I welcome the opportunity to speak on the agricultural aspects of the Agenda 2000 proposals. We are at the critical stage of the negotiations. The Council of Agriculture Ministers will meet in Brussels next Monday and the meeting is likely to continue for most of the week. The German Presidency is determined to try to reach agreement on CAP reform at the meeting. Whether it will be successful in achieving that objective remains to be seen, but one way or another we are coming closer to the stage when far-reaching decisions, which will be vital for the future of Irish agriculture, will be taken.
The European Council meeting in Bonn on Friday, 26 February is scheduled, among other things, to consider the outcome of the Agriculture Council meeting. In any event the European Council meeting in Vienna last December confirmed that political agreement on the Agenda 2000 package as a whole should be reached no later than the end of next month. It is precisely because the decisions to be taken are of such major importance that I have devoted such a high priority to forcefully putting Ireland's case at successive meetings of the Council of Agriculture Ministers. I have also used every opportunity to put Ireland's case in a series of bilateral meetings with Commissioner Fischler and with my ministerial colleagues. I have consulted widely here in order to get the best advice and input and I will come back to these contacts in greater detail later.
Statements on the Agenda 2000 CAP reform proposals were last taken in the House on 27 November 1997. At that stage we had only outline proposals on the table and I indicated that my concerns were that the reforms should be carried out in a way which ensured that the principles of the CAP were preserved, the interests of member states should be taken into account in a balanced way and, above all, the incomes of farmers and the viability of rural communities should be fully protected.
These remain my concerns, but the detailed proposals for CAP reform which the Commission presented in March 1998 disappointed me greatly as they contained major changes, by reference to the outline proposals of July 1997, which would adversely impact on Ireland. The more significant changes which affect us are the reduction of beef premia to create the national envelopes; reductions in our male beef premium ceiling and suckler cow premium rights; the abolition of beef intervention and its replacement by a scheme of aids to private storage and an increase from 10 to 15 per cent in the price reduction for milk.
All these changes involve a loss of one kind or another for Ireland. In addition, the Commission put forward other changes from which Ireland does not gain, including the allocation of milk quota to mountainous regions, the restoration of the maize silage subsidy and changes in the beef extensification measures. The balance of the proposals, therefore, changed significantly for Ireland between July 1997 and March 1998.
I accept that European agriculture has to be positioned to cope with the rapid changes taking place both in agriculture and society in general. I agree that, in particular, it has to be ready to meet the challenges which will inevitably arise from the enlargement of the Union and the next round of the World Trade Organisation negotiations, which are due to commence before the end of the year. However, since the proposals emerged, I have made it very clear at meetings of the Council of Agriculture Ministers that the proposals in their present form would seriously damage Irish agriculture and the Irish economy.
From the outset I indicated in the strongest manner my concerns about the effect of the proposals on Irish farmers' incomes and about the lack of equity between member states and different types of production. I have also taken every opportunity to put this case in bilateral meetings with Commissioner Fischler and ministerial colleagues, most recently when meeting the Commissioner in Dublin earlier this month and again in bilateral discussion with him and the President of the Council, German Minister, Herr Funke, in Brussels yesterday. The Taoiseach has also put forward this point of view in his bilateral discussions on Agenda 2000, most recently with President Chirac and Prime Minister Jospin in Paris and Prime Minister Kok in the Hague this week.
It is significant that I obtained acknowledgement of the importance of the beef and milk sectors to Ireland by having written into the conclusions of the Agriculture Council last May a statement that the dependence of particular member states on specific sectors would be taken into account in the final agreement. The beef and milk sectors account for 70 per cent of the Irish agricultural output and 4 per cent of Irish GDP. This is not the case in any other member state, or even remotely so. Each of these sectors is more important to our economy than the entire agriculture sector is to nine other member states. Through the conclusions agreed at the May meeting, the Council has recognised that major Irish economic interests are at stake in the CAP reform negotiations and I intend to ensure that this recognition is honoured by the Council.
The 30 per cent price reduction and the supply control measures proposed for the beef sector by the Commission go far beyond what is needed to restore market balance and will fall disproportionately on extensive producers. It is possible to achieve market balance through lower price reduction and a different approach to supply controls. I put forward proposals for a solution along those lines to the Commission and my colleagues on the Council.
Another issue of major importance to Ireland is the level of compensation in the beef sector. The Commission proposals aim to shift the balance of compensation in favour of intensive production. I have stressed the need for changes to be made to favour extensive production and that a satisfactory outcome to this crucial issue is essential. It is also central that an effective intervention system is retained to ensure that, in the event of temporary market disturbances, it will be possible to provide a floor in the market. That situation was seen last autumn when, despite that fact that we got increases in export refunds and private storage, it was necessary to introduce intervention. It had a stabilising effect on the market. It is critically important for Ireland, which has such a dependence on export markets to third countries and is so vulnerable to them, to have intervention retained.
A further difficulty in the beef negotiations is that there is a perception among other member states that Ireland fared well out of the 1992 reforms. I pointed out that in 1992 the Council decided deliberately to encourage extensive production and structured the premium system accordingly. It was not surprising, therefore, that Ireland, where 99 per cent of beef is produced extensively, benefited from the premium system. I also pointed out that extensive production is a low profit production system and our beef prices are as much as 25 per cent below European levels.
We only have to look at the annual report from Teagasc on incomes to see that incomes in the beef sector are among the lowest of any farming enterprise. We do not have the benefit of maize silage and lower cereal prices which benefit more intensive production systems. If those were taken into account the perception that Ireland receives proportionately more per kilogramme of beef would be found to be erroneous.
