I welcome Dr. Franz Fischler, EU Commissioner for Agriculture, Rural Development and Fisheries. This meeting provides us with the opportunity to exchange views on matters of mutual interest.
EU Commissioner for Agriculture, Rural Development and Fisheries: Presentation.
Dr. Franz Fischler
I understand why so many people describe Ireland as the place that is "once visited, never forgotten". I never need an excuse to visit the Emerald Isle and it was a pleasure, as always, to accept today's invitation to address the committee.
Only ten days ago, Dublin signified the centre of Europe in the accession day celebrations. Ireland is seen by many of the new member states as the example to follow. Ireland continues to play a defining role in the shaping of the new European Union as the Taoiseach, Deputy Ahern, tours member state capitals in attempts to resolve the outstanding elements of the draft EU constitution. Seamus Heaney's welcome day poem signified for me not only the arrival of the ten new member states, but also the enriched diversity that enlargement will bring to the EU. "Move lips, move minds and make new meanings flare," he said, and it is by growing together and creating opportunities that we will be able to make the most of the possibilities offered by this historic project.
Farming is one area where new doors have been opened. In recent years, agricultural trade has been boosted thanks to the gradual breaking down of barriers under the double zero and double profit agreements. Consumption patterns are also changing with rising living standards and spending power, generating new opportunities for producers in an open market with 500 million consumers. With disposable incomes in the accession member states growing approximately twice as fast as those in the former EU-15 group, consumers are increasingly turning to higher quality, healthy and environmentally friendly products, which Ireland, famed for its natural, pasture-fed production systems, will be well placed to serve. Examples such as Dubliner cheese, Bailey's and Boru vodka speak for themselves.
As with any project of such scale, enlargement is not without its challenges. Irish dairy farmers are concerned about competition from lower cost producers in the new member states. Although lower standards will undoubtedly inhibit those member states now, what will happen when their production standards are up to scratch in several years time? Although demand for milk is not expected to grow much in the coming years, value added dairy products, including convenience products such as yoghurt, cheese and milk drinks, are expected to be in higher demand. With new measures introduced under Common Agricultural Policy reform, which are designed to help farmers adjust production to market requirements, increase standards and focus on quality goods, Europe's dairy producers still have considerable scope open to them.
Enlargement is not the only concern for dairy producers. Other compounding factors have also taken their toll on the milk sector. As part of the reform process, member states agreed to reduce the intervention price for milk in order to increase competitiveness and bring the EU market situation closer to reality. It was also agreed to compensate producers for the reduction through a specific dairy payment to be made in December. However, by anticipating the drop in the intervention price, buyers have put additional pressure on the market by commanding a lower price before the introduction of the cuts. It is hoped that the Commission's recent decision to bring the compensation payment forward to 16 October will alleviate some difficulties that will be faced by farmers. The Commission also approved an EU-wide derogation to the set aside rule for 2003 to cater for the increased price of feedstuffs following the recent droughts. Affected farmers were able to graze their animals on their set aside land for a limited period. The Commission is prepared to do the same this year.
The package secured by Common Agricultural Policy reform is specifically designed to make EU agriculture more competitive and to encourage farmers to be flexible, forward thinking and focused on developing new business opportunities and higher qualities in overall product. In particular, I congratulate Ireland on its decision to go down the route of full decoupling. My opinion on this subject is well publicised. Simplification was one of the chief aims of reform and I have said all along that the closer a member state is to fully decoupled payments, the greater will be the benefits of the reform process. I will not say too much about reform but I am pleased that we have found a satisfactory solution to the Irish entitlement problem so that Ireland can press on with implementing the full package. The fact that Irish producers now recognise how reform can contribute to increasing their competitive advantage is also a positive development. Ireland's agricultural trade with third countries has risen impressively since 1995 by over 85%, which is a good omen for Irish agriculture.
The recent proposals for the financial framework between 2007 and 2013 should also leave farmers confident of where they stand. The CAP will have to be managed within strict limits in the coming years. We knew that as soon as agriculture expenditure was frozen until 2013 at the Brussels summit two years ago. To ensure that every farmer is provided for in the enlarged EU, the Commission has made sure that the proposals for the next budgetary period maintain full support for agriculture, foresee the necessary strengthening of our cohesion policy to secure growth and boost competitiveness in underdeveloped regions of the EU. They also fully endorse the direction that our agricultural policy has taken since reform, by linking agriculture, environment and sustainability more closely under a single heading.
We have moved towards certainty internally, but that is something I hope to see evolve externally over the coming months as well, which brings me to my last point today regarding the trade talks and the WTO. Agriculture is clearly a sticking point and it is clear that the major subsidising countries in the developed world must take the lead. This was why Pascal Lamy and I sent a letter on Sunday to all WTO member trade Ministers, outlining what we see as the key areas where more movement is needed and in the hope that this will provide the final push towards an agreement on the framework modalities by July. Its timing was not a coincidence. This week in Paris we will bring together as many trade Ministers as we could possibly have in one place for some time. What we want is clear and no one disputes that we are ambitious. We are also firm on the point that this round of talks is not just about us, but about what everyone will give and take in order to benefit from further growth in trade.
