Common Agricultural Policy Reform: Statements

Minister for Agriculture, Food and the Marine (Deputy Simon Coveney)

My apologies for being a couple of minutes late. I am pleased to have the opportunity to address the House today on the Common Agricultural Policy reform proposals. Our debate is timely given that we are approaching a crucial juncture in the negotiations. The EU Council of Ministers will meet on Monday and Tuesday of next week with a view to adopting a comprehensive Council position on the proposed reforms.

The proposed reform of the CAP arises in the context of the revision of the EU multi-annual financial framework, MFF, for the EU budget for the coming years. This is a seven-year budget. The reform must be decided by full co-decision between the Ministers of the 27 member states in the Council and the European Parliament. The challenge for the current round of CAP reform is to deliver in good time a Common Agricultural Policy that is fit for purpose and coherent with the Europe 2020 strategy for recovery and growth, and that supports the twin goals of competitiveness and sustainability. Ireland seeks a policy that promotes sustainable intensification of production, environmental stewardship and a vibrant rural economy and that is consistent with our Food Harvest 2020 strategy.

As the current holder of the Presidency of the Council of the European Union, Ireland is at the centre of the negotiations. Good progress was made by previous Presidencies on technical issues, with the result that there were some 30 issues outstanding when Ireland took over the Presidency last January. In parallel, the European Parliament has made substantial progress on the dossier. The agriculture and rural development committee of the EU Parliament voted on its amendments in January and the Parliament's position was confirmed yesterday in plenary session.

My aim is to finalise the Council position and negotiating mandate by the end of March, leading to inter-institutional trilogues with the aim of overall political agreement by the end of June. A significant step forward in this process was achieved on 8 February 2013 when the European Council reached agreement on the EU budget for the next seven years. Subject to the consent of the European Parliament, the agreement provides the necessary clarity on agricultural funding that will allow completion of the negotiations on CAP reform. I hope this occurs under our Presidency.

The agreement was generally positive from a CAP perspective. The CAP will continue to account for almost 39% of the overall budget in year one. It incurred a cut of 3% compared to the Commission's original proposals, whereas the total EU budget was cut by 7%. This represented a good negotiating outcome in the face of significant pressure from several sources for a higher cut to CAP expenditure. Ireland has secured €1.5 billion per year for agriculture, or €11 billion over the seven-year period of the CAP.

Another crucial issue in the MFF agreement is the distribution of CAP funds between member states. The formula agreed by the Heads of State and Government for the distribution of direct payment funds, or Pillar 1 funds as farmers know them, between member states had originally been proposed by Ireland and resulted in a relatively favourable outcome for the country. The result is that the level of direct payments made to Irish farmers has been largely protected by maintenance of our direct payments ceiling at over €1.2 billion per year, with a relatively small reduction to accommodate new member states and because of the overall cut in the budget.

Now that the EU budget has been decided, although it has still to be confirmed by the European Parliament, the main issue for many member states, including Ireland, is the distribution of direct payments among farmers and the attendant rules and regulations. The Commission has proposed moving to a flat-rate payment system. In the case of several member states, including Ireland, this would result in a significant transfer of funds among farmers. I believe there is a need for redistribution but I am seriously concerned that moving to a flat rate, as proposed, would be harmful for the Irish agricultural sector as a whole and certainly for the Food Harvest 2020 strategy. Some member states, especially the newer member states, are seeking alternative solutions, while others, including Germany, are satisfied with the flat-rate proposal.

The February Agriculture and Fisheries Council meeting broadly endorsed a package of measures which I tabled, aimed at achieving a compromise on this rather difficult issue. The package included an option to take a more flexible approach to distribution, the so-called approximation model favoured by Ireland. This would result in a less radical level of redistribution between individual farmers, moving gradually towards, but certainly not all the way to, a flat-rate payment for everyone. It also included a redistributive payment as an additional option for member states. This is essentially a top-up payment for the first number of hectares.

The reality is that Ireland is facing two sets of demands on this issue. On the one hand, there are farmers on low payments per hectare who are arguing for a larger share of the available funding on the grounds of equity and fairness, and on the other hand there are farmers on high payments per hectare who have invested single farm payment funds in improving the productive capacity of their farms and have no wish to move back from this position. They have earned these entitlements over time. Both sets of demands are understandable and reasonable, but they are difficult to reconcile. We need a solution that is fair to everyone and that will represent a real move away from historical payments - such payments seriously disadvantage some farmers - but that avoids unreasonably large cuts to those on higher payments. This is why I have put forward the approximation model, which would give member states such as Ireland the flexibility to do that.

Under the Commission proposal, we have estimated, using our 2010 database, that €280 million would be transferred between farmers. Under the Irish proposal, a minimum of €74 million would be transferred, with flexibility to transfer more if we wished to do so. The key will be reaching a fair compromise which levels the playing field without putting productive farmers out of business. As is the case with any negotiation, the final position will be somewhere between my approach and that of the Commission. I am fighting to ensure that the best possible outcome for all farmers is reached in a balanced and fair way.

A second major issue for member states is the Commission's proposal on greening the CAP. There is broad support for the Commission's approach of adopting three basic greening criteria. However, member states have a range of views on how the proposal should be implemented. We in Ireland have our own particular issues that need to be resolved. These include our desire to make the greening payment a percentage of a farmer's overall payment rather than a flat rate and the need to adjust the three criteria to suit Irish farming conditions. We have tabled proposals aimed at dealing with all of the concerns expressed and the compromise proposals have received support from member states. A number of issues which remain outstanding mainly arise from the concerns expressed by individual member states about some of the detailed aspects. I hope these can be sorted out at next week's Council with a view to obtaining a full Council position.

