I welcome Mr. Mick Cronin and Mr. Eoin MacGuill from the Department of Agriculture and Food and Mr. Donal Coleman from the Department of Community, Rural and Gaeltacht Affairs who are in attendance to provide an update for members on EU proposal COM (2006) 238, a Council decision on the Community support available for rural development in the period 1 January 2007 to 1 December 2013. Before I ask Mr. Cronin to make his opening remarks, I draw the attention of delegates to the fact that while members of the committee enjoy absolute privilege, this same privilege does not extend to those appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
Scrutiny of EU Proposals.
Mr. Mick Cronin
The background to COM (2006) 238 is the new rural development regulation, No. 1698/2005, which establishes the framework for EU rural development support in the period 2007 to 2013. As the regulation was agreed in September 2005 when Community expenditure plans for the same period had not yet been decided, it mandated the Commission to bring forward to the Council proposals for rural development funding in line with whatever would eventually be agreed under the financial perspectives.
The proposal sets out the level of rural development funding that will be available in the period 2007 to 2013, the annual breakdown and the minimum amount for the convergence regions and is in line with the agreement on the financial perspectives. Of the total of €69.75 billion for rural development, at least €27.699 billion will go to the convergence regions. While not part of the decision, the proposal is important because the explanatory memorandum details the manner in which the sum of €18.91 billion reserved for the EU 15 is to be allocated by the Commission on the basis of historical allocations. The proposal was agreed by the Agriculture and Fisheries Council on 19 June rather than on 14 June as stated in the committee's notes. My colleagues and I will be very pleased to answer any questions members may have.
I thank Mr. Cronin and his colleagues for attending to provide the committee with an update on the financial perspectives for the rural development budget for the period 2007 to 2013. It is a vital issue for the committee as six farmers per day leave agriculture with devastating implications for rural communities and the rural economy which is being decimated. We must provide funds targeted specifically at rural development.
Previous budgets set out restrictions on the projects which could be funded. For example, funding for tourism projects was channelled through Bord Fáilte and the various regional tourism authorities. What range of projects will be funded from the proposed budget?
Mr. Cronin has said a sum of €18.91 billion will be reserved for the EU 15 and distributed on the basis of historical calculations. What allocation will Ireland receive and how will its allocation compare with those under the previous rural development programme? Has a decision been taken at ministerial level on the distribution of funding between the Department of Agriculture and Food and the Department of Community, Rural and Gaeltacht Affairs? Will Mr. Cronin elaborate on the level of co-ordination between the two Departments? Which is the lead Department in determining how the funding will be distributed and allocated to the various agencies? What priorities will be given to various projects?
I thank the delegation for coming today to address this matter. Rural development and agriculture are irreversibly bound to each other and agriculture should play an important role in the future. The main questions have been asked. I have a question on organic farming that may be more appropriate to the next meeting. The Commission strongly recommends that member states make full use within their rural development programmes of the instruments available to support organic farming. As we will also deal with that subject this morning, it might be an important matter to address.
I also welcome Mr. Cronin and his colleagues. We should recognise that the Government was the first to appoint a Cabinet Minister with responsibility for rural development. We have seen the benefits of that decision throughout the country, for example, in the CLÁR areas and their extension in recent times. Life has been rejuvenated in rural areas as a result. We are grateful for the work in the relevant areas to ensure people in rural areas gain maximum benefit.
We need to consider the rehabilitation of farmers — I mean that in the very positive sense of the day-to-day change in farmers' lives. People who reside in their own workplace face enormous decisions often with little direction from any source. There have been various successful projects allowing farmers to move from the farm gate and look for outside supports to take new direction while remaining on the land. While it can be said that farming is our most subsidised industry, the dilemma facing farmers regarding what to do next, the future of the land and its management, and the future of the farm family has not been recognised. Farmers have a crisis in knowing what they can do best in the circumstances. We have a different dilemma each week regarding meeting financial constraints. While there is so much input into remaining on the farm, still the income is not showing on the other side. I am prepared to talk further with the officials on the matter. We have already received correspondence dealing with people who have successfully worked with farmers on self-development programmes. It should be high on the agenda of priorities for the officials before us. I hope in the near future those people who corresponded with us will have the opportunity to appear before the committee.
I thank the officials for appearing before the committee. Rural development will be very significant in the years ahead. As one whose constituents have tried everything that can be attached to farming, I am worried about the possible way forward. I appreciate the comments made by Deputy Hoctor. I agree with her that farmers have undergone enormous change without direction. It is a crisis and there is a problem with finance. It is great that we can have an all-party approach on the matter and know that is where we are coming from. The Cavan and Monaghan region has had major poultry and pig production. Deer production was another area of endeavour that was tried. There are still some major legal cases ongoing in regard to the pure bred deer promoted by senior personnel within Government. Other alternative enterprises such as rabbit farming, ostrich farming and many other endeavours have been tried in my constituency.