We are also clear about what this new initiative means for EU agriculture. On market access, we need to find an acceptable balance that allows us to migrate to warmer climes together, not a clime that leaves us circling above our independent nests looking for food. We will only be successful if we swoop in for the kill in unison, but this need to rebalance seems to have been missed again by those who have increasingly criticised the so-called "blended formula" in recent weeks. It is hardly surprising that no viable alternative has emerged if its critics choose to ignore its most essential element that it was meant to bring together opposing interests.
The sensitivities, interests and concerns of exporting members lie in a generalised drop in tariffs, with emphases on tariff peaks and a greater reduction of the highest tariffs, which explains their preference for the Swiss formula. Those of the importing members, on the other hand, are a lower ambition for tariff reductions and adequate protection for sensitive products, so they prefer a linear approach, such as the Uruguay Round formula.
If we are really interested in a solution, we have to address the concerns of both groups. The only way to do so is by blending their different approaches. It does not get any simpler than that. The extent of ambition that this blending will achieve will clearly differ based on numbers — how many products there are on the sensitive list, how many tariffs will face linear and how many non-linear reductions, and by how much. These are questions which the negotiations will have to resolve after a framework for modalities is agreed, not before, and only when the overall balance of an agreement between all three pillars, taking into consideration all the sectors, is known. This is why we continue to believe that with the necessary modifications, a blended formula could meet the concerns of all participants as well as our own sensitivities. Instead of looking for our own magic solutions, we should consider how best to address these concerns by focusing on the necessary flexibility, particularly in response to developing country sensitivities.
On domestic support, we continue to aim for a very substantial reduction of all forms of trade distorting subsidisation. We must ensure that this takes place in a manner that both recognises the reform efforts we have already made and opens the door to real US farm policy reform. CAP reform allows us to commit ourselves to a large reduction in trade distorting "amber" support as well as a reduction in existing blue box payments and their capping. Non-trade distorting support, green box support, must remain free of restrictions.
It is clear that eliminating all forms of export support is one objective shared by the great majority of participants. We have already made decisive moves to address this issue by offering to eliminate export subsidies on a list of products of interest to developing countries and we subsequently made clear that there would be no a priori exclusions, that no products were excluded. This Commission position is not new. It received the wide support and endorsement of member states during the preparations for the ministerial meeting in Cancun more than a year ago and it was reconfirmed post-Cancun in the preparation of the WTO General Council last December. We must, however, take into account that the list approach has not worked. Again, this means going it together. Our own export subsidies have been disciplined and have decreased substantially over recent years. Other forms of export subsidisation in contrast remain undisciplined and have been maintained at very best, at worst increased. This issue has to be addressed first by clearly defining the requirements of full parallelism among different forms of export competition. This is not just a requirement of the Doha mandate but makes common sense if we want to be serious. Eliminating EU export subsidies for wheat while US export credit allocation is based on multiple government guarantees, or Canada and Australia continue to grant export monopoly status to their wheat boards, will hardly convince us, or the European public, that we are heading in the right direction.
Trade distorting support is not a problem exclusive to the EU. Our export support instruments have been disciplined and we have made clear our intention to go further. However, as long as a legal basis and a budget for a policy instrument supporting exports exist, the clear trade distorting effect of such an instrument will also exist. Success depends on an overall balance in the approach and it requires all instruments that distort exports to move in a strictly parallel manner. Europe going it alone would be to tell not even half the story.
Clearly, the agriculture package must be taken as a whole and that whole includes our non-trade concerns agreed in Doha being adequately addressed. From what I have just explained, members can clearly see why I believe that the ideas that Pascal Lamy and I have developed in all three pillars are fully in line with the European Community's position as it has evolved during the negotiations.
Our reform process is well under way and regardless of agreement at the WTO we will continue to make our domestic improvements, as Ireland is only too aware. I must express my thanks to the Minister, Deputy Joe Walsh, for his part in paving the way to the second reform package just a few weeks ago. However, we remain committed to playing our part in overcoming the significant shortfalls in the WTO, chiefly for those parties whose development depends so heavily on it. Farming for the future in an enlarged EU means a sustainable support policy that recognises the links between farming, rural development, the environment and plant and animal health and welfare. Securing a future for the world trade talks relies heavily on making the necessary progress before the summer break, a real commitment from all concerned and clear evidence from the other core members of the WTO that improving the world trade system is a group project and not an individual undertaking.
I thank the Commissioner for his presentation. I will now allow questions from the members, whom I ask to be concise to allow everyone on the committee an opportunity to participate. We hope to conclude the meeting by 6.15 p.m. as the Commissioner has an engagement with the Irish Farm Centre at 7.15 p.m.