In essence, our proposals on greening retain the three greening criteria proposed by the Commission, namely, crop diversification, maintenance of permanent grassland and establishment of ecological focus areas. However, we have built additional flexibility into the proposals in a number of ways. For example, we are proposing that member states may elect to apply the obligation to maintain permanent grassland at regional or national level. This makes perfect sense in a member state such as Ireland which is dominated by grassland. We are proposing progressive implementation of the crop diversification requirements in order that small holdings under 10 ha would not be bound by these requirements and that a two crop obligation would apply to farms between 10 and 30 ha, with three crops required above that level. We are also proposing a graduated approach to ecological focus areas, starting with a 3% requirement in 2015 that would gradually be increased to 5% in 2016 and, depending on the outcome of a review, 7% in 2017 and beyond. We are also proposing to increase the scope of what is deemed to constitute an ecological focus area to ensure the land would be productive as long as it had a positive value from an ecological point of view such as carbon fixing in the soil. In addition, we are proposing that farmers might be excused from applying the three greening criteria provided they undertook certain agri-environmental measures deemed to be equivalent. Our purpose in providing this additional flexibility is to ensure greening the CAP would provide added value in terms of benefits to the environment, while at the same time was workable and practical for farmers and administrators alike. Where good ideas have emerged in the European Parliament, we have taken them on board in our proposals to the Council.

A number of other complex, difficult and potentially divisive issues are included in the compromise proposals and will be put to Ministers next Monday and Tuesday. These concern matters such as supply management measures in the sugar and wine sectors; the future of market support measures; the status of producer organisations; the designation of less favoured areas which are now to be known as areas of natural constraint; the future of the single area payment scheme operated in new member states; and the extent to which coupled payments will be allowed in the reformed CAP. I aim to reach agreement on all these issues in the Council of Ministers in order that we can proceed to the next phase of negotiations with the Commission and the Parliament. I am focused on achieving an agreement during the Irish Presidency that will be of long-term benefit to Irish and European agriculture. From my point of view, this exercise is about protecting family farms, supporting productive agriculture and the ambition of the Food Harvest 2020 plan, fair distribution of direct payments for all farmers, maintaining rural development funds to support vulnerable sectors, while also incentivising innovation and competitiveness, and the sustainable, safe and traceable production of increasing volumes food. This CAP reform needs to protect agriculture and the agrifood industry as the most important contributors the economy and reaffirm their status as the heartbeat of rural Ireland.

Deputy Éamon Ó Cuív

I thank the Minister for coming to the House in advance of next week's Council of Ministers. We are engaged in a slow process and the options will narrow until agreement is reached at European level. Even after we reach agreement, however, we will still have to make a number of national choices. We must retain our focus on what we want to achieve in the end game. It is vital that we give a higher priority than is given in popular discourse to price stability and guaranteeing primary producers will receive a fair share of the price paid by consumers. If farming is not profitable even on the best of land, there is no inducement to produce more. The Food Harvest 2020 programme which we prepared in government should underlie our actions. The programme aimed to expand Irish agriculture to produce the maximum possible product from the land.

I have heard statements in this debate which would be considered ridiculous in any other forum. It is suggested that somehow there is an incentive to produce if someone has a fixed payment, notwithstanding the fact that the more he or she produces, the less money he or she will make. In other words, having taken the fixed income, the enterprises loses money when it produces more. To expect anybody or any country to expand production dramatically in such a situation is Alice in Wonderland talk. We have to fight to get recognition from the European Union that if farming is not profitable now that it has been decoupled, there is no incentive to produce more. If we accept that principle, a second point becomes obvious. The better the land and the more efficient the farmer, the better his or her capacity to make profits from the market. If the average farmer can make a profit by increasing production, which will be necessary if we want to achieve our targets, it is fair to say the farmer with the best land has an even better opportunity because of economies of scale. We must, therefore, get it into our minds that the payments are decoupled.

From a farmer's point of view, pillar I is only part of the equation. When farmers received information on their farm payments from the Department at the end of the year, they always looked at the bottom line. For 100% of the farmers in the CAP covered industries, this meant the single payment; for 75% of farmers, it meant the single payment and the disadvantaged area payments, and for approximately 33%, depending on REPS and AEOS cycles, it meant the single payment, the disadvantaged area payment and an agri-environmental payment. We have to recognise that, for various reasons the Minister could not reverse, there have been significant decreases for the 75% of farmers receiving the disadvantaged area payment.

There have been very significant decreases for some farmers in the amount of money they get paid for agri-environmental schemes. I am talking about farmers who were in REPS 1, REPS 2, REPS 3 and REPS 4 who had come to depend on their payment, but it disappeared overnight. Therefore, when we are looking at winners and losers on Pillar 1, we must match those farmers to the winners and losers under Pillar 2 to see who are the net winners and net losers over this. I have also argued, though not everybody agrees with me on this, that unlike what happens to REPS farmers, it is important that this change is graduated over the coming years and does not all happen at once or is not all front-loaded in 2015. In other words, I accept that people need time to adjust.

I always believed the Minister's approach was fundamentally flawed and that single payments were not a measure of production. They were a measure of an enterprise a farmer was in and of the grants it attracted. In terms of milk, allocations were made. However, there are people now who had milk quotas and who got out of milk totally, but still get paid the single payment for that milk. Therefore, even from the beginning, there was a mismatch between the single payment and production. Take for example the case of a farmer who produced weanlings and sold them before the ten-month punch because that was his system of farming. The person who bought the weanling got the ten-month punch, the 22-month punch and the slaughter premium. The farmer who bought probably factored the ten-month punch and the 22-month punch into the payment he made, but only for one year. As long the farmer purchased in the years 2000, 2001 and 2002, he had for the following seven years - something the Minister wanted to extend to 14 years - the advantage of the grants paid in those three years. Therefore, the idea that there is a straight match between production and farm type is wrong and untrue. The longer we distance ourselves from the years 2000, 2001 and 2002 - the Minister's official said the scheme cannot be recalibrated - the more the payment becomes historic and not linked to the farm activity.

