Push is now on to revive mothballed sugar industry
Published 04/07/2013 | 05:00
HAS the sugar industry's day come again? A decision in Brussels last week to end sugar-beet quotas in the EU by 2017 will bring machinations to a head over whether Ireland kick-starts its sugar industry again.
Many of the 3,500 sugar beet growers that took almost €60m in compensation from the EU in return for exiting the sector in 2006, still rue the day that the industry decided to opt for the easy money.
Ever since, sugar prices have rocketed to record highs, farmers have struggled to maintain healthy crop rotations and Ireland Inc forks out about €150m a year on imported sugar.
Prof Jimmy Burke of UCD's crop science department agrees. "We should never have exited. It was simply a wrong decision."
Prof Burke has been involved in studies on how to restart the industry. They centre on finding a suitable site for a new €350m plant, funded by a combination of farmer-growers and bank debt. But does such an investment make sense?
Greencore was the company that was in charge of sugar processing in Ireland when the sector was shut down. Its CEO, Patrick Coveney, recently said that there would never be another sugar industry here.
"Sugar yields in Ireland are awful relative to Britain and France," he said.
However, Dave Barry of beet seed suppliers Goldcrop maintains that good Irish growers would be well able to match the average yields achieved in Britain and Scandinavia.
Michael Hoey, who founded vegetable and ready-meal processor Country Crest with his brother 20 years ago, has led a group called BEET Ireland which has invested over €100,000 to study the viability of a new sugar factory.
"The country needs a sugar plant to guarantee sugar supplies for all the food manufacturers based here. Otherwise we could lose them," claims Mr Hoey.
"We have spent a lot of time looking at all the possibilities. We already have 1,100 expressions of interest from farmers prepared to invest a minimum of €25,000 each to buy shares in a plant that would be capable of producing 250,000 tonnes of sugar a year."
But former Irish Sugar boss Chris Comerford says it is highly unlikely that farmers will actually pony up enough money when push comes to shove.
He heads up a separate body called the Irish Sugar Biorefinery Group, which, as the name suggests, believes a plant that can produce both sugar and bioethanol will need outside investment.
"Farmers don't have the cash, and if they did, they would sooner invest it in land than a potentially risky venture like this," said Mr Comerford.
Mr Hoey insists that his group has already secured commitments for five-year deals with banks on behalf of growers, with tax breaks built in to sweeten the deal.
"It would be easy to get a multinational in and sell this down the river," he says. "But that would be a loss to the country and the growers."
County councils are also sold on the idea, with Cork, Carlow, Waterford and Kilkenny all reported to be actively lining up suitable sites.
With a growing cost of €30/t of beet, farmers would need €40/t to return €600/ha. But this price could be as high as €50/t with current refined sugar prices of €750/t according to Prof Burke.
But how long will this prices hold? "This is a big imponderable at the moment," says Prof Burke.
"We need a minimum refined-sugar price of €500/t. If increased supplies collapsed prices, the fact is that the British growers could probably stay in business even at a price of €400/t.
"And remember that the big processors all over Europe have made monstrous profits over the last six years. They've very deep pockets now and probably little or no debt."
Irish IndependentFollow @Indobusiness