Where does the Commissioner see the future of agriculture in an expanding Europe? What will the implications of the nitrates directive be for agriculture in Ireland?
I am the Fine Gael spokesperson on agriculture. I have met the Commissioner several times in the past and every time he comes to Ireland, he certainly causes a stir. He is very welcome and we are glad to have him here this evening.
I have one or two simple issues to raise with him following his contribution. The immediate things, before his visit, impacting on Irish farmers are the same issues that have been to the forefront recently. The Chairman mentioned the nitrates directive, animal transport and food labelling, which in many respects are outside the Commissioner's remit, to the best of my understanding. During the selling of the mid-term review, one of the catch-phrases that the Commissioner used all the time was "freedom to farm". I commend the EU for coming up with such nice catch-phrases, the most recent one being "the blended formula", which reminds me of eggs and flour and something smooth. There is now a feeling among farmers that they may have been sold a pup in that the cross-compliance measures will be far more rigid than any red tape that has existed hitherto. Can the Commissioner give us any assurance or any view on the nitrates directive? If we do not have a system in place, will there be an impact on the single farm payment?
The second issue is animal transport. I believe that it is finished with for the moment so I will not ask the Commissioner for a comment on it. I came across some reports from the Food and Veterinary Office, of which the Commission is probably aware, concerning inspections of meat plants in South America. That has certainly raised a good many questions. One of the difficulties we have here concerns the import of foodstuffs for sale, particularly beef in the catering industry. People do not know what they are eating. I know the Minister has made moves and made it part of his mission during the Irish Presidency to establish stronger labelling. Does the Commissioner not believe that we should have full labelling of non-EU products within the EU, in both the catering and retail sectors?
The Commissioner rightly mentioned the disposable income of the accession countries rising at twice the rate of the older states and the move to a higher quality product. That would afford Ireland an opportunity. Our concern is with the home country. Where will that leave the many farmers in the accession countries? They are a good few years behind the older EU countries. Will there be a move out of farming in those countries or a greater drain on the EU budget to keep agriculture sustainable there, as opposed to the money going around the block? The Commissioner mentioned the financial framework from 2007 to 2013 being in place. I will return to the blended formula.
I have not discussed this with any of the farm organisations or groups, but I would imagine that, during the mid-term review, the Commissioner put his cards on the table, took his chance and moved before others, saying that they should do likewise. Now there is a feeling that we must move again. Can he understand that there is fear and uncertainty that, if the removal of the export subsidies comes — perhaps we laid our cards on the table too early — it will lead to a further reduction in prices? If there is an agreement at the WTO, how will that impact on Irish agriculture as opposed to there being no agreement?
I welcome the Commissioner and thank him for his presentation. I will start with the issue to which he devoted most of his presentation, which has also caused most interest in the past day or two in our national newspapers, that of the WTO. He proposes to move on export subsidies in the talks on agriculture. Perhaps he might be more definitive about what he means by "move on export subsidies". Specifically, does he have a timeframe in mind for that move? I refer to the issue of the removal of subsidies on tobacco. I am looking at the progress on that and there is a significant transition period up to 2010, mainly because of resistance from two countries, Italy and Greece. Perhaps the Commissioner might comment on that and what type of end plan or game there is regarding timing.
Another issue that I would like to raise, which the Commissioner has not addressed, which also falls outside his portfolio but will have an impact on agriculture here, is genetically modified food. There has been much discussion of it at European level and in the US too. What are the Commissioner's views on genetically modified food? What protections can be put in place regarding developments that I see as important to the future of agriculture, such as the need to increase the role of organic farming? There is a need to increase a sense of the importance in the role of organic farming and to indicate how the development of genetically modified plants might impact on that, if it was to be allowed, and also on traditional farming methods.
The dairy sector in particular was among those highlighted by the Commissioner that will be affected significantly by the changes taking place. Does he believe that enough resources have been put into the development of the value-added products he mentioned such as dairy produce, yoghurts and so on? What role does he see in the enlarged EU for the promotion of such products, given that there will be competition from the accession countries?
I thank the Commissioner for his presentation. Over the last couple of decades there has been considerable gain within Irish farming for many farmers. However, the farming population has declined significantly. From where I come, many small farmers have disappeared from the landscape. To say that these policies have had a beneficial effect is true for many, but not for many others. I am concerned in particular about farmers who have taken early retirement. What appeared to be quite a generous offer six or seven years ago because of no indexation in the linkage, and also the knock-on effect of the implementation of decoupling — which I fully supported — must be examined in the light of the value of land being currently leased. There should be some mechanism for compensating farmers who have taken that course of action to facilitate younger people coming into farming. Many, because of illnesses etc., find that the value of their incomes and their properties have been greatly reduced as a result. I would like the Commissioner's views on that.