Even if we deal with the price issue, there is a bit of a contradiction with regard to paying those with the best land more and that is the flaw with the Minister's approach. On the other hand, there is a major flaw with the Commissioner's approach. It gives an equally distorted result, because in that case it has nothing to do with what a farmer produces in a certain year, but depends on the number of hectares he has. If a farmer has a lot of hectares, he gets a large payment, without limit. In either case, the limit talked about in the Irish context is unreasonable. When I looked at this, I said to myself that what we want is to ensure all our land is farmed. There are varying challenges in different places. We want profitable, progressive farming, but we also need to get the most challenging land farmed. Otherwise, we will have an ecological disaster. Ecological and environmental stewardship are of huge importance to the European Union.

If we want our marginal land farmed on a continuous basis, if we want to make that proposition attractive and if we want to protect the environmental and ecological values in the CAP, we will have to pay for that. However, I do not want us to move to a situation where we have a new set of people getting very large payments. Therefore, I have said from the beginning that nobody should get more than €50,000 of a payment through the CAP. One would think I had two heads on me when I suggested this very high cap on these payments, although we have accepted for years a cap on the disadvantaged area payment where, no matter how much land a farmer owns, he can only claim on a modest amount of acres. We have also accepted a cap on the all-farm REPS payment. In other words, if a farmer had 1,000 acres or 400 hectares of land, he had to keep all of it in good environmental order, but only got paid on the first 100 acres or first 40 hectares. The idea of a cap is nothing new. What a cap did was ensure we could pay new young farmers etc. By capping the payment, we could pay more farmers rather than take money from every farmer's payment.

It is important to put the figures on the record of the House. Some 80% of farmers get less than €15,000 of a single payment and there are strong numbers of those farmers in every county in the country. The question is whether the policy on single payment is for the 80% or includes them or whether we are we really saying the policy is for the top 10% or 20%. As the Minister knows, the top 2% of farmers get more than the bottom 52,000 farmers. Is that fair and equitable? Are the people with the best and the most land the ones who need the subsidy? If that is so, there is something fundamentally flawed with our agricultural system. If they cannot make a commercial profit with some single payment from their farms, how can we expect the people on the less favoured land to survive at all? Does the Minister believe that the payment of €3,000 somehow hugely compensates these farmers for the poor quality of their land?

Another flaw in both the Minister's and the Commissioner's policies relates to payment per hectare. With regard to this payment, some 66% of farmers get less than €300 per hectare. The mean figure is €261, without deductions. This is a much lower figure than the 80% who get less than €15,000. Therefore, what we have in this country are farmers with little land and very low payments per hectare. The Commissioner is dealing with that. He says that if they have little land and low payments, the solution is to increase their payment because of having disadvantaged land. However, he if he moves to flat rate payments, he will not deal with the fact that we have a lot of farmers - like those on the east coast where land is better, from Louth down to Wexford - whose farm size is quite small. When we look at counties such as Kilkenny, Waterford, Wexford and Carlow, the counties with the highest number of single farm payments, we find a huge number of farmers who receive high payments per hectare, but a low number of hectares. In the tug of war going on between the Minister and the Commissioner, I am afraid that what will happen is that the Commissioner will win out with regard to the flat rate payments and that both of them will leave these farmers behind. I believe significant flattening will take place, more than outlined by the Minister.

If this happens - we are aware the average farm size in Ireland is 32 hectares - we must ensure there is an extra top-up payment on the first 32 hectares so that small intensive farmers, farmers with 30 or 40 cows or a small suckler herd, are protected. The only way to protect them is to ensure the possibility of a redistributive or front-loaded payment. This should be more significant and much higher than the 30% proposed in the Presidency document.

There has been significant mention of two words, "productive" and "active". I am willing to define those words and have defined them at meetings. I see "production" as producing as much as is possible, given the land circumstances in which a farmer finds himself. Most people farm the land in the area in which they were born. I see the word "active" as meaning the farmer farms his land actively. I believe the small number of people who have land but are not using it in a meaningful way should be cut out of the scheme. I believe there should be a minimum stocking level and that this level should relate to the quality of the land.

I am suggesting four categories of land quality: non-designated land, less favoured areas, severely disadvantaged areas and mountain land. Much more accurate data will be available for these purposes after the areas of natural constraints survey has been completed. I am proposing that livestock farmers not be able to drawn down payments without meeting the minimum stocking requirement that would apply in each of these four categories. This approach does not link the payment to production - it links it with a minimum requirement already in place under the disadvantaged areas scheme. The mistake made under that scheme was that the lowest common denominator was used. I am suggesting that only in the event of an ecological order from the State would farmers be exempt from having to achieve these basic minimum standards.

I would speak about many other aspects of this matter if more time was available to me. I have not even referred to Pillar 2. We need to discuss this process as it continues. I might disagree fundamentally with the Minister on philosophical issues, but I accept that he is amenable to debate. I hope we can have detailed ongoing dialogue on this issue at the Joint Committee on Agriculture, Food and the Marine. We should thrash it out as each step is taken. That is necessary if Oireachtas Éireann is to have a real input into the development of the Common Agricultural Policy.

Deputy Martin Ferris

I would like to share time with Deputy Michael Colreavy.

Acting Chairman (Deputy Joe O'Reilly)

Is that agreed? Agreed.

Deputy Martin Ferris

I thank the Minister for attending today's debate and wish him well in the ongoing negotiations. The proposals for the reform of the farm payments scheme have excited huge debate within the farming community. It is possible that the debate has highlighted for the first time the fact that the community does not share a common view on all issues. I have attended a number of meetings on the issue and was part of a delegation of Sinn Féin members and farming representatives that travelled to Brussels last week. We discussed the proposals and the likely outcome of the negotiations with members of Commissioner Ciolo's team.

