JOINT COMMITTEE ON AGRICULTURE AND FOOD debate -
Thursday, 23 Jun 2005

Scrutiny of EU Proposals.

Chairman

I welcome Mr. Aidan O'Driscoll, assistant secretary, and Mr. Brendan Gleeson, principal officer, from the Department of Agriculture and Food who will discuss the EU proposal COM (2004) 712 regarding exceptional market support measures. The proposal seeks to amend the regulations and concerns the costs of measures to tackle serious market problems arising from trade restrictions due to the application of measures to combat animal diseases.

Before asking Mr. O'Driscoll to commence his presentation, I draw witnesses' attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to them. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way to make him or her identifiable.

Mr. Aidan O’Driscoll

I am pleased to meet the committee today to discuss this matter. I will make a short presentation and we will then answer any questions.

The proposal under scrutiny provides for EU co-funding for exceptional market support measures introduced as a result of animal disease related market restrictions. It relates to extraordinary market measures only and does not, in general, affect disease eradication programmes established by member states and approved by the EU Commission under veterinary rules. Also, the standard core support arrangements, such as intervention, are not affected by this proposal.

The proposal is a reaction to a judgment of the European Court of Justice in a case taken by the German Federal Government in 2001. To understand the proposal, it is essential to understand the Court judgment.

In this case, the German authorities challenged the legal basis upon which the special purchase scheme, introduced across the EU in 2001, was co-funded by the EU. This scheme was introduced against the background of a crisis in EU beef markets resulting from the discovery of BSE in late 2000 in a number of countries that had been thought to be free of the disease. It involved taking the carcases of bovines over 30 months of age off the market and either destroying them or releasing them on to the market at a later date. It ran from 31 June 2001 to 31 March 2002.

The German authorities called for the annulment of Article 5(5) of Council Regulation 690/2001, which established the scheme. This article required member states to finance 30% of the cost of beef purchased under the scheme. As the legal basis for this measure was the regulation on the common organisation of the market in beef and veal, the Germans considered it had to be fully financed by the Commission in the same way as the more classical market support measures. In a judgment dated 30 September 2003, the European Court of Justice found in favour of the German authorities.

The legal basis for special purchase scheme funding, successfully challenged by the German authorities, was Article 38 of Council Regulation 1254/99, which deals with market measures related to beef and veal. This is a broadly drawn provision, allowing the Commission to take market measures where a substantial rise or fall is recorded in beef prices on the Community market, and is likely to continue, thereby threatening to disturb the market. It is important to note that the proposal currently under discussion does notaffect measures adopted under this provision. It would appear that following the judgment of the European Court, measures taken under this provision will have to be fully funded by the Commission. However, the current proposal seeks to prevent an extension of the precedent established in relation to Article 38 of Regulation 1254/99 with regard to beef, into other beef-related measures adopted under Article 39 of that regulation and equivalent provisions in other regulations covering commodities other than beef.

Article 39 of Regulation 1254/99 is more narrowly drawn than Article 38, and provides that:

In order to take account of the restrictions on free circulation which may result from the application of measures combating the spread of diseases in animals, exceptional measures of support for the market affected by those restriction may be taken.

Measures of this nature can only be taken for as long as is strictly necessary to support the affected market. The proposal, in addition, requires member states to have taken the necessary veterinary measures to stamp out the disease.

The draft regulation adds a specific provision into Article 39 of Regulation 1254/99 requiring 50-50 co-financing, and also adds similar provisions into five other regulations dealing with pigmeat, eggs, poultry meat, milk and milk products and sheepmeat and goat meat.

At EU level, this proposal has been discussed at working party level on 7 December 2004 and at the Special Committee for Agriculture, a higher level group of officials, on 29 November and 13 December, 2004. The primary focus at these meetings has been on the possibility that these measures, and the consequent co-funding requirement, could be imposed on member states against their will, and on the co-funding rate. Regarding the former point, the Commission has confirmed at working group discussions that the amendments proposed will not impose on member states an obligation to co-finance measures on which they have not taken the initiative. Ireland and other member states have also raised a number of detailed technical points on the wording of the proposal. On the question of co-funding, it appears more likely than not that there will be broad acceptance in principle of co-funding, and that future discussions will focus on the precise rate.

