Talks between EU agriculture ministers broke up last night with no agreement on a controversial reform of the sugar industry that threatens thousands of jobs in Ireland.
A group of 11 member states are opposing a compromise reform package tabled yesterday by EU president Britain to try to overcome resistance to reforms that will cut the price of sugar in the EU.
The compromise package offers more flexibility to member states to compensate sugar beet farmers and to stagger the time period for the introduction of steep price cuts in sugar from two to four years.
It would divert to farmers a minimum of 10 per cent of the compensation available to sugar factories that close due to the reforms. It would also introduce the concept of a diversification fund, which would help farmers move into new farming sectors.
The package would offer Irish farmers at least €18 million in compensation and potentially more funding from a diversification fund set up by the European Commission.
However, the British presidency stuck to the original commission proposal to cut sugar prices by 39 per cent, a level that the Government and the Irish Farmers' Association insist will force 3,500 sugar beet-growers to leave the industry.
"The overall package is insufficient, unbalanced and would have huge repercussions for the industry if it goes ahead," said Agriculture Minister Mary Coughlan, who added that she was seeking new proposals on the price and extra compensation for farmers.
Ms Coughlan is due to meet agricultural ministers from the 10 other member states that currently oppose the package of reform measures tomorrow before the council of ministers begin further negotiations on reform.
She will also attend trilateral meetings with Margaret Beckett, UK secretary of state for the environment, food and rural affairs, representing the British presidency, and the agriculture commissioner, Mariann Fischer Boel.
Diplomats said Portugal, Greece and Ireland were the three countries that expressed the deepest reservations about the reform package at yesterday's meetings. Poland may also have difficulties agreeing a deal as its agricultural minister has just taken office.
But it is expected that other member states may be prepared to accept a deal if a more generous compromise is tabled by the British presidency.
Member states are divided between large producers of sugar mainly in favour of reform and countries with smaller, less efficient industries that could be forced out of the sector altogether. Irish sugar-beet growers are in a particularly vulnerable position as there is just a single plant operating, in Mallow, Co Cork.
There is significant pressure on member states to agree a deal on reform as the World Trade Organisation has already ruled that the current price is illegal. Both Ms Beckett and Ms Boel warned yesterday that this was the last opportunity to reach an orderly transition to a new sugar regime next year.