As regards genetically modified organisms, I want to ask about the proposal to allow GM on this small island in terms of the effects it will have through cross-contamination on existing produce. The Commission made reference in his speech to the status Irish produce enjoys outside Ireland. Even more worrying is the lack of debate on this question. We have not had the opportunity to debate this issue in the Oireachtas, yet we are effectively being presented with a fait accompli. I would like his views on that.
Other matters of concern involve traceability, that is, traceability within Europe compared to the lack of individual traceability for other countries supplying GM food into the EU market. Food labelling is another concern as is the nitrates directive. I thank the Commissioner and look forward to his replies.
Dr. Fischler
It is a long list of questions. I will try to answer all of them in the sequence in which they were raised. The Chairman's first question was about the future of agriculture in an expanded Europe. I think this is one of the most important questions. As I see it — and this is based on extensive economic analysis — agriculture is a demand-driven sector, and so it is important to know how demand is developing. In the next five to ten years it is clear that the average growth rate of the economies in the new EU countries will be about twice what it has been in previous years. Therefore, there will be more and more consumers interested in and able to buy branded and higher-quality food. This demand can be much better met, it is clear, by the food industry in the "EU 15" than in the ten new member states. Broadly speaking, this is the opportunity we have.
On the other hand, it is clear that on their side, the new states will be extremely competitive in the production of relatively simple commodities such as feed grain or oil seeds etc. In that sector they are much more cost-sensitive. Therefore, the production costs play a much bigger role in the competition; they have lower labour and land costs etc. and will therefore be competitive in the production of feeding stuffs. That is basically how I see the main development. There are a few other phenomena. All animal products first need to be processed before they can be sold. The processing sector in these countries is still weak. They are improving and at least they have to comply with our hygiene rules and such like. If they do not, they cannot market their products on the Community markets. Neither can they export such products. Therefore, they can only market such products locally. This may also be done in "EU 15", where, for example, there are two different stamps for meat. A similar system is in place for dairy products. However, this system for the dairy sector may remain in place only for another two years. Factories that do not fully comply with all the rules and who are not able, as a result, to sell their products in supermarket chains etc., will have to close down. That is a matter of fact. It is hard for them, but this is how matters are developing.
International companies, such as Unilever or Nestlé, are investing in the dairy sector in these new EU countries. They will focus strongly on the supply of fresh milk products. It is clear that in the dairy sector the demand will increase, but what about the quota? On average the total quota of the new countries is about 25% less than production in the mid-1980s. It will not be possible for them to meet the increasing demand for dairy products from their own quota. This provides an additional opportunity for the "EU 15" and especially for countries such as Ireland. It is appreciated that Ireland has to reorientate somewhat the destinations of its exports. It would not be well advised to just continue to export standard butter and skim milk powder and to place them somewhere on world markets. It is very important. Last Saturday, I visited a successful dairy in the south which is well placed in the market and not one kilo of its production is for intervention. It is not within my area of competence to deal with the Nitrate directive, but Ireland is not the only country facing problems with fulfilling the requirements of the directive. Court action was taken against 12 of the then 15 members states. In addition, there is the question of cross-compliance. It seems there is a mix up between cross-compliance, which is already established in rural development, and cross-compliance decided in the reform package. Under Agenda 2000, it was decided in principle that a farmer must comply with certain cross-compliance rules in the nitrates directive to get the full support from the rural development programmes. Certain conditions have to be fulfilled by member states in order to have the rural development programme approved. In principle, Ireland has an improved programme, but as I see it, the negotiations are going in two directions. First, Ireland is seeking an amendment of or a derogation from the nitrates directive, similar to what the Danes negotiated with the Environmental Director General of the Commission. I see no reason that Ireland should not get the same conditions that others got. Second, Ireland is proposing to make changes in the rural development programme and these changes must be approved. Some members of the committee may be aware that at a meeting today, one member state did not agree with a request from Ireland in this area, but I am sure we will be able in negotiations to get the necessary approval at the next meeting.
Deputy Timmins states that we are using phrases such as "mid-term review", "freedom to farm", "the blended formula" and so. Let us be clear. In referring to the mid-term review one implies that more reform is expected. This is not the intention. It was agreed in Agenda 2000 that there should be a mid-term review, but it was subsequently decided that instead of a mid-term review and further reforms two or three years later, it would be better to carry out the necessary reform steps and then keep the policy unchanged. This is still our position. This ensures that the money needed in the next financing period is also available. What is meant by freedom to farm is that the farmer has more choice on what and how much he or she is producing. The proposed reform, known as the historic model, guarantees this freedom. If a strict regionalised model were introduced, farmers would be forced to change their farm practices. Most member states now appreciate the disadvantages of such a system, as farmers would not have the freedom to farm, but would be forced to change their farm practices. This was not the intention of the reform.