The European Parliament has been consulted on this proposal, its role is consultative and its opinion is not binding on the Council. On 29 April 2005 the Parliament's Agriculture Committee produced a report recommending that:

. . . the Commission's proposal in its current form must be rejected and the Commission must be called upon instead to examine alternative financing systems such as the accumulation of a risk fund, insurance regulations, etc. before submitting a new proposal . . .

Among the issues raised by the committee were that the proposal is tantamount to opening the way to the re-nationalisation of the CAP; could result in member states refusing to co-operate with national co-financing; is unclear as to the extent to which the national contribution will be paid from the public purse, from the agriculture sector or via para-fiscal levies; and may not be legally sustainable under the current CAP.

It also called for more effort to be put into disease prevention measures and pointed out that this could be achieved through improved operation of the Animo system and by halting all unnecessary transport of animals from one farm to another, and by reducing maximum stocking density.

The European Parliament has adopted the report of its Agriculture Committee. However, the Commission has indicated that it does not intend to withdraw its proposal. The matter will now be referred back to the European Parliament's Agriculture Committee, which, I am advised by the Commission, is likely to consider the matter again in July or September.

Ireland has in the past benefited from EU co-funding of this type of exceptional market measure, but has not been the principal beneficiary. It is not possible to predict future costs with certainty, because they depend on the impact of future disease outbreaks and the exceptional market measure taken as a result. Between 1996 and 2004, Ireland received €95.8 million for compensation paid to farmers under our BSE depopulation programme, co-financed at a rate of 70%.

From 1 January 2005, funding for this measure has been moved to the Veterinary Fund (Council Decision 90/424), where it will be co-funded at a rate of 50%. It will no longer be funded as an exceptional market measure, though it will continue to be co-funded under the Veterinary Fund as part of a disease eradication programme. It will therefore not be affected by the proposal under scrutiny today.

By way of comparison, in the same period, the UK received co-funding of more than €2.25 billion for its BSE related measures. Since 1990, Belgium, Germany, Spain and the Netherlands have between them received more than €835 million for exceptional market measures required because of classical swine fever.

Historically therefore, Ireland has not been the principal beneficiary of the exceptional measures covered by the proposal under scrutiny today. In the future such measures may be required in Ireland, or in any one of the other 24 members of the Union. Ireland could therefore be a net recipient or a net contributor as a result of such measures. From a financial perspective therefore it would be appropriate for us to adopt a cautious attitude. Provided we are satisfied on matters of principle, we could, at this point, accept the continuation of co-funding for these measures and would generally favour the minimum change from the existing rates of funding.

With regard to the issue of principle on any proposal to re-nationalise the Common Agricultural Policy, the Irish position is crystal clear. We would be opposed to any proposal to co-fund the core CAP market support and direct payment measures. In this context, we would note that the measures covered by this proposal are quite different in nature, being exceptional once-off measures in individual member states, and that co-funding has been the norm for such measures for several years. We would reject any suggestion that this forms any kind of precedent for the core CAP measures that are fully funded by the EU. We note that the Commission has confirmed this view and that Commissioner Fischer Boel has been forthright in rejecting the idea of co-funding the CAP.

On the general question of disease control, it is essential that the Community continues to play the lead role in defining and financing such measures, because they are necessary for the smooth operation of a single market in animals and animal products. In this context it is essential that sufficient emphasis be placed on preventative measures. The Animo system has been replaced by a system called Traces to improve information on animals and products in intra community trade.

The timetable for further progress on this proposal is somewhat unclear at this stage.