The one area on which I seek guidance is the food industry in which there is significant potential. When we travel to other continental countries, we find the restrictions are not as tight on the on-farm production of food. Currently, very few slaughterhouses are being used by butchers because of the regulations in place. Goat farmers who started with the intention of producing goats' milk, cheese and so on found that their enterprises were not big enough to justify the demands being placed on them by the regulations. There is potential to create a niche market. If such a market could be properly marketed to a co-operative group, we could begin to make progress on that front. However, there appears to be an over-emphasis on so-called EU regulations but when I travel to Spain or other continental countries the same regulations do not appear to be in force. We must examine this as a matter of urgency as many would be interested in getting involved in food production if the regulations were not so tight.
Organic farming, an issue we will discuss later, will only work if it can be engaged in in small processing units. It cannot be engaged in through the major factories as otherwise it will give rise to question marks. The smaller units involved in rabbit production were not allowed to continue in business. If it is not possible to ease the regulations to make them workable, the big problem will not be funding but to find a sector that will provide an income for a farm family or rural dwellers. As Deputy Hoctor stated, we want to keep people on farms and in rural areas. The houses, schools and churches are there but without the potential to develop in other farming sectors, people will not be able to remain in rural areas.
I welcome the officials. We are dealing with a topic that has serious implications for rural areas, especially the farming sector. I am interested in getting a list of projects that will qualify for the funding available. I was taken aback to hear a Government spokesperson refer to the need to rehabilitate farming. Perhaps he was referring to the demise of the beet growing sector. As a member of a farming organisation, I believe funding should be specifically directed at farming to keep farmers on the land. This formed part of the compensation package agreed when it was undertaken to reform the Common Agricultural Policy. The single farm payment is being reduced by an increasing percentage each year.
We must be serious about assisting rural Ireland. We do not want it to end up as a landscaping project. We want farm families to be actively involved in farming, not as landscape managers of the countryside. Other infrastructural funds such as those available under the CLÁR programme should be directed towards roads and the improvement of infrastructural services but the funding in question should be given directly to farmers, whether to increase the quality of their livestock or engage in food production. The focus should be on providing opportunities for farming communities to diversify into food production, organic or otherwise. The idea that the Department is to rehabilitate farming is frightening in itself. The money should be invested directly in positive farm proposals that will increase production, increase the number of farmers and keep farming families active. I look forward to hearing the projects the money is directed towards and the capacity of farmers to participate directly therein.
I, too, welcome Mr. Cronin and his team. The subject he has raised is very important to the future of agriculture. The agricultural scene is changing rapidly and we must remember that any project in which a farmer engages must pay for itself in the long run, and there is no point in overproducing an item. The niche market is very important in this regard.
I know of many farmers who have started enterprises on their farms that are not linked directly to agriculture. One farmer I know has a little steel works, another has a small transport company and yet another has a business building sun porches and sun rooms, all of which enterprises are operating in conjunction with the farming activities. Problems arise in this regard because obtaining planning permission to get such businesses off the ground is very difficult. Development charges and road charges also apply although the roads are being used by many others besides the farmers. This is happening throughout the country.
Farmers are well able to consider opportunities that arise and many are making their own decisions but they need all the help they can get. It is quite right that there is to be a fund for this. Planners are not fully aware of the rapidly changing circumstances in rural Ireland. If we are to keep people in the countryside, we must take a genuine look at the planning process in so far as it applies to farmers. I welcome the remarks of Mr. Cronin. The fund is very welcome in a rapidly changing Ireland.
I thank Mr. Cronin for his submission and support my colleague, Deputy Wilkinson. There is certainly a need for joined-up government and joined-up thinking in this area of rural development. We can have all the funds and programmes we like, originating in the Department of Agriculture and Food or other Departments, but if those responsible for what happens on a daily basis are actively involved in preventing initiatives from taking place on farms, we can go nowhere. A significant mind shift must, therefore, take place among planners, very many of whom have little or no understanding of agriculture issues or the mammoth changes that have occurred in agriculture in recent years. The Department of Agriculture and Food needs to engage very actively with its colleagues in the Department of the Environment, Heritage and Local Government, particularly on the area of rural planning.
Mr. Cronin
A number of questions were asked on the projects that would be eligible for the rural development funding. I will start on this subject and then address the other issues.