To explain what is meant by the term "blended formula", I will have to outline to the committee the whole story. Before Cancún, there was a mini ministerial meeting in Montreal, Canada, at which more than 20 countries were present. The European Union and the United States — the "big elephants" as they were referred to by the 20 countries — were requested to go together and prepare a proposal for a modality structure because it was felt that if the two "big elephants" differed, there would be no chance of making progress at the meeting in Cancún. The blended formula idea was invented in Montreal. We did as we were asked and were then blamed for doing it. When we arrived in Cancún, the G20 members stated that it was unacceptable that the two richest countries in the world should together agree on something. This was disappointing and we will not make such an offer again.
It is important that members are aware that the blended formula approach is criticised again by the G20 and others that are bringing forward what they call a tier approach. We consider the tier approach very dangerous because of the fundamental differences on regulating the market. In the European Union and United States model, a WTO member has the right to chose a lower level of reduction for the country's sensitive products as part of the discipline, what we call the Uruguay round approach, and the less sensitive products can come under the Swiss formula approach. With the tier approach, one does not have this choice, because a fundamental principle of the alternative approach is that one must reduce most the areas of highest production. In other words, one has to make greater reductions in the areas of sensitivities. This is the crucial difference. We must be very careful in the public discussion that we are not losing our momentum.
Turning to the issues of food labelling and the problems of imports, the committee should invite the Irish Commissioner because this area is his responsibility, as are the rules on animal transportation. However, we clearly need to treat all products in the same way, whether produced inside or outside the Community, and this should be done in a non-discriminatory way. We must also apply the same rules for imported products. While this is the case in the regulations, the problem lies more in whether the controls are sufficient. Controls must be enforced at every border where goods enter and we depend totally on customs authorities for this. If they work properly, there will be no problems.
There was a question as to why we should move again when we have already moved while others have not. One must understand what is behind this and also the difference between making an offer and completing a deal. We are making an offer in this case and in principle we are saying that our export subsidies are not taboo. However, if we were to give more or negotiate about the phasing out of export subsidies, we would do so on the basis of four conditions. First, we must be satisfied about market access. Second, we must be satisfied in regard to domestic support and the following conditions must be fulfilled — the trade distorting reduction must be great enough so that the Americans and others are also forced to carry out agricultural reform, the green box must remain untouched and it should also guaranteed that there is no phasing out of the blue box. Third, we must be satisfied about our requests on non-trade concerns. The fourth condition concerns parallelism, about which I explained in my introduction. We will be ready to move only if these four conditions are satisfied. However, it would be a mistake to talk of dates for particular measures, for example, the date when the export refund for butter would go.
At the moment, we are negotiating a structure of modalities, without figures. Whatever structure is agreed, the parties cannot be satisfied so long as the figures on the percentage reduction are not known. The same is true of the phasing out of export subsidies. We will never accept a date without knowing all of the other figures. This must be balanced and the two sides must act together. One side cannot begin to discuss phasing out dates while the other side says nothing about the other figures, for example, whether it is accepted that the de minimis rule will phased out. The phasing out of the de minimis rule would mean €8 billion less in American farm support, which suggests that serious issues remain behind the scenes.
Deputies Upton and Ferris referred to genetically modified organisms, GMO. It is clear that organic farming remains a production method which does not use GMO and that organically produced products must be free of GMO. In this regard, a new law has introduced a much stricter authorisation procedure. The experts, particularly those working for Commissioner Byrne, state that the EU now has the most modern legislation for the authorisation of GMO. However, it should not be forgotten that those applying to use GMO must always be asked as to the purpose of the GMO. The current argument surrounding B+11 maize is focused on the use of the product — for example, whether corn flakes could be made from it. However, the argument is not about the seeds or the production of this kind of maize in the European Union. Anyone wishing to produce within the Union must make a specific request to do so. In addition, new labelling rules foresee a clear threshold above which every product would have to be labelled as containing GMO.
However, there are new problems in the area of coexistence. This must be organised so that farmers who do not want GMO on their farms should not have them whereas those that do should have them. One of the most important questions in this context is that of liability. As liability rules and legislation are so different between member states, responsibility for the rules is given to the member states, which can introduce liability rules. For example, the Germans, who are very critical of GMO, have a proposal for a new law whereby if a field is contaminated with GMO and a particular farmer can be found to be responsible, that farmer should pay. If not, a system will be introduced whereby all possible damages suffered by farmers producing GMO free products are paid for. It is clear that the GMO free producers were the first in the market whereas GMO producers entered the market later.
The last question concerns decoupling and its influence on land values. Our idea of decoupling should have almost no effect on land values if it is based on the historical model. It is also difficult to understand why, if the support is distributed in the same way as it was done until now, there should be a major change in the land value. The change in the land value took place when we introduced the compensation payments in 1993. They were clearly related to each hectare, and it was higher the more one produced on the hectare. If we look back to what happened in the early 1990s, we can see that the land values, the renting prices, went up but that is not the case in the decoupling.