The matter will now revert to the agriculture committee of the Parliament and when it issues a new report, it will probably go to the special committee on agriculture for consideration. On the basis of the consideration of this proposal to date, further discussion is likely to centre on the co-financing rate, although it remains to be seen what influence events in the European Parliament will have on the shape of the discussion in that forum and in the Council. This is where the Department's consideration of this proposal currently stands and I will be happy to attempt to answer any questions from the joint committee.

Chairman

I thank Mr. O'Driscoll. The joint committee members will now ask some questions.

Deputy Naughten

I welcome Mr. O'Driscoll and Mr. Gleeson. I also thank Mr. O'Driscoll for his presentation, which was very informative. I asked the joint committee to examine this proposal because the Chairman and I were in the Hague, prior to Christmas, during the Dutch Presidency. At that stage, the Presidency flagged the issue whereby the question of co-financing would be examined but also the question that the producer would be levied in respect of compensation levels for outbreaks of class A diseases, and the levels of compensation involved. I would like Mr. O'Driscoll to elaborate on developments in that area. It has been indicated from the report of the Parliament's agricultural committee that this avenue might be taken in respect of the provision of co-funding.

I am concerned by Mr. O'Driscoll's comment that Ireland rejects the suggestion that this would set any precedent for the core CAP measures. Commissioner Fischer Boel has confirmed this. Undoubtedly, the Government is adamant regarding its position but we would have to take any commitment given by that Commissioner with a large grain or tablespoon of salt. Last week she proposed a 4% cut in the single farm payment for Irish farmers before they even received it, less than three years after that agreement was signed. The Commissioner's commitment to Irish farmers and to farmers in general throughout the European Union has not been great to date. Any commitment she gives requires significant scrutiny.

The European Parliament's presentation on this issue referred to the possibility of the accumulation of a risk fund or insurance regulations etc. Does the Commission envisage how this type of fund could be accumulated? There is a tendency at European level to impose levies on farmers and the suggestion to do so in order to fund any future outbreak of disease appears to be present. This would have major implications for agriculture.

This is important, especially in the context of the current debate that the British appear to be spearheading. They want food throughout the European Union to be produced at world market rates, yet still want the type of food safety and security that has been provided under the current regime. One cannot have it both ways. It costs money to provide that type of food safety and security to reduce the risk of disease outbreaks. The consumer cannot buy beef at world market rates and at the same time expect the farmer to jump through all these hoops. Has such a case been put forward to the Commission regarding this issue? What assessment has been carried out at a European level to try to avoid the kinds of risky behaviour that currently occur? One example is that beef is being imported from South America, which does not meet the pH requirements. The Food and Veterinary Office of the EU in County Meath has highlighted the risks associated with this on a number of occasions. Similar issues arise with chicken imported from Thailand with respect to avian flu. There is little point in the Commission penalising farmers here or elsewhere in the European Union if it is not prepared to secure the borders and ensure that disease is not imported from outside of the European Union.

Mr. O’Driscoll

I will take up some of the points raised by Deputy Naughten. There is a question about producer levies and some of the debate on this issue in general has arisen from concern that in some way, this could lead to producer levies. The Commission proposal has no particular implication as to whether a member state chooses to apply levies on producers. Obviously, it is open to member states to do so if they so wish. However, this proposal has no implication in this respect.

However, there are references in the report from the European Parliament that appear to raise the issue of producer co-funding. The Deputy mentioned the insurance issue. The report from the Parliament refers to the fact that a commitment was given that the Commission would look at the implementation of risk management and insurance type measures. It suggests that the Council has not received such communication but in fact, the Council received such a communication in March 2005 on insurance-type measures. I may return to this point shortly. However, in the report from the European Parliament, the issues raised by the Agricultural Committee itself include the possibility of an insurance regulation or a fund financed from the agricultural sector — in other words from farmers — the members states and the EU. It is somewhat paradoxical but on the one hand the Agriculture Committee appears to be raising the spectre of levies on farmers while on the other hand it advocates that this issue be actively examined.