The rural development regulation is broken into three main objectives, the first of which deals with the competitiveness of the agriculture and food sectors. Possible measures in that regard include on-farm investment, training, installation aid and early retirement. Those are the types of measures under the competitiveness umbrella.
The second main objective concerns the environment and countryside. Well known current measures such as REPS, compensatory allowances and forestry give a flavour. Organics could come in under either axis 1 or 2, meaning that there are certainly possibilities under the first two objectives. I am sure that my colleagues from the Department will expand on them later.
The third main objective is outside the farm gate, concerning the wider rural economy and rural diversification. Those measures are within the remit of the Department of Community, Rural and Gaeltacht Affairs. They include alternative enterprises, rural tourism and perhaps such matters as local heritage and infrastructural projects. The Commission and the Council of Ministers very much had in mind that there be a joined-up approach to rural development, with the result that minimum expenditure levels have been set for each objective. We must spend at least 10% of the EU money on competitiveness and the wider rural economy. It ensures that not all the eggs are put into one basket.
Regarding EU funding, we mentioned the amount detailed in the explanatory memorandum to the Commission decision. It must still be confirmed by a Commission decision, but taking account of the division of that amount and the €500 million special allocation that we received in December following discussions on the financial perspectives, we hope to get €1.884 billion in EU funding. To that must be added the €203 million of EU funding that will come through from modulation, which I believe the Deputy mentioned. That will give us a total of €2.087 billion from the European Union, compared with €2.63 billion currently. The reason for the fall is that we are now dealing with a Union of 25 countries, plus Bulgaria and Romania, instead of the 15 member states dealt with in the current round. The sum has fallen from €2.63 billion to approximately €2.1 billion.
Regarding how the Departments of Agriculture and Food and Community, Rural and Gaeltacht Affairs approach the new strategy and the drafting of the rural development programme, it is not the case that one has taken a lead. We are very much working in unison and have consulted stakeholders. We had a fairly long consultation process, and a few months ago we held a major consultative meeting in Tullamore. That has provided input for us in preparing a strategy and programme. We are also involved in partnership, the outcome of which will to a large extent dictate what will happen on funding.
In addition, an independent evaluation must be carried out on the draft programme. There is still some work to do before we go to the Commission with that, and we will certainly be busy in the next few months. It is certainly not the case that one Department dictates to the other what should be done. It is fairly clear that the Department of Community, Rural and Gaeltacht Affairs is responsible for the third objective under the regulation, while the Department of Agriculture and Food has greatest responsibility for the other two.
I have mentioned organic farming. There are certainly possibilities regarding axis 1 and axis 2. My colleagues can deal with that matter later. The possibility of developing niche food products was raised and we will certainly take it away with us. It is a point that also came through during our consultative process. There are possibilities in this regard under the rural development programme and even outside of it, for example, in terms of food policies under a new national development plan. We will take with us the point in regard to niche markets. I also note the observation that there is a perception that a rigorous view is being taken in regard to regulations. I am not an expert on veterinary or technical issues but I will also take these comments back.
Senator Coonan expressed his concern that the rural development regulation should not be seen as one purely related to the landscape. We agree with him that farming is an important part of rural development and that we should look after the economic and competitiveness aspects of it. We must also recognise, however, that agriculture has a multifunctional role. In addition to the economic and competitiveness aspects, it certainly can and does contribute positively to the environment. The rural development regulation aims to provide support in this multifunctional context. It is not purely a question of the landscape.
A question was asked about the future for farmers in view of this regulation. There are different categories of farmers, including full-time commercial farmers and part-time farmers who may seek additional employment in the local town or elsewhere. We intend to support farmers in each of these categories under the rural development programme. It is a programme that can feed into the new situation in agriculture by supporting and motivating farmers both from a commercial perspective and in terms of securing off-farm employment.
Mr. Coleman might deal with the issues in regard to tourism in terms of the CLÁR and Leader programmes. If I have neglected to answer any questions, I will be glad to return to them.
Mr. Donal Coleman
I concur with the comments of Mr. Cronin. He has covered most of the points raised. Rather than going through individual questions, I will respond to the tenor of members' contributions. Broadly, the Department of Community, Rural and Gaeltacht Affairs agrees with the general sentiments they have expressed.
Deputy Naughten spoke about the range of measures to promote tourism. I will not go over what Mr. Cronin said in this regard because the measures in question are indicative only. I make the point, however, that my Department does not see the countryside merely in narrow terms of tourism and as a case of us versus Fáilte Ireland or other organisations. Rather, we are working within a broader countryside recreation strategy which is being developed and articulated through the Department. This is a more holistic approach that is concerned not only with tourists but with those who live in the countryside. It is a core issue for us.