There is an additional effect which we should be aware of because it is a positive development for farmers. The OECD did a major study and compared support systems which are coupled with support systems which are decoupled. It found out that in a traditional support scheme, for example, where one pays a certain amount of money for a bull, some milk or whatever, only 25% of the money paid ends up in the pocket of the farmer. The rest goes towards additional land values to the processors, the trades and to many other addresses.
In regard to decoupling, following this study it was found that double as much money remains in the pockets of the farmers. In that context, this decoupling system should also help the farmers, and Irish farmers realise that. I met many farmers in the past two or three days and I got clear signals that they see this in that way. This is one of the positive elements of our reform.
On the question of traceability, I do not know why one would think there would be any change. The traceability requirements are the same. We introduced new rules two years ago and, as far as I know, no change is foreseen. Our products can be traced back to the producer and we will keep that system.
I am sorry for taking so long but it will be of some value to the members if I give them a little more information, which will make it more interesting.
I, too, welcome Commissioner Fischler and his team and thank him for his presentation. I have a number of questions on the early retirement scheme. The concept of the early retirement scheme was a good one but a number of anomalies have arisen in the scheme over the years and while enormous change is taking place in agriculture, these anomalies should be addressed. I am talking about people who, due to illness, could not apply for the scheme before the age of application because they were not active farmers. I am also concerned with a situation where the farmer cannot get his or her old age pension along with his early retirement scheme payment. Given the difference between the value of the pension now and what it was worth when it was introduced, a mechanism should be found to increase it. We would like to have retrospection but I will leave that to Commissioner Fischler. Those three anomalies should be examined. There are others but those are the ones in which I am interested.
I, too, join my colleagues in welcoming the Commissioner. I ask the Commissioner to give support to our Minister in regard to the live exports. This country is in a unique position in terms of live exports because we are an island nation and if the proposed rules are introduced, our export trade and our livestock industry will be badly affected.
I would also like to extend a céad míle fáilte to the Commissioner and thank him for his presentation. I apologise for having to leave the room on a number of occasions; that is democracy in action. I may have missed some of the Commissioner's responses. I had intended asking about the retirement scheme but the question has been asked already.
Farmers accepted the Commissioner's proposals on the basis that it would give them the freedom to farm but there is no evidence to date that this is happening. There are 18 EU and national directives under which farmers have to operate yet there is zero tolerance in regard to farmers at inspection time. Is it a question of the EU being over-strict on these regulations or are they being implemented by an over-zealous Department of Agriculture and Food? The small farmer cannot live with these penalties that are being imposed on him or her. They are putting them out of business. Every farm that has been inspected to date has had fines imposed as a result of that inspection and there are many problems with the inspections, particularly with the CMS system. These farmers are being penalised to such an extent that many of them are being put out of business over minor problems. I ask the Commissioner to examine that aspect of farming and the danger that may be faced with the introduction of cross-compliance between the Department of Agriculture and Food and the Department of the Environment, Heritage and Local Government. This freedom to farm is a myth and it needs to be properly addressed.
The Department makes many mistakes and farmers have to pay for them. When farmers make mistakes, they have to pay for them. For example, a new system was introduced here in December last year under the CMS situation, as a result of which the old forms farmers used went missing, and farmers are now being penalised. In inspections taking place this year they are being penalised over simple issues. I would accept it where there is a genuine intent but under the system here one is innocent until proven guilty. That is not happening with these inspections, however. There is zero tolerance in respect of them.
The Commissioner stated that he was linking agriculture and the environment under a single heading. Does that mean that under the new cost compliance regulations farmers, as they are requesting, will be dealt with under one Department rather than having to deal with the Department of Agriculture and Food, the Department of the Environment, Heritage and Local Government or other Departments? Will it be done under the one heading?
The nitrates directive is a hugely important issue among the farming community. I put it to the Commissioner that prior to enlargement, 14 out of the 15 member states had problems with the directive. Is it not time to re-examine that issue in view of the current situation in agriculture? Also, from this country's point of view, will failure to reach agreement or to implement the directive have an effect on the single farm payments that are about to come into effect?
I welcome Commissioner Fischler and thank him for his detailed analysis. Many questions have been asked already but the Commissioner raised the question of the future of the dairy industry, and in particular the viability of the small to medium size farmers. The Commissioner mentioned that he visited some milk processors in the south over the weekend. I hope he had a pleasant visit. Great pressure has been exerted on small food processing industries over the years to amalgamate into major corporations, but I am not sure that such corporations have served the dairy industry well. In light of the Commissioner's comments about added value products and moving away from the products produced heretofore, should it be EU policy, and perhaps national policy, to support cottage industries, particularly those engaged in the processing of dairy products, and small food producers who have served the industry well? With the current pressure on the dairy industry, such small industries could disappear off the horizon and thereby cause further problems for small to medium-sized dairy farmers.
