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A sweet prospect for beet?

on .

 

There is general agreement that the demise of the sugar beet industry in Ireland was a great loss not only to the tillage sector but to the wider economy. Matt O’Keeffe speaks to Monasterevin tillage farmer, Pat Cleary, about the prospects for a viable beet industry in Ireland.

There is now growing enthusiasm for the re-establishment of a beet industry. The latest development is the purchase by a group called Beet Ireland of a site near Castledermot, Co Kildare, for the purpose of building a state-of-the-art beet processing factory. Pat Cleary is one of the leading proponents of this initiative.

Progressing the project
“The proposed site for a new factory is beside the M9, and right in the middle of the best beet growing soils in the country,” Pat says. “The main bulk of the beet requirements can all be grown within a 60-mile radius of this site, so it is perfectly located.”  So what is the scale of this proposed beet renewal? “We are looking at building a facility with the capacity to produce 200,000 tonnes of sugar annually. That would be only slightly lower than the combined capacity of both the Carlow and Mallow factories when they were operating. We are planning on processing 1.8 million tonnes of beet, and one of the great positives about the catchment area is that when we exited the industry the average tonnage was between 18 and 20 tonnes per acre. This year, the average yield in the UK, with the new varieties and improved agronomy available, is 86 tonnes per hectare, or almost 35 tonnes per acre. The soils around the proposed factory are capable of similar yields and we will require up to 25,000 hectares of beet to satisfy supply requirements.”

Financing the factory
Pat explains the complexities of a new processing facility: “There will be more than just sugar processing involved in a new processing unit. We have looked at similar models in France, particularly where co-operative ventures are popular. One, in particular, is owned by farmers and has four times the capacity of our proposed operation. The French factory also takes in one-million tonnes of wheat for ethanol production with ancillary industries on site. Modern sugar-processing and refining factories are built to be multi-use units. That’s the model we are looking to develop. In retrospect, it was a pity that Irish farmers did not take a stake in the industry when it was transforming from CSE to Greencore. There might have been a different outcome if that had been the case.”

An important development
“The redevelopment of a sugar industry is more important than ever, given the poor returns from grain. The average margin as calculated by Teagasc on fodder/sugar beet production in Ireland is €640 per hectare, whereas cereals is half of that figure. Producing beet for sugar, together with the beet pulp value, should drive that margin up considerably. In addition, there is the considerable yield bounce for crops following beet and that adds to the options a farmer has for crop rotation. So the on-farm benefits are considerable.”

The cost
What would it cost to build the kind of factory that Pat Cleary and Beet Ireland are proposing? “Our feasibility study has shown that the cost would be in the region of €300m. The fact that the chairman of Beet Ireland, Michael Hoey, deals regularly with a range of Irish supermarkets is important. There are a lot of Irish businesses who are very supportive of a rejuvenated indigenous beet industry in Ireland. There is a huge willingness to put Irish sugar back on the shelves. That’s important because it is the domestic market that we will be targeting initially.”

Who will pay?
“There will be private investment involved. We also need farmers to take a significant stake in the business. There will also be borrowings involved, as would be expected in any start-up business. That will most likely be sourced from the European Investment Bank. Grower commitment through their making a capital contribution is important [as] a supply commitment as well as being a viable investment.” So, are farmers willing to make that investment? “We have had a continuous liaison with growers since 2012. There have been declarations of interest from over 1,600 growers so far that they would put money into the development as part of their commitment to its success.  To make it work, we need a minimum quota supply of beet. From our studies, we believe that there is the prospect of better returns from beet than any other crop, even from surplus beet produced over and above a committed tonnage from farms.”

The price of beet
While Pat cannot commit to an exact price for beet supplied to the proposed facility at Castledermot, he highlights the price prospects: “Returns to growers will certainly be comparable to the margins estimated by Teagasc, and better than that. There is also the prospect of a return on the investment made by growers in financing the establishment of the factory.  The French co-operative model includes a top-up per tonne on the base price received from the accruing profits of the operation. That allows for an improved price compared with what British Sugar, for instance, is paying its growers. They receive in the region of £24 per tonne, which is not adequate. Under the old EU sugar regime, the base price for sugar beet was €44 per tonne in Europe before the reforms that saw the closure of the Irish industry. As part of the reform, farmers received compensation whether they continued to grow beet or not. That established the right to an Area Aid payment that will still be there if farmers resume growing beet.”

Time scale
“If we can get the planning element completed within a year then we can progress our plans to have a factory on the site within a further two years.” That would suggest that a fully functional sugar and ancillary processing unit could be operational in time for a 2021 ‘Beet campaign’. There are a lot of issues to be resolved before that eventuality is realised. A more determined pricing model will be central to grower involvement and commitment, both in growing the raw material and, literally, buying into the concept. It is clear, however, that the prospects of a renewed sugar refining industry in Ireland are greatly enhanced by the abilities and commitment of those driving the project.

Tags: Sugar Beet PatCleary Tillage sector Beet processing