The Irish sugar industry will get a compensation package worth €310 million under a deal to slash prices struck by European Union agriculture ministers in Brussels this afternoon.
Eleven of the 25 EU countries, including Ireland, were opposed to a proposal by European Agriculture Commissioner Mariann Fischer Boel to cut the price of sugar by 39 per cent, claiming it would cost thousands of jobs.
The Irish Farmers Association (IFA) warned that any cut in prices would "wipe out" sugar beet farming in Ireland and the livelihoods of 3,700 farmers.
EU ministers finally agreed this afternoon on a 36 per cent reduction in support prices for the subsidy-laden industry over the next four years.
Under the deal, farmers who abandon beet growing will receive compensation equivalent to 64.2 per cent of the revenues they will lose because of the price cuts.
The Irish sugar industry will get a package totalling €310 million, made up of €121 million in direct farm premiums for growers over the next seven years; a top-up of €44 million for special assistance and a €145 million restructuring package for the industry.
Ireland's main sugar company, Greencore, will receive around 90 per cent of that the restructuring package, with the remainder going to farmers, machinery contractors and employees. Greencore owns the last remaining Irish sugar factory in Mallow, Co Cork.
Minister for Agriculture Mary Coughlan insisted the deal struck was a "major improvement" on the EC's initial proposal for a 39 per cent reduction. The Minister also said she had secured an increase in rate of compensation for the direct payments from the 60 per cent that was offered to the 64.2 per cent that was eventually agreed.
"The final package provides critical options for the industry in terms of managing change," she said.
But the IFA reacted angrily, claiming the deal sounded the death knell for sugar beet production in Ireland. "It's a bleak day for Irish tillage farmers," said IFA President John Dillon. "The compensation proposed is totally inadequate for the devastation of the industry."
He called on Ms Coughlan to "intensify her demands" for increased compensation for farmers, claiming it would be "untenable and indefensible" for her to preside over a deal that would see Greencore receive around €130 million.
"No grower wants to be forced out of beet, but if the EU Commission closes down the industry, there's no way the compensation should go to Greencore," he said.
"Growers have invested in land, quota and machinery and they're not going to be forced out and allow Greencore walk away with 90 per cent of the restructuring fund."
Fine Gael's agriculture spokesman Denis Naughten called on Ms Coughlan to "stand firm" with Irish beet growers and to "prevent Greencore from pocketing the lion's share" of the compensation deal.
"This is an issue of parity of treatment and justice for Irish beet growers," he said. "I understand from today's deal that the Minister for Agriculture will have a certain degree of discretion in the allocation of compensation funding and I would urge her to use this discretion to substantially increase the level of compensation available to growers."
EU sugar policy has survived nearly all attempts at reform since its birth in the late 1960s and is often attacked for harming Third World producers as it encourages millions of tonnes of EU sugar to flow onto world markets, lowering prices.
The World Trade Organization (WTO) had declared the system illegal and told the EU to bring its policy into line by May 2006, after a case brought by big exporters Brazil, Australia and Thailand.
The European Commission was keen to get a reform deal before a meeting next month in Hong Kong of the WTO's 148 members to discuss a new global trade round.
(Additional Reporting: Reuters)