As I noted, there was a communication from the Commission to the Council in March 2005 pertaining to insurance. It is a rather complex area. Briefly however, that communication did not contain any firm proposal on insurance measures or risk management measures and was not so designed. As the Department understands it, the communication was intended to "stimulate debate" on the issue. However, it outlined what the Commission viewed as being three possibilities in this regard. The first concerned insurance against natural disasters and in the course of discussions, it emerged that the Commission envisaged that it would cover disease outbreaks. It hypothesised that in the case of this kind of insurance, member states and the EU might contribute approximately 50% of the insurance premium, but farmers would also be called upon to contribute 50% of the insurance premium.

The second option it outlined was the establishment of mutual funds. The producers would essentially fund such mutual funds. As I understand it, the only public funding the Commission envisaged for that option was for very limited, temporary funds for administration and similar matters. The third option it mentioned was a much broader idea where one would have an income stabilisation payment in the event of agricultural incomes being less than, say, 70% of average income over the preceding three years. However, it was not clear how that proposal would be funded.

Deputy Naughten

There would be a big draw down on that option.

Mr. O’Driscoll

Yes. All three options were introduced as discussion items in general terms. No proposal was made and no costings were provided. We have adopted a cautious attitude to all of them for a number of reasons. One is that it is envisaged that in so far as there would be EU funding for these measures, it would come from modulation funds. As members of the committee know, modulation funds are available for the measures under the rural development framework, in the rural development regulation. This would add a new area of funding that those very limited funds would go for. Modulation funds are only a few tens of millions of euro per year. There would be doubt as to whether this would be the best use of them from a farmer's perspective.

We have adopted a fairly cautious attitude to it, however, I again emphasise that the paper from the Commission is only a discussion paper. It received a wide variety of different reactions from different member states. It has now gone back to the Commission, which will decide whether to come up with a proposal. From our perspective, one of the critical things would be if the Commission comes up with a proposal that it should be optional at member state and producer level. In other words, it is not something that should be forced on people.

I will clarify the issue of insurance, which was raised in the European Parliament report about insurance. With regard to risky behaviour and persuading people not to engage in it, this regulation is very closely related to market measures that arise as a result of actions taken on foot of animal diseases. It is a very limited and tightly defined measure. The proposal the Commission made contains a clause that these measures may only be taken if the member state concerned — these measures are taken at individual member state level — has taken health and veterinary measures to quickly stamp out the disease. In other words, the Commission has included a provision that this kind of co-funding and these kind of measures will only be available where a member state is seen to be acting rapidly to deal with the problem. This measure is to be welcomed. I think these were three issues raised.

Deputy Crawford

I also thank Mr. O'Driscoll and Mr. Gleeson for attending to brief the committee. I am sorry I could not be present for the start of the briefing. As a practising farmer who came through the IFA and European structures before entering this House, I am very worried about this issue of trying to put the cost of diseases like this on to farmers. It has very serious implications.

One cannot help but look back at the foot and mouth disease issue, particularly the question of how it was handled in the UK. From this perspective, I am glad to hear the proposal contains regulations that suggest that these matters should be handled in a proper and constructive way because it was clear that foot and mouth disease ran through the UK without any effort being made to control it. I witnessed at first hand how the carcases of slaughtered animals were strewn along the roadside with no disinfectant used. It was not difficult to see how the disease spread throughout the UK. In Ireland, we were unfortunate in that there was less than proper scrutiny of the importation of products.

In the context of the present debate regarding the Common Agricultural Policy stimulated by the UK, can Mr. O'Driscoll tell us what percentage of the €2.25 billion received by UK in co-funding was co-funded by the EU? Does he know how much the UK received in similar funding at the time of the foot and mouth disease affair? He may not have the figures with him but I am interested in obtaining them, in the context of the present debate, because one would believe if one was to listen to it, that the UK farming bodies were not gaining anything from the EU.