On Tuesday night I attended a large meeting of farmers from south-west Munster at the Devon Inn. It was apparent at the meeting, as it has been at othes I have attended with farmers and members of various farming organisations, that the perception in some quarters that there was widespread hostility to the proposals to redistribute funds was by no means a reflection of the position on the ground. It is apparent that many farmers are unhappy at the lack of debate on the proposals. There is a perception that the debate has not been conducted with all of the relevant facts on the table. Many farmers believe the distribution of Common Agricultural Policy moneys has been unfair and unequal.

There appears to be an insinuation in certain quarters that some smaller operators are not really entitled to payments at all. The use of a code, involving the use of terms such as "active" or "productive" farmers, on the one hand, and "unproductive" and "inactive" farmers, on the other, is rightly seen as an insult by many smaller producers who have to supplement their low incomes by seeking part-time off-farm employment or availing of the farm assist scheme. The antipathy to a fair distribution of funding extends to many small to medium-sized full-time producers. I have it on good authority from a party member that a person who addressed the picket on the Minister’s office in Cork last weekend said the Minister should remember he was the Minister for agriculture rather than the Minister for social welfare. I doubt that we will see that argument used as a headline in the Irish Farmers' Journal. It sums up the attitude of a small minority of major beneficiaries of the single farm payment to thousands of other farmers whom they see as lesser farmers.

I would like to mention a significant contradiction in this respect. Some of those objecting to allegedly unproductive farmers receiving a more equitable share of farm payments and thereby being allowed to improve their productivity have no problem in defending the large single farm payment cheques to certain big businesses. The last year for which we have individual breakdowns showing who received what under the single farm payment scheme and other Common Agricultural Policy schemes is 2008. The largest recipient of CAP funds in that year was Greencore which received €83 million in respect of the closure of the Irish sugar industry. This closure was facilitated by the then Minister, Mary Coughlan of Fianna Fáil, and the leadership of the IFA. We know now that the closure did not need to take place.

Of the top 20 recipients in 2008, 16 were agribusinesses that received over €20 million between them. Some 243 recipients are receiving more than €32 million between them, while a further 1,800 are receiving over €118 million between them. The total moneys received by these 2,250 individuals and companies are more than what is received by 50,000 farmers who receive single farm payments of less than €5,000. The average payment to the top recipients is over €73,000 per year. The average payment to the 50,000 farmers I have mentioned is just over €2,400. In other words, more money is paid to the top 2% of those who receive single farm payments than to the bottom 42%. It is beyond me how anyone can defend this or claim it promotes the best interests of Irish farming.

Deputy Simon Coveney

I am not defending it.

Deputy Martin Ferris

I know that and I am not saying the Minister is.

Deputy Simon Coveney

That is why we are proposing redistribution.

Deputy Martin Ferris

Others, however, are defending it.

There is a clear regional divide in the payment of moneys under the Common Agricultural Policy. This reflects the type of land being farmed, the size of the land parcel in question and the scale of production. Some 18% of farmers receive less than €2,000 per annum, one third of whom are currently not entitled to any payment. There are large discrepancies throughout the country. Less than 9% of farmers in County Kilkenny receive less than €2,000 per annum, whereas 32% of farmers in County Donegal are in that category. Some 42% of farmers receive less than €5,000, as I have mentioned. They stand to gain most significantly if a redistribution takes place. The equivalent figure is 65% in County Donegal, 62% in County Leitrim and 60% in County Mayo. By contrast, payments in excess of €75,000 were made to just three of the more than 3,000 farms in County Leitrim. In 21 of the 26 counties, the majority of farmers receive payments of less than €10,000.

The distribution of funds also reflects the fact that the historical reference payments date to years when subsidies were tied to production. Far from encouraging expansion and productivity, this permanent unbalanced distribution of funds inhibits it. It was recently proposed that changes in productivity should be taken into account in the new system. This was seen by some as an attempt to deflect criticism to those on lower payments and support a change in the payments system. However, the Department of Agriculture, Food and the Marine has issued figures which undermine that argument. In fact, there has been little change since the reference years. One of the objectives of the 2003 reform was to restrict expansion, based on pressure from the WTO. In other words, the current single farm payment is a negative or, at best, a neutral factor in farm productivity. Farm numbers have continued to decline in the past ten years, albeit at a lower rate than in the previous decade.

It is not correct to claim that those who receive sums at the upper end of the scale will be forced to curtail their operations if their payments are reduced. If there was a fairer means of distributing farm payments, many small or medium-sized producers at the lower end of the payments scale would be able to expand their production. This would provide them with a level of income security and allow them to expand, including into new areas of production. It is a curious world view that holds that the imposition of a cap of €50,000 on farm payments to any individual would act as a major market disincentive, whereas an increase in the average payment made to over 50,000 farmers from €2,400 to €8,000 would encourage them to do less. It is a flawed argument.

The likely outcomes of the various proposals, dating back to the original Ciolo flat-rate proposal, can be subjected to many statistically breakdowns. It has been suggested payments on the first proportion of hectares should be front-loaded. In the Irish case, that has to be looked at for the first 20 hectares. These proposals have divided the debate within the farming community between those who would gain and those who would lose out. There would be a substantial number of significant gainers at the lower end of the current payments and a small number of significant losers at the upper end. Over 67% of farmers receive single farm payments of less than €10,000. It is not true to claim, as some have, that most farmers would lose out badly under any model which moves towards front-loading of up to €400 per hectare, or a similar figure. With a reduction in the larger payments, a further tranche of funds would be available to pay an extra amount on land above 20 hectares and, of course, there would be Pillar 2 funds. The question of how many would gain and lose in the reform of the payments scheme needs to be honestly debated, even at this late stage.

