THE CLOSURE of the Mallow sugar factory, Ireland’s last, was needless because the business was profitable at the time, EU auditors have found.
Some 320 workers lost their jobs when Greencore shut the plant in 2006 under a European Commission scheme to eliminate unprofitable sugar production.
In a new report on the initiative, the European Court of Auditors strongly implies that it cost more to close the business than it would have to keep it open.
Referring to Ireland, without naming the country or the Mallow plant in particular, the report noted it was the only national producer and had undertaken a rationalisation of its operations before the reforms were introduced.
The report found that the producer justified its decision to close this large, modern and “potentially efficient” operation – which defined itself as one of Europe’s most efficient producers – due to the risk of lower prices reducing the supply of sugar beet to an uneconomic level.
“Without sugar reform, it’s quite possible that the sugar factory in Mallow would exist and sugar growers would be growing,” said Eoin O’Shea, Ireland’s member of the Luxembourg-based audit body.
Asked if the plant’s closure was needless, Mr O’Shea said that was “the inescapable truth of the court’s report”.
The audit body examined a scheme to restructure Europe’s sugar industries in the light of a World Trade Organisation ruling that found EU sugar subsidies illegal because they resulted in surplus supplies being dumped on world markets.
“Whereas the aim was to create an incentive for the least competitive sugar producers to give up their quotas, quotas were also abandoned by competitive factories,” the court said yesterday.
“There is an increased dependence on imports, while there are doubts as to whether the fall in prices will be passed on to final consumers, and delays persist in implementing diversification and environmental measures.”
The report follows a special examination of the scheme by the court, which periodically audits specific EU policy initiatives.
According to its findings, no comparison of the productivity of individual producers or factories was available when the scheme was in preparation.
“The impact assessment merely referred to studies which have ranked the sugar-producing regions according to the combined profitability of growers and producers, categorising the regions as low, medium and high combined profitability,” the report said.
“The ranking was based on 2001 data for the EU sugar industry. However, the data had not been updated when the commission made its proposal in 2005, notwithstanding that certain significant changes had taken place, such as increases in sugar beet yields in Spain and the UK and producer consolidation/rationalisation in Ireland.”
There was no comment on the report from Greencore.
Direct-closure costs of €172 million were incurred, the report said. When set against the availability of just €127 million in restructuring aid, closure costs of some €45 million in excess of the available EU aid are implied by the report. In essence, this means it would have been cheaper to keep the plant open.
Kieran Buckley, chairman of the committee of former Irish Sugar workers, said they felt angry and took little satisfaction from the report vindicating their position.
Irish Farmers’ Association (IFA) deputy president Eddie Downey said the auditors’ report highlighted the grave dangers of pursuing a free-trade agenda that was driven by world trade talks and that failed to recognise the damage that it could inflict on food production in Europe.