Deputy Naughten asked most of the questions that are relevant from our perspective. Apart from the sugar regime, which is up for debate, the entire livestock sector is under pressure. Farmers do not have sufficient funds to co-fund any of this. In my constituency of Cavan-Monaghan, 75 dairy farmers are going out of business because they cannot make a profit. These individuals are not the smallest farmers by any means. The money simply is not there so we need to be very careful that we do not allow any other regulations that will make agriculture, particularly at farm level, even less profitable that it is.

Deputy Ó Fearghaíl

I thank Mr. O'Driscoll for his presentation. Obviously, the implications of this are quite limited and clear. What sort of timeframe are we looking at if this proposal is adopted? How long will it be before it is implemented?

Mr. O’Driscoll

It is important to again return to the point that we do not see this as having specific implications with regard to levies on producers. Such levies can be introduced at any time by member states and this proposal does not add or subtract from this possibility. It does not deal with this issue. I can amplify this point if members think it is necessary.

Regarding the question asked by Deputy Crawford about the €2.25 million, the UK received all of this money from the EU budget. A total of €2.19 billion of that was for the over 30 months scheme. This is obviously an enormous payment by the EU to the UK. This serves to underline a point I made in my opening statement, which is that measures of this sort may happen in Ireland. If they were to happen in Ireland, we would want the maximum possible level of EU co-funding. These measures can happen in any one of the other member states, in which case Ireland would be a net contributor to it. This is why there is an issue of balance here as regards our attitude to these measures.

I do not have the figures with regard to the foot and mouth disease affair but I will obtain them for Deputy Crawford and can send them directly to him. We are slightly uncertain as regards the timeframe for the introduction of the proposal. What has happened is quite unusual in that the European Parliament rejected the proposal from the Commission and the proposal is now going back to Parliament's Agriculture Committee. We do not have much experience of this so I am not quite sure what the timing is from here on in. A committee of the European Parliament normally has two months in which to respond. We would then have to see what the Commission does. We would expect it to bring the proposal back, probably to the special committee on agriculture, which is the high level official group.

As I mentioned in my presentation, one slight uncertainty is whether the debate that occurred in the European Parliament will be reflected in some way in the debate in the Council of the European Union. I do not wish to predict what will happen. On the basis of the discussions that occurred in the Council groups to date, one would anticipate that the discussion would concentrate on the fairly narrow issue of the rate of co-funding — whether it should be 50%, 70% or some other percentage. If this is the only issue, I would have thought it would have been dealt with fairly quickly. What is clear is that the Commission wishes to close this issue fairly quickly. The court case in Germany has opened a window that the Commission would like to close again. The incentive for the Commission would be to act fairly quickly. I anticipate that there will be action on the matter within the next few months but I could not be more specific than that.

Deputy Naughten

I want to come back on a number of points made earlier. Mr. O'Driscoll makes the point that this proposal does not impose producer levies, but it facilitates and encourages member states to seriously consider their introduction. This is especially true in member states that do not have a significant farm lobby, such as the United Kingdom, for example. If such producer levies were introduced in a number of member states, that would put pressure on the Commission to introduce them throughout the EU. I would like him to comment on that.

He makes the point that if mutual funds or some type of insurance scheme were to be established, EU funding would come from the modulation budget. What is the position as regards the 100% funding that exists at present or the proposed 50% funding? From what fund does that come? I know that to date these schemes have come out of the beef and veal budget. For the future will such schemes come out of specific budgets, the pigs or sheep budgets, for example, depending on where the outbreak arises? This is right across the board as regards all animal production.