I thank the Commissioner for his presentation and his comprehensive response to queries. He covered many of the points I intended to raise. To return to the vexed and controversial issue of the nitrates directive and following Senator Coonan's point that it would appear that 14 of the 15 member states are non-compliant with it, is it the case that the problem rests with the directive and not with the agricultural community in those 14 member states? Is it time that the directive was renegotiated? Will the Commissioner concede that perhaps it is unimplementable? Do I detect from him a degree of pessimism about the prospects of achieving a positive outcome for EU agriculture at the WTO talks?
Senator Callanan has to leave the meeting because a vote has been called in the Seanad, but he may ask the Commissioner a question before he does so.
We have an arrangement between ourselves because we have done enough walking to and from the Seanad for one evening. Like everybody else, I welcome Commissioner Fischler, more particularly when he visited the south and the county from which I come. I listened with interest to what he had to say. Like my colleague, I had to leave the meeting and I am not certain what answers he gave to questions. There is a reference in The Irish Times today to export refunds, to which the Commissioner referred in pages ten and 11 of his presentation. I have some difficulty in understanding the Commissioner’s position.
Dr. Fischler
I ask the Senator to outline these references.
I presume the Commissioner has some information about what he read out.
Dr. Fischler
Yes.
On page ten of his presentation, the Commissioner referred to the eliminating of all forms of export support, an objective that is shared by the great majority of participants. Page 11 refers to the eliminating of EU export subsidies for wheat. On page ten there is a reference to the list of products. I hope that what I say will be taken in the spirit in which it is being offered. We are an island nation exporting 80% to 90% of two of our major agricultural products, dairy products and beef. To eliminate any portion of, or all, export refunds, which seems to be what is suggested, would put us out of business. We are not like the rest of Europe and the Commissioner knows that well. He also knows that there is a deficit in aspects of the food situation in Europe. We need to export to markets other than the EU markets. We also need export refunds. That is not a question but my observation as a farmer representing those involved in agriculture. We cannot do without them.
Another point I wish to make, which has been made by a number of speakers, is that the nitrates directive is putting an imposition on us, the effects of which do not seem to have been scientifically or otherwise well thought out. Like my colleague, I suggest that it should be reconsidered because of this. The Commissioner visited the south of the country. The impact of this directive on southern farmers, who have high intensive production levels, higher than farmers in any other part of the country, is such as to cause the closure of their operations.
Deputy Carty mentioned the live export business. It is critical for the industry that we have live export of cattle of all ages. As the regulations are currently designed, they are a negative. Commissioner Fischler understands that they need modification. We have no problem meeting high standards; we are in favour of them, but we, as an island nation, are also entitled to have a mechanism which will allow us to have live exports.
I wish to deal with the issue of GMOs. I heard with interest what the Commissioner said in reply to a point raised by Deputy Upton about what the Germans are talking about in terms of having GMOs in one field and not in another. Can the Commissioner justify to those of us representing those engaged in agriculture, that we should be pay legal fees to have representation if something goes radically wrong? I am of the opinion — I ask the Commissioner for his view — as a user of land for food production that the use of the GMOs is a contaminant to the soil and one that is borne by air and carried not by birds but by a variety of other species.
How does the Commissioner envisage the sugarbeet regime will fare in the negotiations? Sugarbeet is an extremely important industry here. If there is a negative outcome to the negotiations, it would suggest to the industry and the agricultural sides that the employment content of processing would be lost. Sugarbeet production is also a good farm enterprise here.
Dr. Fischler
I will do my best to reply to the questions asked. The Deputy who asked about early retirement — not mine, though — is correct in that there are some anomalies and weaknesses in the system. We are prepared to examine the system in the context of our preparing already for the next generation of rural development programmes. We will consider changes in this area and present a proposal in this regard in July. I must be clear that it is not possible to introduce such a measure retrospectively. When we speak about early retirement, it is part of what is called accompanying measures and has to follow the principles of an annual budget for the time being. Therefore, to do this retrospectively would be difficult.
On the specific question that account should be taken of illnesses and other such problems, that is a point on which it is worth reflecting. We should learn from the experiences of people here because farmers in only a few member states use the early retirement scheme.
I understand the concern regarding live exports. It is true that no other country depends as much on live exports as Ireland. If Ireland had a little more competition in the beef sector, perhaps it would not depend so much on live exports, but that is another story.
A huge majority of opinion in the European Parliament opposes paying any refunds for live exports. However, if we do not pay refunds that will not help. This is the problem. We continue to pay and we changed the rules to improve the guarantees and to ensure that the cattle and sheep transported on vessels or lorries are treated well. If controls are good enough, there should not be a problem in principle. However, we have a difficulty with the European Parliament in this area and I cannot ignore it. The committee would also criticise me if I said I would ignore the opinion of the Irish Parliament. It would be good if representatives from the members' country would explain to the agriculture committee in the European Parliament why live exports are so necessary in Ireland. For my part, I continue to pay export refunds for live exports.