Another issue that needs to be addressed is the age imbalance within Irish farming, as a result of which there is a disproportionate number of farmers over the age of 65 years and an average age of 56. There are more farmers over the age of 70 years than under 35. The majority of these older farmers would willingly transfer their land, particularly to farm family members, if there was a productive scheme in place, but a new scheme utilising part of the Irish CAP funds would be required to facilitate that transition. As I understand it, there are proposals that would release some €25 million under Pillar 2 to support younger farmers and a proposal under Pillar 2 to establish a grant of €18,000 in the form of an installation grant for younger farmers. Obviously, such schemes would be most welcome and represent a significant boost for the rural economy, in which the demographics are particularly skewed towards the older farmer.

I hope the Minister will ensure that whatever emerges from the negotiations will be to the benefit of the majority of Irish farmers and the agriculture sector. There is consensus within the wider farming community that we need a fair distribution and equity in what comes out of the process. Some of the commentary from people purporting to represent farming organisations has been very disingenuous and quite insulting to farmers who are struggling to survive on a small family farm on which their family has lived for generations. Everything is set against them. It is no one's fault if they are born onto land that is not as productive as other land, but they are still putting in the same hours and have the same working arrangements, day in, day out. I hope we can move to a more equitable and fairer distribution and we will give the Minister any help we can in that regard.

Our position on the CAP has been that the figure should be €100,000 and reduce to €50,000 over four years. The Fianna Fáil position is that it should be €50,000. It is ironic that when I raised this issue in the House with the then Minister, Mary Coughlan, she accused me of being naive, stupid and failing to understand what I was proposing at the time, which she said would be very damaging to the farm network. Obviously, Fianna Fáil has revisited the policies of the past. If it had had the vision then which it now claims to have, many people who are no longer farming might still be involved.

Deputy Michael Colreavy

The coming reform of the CAP will determine the shape of agriculture in Ireland and the rest of Europe for the next six years and beyond. Our guiding principles in the negotiations must be the productivity targets set out in Food Harvest 2020, fairness and equity in payment distribution, encouragement for younger people to take up farming and the sustainability of family farms, in particular the sustainability of farms in particularly disadvantaged areas such as the west and north-west, the area I represent. Central to the evolving negotiations is the proposal to move to a flat rate per hectare payment in place of the current single farm payment which is based on historical entitlements and subsidies received in the reference year. There is a big imbalance in the system of payments, with larger producers receiving a grossly higher payment than farmers with smaller land holdings. What is needed is a proper redistribution of the payments to reflect a more equitable system of payments for farmers.

There is general acceptance that the reference year is gone. We need a better thought out mechanism to facilitate new entrants, particularly young new entrants, to farming. While I do not know what the solution is, I know we need some well thought out mechanism to achieve this objective.

Deputy Simon Coveney

We have a national reserve factored into the reform process for new entrants.

Deputy Michael Colreavy

My point concerns the scale of the problem. One of the biggest challenges facing farming is the number of farmers aged over 80 years compared to the number aged under 35. This shows an industry that is going nowhere. We have to encourage young farmers to enter agriculture and give them greater access to the agricultural colleges. There is not enough support for young people to get involved in agriculture, which means many will go off to Australia or France, where there are more favourable start-up schemes for those entering farming.

There should also be an incentive for older farmers to lease their land to younger farmers, possibly through reduced tax rates to allow the younger farmers to be competitive in the start-up years. There is also a need to ensure any new scheme will protect farmers who are working leased land. The last thing we want is to see the guys with the big cheque books buying up or leasing land and then stocking it with minimum stock levels. The well paid professionals with the big cheque books will buy or lease land as a money-making venture, rather than as part of Food Harvest 2020, towards which we are all working.

It looks likely that the maximum payment under the single farm payment scheme will be roughly €318 per hectare for the first 30 hectares and €190 for every hectare thereafter, which would provide farmers with a guaranteed income of about €10,000. As Deputy Martin Ferris said, we seek a cap of €50,000, but, recognising the need for a transition, we argue for an immediate limit of €100,000 on individual payments, moving to €50,000 by 2019. The advantage is that it would be free up €150 million that could be used to make a higher per hectare payment and would mean fewer farmers would see their payments fall.

We also favour a situation where the greening payments under pillar II would be directed more at farmers in genuinely disadvantaged areas, rather than the current situation where Pillar 2 funding is more or less distributed across all farmers. Ultimately, the CAP should ensure that as many farmers as possible are kept on the land, which is not only of benefit to the agriculture industry but also to rural Ireland as a whole, given the money that comes into agriculture at local level is generally spent at local level. The last thing we want is a situation where a small number of very large farmers dominate the sector and remove small farmers from the market. A diverse and well supported agriculture sector is the desired outcome of the CAP negotiations.

When he was embarking on the negotiations, I wished the Minister and his negotiating team all the very best and I continue to do so. He has our full support, but we need to be very clear on the principles to which we are working and the features we want to see achieved.

Deputy Luke 'Ming' Flanagan

I wish to share time with Deputy Tom Fleming.

Acting Chairman (Deputy Tom Hayes)

Is that agreed? Agreed.

Deputy Luke 'Ming' Flanagan

I am glad this debate is taking place. When it comes to rural Ireland, I cannot see how any Dáil discussion in the next three years could be more important than this one. It is massive, not just for farmers but also for carpenters, blocklayers and everyone within the rural community. My father is a carpenter and my brother, a blocklayer. Even though they are not farmers, they know that when farmers receive money, they spend it. Whether it be on a built-in wardrobe or putting up a new wall, the money goes back into the community. This is an issue in which everyone in rural Ireland should show an interest, including the chambers of commerce.