The point was also made as regards the issue of insurance that a disease outbreak would come under the terms of a natural disaster. The difficulty I have is if the outbreak of a so-called natural disaster is facilitated through shoddy management, at either State or European levels, will that provide insurance companies with an opt-out clause? I come back to the beef sector because it is the one with which I am most familiar. The food and veterinary office in Grange, County Meath, for example, was to carry out an inspection in Brazil earlier this year. This has been postponed, for some reason, at the request of the Brazilians. That would not happen anywhere else in the world. If Ireland was exporting to Russia and we asked the Russians to postpone an inspection here, we would be told that the industry would be closed and they would not accept exports from Ireland. However, if that had facilitated a disease outbreak, it would not have been the farmers' fault or the fault of the member state. What happens in this type of situation?

Another example would have been some of the practices associated with the outbreak of foot and mouth disease. The State clearly knew what was going on and did not take action. Why then should the farmer have to foot the bill for that when the State was liable? Up to the German court challenge a 30% rate was in place, that is, each member state provided 30%. Now, suddenly, the Commission is talking about 50%. Why has it increased by 20% in the intervening period?

Mr. O’Driscoll

There are a number of issues there and I shall address them as they came.

On the question of producer levies, it is always open to member states to apply national levies, provided they abide by EU rules. There are certain limits, but broadly speaking, member states can apply disease levies of whatever type they wish. I am sure the committee has heard debates on that issue, as well. The question whether this gives rise to a greater likelihood of this happening or could create a wider precedent if it happened in more than one or two member states is hypothetical and somewhat difficult to deal with. There is a curiosity about this proposal. While we talk about a difference of between 50%, 70% and 100% funding by the EU, there are a number of ways for the Commission to skin that cat, so to speak.

Not alone does it have different co-funding rates, but it can also place ceilings on the amount it gives and it can undertake action on the basis of flat rate payments. For example, in the UK over 30 months scheme, the Commission co-funding was €392 per purchased animal and was limited to that. The EU could call that 100% co-funding. However, if the costs go above that the member state concerned has to pay it.

Equally, in our own BSE measures, there is 70% co-funding, but only of the compensation paid to farmers. Co-funding does not cover the cost of transport, slaughter, destruction etc. The Commission, in effect, has another variable it can play with, which is how much of the measure to fund or co-fund. The Commission, in fact, has made this point quite clear in Brussels that if, for example, it was stuck with 100% funding it could quite simply "100% fund" 50% of the measure and end up in precisely the same situation as this. While this is quite a technical and complex proposal, in practical terms there may be somewhat less to it than meets the eye. The Commission has not been slow to make that point. This is borne out by past experience. It is not a theoretical point. Both as regards veterinary fund measures and exceptional market measures the Commission has done this type of thing. It has narrowed or widened the element it will co-fund.

What that means, in effect, is that with or without this proposal there will be actions the member state has to fund. Under the actions the member states have to fund, the individual member state may or may not decide to partly fund by producer levies. That is a political decision as to whether it wants to do that, and if so, to what extent. However, this regulation does not change the playing pitch as regards producer levies. That is the essential point I would like to get across.

As regards the source of funds, Deputy Naughten is quite right. This will not change the source of funds. The funds for these measures will come from the normal funding for the beef and various other areas. Then there are the veterinary fund measures also, which are similar though somewhat different. They are not exceptional market measures. These are the ordinary disease eradication measures. Each of those is from the normal budget.

As regards the insurance issue Deputy Naughten raised, I had better emphasise that this communication the Council received from the Commission was very tentative, throwing out a few general ideas. There was no financial table and it was a matter of kicking the ball around at a very initial stage. It is not absolutely clear what any of the three measures being put forward for discussion actually covers. If one was looking at an actual proposal from the Commission it would have to be reviewed in great detail to determine what it covered or did not cover. In the course of the discussion, however, it was made clear at one of the meetings that when the Commission uses the term "natural disaster" to refer to the insurance option, it envisaged it as including disease outbreak. That is really as far as we got. A firm proposal from the Commission would obviously deal with matters in greater detail.

