Farm Ireland
Independent.ie

Tuesday 6 December 2016

Plan for growers to pay €50k each to restart sugar industry

Declan O'Brien

Published 20/09/2011 | 05:00

Farmers interested in getting back into growing sugar beet will be required to buy a €50,000 stake in the new processing business.

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This is one of the suggestions from the Beet Ireland feasibility study which is to be launched at the National Ploughing Championships tomorrow morning.

The study, which was carried out by the PM Group, found that the resumption of the sugar industry in Ireland would be viable. However, the plan hinges on 30pc of the €400m investment required being held by beet growers. This would require farmers to invest €112m in the project, which will be divided up among around 2,450 growers in €50,000 blocks. These shares would, in turn, give growers beet quota and processing rights within the new business.

A further €288m is envisaged coming from a combination of private sector investment and bank debt.

Assessment

A business assessment of the proposal, which was undertaken by Ernst and Young in parallel to the PM Group study, showed that the business case for the venture also made sense.

The feasibility study was presented by a Beet Ireland delegation to the Minister for Agriculture, Simon Coveney, and senior officials from the Department of Agriculture last week.

This is the second feasibility study to be carried out on the viability of resuming sugar production and processing in Ireland.

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The Irish Sugar Biorefinery Group -- headed up by the former Greencore boss Chris Comerford -- presented its findings to the minister two weeks ago.

Minister Coveney said he had an open mind on plans to restart the sugar processing sector, but he admitted that both studies were "very impressive" and "very persuasive".

He said any venture to develop a combined sugar processing and ethanol production plant would have to be a commercial proposition that would "stand on its own".

Minister Coveney accepted that proposals by the EU Commission to abolish sugar quotas at the end of the current sugar regime in 2016 had changed the situation.

He said the overall shortage of sugar globally and fears for supply security within Europe should make the case for restarting the industry here easier to pursue.

However, Michael Hoey of Beet Ireland said serious obstacles still had to be negotiated before concrete proposals could be put in place.

He pointed out that €400m in investment capital would have to be raised, a site for a plant would have to be chosen and then planning permission for the facility secured.

Feasible

It is understood that five potential locations for a new sugar factory have been identified by Beet Ireland. These include two sites in Cork, one in Tipperary and two in Carlow/Wexford.

Asked if an outlay of at least €50,000 from each grower was feasible in the current climate, Mr Hoey pointed out that farmers were borrowing that amount to spend on tractors.

"This is something tangible that will give a return every year," Mr Hoey said. He added that the plan also included a proposed dividend of 6.4pc on the investment which would cover the interest charges.

A series of public meetings for farmers will be held in October to discuss the feasibility study findings. These will be in Mallow, Midleton, Enniscorthy, Kilkenny and Kildare.

The launch of the feasibility study takes place at 10am tomorrow on Stand 186, Row F.

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