I am delighted to have the opportunity to lead for the Technical Group on this issue which, as I said, is of massive importance. As outlined, the future CAP deal will see Ireland receive over €1.2 billion under Pillar 1, which covers the single payment, and €313 million under Pillar 2, which covers rural development. While this €313 million under Pillar 2 has to be co-financed by the Government, it can be done at different rates. I encourage the Government to co-finance it on a 50:50 basis, which would increase the overall Pillar 2 fund to over €600 million, which would still be €100 million less than under the previous CAP.

The importance of getting the maximum into Pillar 2 cannot be underestimated. In the communities on the western seaboard, schemes under Pillar 2 funding such as REPS and the disadvantaged areas scheme have been critical in supporting incomes. Since 2008, these schemes have been cut by successive Governments to the detriment of incomes for most vulnerable farmers, forcing these people to get Farm Assist, which is 100% funded by the State. If the Government was to take an overall view on spending, it would realise that not fully funding Pillar 2 costs us money.

The cuts in Pillar 2 are one of the main reasons so many farmers on low single farm payments are adamant that they get a fairer distribution of funds in Pillar 1, namely, single farm payment. The Minister and the farming organisations are only fully realising this. In the past few weeks, the farming organisations, in particular the IFA, have begun to panic. The reason for this is that ordinary farmers on very low payments are starting to demand a fairer deal. I understand that an IFA regional meeting with over 300 farmers in Claremorris on Tuesday that was attended by IFA president John Bryan and CEO Pat Smith saw an open revolt by members. John Bryan was booed and shouted down when he tried to quieten a farmer and IFA county chairman who said the IFA was not representing them. This is action from its own members. In Limerick on Tuesday, the IFA and the Irish Creamery Milk Suppliers Association were also verbally abused by farmers demanding a fairer deal. I get phone calls every day from farmers furious at the IFA and the Minister. Some of these farmers are not in my constituency but feel their voice is not being heard. I have talked to mountain farmers who say that if they do not get a fairer deal, they will close off the mountains to walkers. What kind of impact will that have on tourism? It will cost us money.

To understand the anger, we need to look at what the European Union is proposing. Commissioner Ciolo is proposing a flat rate per hectare payment which would work out at about €250 per hectare. This proposal has been roundly criticised as too simplistic and would see very heavy hits for some farmers, with some on mountains gaining substantially. Overall, we will be looking for redistribution of around €300 million. Other proposals, which I understand the Minister was involved in drafting in his capacity as chair of these talks, would see a minimum payment per hectare in the region of €196 and the front loading of payments on the first number of hectares, which would be the national average of that country. In Ireland's case, this would be 33 hectares. While I do not have the figures for front loading on the first 33 hectares, I know one could front load €400 on the first 20 and there would be €130 left per hectare for every other hectare after that. By adopting this policy of front loading, we will get money to the small farmers while reducing the negative impact for many small to medium-sized farmers with present payments of €400 to €500 per hectare. This will give everyone a fair chance.

I understand that the Minister put forward a different proposal, namely, approximation. I think the IFA is also proposing this but I do not think anyone is quite sure what the IFA is proposing because it has not said what it really wants. By this, I mean clarifying how much money in millions of euro it proposes to distribute. What the IFA has done is say it does not want to be saying "no" to everything like a former politician in Northern Ireland. I understand that the Minister's proposal involves a gradual move towards a flat-rate payment but here is the key - we never get to a flat rate. We will be about one third of the way there if we do that. The Minister's proposal will see a redistribution of €80 million. This is not radical enough, a viewpoint the European Union shares. As someone who classifies himself as a eurosceptic, I find it strange that on this occasion, it is the European Union that is fighting for our cause, not our people.

This model would see those with larger payments retain most of them. I can see why certain people in government want that to happen because there are many large farmers in there. Change must happen no matter who it upsets. A farm of 400 acres is not a small farm by anyone's estimation. Let us realise who will get upset. Based on the 2010 single farm payment, 247 farmers will get more than €100,000. When one thinks about that and compares it with the payments Senators and Deputies get, which are often criticised and rightfully so, how can we go along with a payments system like that? If we look a bit further down the line, we can see that a further 1,950 farmers are getting over €50,000. When one adds these two groups together, their total payment comes to over €150 million. Is it any wonder that there is such anger surrounding this issue?

I will deal with a major point in this debate, namely, productive and unproductive farmers. Obviously, we should expect farmers to be as productive as possible but the level of production will depend on the type of land. Productive farming cannot be a code for intensive farming. It is very easy to be productive if one has the backing of a high single farm payment because if things go wrong, one has the support of the high payment, which is a significant advantage. Farmers who have low payments for whatever reason need to be given a chance like a soccer team when the game starts and should at least be level. What hope is there for them if they must start ten goals down? That is what is being asked of farmers with low payments.

Another issue I want to discuss is the proposal for the Commission on greening, in particular the payment method which is a microcosm of the entire debate. The Commission has put forward a proposal which will see pasture, crop diversification and ecological focus areas. The proposal is that 30% of the national envelope in Pillar 1 be paid on these greening measures from which a farmer would have to choose. This payment would translate into a payment per hectare of €78 and would see a redistribution of €18 million from day one. Unfortunately, this does not seem to be the road the Minister is going. In payment terms, what this will mean is that a farmer now getting €600 per hectare will get 30% greening, which will be paid as a percentage of their current payment. For this farmer, it will mean a greening payment of €180 yet another farmer with a payment of €60 will get 30% greening on each payment, which will come to €18. These two farmers who are doing the same thing will get totally different payments. This is because of how they farmed 11 years ago.

Could I take one minute off Deputy Tom Fleming?

Deputy Tom Fleming

Yes.

