Disappearance of the sugar millions leaves a sour taste

WHEN close to a third-of-a-billion euro disappears without any apparent trace, there is usually an investigation about it.

But not when it comes to the country’s late sugar industry. It has disappeared, and with it the €310 million the EU handed out to farmers and the company that manufactured the product.

An accountants’ study into how the EU’s €11bn sugar industry was reformed four years ago and how the European Commission handled it came up with some shocking conclusions.

The reform has cost more than the once highly-subsidised industry for instance; and instead of improving the EU’s sugar situation, now there is not enough being produced in the bloc and it has to import an increasing amount. There are claims that the plan was based on out-of- date data where Ireland was concerned – not necessarily a true assertion.

The report claimed that Ireland might have joined the ranks of the more competitive sugar producers had the effect of the closure of the Carlow plant been taken into account.

It referred to Greencore’s profits from its one remaining plant, in Mallow. But Carlow closed in 2005 and the increased profits were not known until a year or so later, when the Government was in the process of negotiating the shut-down.

The grim truth of the matter is that nobody really cared about the sugar industry except for a few farmers. The farmers did protest, but most of their complaints in the end were about the amount of money they were getting.

Greencore could have dug in its heels and refused to give up the quota that it had from the EU, and there was very little the Government could have done about that. But that’s not what happened.

After the usual protests, the negotiations began and the only issue was “how much”.

The rationale behind shutting down the industry was that it could not compete and a lengthy report produced by TCD experts showed just how uneconomic it was at the time.

The EU subsidy meant that producers were getting three times the sum for sugar in Europe as they would get for it if they sold at world prices.

As a result, it was a very profitable business for Greencore.

It made up 20% of company profits, although it was just 10% of its turnover. And for the farmers too, it was a much more lucrative crop than many others.

The subsidy was costing consumers around €15 each a year.

Once the subsidy was reduced by 35% it would become less profitable of course, and eventually it would not be profitable at all, as everybody was aware.

And, as in any story about Ireland now, it seems, there was eventually a developer involved.

The owner of Zoe Developments, Liam Carroll, paid very big sums of money to buy up Greencore shares at the time.

He was not interested in sugar, but in the substantial properties in Carlow and Mallow and a site the company owned in Britain.

He eventually increased his share-holding to 29.9% at a cost of €240m.

It is now worth substantially less and Ulster Bank took over the shares some time ago. Greencore still has the empty factories and says it will hold onto them until the market improves.

The EU gave €231m, divided between Greencore, the farmers and the machine operators, so that they could create alternative sources of employment.

Unfortunately, the Irish Government did not ask for any proof that the money was being spent in ensuring the Carlow and Mallow areas would benefit from alternative development.

Greencore is now Europe’s biggest sandwich manufacturer based out of Britain. The money no doubt is long gone. And it’s unlikely that the EU will accede to local requests and hand over more money to re-establish an industry the Government co-operated in shutting down so recently.