Mr. Cronin responded to Deputy Upton's questions about organic food and I will not go into it further. I fully understand and sympathise with Deputy Hoctor's concern that family farms and farm incomes be supported. Apart from the initiatives being considered under the rural development programme, my Department is involved in several other schemes. These include the following: the small holders programme; the rural social scheme, with which many members are familiar; and our work with Teagasc on the farm opportunities programme. We are very conscious of this, notwithstanding the interventions we would hope to make in terms of providing on-farm supports in other areas referred to by other members in respect of potential sources of income. These are areas with which we are very much in tune and which we accept.
I understand that Mr. Cronin answered Deputy Crawford's question. A discussion of these issues is beyond our remit today but we strongly approve of developments like farm shops and on-farm food once all the various regulatory elements are in place. We have no difficulty with this and would actively support it. I am very aware of developments in the Deputy's own area.
Mr. Cronin alluded to the fact that we are not looking at a landscape or something in a garden. My Department does not attempt to do this in any way. If anything, it attempts to reinforce a dynamic and vibrant farming community, as well as a rural community.
The subject of Deputy Wilkinson's question is slightly outside my remit. In respect of Deputy Ó Fearghaíl's question, we are very conscious of planning issues but, as I previously explained to the committee, the Minister of Community, Rural and Gaeltacht Affairs is very conscious of them and has expressed his opinions on them. Therefore, we must work within that constraint.
One speaker made a point about on-farm activities supporting existing farming in terms of the few examples given. I find these worthy of support and we are attempting to assist these initiatives. It is not so much a matter of helping the farm and farm family. It is legitimate to assist any member of the farm family under our element.
I thank Mr. Coleman for his contribution. There are no supplementaries.
I have a supplementary question relating to smallholders support. It obviously starts with farm assist but from there, one can access the rural employment scheme. People should be more conscious of this scheme. More were supposed to initially participate in this scheme but the numbers of participants never rose much above 8,000 or thereabouts.
Recently, I dealt with a few cases taken up by a partnership. This partnership tried to help smallholders but it did not realise that the people in question were so shy and backward that they were literally living on peanuts rather than applying for schemes for which they should have applied. We must be very conscious of such situations. There is a considerable amount of loneliness and isolation out there. One case involved a person whose state of mind was such that the man dealing with that individual immediately contacted psychiatric services.
I am aware that it is more a matter for the Department of Social and Family Affairs. I contacted this Department and informed it that although it was supposed to be promoting this scheme, I did not believe its promotion to be effective. Farmers are extremely reluctant to apply for the scheme because of all the questions they are asked and pressure they are placed under. This is in line with Mr. Coleman's argument that we could, I hope, work on this area.
Does Mr. Coleman wish to respond to this question?
Mr. Coleman
We are very conscious of this problem and are working towards the same goal as Deputy Crawford. Every place on the rural social scheme has been filled this year. Therefore, the target has been met.
I have one brief statistical question. Mr. Cronin stated that 10% is ring-fenced for strand 1, which is competitiveness. Is there any ring-fencing in respect of the distribution of funding for strands 2 and 3?
Mr. Cronin
This relates solely to EU co-funded money. Strands 1 and 3 must receive at least 10% each, while strand 2 must receive at least 25%.
This concludes our scrutiny of COM (2006) 238. I thank members of the delegation for attending today's meeting and the way in which they responded to the questions raised by members of the committee. The clerk to the committee will prepare a draft report on today's discussion for the next meeting. Is that agreed? Agreed.
I welcome Mr. Michael O'Donovan, Mr. Tony Reid, Mr. Jim Carew and Mr. Oliver Healy from the Department of Agriculture and Food who are here to update members on EU proposal COM (2005) 671 relating to the selling and labelling of organic products. Before asking Mr. O'Donovan to make his opening remarks, I draw attention to the fact that members of the committee have absolute privilege, but the same privilege does not extend to witnesses. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.
I invite Mr. O'Donovan to make his opening remarks.
Mr. Michael O’Donovan
The proposal which we have been asked to discuss is one to amend existing EU regulations governing the organic sector. A document has been circulated to committee members but I do not propose to read it in full as it is quite long. I will extract the essential points.
The Department of Agriculture and Food is the competent authority for regulating the organic sector in this country under EU regulations which date from 1991 and were extended in 1999 to cover the livestock sector. Previously the regulations covered only non-animal produce. The regulations define the methods of production of organic crops and livestock, and they also regulate issues such as labelling, processing, inspection and marketing within the European Community, with the importation of organic produce from outside the Community. The regulations are given effect under SI 112 of 2004.