Deputy Luke 'Ming' Flanagan

Eleven years is a long time ago. As some people who are farming now believed in Santa Claus then, it should not be that relevant. What about the farmer who is entering farming with no historic payment? As 30% of nothing is nothing, we will not get any greening payment. In one sense, we should not be too surprised by our Government because it has form in this area, particularly when one looks at how it dealt with new entrants to the nursing and teaching professions. The Minister's proposal is grossly unfair like much of the CAP debate which sees him and the farming organisations trying to justify making payments to farmers based on how they farmed at the beginning of the last decade. This is what it is all about. By staying in the time warp of 2002, larger and more established farmers will continue to draw obscene sums of money while more and more small farmers leave the land to the detriment of rural Ireland. It is not always beautiful.

Let us front load payments, put in a fairly high minimum payment in the region of what the Commission is proposing and put a limit on the maximum anyone can draw down at €35,000. If one cannot survive with a big lump of land and €35,000, one should get out of farming. This would redistribute €99 million and give the farmers on what is left behind a chance to compete on a level playing field. The alternative is that we will see a further exodus from rural Ireland. There is not much to get excited about in the economy but this is something exciting. If it is dealt with correctly, it could be the saving of rural Ireland. I plead with the Minister to think of the small farmer.

Deputy Tom Fleming

We must certainly strike a balance in any conclusions we reach in this new CAP agreement. I plead with the Minister regarding small farmers and mountain landholders who must be supported to help them maintain their family holdings which are pivotal in the social fabric of rural Ireland.

These families have eked out a living for generations, in many instances, completely against the grain and on marginal land. There is great credit due to them for their determination, diligence and industry in making a living, often with the odds stacked against them while they carry out progressive work to improve their lot.

A man at a meeting referred to the fact that he had a farm of about 60 acres. He remarked it consisted of 20 acres arable land and 40 acres horrible land. That has been the reality in rural Ireland during the years. Those living in the west of Ireland have slaved and have been committed to improving their lot. They have carried out all types of drainage work with spades and sleáns in order to maintain the quality of the land. They cultivated their land and made it productive. In some cases, farmers are penalised for having rushes growing on their land. The weather is a contributory factor.

Land quality has divided the country into two Irelands. One cannot compare the conditions applying in the Golden Vale of Munster and the general areas east of the Shannon over to the Irish Sea and to the English Channel, with land along the western seaboard. One cannot overlook the fact that farmers on the western seaboard - dairy, beef or sheep farmers - are productive farmers if even at a micro-level. At all times they have contributed to the economy of this country by producing quality products as well as being excellent custodians of all aspects of the environment with regard to wildlife, heritage, traditions and all aspects of the quality of rural life.

A formula needs to be devised that is fair and equitable in order to address the gross inequity that exists in the current single farm payment. I refer to the many anomalies and loopholes in the current system which have been manipulated, for example, by the movement of cattle via the marts and directly onwards to the factories. This movement of animals was legal and above board. Because of the system adopted by Ireland very little farming activity was involved. These matters need to be addressed in order to provide fairness in the system for the people to whom I have referred.

Many aspects of the current system are far from equitable. For example, 50,000 farmers received less than €5,000 last year from the current single farm payment while 83,000 farmers received less than €10,000. At the same time, 243 farmers received €150,000 or more while four recipients received more than €300,000. A fairer distribution of the funds would protect the active farmer. It is imperative to double or treble the payments for existing recipients of lower levels of payments. There are significant opportunities for the large commercial farmer and the factory farmer in the medium to longer term as a result of the removal of the milk quota system and the need for food to feed the increasing global population. There is much to be gained for Ireland in this respect. It will provide opportunities for the large farmer and will improve the lot of the small farmer.

Deputy Willie Penrose

I thank the Minister for coming to the House to discuss the CAP reform proposals in advance of the Council meeting next week. I advise the Minister that this is a time to be brave and inspired and it is our time to give him our support. We need him to do something which it must be fairly recognised he cannot do on his own, as he will need to bring his 26 member state ministerial colleagues with him, together with the European Parliament in the co-decision process.

The critical phase has been reached. The noble objective is to do what is right and proper for the greater good, the common good, for the multitude of farmers. It is critical that the Minister should not allow himself to become the prisoner or, indeed, erstwhile mouth-piece of the powerful, articulate end of the farming lobby which seems hell-bent on protecting what they have, the status quo. The Minister's hour is fast approaching. From my many conversations with ordinary farmers I know that is how the Minister will be judged. The current system is clearly in need of reform as it is greatly flawed and highly inequitable.

This debate is significant as talks intensify in the next few days concerning the budget. The Minister has done a deal of work to bring it to this stage. The size of the budget and the agricultural envelope is now evident. It is important to keep in mind - many people seem to have gone astray in this regard - the origins of the policy which focused on the cheap supply of quality food for the 500 million citizens of the European Union and those further afield. A central tenet of the policy was to keep the maximum number of farmers on the land earning a living by achieving a viable income. There is now a narrow window of opportunity for the Minister, in his role as president, to conclude the CAP reform deal by June 2013. It is in the interest of Irish farmers that he does so.

I recall an initial proposal to cut the CAP spending budget by €25 billion over six years and after some intensive and successful negotiations, which we should acknowledge were spearheaded by the French, the Spanish and the Irish Government, this spending cut has been substantially reduced. We acknowledge the Minister's role to the fore in helping to reduce the size of the reduction which was achieved.

More needs to be done in recognition of the fact that the agricultural industry plays a vital and pivotal role in the economy. It supports 300,000 jobs as well as a large number of businesses in the rural economy. It provides the raw material for export earnings of €9 billion. It is in this context that securing the maximum amount of payment for the single farm payment and rural development schemes is paramount, approximating to just slightly less than €1.2 billion for the single farm payment under Pillar 1 and €350 million for the rural development scheme under the aegis of Pillar 2 - which is extremely important and seems to have been lost from the equation.

