Beet Ireland not dissuaded
However, there was a strangely muted reaction to the launch at the event of a €400 million investment plan to revive the sugar industry.
While announcements like Intel’s decision last January to begin a €370m upgrade of its Leixlip plant are front page news, the sugar plan hardly caused a ripple. That won’t dissuade Beet Ireland, the agri-business/beet growers/food processors group which is ready to go ahead with the project if, as expected, the EU sugar quota system is abolished in 2016.
There are a few major “ifs”. But there are many positives.
If tillage farming continues to go well, growers will be ready to invest more than €200m, at €25,000 per contract for 400 tons of sugar beet, the produce of about 17 acres. Already, growers have about 20,000 acres per year under beet, a crop which can be worth €1,000 per acre for selling to livestock farmers. For sugar processing, acreage would need to be trebled at least. But sugar beet is a favourite crop for many farmers, resulting in increased yields from subsequent grain crops in the tillage rotation.
In the Beet Ireland plan, farmer investors in more than 5,000 contracts would gain the right to have their beet processed, earn dividends on their investment, and have a 30% controlling interest in the new industry.
Costing about as much as a second-hand tractor, a contract could pay for itself quickly.
Scrapping the sugar quota system could increase beet sugar production 1.9% in the EU, and knock 8.2% off beet prices. But some experts estimate sugar prices could fall 40% from current levels, before sugar beet would become unprofitable for Irish growers.
The CAP reform thinking in Brussels — that tillage farmers must grow at least three different crops at any one time, to earn 30% of their EU-income support — also plays into the hands of sugar beet industry supporters.
Government backing is reflected in Agriculture Minister Simon Coveney’s statement that feasibility studies are very persuasive, and his strong support for EU proposals to end sugar quotas by 2016, and for revival of the sugar industry, if it makes commercial sense.
It would be a major coup for him to announce an industry which would improve Ireland’s balance of trade while generating up to 4,000 sustainable long- term jobs (plus 500 extra jobs during construction of a plant to produce 250,000 tonnes of refined sugar and 11 million litres of bio-ethanol per year).
Although Beet Ireland has put forward a plan on strictly commercial grounds, government support would be sought in the form of tax breaks, and help with any transitional arrangements the EU might make for ending sugar quotas.
The industry would have a home market for about 200,000 tonnes of sugar per year, mostly used by food processors who have been hit hard by soaring EU sugar prices — which are even more prohibitive when the cost of import into Ireland is added. A huge sugar price rise in the past year has threatened their future viability in Ireland.
It could be in their interests to become big investors in the new venture.
The biggest obstacle to sugar industry plans is likely to be the availability of loans from the weakened Irish and international bank sector — as in most areas of business nowadays.
Ireland exited sugar production in 2006. In return for its dismantled sugar industry, the country secured a compensation package from the EU of €353m — of which €220m went to beet growers, €127m to Greencore, and €6m to machinery contractors.
Beet growers at least are ready to reinvest their compensation.
