The complexities of trying to switch sugar beet quota between farmers within a short period of time is likely to prove an insurmountable problem for the company, since it will mean that not enough capacity will be transferred to Irish Sugar's Mallow plant to make a campaign viable.

Greencore chairman Ned Sullivan told the company's annual general meeting last week that the company was still planning a sugar processing campaign in 2006 and 2007, and that a final decision would be taken on the issue next month.

Clarifications to the EU compensation scheme that were revealed several hours after that meeting make a 2006 campaign highly unlikely, however.

Under the rules that were outlined late last Thursday, farmers will not actually have to grow beet this year to qualify for the 123m compensation to be paid out over the next seven years.

Neither is access to the 44m restructuring fund going to be based on growing beet in the year before leaving the industry.

The farmers who supply Greencore are divided on whether or not to continue growing beet this year, and the clarification of the compensation scheme means that those wavering are now likely to opt not to grow, sources said.

Due to the complexities involved in reallocating the quota at short notice, "the odds are stacked against another sugar processing crop taking place", according to NCB analyst Paul Meade.

He estimates that the loss of sugar processing would cost Greencore about 20m in lost profits this year.

Farmers with easy access to the Mallow plant, in north Co Cork, are more keen to continue supplying Irish Sugar, but 100% of Ireland's sugar quota will have to be transferred to willing growers for any harvest to make sense this year.

The clarification of the rules means that if, for example, Greencore only processed 50% of the available quota in 2006, it would make no profit from Irish Sugar because of the impact of the 25m restructuring levy.