While many European Union member states are locked in battle over whether or not to extend sugarbeet production quotas beyond 2015—with farmers needing support during transition on one hand, to a more free market position on the other—Ireland is doing its best to get back into the sugar production game.
And that means getting rid of quotas.
Ireland has been struggling to find a solution to its sugar situation since 2006 when the last of its beet factories were closed, thanks to Greencore’s decision to cash out rather than hang on to the remaining quota it still had left after years of industry consolidation. In recent years, farmer groups have tried to raise funding in order to re-start production along with supplying ethanol for the domestic market.
A lot of in roads have been made, perhaps not on the European stage, but certainly at home. The plan to re-introduce commercial beet farming for sugar rather than just using it as animal feed received cross-party support last week from the national parliament’s joint agricultural committee that includes representatives from both houses.
The support for building a new, modern beet facility with ethanol production capacity was overwhelming. It is seen as a way to provide new jobs, stimulate the economy, and strengthen agriculture. There’s a lot of bad blood left over from the shutdown of Carlow and Mallow sugar factories, and the fact that the country is importing EUR200 million a year in sugar is a daily reminder of the snub.
At the moment, the local sugar industry is dominated by British Sugar and Nordic Sugar, the latter of whom entered the market in 2009 when it bought out some of Greencore’s old labels. According to one local deputy’s website, the company has been interested in the discussions on revitalising sugar production in Ireland with a keen eye out for results from the feasibility studies, but no clear declarations have been made about intentions for investment.
Beet Ireland, on the other hand, has made its intentions to redevelop the industry abundantly clear. The Irish Sugar Bio Refinery Group has as well, and that’s where this story begins to get interesting.
Beet Ireland has been at the forefront of pushing for getting back into beet production. They want to set up a EUR400 million factory that would process beet supplied by 2,000 farmers to produce sugar and ethanol for the local market. Job creation is expected at about 5,000 including direct and indirect jobs. The business model says it would be viable at EUR570/tonne of sugar, whereas sugar in Ireland is currently running at EUR850/tonne.
The project is promoted by a group of beet farmers and the business model is very much in support of including farmers in decision making as well as profit making. The town of Portlaoise, about 40km from Carlow in the centre of the country, appears to be the leading site for the facility at the moment thanks to its existing infrastructure that would facilitate rail and road transport for both sugar and ethanol throughout the country.
Then there’s the Irish Sugar Bio Refinery Group who are looking to develop a EUR350 million facility somewhere in the southeast of Ireland. The facility, which is backed by a PWC viability study, would produce 154,000 tonnes of sugar annually along with 50 million litres of ethanol from molasses and locally produced grain. They also expect to need 2,000 farmers to supply them and also to create about 5,000 direct and indirect jobs.
The business model for the Irish Sugar Bio Refinery Group is a bit different, however, as the company is driven not by beet farmers but by former Greencore and British Sugar executives. That fact has got some in the parliament’s joint committee asking questions as to the motives behind setting up the factory and if the project isn’t just a front for British Sugar or someone else (they adamantly deny this, of course). There’s also concern that the farmers aren’t tied into the business structure in the same way as Beet Ireland, causing further distrust.
So there are two very different models driven by two very different groups with the same goal to build a beet industry, but on different parts of the island. What was made very clear at last week’s meeting is that there isn’t enough demand, supply or market for two of these mega bio-refineries in Ireland. That means that there’s already competition in the market before the industry even gets off the ground.
So what to do?
The agricultural committee told Beet Ireland and Irish Sugar Bio Refinery Group that they should collaborate together on building the project, making sure that farmers get as much benefit as possible. Putting together beet farmers with executives who have real experience in sugar production and marketing in Ireland could be a very potent combination. Or it could totally implode.
Both sides have said that they’re willing to work together. With just four years left before 2016, when both projects expected they could be online to take advantage of expiring EU beet quotas in 2015, hopefully there is enough time to settle the millennia-long dispute between farmers and processors to ensure a successful re-launch of Ireland’s sugar industry.