EU reforms blamed for sugar plant closure

- Last updated on GMT

Related tags: Sugar, Eu

Ireland's lone sugar processor Greencore Sugar is to cease
operating at its Carlow production facility in anticipation of the
pending EU reform of the sugar industry, Tom Armitage
reports.

Greencore, formerly the Irish Sugar Company, has announced that following a strategic review the plant will close in mid-March 2005, while operations will be transferred and consolidated across its second processing facility in Mallow, Cork.

The group confirmed that the disposal would not affect its decision to upgrade and increase capacity at its Mallow site, due for completion in time for the 2005 processing season, although conceded that its extension programme would be scaled back over the following years, in line with the anticipated quota reductions arising from the EU sugar regime reform.

In recent years Europe's sugar regime has come under fierce criticism for distorting sugar prices through excessive EU subsidisation - a regime which has also made Ireland's estimated 3,600 sugar beet farmers some of the wealthiest in Europe.

Under current EU law, European food and beverage manufacturers must procure their sugar from within the domestic and EU borders - and with average sugar prices currently operating at nearly three times the level of their international competitors, this has long been a bone of contention.

Greencore accounts for approximately 50 per cent of Ireland's domestic sugar sales, although this figure looks set to change under new proposals outlined by the former EU farm commissioner, Frank Fischler.

In July last year Fischler proposed an overhaul of the EU's regime in a bid to reduce European over-production and promote a more liberal sugar trading system, which will see the present quota of 14.6 million tons slashed by 2.8 million by 2008/9.

David Dilger, Greencore's chief executive, commented: "European sugar processors are facing increased levels of competition and impending regime reform. We have conducted a comprehensive review of all options available to the business in this challenging environment. It has confirmed that consolidating manufacturing in Mallow is a necessary step to secure the survival of the Irish beet growing and sugar processing industries for the benefit of all involved."

"Furthermore, whilst the initial reform proposals are likely to be modified, inevitable reductions in quota make the move to one manufacturing facility unavoidable,"​ he added.

Greencore said that it although the plant disposal would ultimately reduce long-term costs by €6 to €7 million by 2007, it would take an exceptional loss of approximately €65 million in its 2005 accounts to cover asset write-offs and redundancies.

Jim O'Regan, chairman of the Irish Farmers Association's (IFA) sugar beet section, branded Greencore's decision as "irresponsible"​ adding that "Greencore has undermined Ireland's case in the vital EU sugar reform negotiations."

The Irish government founded the Irish Sugar Company in 1924, which underwent subsequent privatisation in 1991 after Greencore successfully floated on the Irish Stock Exchange.

Related topics: Commodities, Cocoa & Sugar

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