Deputy Carty mentioned the freedom to farm in the context of penalisation and the requirements of the CMS system and so forth. First, let us deal with the principle. Freedom to farm does not mean that one is free from any rules in farming and that one can do what one wishes. The rules must be respected. If there are bureaucratic difficulties or if the way the system is implemented leads to hardship cases, we can discuss this but we must know precisely what the cases and the problems are and we can try to resolve them. I am always open to this because I have no interest in increasing the bureaucratic burden.
One member of the committee asked what is behind the statements by the Commission that in future there should only be one heading and so forth. The situation is as follows. With regard to future financing, the money for the 25 member states and the money that is necessary for agricultural expenditures is fixed. What is not fixed is the budget that is necessary for the two additional future members, Romania and Bulgaria. It is possible that they could join the European Union in 2007 so we have to provide a budget for them. In the proposal we made we added the necessary amount to the money fixed in October 2002 by the heads of states and governments. What is also not fixed is rural development. We are of the opinion, especially in the context of enlargement, that more must be done in the rural development sector. We envisage, therefore, at the end of the next implementation period an increase of 25% in the budget for rural development. This will be a hard fight. I will count on the committee's support in defending it against those who say 1% and no more.
I must also deal with the 1% argument. This would create a huge problem for the agricultural and rural development sector. In 2006, the last year of the ongoing implementation period of the financial perspective, we will have more than 1%. We will have 1.09% expenditure. If one adds to this 1.09% the expenditure necessary for Romania and Bulgaria in 2007 and if we accept that the new financial perspective would be limited at the level of 1%, we would have a cut in expenditure from 2006 to 2007 of more than 10% and that is impossible. We must continue, therefore, to defend our position.
I really do not understand this discussion for two reasons. One is that we are prepared to accept that we have to show evidence that whatever we spend, it is better to spend it at European level than at national level. We can demonstrate that, for example, it is better to spend research and development money at European level instead of having 25 different national concepts competing with each other. On the other hand, if we do more at European level in this respect, this saves money in the national budgets. That is how things are working. We need more money for rural development.
With regard to revision of the nitrates directive, it would be simple for me to say I am in favour of a revision because I do not have the competence to do it. Others must do it. All I can promise is that I will convey the committee's clear message to the Commissioner who is responsible. With regard to support for industry, especially small-scale industry, it is possible. It is the responsibility of the member states to distribute the money in the rural development sector and under the regional policy in accordance with their own principles.
There was a question about the outcome of the WTO. Our initiative is not a guarantee that we will have a breakthrough at the end of the week but it increases the chances of one. At present, I believe the chances are about 50/50. There was a comment that we should have food deficits in Europe. This is news to me. We have much more than we need and we have to export a great deal.
We import a lot too.
Dr. Fischler
However, we export more than we import. With regard to the list of products, earlier I gave an example to demonstrate that nobody can ask us to give up export subsidies for wheat when others will not give up their export credits or food aid programmes for wheat. Either all of them go or nothing goes. That is the principle.
One of the members referred to GMOs. What he said seemed a little exaggerated. At present, GMOs are used in corn, soya bean production — which is limited in Ireland — cotton and partly in Swedish rapeseed. There is no other GMO available for any other product. For Ireland, this problem is limited. If there is a problem, it might be if Ireland imports soya which contains GMOs. As a farm leader one must be clear in saying that Irish farmers should accept higher prices for the imported soya that does not contain GMOs. In my view, one must be a little more careful here.
With regard to the sugar industry, the reality is that reform is necessary. It is also the reality that such reform is complex and I would say it is the most complex matter we currently have to deal with in the European Union. We are working on a proposal, which will not be one of the three options we presented some months ago. It will be something different. We are considering a step-by-step approach so that we can further develop the sugar sector in a way that will not unnecessarily harm sugar beet producers. There is no other way out of it. We have a panel but many factors must be taken into account, including imports from the Balkans and the glucose industry, which all point to the necessity for reform in this sector.
I thank you, Mr. Chairman, for having invited me to attend the committee. I also thank the members of the committee for the interesting discussions we have had.
On behalf of the committee, I wish to thank Commissioner Fischler for his attendance and for participating in this interesting debate. The discussions have been worthwhile and we have learned much from our exchange of views. As he comes to the end of his term of office as EU Agriculture Commissioner, I wish to thank Commissioner Fischler, most sincerely for the contributions he has made to agriculture, rural development and fisheries. For my part, I was delighted to meet him informally in Athens last year when we had a very worthwhile meeting.
On behalf of the committee, I thank the Commissioner and wish him well in his retirement. Commissioner Fischler's name will be remembered in Ireland for a long time to come. Go raibh míle maith agat.
Dr. Fischler
Thank you.
The joint committee adjourned at 6.25 p.m. until 3 p.m. on Wednesday, 19 May 2004.