The Commission proposals in the milk sector also give rise to difficulties for Ireland. They involve a 15 per cent price reduction and compensatory premia, which would only compensate for 60 per cent of the price reduction. This inadequate compensation is unacceptable. The proposals also involve a milk quota increase of 2 per cent at EU level but the proposed allocation of this increase between member states is uneven, unfair and unacceptable. Ireland's share amounts to a 1 per cent increase, while some other member states receive increases of up to 8.4 per cent. This is clearly discriminatory and will not be accepted.
Reform of the milk sector is not necessary at this stage and we should not embark on changes that would be both expensive – at about 2 billion ECUs per annum – and of limited benefit in terms of trade liberalisation. I would prefer to see the current régime continuing for the present but with provision for a review, in say 2003, in the light of developments at WTO and on world markets.
I have made it clear that if a quota increase is to be part of a final agreement, Ireland will not accept any discrimination against us in its allo cation. In other words, we will demand our fair share of allocation, which is priority allocation, as was written into the 1984 agreement to introduce the milk quota system. We will hold the Council of Ministers to that and ensure they honour that declaration.
On arable crops, the compensation being proposed for the 20 per cent price cut is clearly inadequate. I am seeking to have this redressed, as well as maintaining the separate base area for maize. It is clearly very important that we get a separate maize area because, if we do not, any increase in maize production would eat into our cereal production quota.
On rural development, we support the Commission's proposals, although significant changes are necessary, particularly a widening of the range of eligible activities to include research, advice, training and promotion. That is critically important for Ireland. Teagasc provides a very important research function. It also provides a very important training function. Almost all young farmers have a green certificate and training provided by Teagasc. An Bord Bia has also been supported in its promotional activities under these funds. We need that research, training and promotion to continue. I will demand that the Commission proposals be widened to include those activities.
I am also concerned at the impact of the reform proposals on the sheep sector. That sector is left out of the proposals entirely, as if it did not exist. Sheep production is a very important sector of Irish farming – about 36,000 or 37,000 farmers are provided with an income from sheep farming. There are not any circumstances under which a proposal to reduce, for example, supports for beef by 30 per cent, which is the present proposal, would not impact on the sheepmeat sector – it would be bound to have an impact. I have expressed my concerns about the flaws in the sheepmeat régime. I have pointed out that the consequences of the reform proposals for the beef sector would make the sheepmeat situation even worse. We have the anomaly whereby sheep are counted for stocking density, and yet there is no extensification premium for them. Sheepmeat producers are getting a raw deal in these proposals. I have insisted at every opportunity that sheep be included in the final deliberations.
A complicating factor in the negotiations is the future funding arrangements for the CAP. A report on EU financing arrangements was published by the EU Commission last October. This report addressed the complaints by some member states that the burden of their net contributions is excessive.
One of the options put forward by the Commission to redress the balance was co-financing of direct payments to farmers by the EU and member states. My position is unequivocal on this. Co-financing is completely unacceptable to me and to the Government. At last month's Council of Agriculture Ministers' meeting I pointed out that the Common Agricultural Policy has been built up over 40 years on three central principles – market unity, Community preference and common financial responsibility – and that it has contributed enormously to the solidarity which has cemented the Community over the years. For these reasons, we cannot now begin to dismantle that achievement to provide a partial answer to a problem that goes far beyond the CAP.
While I am reasonably confident that, in the light of the discussions at that meeting and in other fora, the Irish views – shared by some other member states – on co-financing will prevail, there is no doubt that a majority of member states favour a tighter budgetary framework for CAP reform. In this connection, a number of member states have put forward options for the stabilisation of expenditure on the CAP.
In addition, France has put forward the concept of degressivity, that is, the reduction of direct payments to farmers by a certain percentage annually. This concept now appears to have the backing of a significant number of member states and even of the Commission itself, although the Commission has not yet put forward a formal proposal. I am concerned that degressivity will impact more on those sectors, such as beef, which are more dependent on direct payments and less, or not at all, on those sectors where direct payments are small or even non-existent, such as the wine sector. Degressivity could, therefore, give rise to distortions as between sectors, regions and member states and Ireland would be disproportionately affected.
I will stress that if degressivity is to be applied, the different circumstances of each sector will have to be taken into account. It will also have to exclude small scale producers and, in the event of its being applied, I will seek an exemption limit as high as possible to exclude as many Irish producers as possible. For example, the current proposals suggest that those farmers who do not get more than 5,000 euros, or about £4,000, will be excluded. That is obviously too low a limit. I have asked the Department to do a number of studies of limits of 5,000, 7,500, 10,000, 12,500 and 15,000 euros so that we can be certain of the number of farmers who would be affected by this proposal.
While it is clear from what I have said that stricter budgetary discipline will apply, I will insist that the resources available must be adequate to fund a worthwhile and equitable reform. I have already emphasised that there is no point in carrying out a reform that is inappropriate, simply to save money.
Throughout the negotiations, I have been mindful of the need to consult as widely as possible here at home about the implications of the Commission's proposals and on alternatives to them. Since mid-1997 I have had regular consultations with as wide a number of people as possible. That is why I set up four consultative groups last Easter, to which farmers, processors, academics and other interested persons were appointed. I was also conscious of the value of direct consultations with the farm organisations; I met the four farm organisations this morning in preparation for next week's crucial Council meeting. All these consultations have been very helpful in enabling me to gauge the strength of opposition to these proposals by Irish producers and the Irish agriculture industry.
There has been criticism from the Leader of the Opposition of my decision to establish the four consultative groups on the grounds that the members of the groups represented vested interests. This is an extraordinary criticism. In the first place, it ignores – and indeed insults – the many members of the consultative groups who are there because of their professional standing as academics and researchers. Second, this criticism is based on the assumption that policy can be formulated in a vacuum without any input from people involved in the industry, that is, without an input from farmers and processors. I wonder where the Leader of the Opposition is coming from or on what planet he is living.
