factories dismantled as part of the reform, the industry is ancient history.
However, lessons can be learned from the reform, and remembered the next time the EU comes with plans to reform an Irish agri-food sector.
The EU acted because many non-EU countries were granted free access to sell their sugar in Europe by the EU’s ‘Everything but Arms’ free trade initiative, and by a World Trade Organisation ruling against subsidised EU sugar exports. Also in the background was the annual cost to the EU of €700 million for exporting its surplus sugar.
The EU decided it had to cut its sugar production.
Five years on, and now Brussels is negotiating a free trade agreement with South America, which could leave Europe a dumping ground for South America’s farm products.
If agreement is reached, another agri-trade reform will be needed, this time perhaps of the EU beef industry, because Brazil alone can produce as much beef as the entire EU, for as little as one fifth of the production cost.
At least, if that comes to pass, and Ireland is offered a Brussels package to scrap its beef industry, we will have the sugar beet experience to draw on.
If the sugar reform spelled the end of the Mallow factory and its 300 jobs – which Greencore claimed was one of Europe’s most efficient sugar plants – the beef factories which are familiar sights in many of our towns may be equally vulnerable.
The Court of Auditors noted that Greencore had undertaken a consolidation and rationalisation of its processing facilities before the sugar reform, but closed down its large, modern and potentially efficient sugar factory – justifying their decision on the risk of the reform price reduction cutting their sugar beet supply to an uneconomic level.
Prices were to be cut 39% and farmers were to be compensated for 60% of this cut, but said at the time they could not live with the reduced price. Significantly, the European Commission did not require member states and/or the industry to provide assessments of the productivity of their sugar industries.
With sugar quotas to be cut also, processors across the EU decided to close 80 factories and take the compensation deal on offer.
If it was the Irish beef industry on the table, farmers could not live with even a 10% price cut, in an EU market flooded with south American beef.
In return for its sugar industry, Ireland secured a compensation package of €353m – of which €220m went to beet growers, €127m to Greencore, and €6m to machinery contractors.
IFA deputy president John Bryan said last week the EU sugar reform highlighted the dangers of free trade for food production in Europe, without gains for EU consumers. Even as he spoke, trends in the commodity markets were supporting his view.
Speculators had taken the world trade price for sugar to a 30-year peak, but with news this week that India’s sugar surplus in 2010-11 could reach 3.5m tonnes, all bets were off, and the price dropped 14.5% in a day as hedge funds pulled out, with huge profits.
So EU consumers and food processors may get their cheap sugar after all, but how long will it last, with commodity speculators setting the price?
Food security for Europe’s 500 million people should be the guiding principle for policymakers, said John Bryan.
That principle is too late to bring back our sugar industry but timely ahead of next week’s proposals for the Common Agriculture Policy after 2013, which will contain the clues to the commission’s next bout of tampering with the EU food industry.