Deputy Naughten asked why the Commission had taken this opportunity to change from 70% funding by the EU to 50%. The reason is a Court of Auditors report on classical swine fever. Among its findings the court stated that the Commission should examine the appropriateness of different rates of support for the two measures, that is, veterinary fund measures and exceptional market support measures. It stated that exceptional market support measures had been financed at 70% and veterinary measures at50%. It stated, "Given the causal link between veterinary and market support measures and difficulties experienced with classifying some measures, it would be appropriate to introduce a common rate of co-financing of 50%." The court stated this would remove any incentive to reclassify schemes for financial advantage. The court is limiting the Commission's scope to play around with the budget. That has some force and we understand that finding. In any case, we have taken the view that we would prefer not to move from the existing rates, which have worked out reasonably well. However, that is not a firm position of principle and we will take part in any future debate on this. The Commission is bending to the Court of Auditors.

The compensation element of the BSE eradication measures are a case in point where the measure was originally funded under Article 39, as an exceptional market support. It has now moved to the veterinary fund. In fairness to the court and the Commission, that illustrated what the court was talking about.

Deputy Naughten

It went from 70% to 50% support, migration in the wrong direction rather than the right direction.

Mr. O’Driscoll

We have been discussing this point internally. Where does the greater risk lie in the future? Is it within Ireland or in the other 24 member states? That is a difficult question. For anything in Ireland, we would want the maximum level of EU funding for it. On the other hand, if it is happening elsewhere, do we want to be contributors to potentially major expenditures by the EU in other member states?

Deputy Naughten

The probability is that if there is a major disease outbreak based on the type of movement of food around the world at the moment, it will be imported into the Community. The greater risk is that it will come from a reservoir outside of the EU, where there may not be disease. On that basis, the probability is that it would happen in another member state, because the significant volumes of imported goods from third countries into Ireland would be quite limited, as we are such a massive net exporter at this point. Is that a correct assumption?

Deputy Crawford

This is an old hobbyhorse of mine. If we are dealing with the export of meat to Egypt, no animal can be slaughtered on the line in Liffey Meats or anywhere else unless the Egyptian authorities are there. Yet we in the European Union are buying massive quantities from Thailand and Brazil, especially in poultry, which is very important in my constituency. There is not the same control in this instance. When I have asked about it, I have been told that it is being dealt with under world health regulations. However, the Egyptians and others do not pass our meats under world health regulations. If we are looking at future costs at European level, we must also make sure that the product imported into Europe is produced and manufactured at the same level of control as our own. Otherwise we are leaving ourselves wide open to potential disease and potential serious costs.

When we visited Chicago in the US, we saw animals producing milk with stilbistrol and beef being produced with hormones. We were competing with that at world level. There is no doubt that the same is happening in Brazil and elsewhere.

Mr. O’Driscoll

I can only take on board the points made by both Deputies. I do not want to hold myself out as a veterinary expert as I am not. The emphasis on prevention is obviously extremely important. Prevention involves guarding the borders appropriately and ensuring swift and appropriate action whenever there is an internal outbreak. There are external threats, but we have also had threats within the EU such as BSE. What is required is a strong internal and external stance. Ireland would always stand firmly behind that. The only thing relevant in this regulation is the opportunity the Commission has taken to introduce those extra few words, besides co-financing, to require member states to take effective action and to stamp out an issue once it emerges, before it will contemplate these co-funded measures. It provides an additional incentive for member states to act swiftly where a problem emerges.

Deputy Naughten

Can Mr. O'Driscoll give us a copy of the report completed already by the European Parliament? Can he keep the committee updated on the progress in the Parliament, the Commission and the Council on this specific proposal and on the discussion document on the insurance?

Chairman

Is that agreed? Agreed. I thank Mr. O'Driscoll and Mr. Gleeson for attending and for responding to a variety of questions raised by Members. This concludes our scrutiny of COM (2004) 712 on exceptional market support measures. The clerk to the committee will prepare a formal report on our discussions today.

The joint committee adjourned at 12.50 p.m. until 3.00 p.m. Wednesday, 29 June 2005.