The thrust of these schemes was to promote the viability of farming activity so as to secure the maximum number of farmers on the land. That focus should not be overlooked. It is notable that some of our farming organisations - who represent the very well-off and the big farmers - appear to overlook this important objective. It is in this context that the Commission plan for the CAP reform was introduced. It is against that background that the planned flat rate system of payment per hectare at national and regional level by 2020 has been discussed. The likely impact of such proposals has been well ventilated and examined.

I fully support the proposal that these payments are targeted at active farmers and that they should pay special recognition to the particular position of young farmers. It is clear that the historic method and model of paying farmers based on the past production levels of 2000 and 2002 would be jettisoned in Ireland's case. The debate continues to centre on how this system will be replaced and over what time period this will occur. Unlike England and Germany, Ireland, in common with 16 other member states, did not opt for the flat rate system linked to land, which was introduced in 2003. However, change in on the way. It is anticipated there will likely be a significant transition period to enable farmers to adapt to changed circumstances under the proposal. These proposals are not finalised; the Minister has indicated that much discussion has yet to take place. It must be seen what will emerge in the final agreement. It is very clear that farmers who currently have very high per hectare payments will see these reduced and rightly so. How can payments of €200,000, at €4,000 a week, be justified when others are getting nothing?

Deputy Simon Coveney

I agree with the Deputy.

Deputy Willie Penrose

I meet them. I support the Minister's efforts. I have met people who give out about social welfare. A farmer came to my clinic one day. He receives about €1,200 a week and he started telling me about social welfare. I asked him from where did he think that money came.

A person on social welfare payments receives €188 per week and spends every cent of it. Likewise, farmers spend every cent of their incomes. This is extremely important for the rural economy. However, there is a need for change. There must be a significant effort towards redistribution in order to ensure farmers who either receive small payments per hectare or none at all will enjoy an increase. On behalf of the Labour Party, I unreservedly support the efforts at redistribution which recognise these farmers who, as previous speakers indicated, own 30 acres or less. These individuals require a more substantial share of the money on offer in order that they might continue to farm properly and make a contribution to the agricultural economy.

The farmers to whom I refer are also important in the context of their contribution to our achieving the goals relating to Food Harvest 2020. Some farming organisations tried to write these farmers out of the equation. Those with 35 or 40 hectares of land must work extremely hard and are very productive. Who do the farming organisations think they are in suggesting the exclusion of these individuals who are the bedrock of the farming community? Not everybody has 100 or 200 acres. I come from a county in which there is substantial acreage of farmland. Those involved in agriculture in places such as Rathowen, Ballinacargy, Milltown, Loughanavalley, Ballinea and Walshestown in County Westmeath are all small farmers who are struggling. They have all raised families, put their children through college, etc. on the incomes they made from their farms. I am amazed at the attitude of no surrender adopted by some of the farming organisations which seem to be preoccupied with the retention of significantly large payments for the benefit of the few, rather than focusing on the construction of a redistribution model which would jettison and reject regionalisation proposals which should be non-runners because they would cause damage.

Farmers across my constituency and further afield have outlined their views to me on this matter. I have a proud record of fearlessly representing the interests and views of farmers who, in turn, have been faithful in their loyal support for me during the years. I recall being the subject of significantly adverse comment when I wholeheartedly supported decoupling proposals in the 1990s. However, that is a matter for another day. No matter what I said on behalf of the Labour Party at the time, it was not reported. My comments were judiciously kept out of the media and I know why that was the case. In negotiations I tried to ensure any change in payments would be to the benefit of those who most deserved it. One cannot speak out of both sides of one's mouth. I am clearly in favour of the sentiments expressed by representatives of farmers in the western counties in the farming section of the Irish Independent on Tuesday last.

Lest there be any doubt of where my Labour Party colleagues and I stand on this issue, we would not favour under any circumstances a policy which would favour the preservation or promotion of the interests of large, rancher style farmers. Their activities will have what is termed a "supermarket effect" and give rise to a significant drop in the actual number of farmers. This is the very antithesis of a policy objective based on equity and fairness. Ultimately, it would lead to the complete demise of farming in rural areas and the rural economy. We in the Labour Party want special provision to be made for young farmers and new entrants. It is vital that we take proactive steps to ensure we facilitate young people interested in taking up the profession of farming.

I support the Minister's stance, as I understand it, in seeking to have a green element included in future single farm payments, which would represent a percentage of their existing payments, rather than what is proposed by the European Commission. I also understand what he is doing in trying to achieve additional flexibility in the implementation of the greening proposals. However, approximately 250 farmers are in receipt of well over €100,000 each, while the remaining 80% receive average payments of €15,000 or less. That is why, in the interests of equity, justice and fairness and in accordance with the original objectives of the scheme, there must be a frontloading of the payments on the first 33 or 35 hectares, with the proviso that some level of agricultural activity was taking place on the land. I agree with Deputy Éamon Ó Cuív in that regard and it is something in favour of which I have always argued. There must be some recognisable level of activity taking place. One cannot merely look out on one's land and do nothing with it. It cannot be the case that vast areas of good land are left idle. Such activity can relate to forage acres, stocking rates, etc.

What I have outlined completely negates the argument made by one of the farming organisation to the effect that what is proposed only favours those who engage in cattle farming as a hobby. That argument was made out of the blue. How can anyone justify certain individuals receiving single farm payments of €100,000, €200,000 or €250,000 per year? We in the Labour Party believe it is time to introduce a cap on what a person can receive - perhaps €50,000 or €60,000 - by way of single farm payments. This may have to be done by way of transition payments. Fairness in the distribution of single farm payments is the cornerstone of Labour Party policy.

Dáil Éireann debate - Thursday, 14 Mar 2013

Common Agricultural Policy Reform: Statements

Dáil Éireann debate -
Thursday, 14 Mar 2013