Sugar beet farmers and plant owners could receive more compensation under a revised package for the restructuring of the sugar industry drawn up by the European Commission.
If adopted, the scheme would release millions of euro in extra EU aid to the industry even though the last Irish sugar factory closed last year and compensation has already been allocated by the Government.
EU agriculture ministers discussed the draft plan yesterday in Brussels amid concerns that the original restructuring package aimed at the EU sugar industry had failed to halt overproduction.
Over the past 12 months the EU had hoped to cut sugar production by five million tonnes in a bid to restructure the industry and enable it to compete internationally.
However, uptake of the earlier restructuring scheme agreed by ministers in 2005 has been disappointing, leading to cuts in sugar production of just 700,000 tonnes over the last year.
EU agriculture commissioner Mariann Fischer Boel told ministers yesterday that the previous compensation package had not proved attractive to the industry.
"We need to reduce our sugar output dramatically if we are to give the sector in Europe a sustainable future," she said.
The EU reformed its sugar subsidy programme in 2005, ending the dumping of cheap sugar on the world market. Under the old system, production was supported by generous EU subsidies and import tariffs that guaranteed an inflated price for sugar. EU sugar prices are more than three times higher than the global market rate.
Under the previous 2005 restructuring package, states such as Ireland were able to alter the percentage of restructuring aid awarded to beet growers and processors. But the commission has decided this does not offer an incentive for processors to leave the industry.
Under the new draft restructuring package the percentage of aid given to growers and machinery contractors will be fixed at 10 per cent, with a top-up to growers of €237.50 per tonne of renounced quota for 2008/09. This will be payable retroactively, to avoid penalising those who have already given up their quotas, such as Irish growers.
A spokesman for the Department of Agriculture said yesterday it was unclear how much extra aid would be available if the new package was agreed by EU ministers. It also remains unclear how the Government would seek to apportion the extra EU aid, he added.
The Government's decision to give sugar beet farmers 32 per cent of the EU compensation enraged the only sugar processor in the State, Greencore. Under the 2005 scheme Greencore was to have received €98 million, growers were to get €40 million and machinery owners and contractors stood to receive €7 million from the fund. However, Greencore is currently challenging this decision in the High Court.