The Department does not directly inspect organic producers for the most part. In accordance with EU regulations we have a service agreement — a contract — with three private inspection bodies. They inspect and certify all organic operators on our behalf. The Department, in turn, does a type of second-tier inspection of a selection of operators. The primary controls are operated on our behalf by the three private bodies. With regard to size, the Irish Organic Farmers and Growers Association is the largest and is followed by the Organic Trust and Demeter which has a comparatively small number of members and clients.
Anyone producing, processing or importing organic food must firstly register with the Department and then submit the enterprise to inspection and certification by one of the three bodies. The Department's staff are authorised to carry out checks to ensure full compliance. This includes visits to retail outlets including farmers' markets. We have had to increase our presence at farmers' markets in line with their growing importance as an outlet for organic produce.
The organic sector in this country is still comparatively small by European standards. About 0.66% of farmland in Ireland is used for organic production. However, in 2005 there were increases in the land area under organic production and the number of operators involved, though this was with a tiny base as a starting point. The total area either in conversion or with full organic status grew by 5,000 hectares, which may not seem a lot but nonetheless represents a 15% increase on the land area previously under organic production. Similarly, the number of organic operators grew from just over 1,000 to just under 1,100. There has been a further increase in this regard in the first six months of this year. The increase is small, but the trend is in the right direction. This reflects the fact that the organic market has grown very strongly in recent years. At the end of 2003 the Irish organic market was estimated to be worth €38 million. Last year that figure reached €66 million. However, a large portion of this is imported and one of our objectives is to substitute Irish produce for imports.
We support the organic sector in two ways. Organic farmers get direct support under the rural environment protection scheme, REPS. Organic farming is a supplementary measure of REPS. We also provide a grant aid investment scheme which is available both for on farm and off farm development.
During the previous discussion on rural development three members of the committee mentioned organic farming and asked how we planned to approach it under the new rural development regulations. We intend to separate farmers' support from REPS. An organic farmer who wants direct support from the Department of Agriculture and Food has no option but to join REPS. Many farmers do this, but two important groups do not. For very small horticulture operations the cost of having a REPS farm plan drawn up offsets whatever they might receive in REPS payments and the process is not worthwhile. Large tillage operators, a very important sector from the point of view of organic farming, have also not been attracted to REPS. There is a serious deficit in organic cereals here and this is one of the reasons our organic poultry and pig sectors are so small. To be approved as organic the animals must be fed almost entirely on organic feed and because we do not produce enough here it is imported.
By separating organic farmers' support from REPS we hope those in both small horticulture operations and large tillage operations, where a few hectares could be set aside for organic cereals, might be attracted into the sector. This is our main proposal for the new period. As my colleague, Mr. Cronin, said in the earlier session we are still discussing in partnership how the rural development funding will be spent. The Minister for Agriculture and Food is very committed to this and we hope we will have more than enough funding to do what needs to be done in the organic sector.
The European Commission adopted a European action plan for organic food and farming which proposed 21 steps for facilitating the development of organic farming in the European Union. The Commission is strongly pro-organic, reflecting views in some of the larger member states, such as Germany, the Netherlands and the Scandinavian countries, where organic farming is seen as a high priority. These are countries with large, intensive industrial farming sectors and the organic sector is seen as a way of restoring balance in terms of the environment and biodiversity. The Commission formulated proposals for new regulations to amend the existing ones. They take account of views expressed through a wide-ranging consultative process which was by no means confined to governments but included NGOs and all other stakeholders in the European Union. The regulations identify the need to lay down the objectives, principles and rules of organic farming more explicitly but in a simpler, clearer and more transparent way. The existing regulations are off-putting to anyone considering entering the sector as an operator. They require a degree of expert interpretation.
Since the Commission published its proposals for the new regulation in December last year, the Austrian Presidency has presided over eight meetings of the Council working party on organic farming and there has been considerable in-depth discussion of the regulation. The proposal was also debated at the Council of Minsters meeting in June of this year, at which there was broad general agreement on it. However, considerable work still has to be done on the details. When the Finnish Presidency outlined the programme for its Presidency at its first Council meeting last week, it indicated it hoped to finalise this proposal by the end of this year.
The new regulation, if and when adopted, will once again define the objectives and principles of organic production while allowing for local conditions and the different stages of development in various countries. For the first time it will lay down specific standards for aquaculture, for which at present there are no EU standards. Members will probably have seen certified Irish organic smoked salmon and other organic products. That is an ad hoc system of certification operated by one of the three certifying bodies in this country, IOFGA, the Irish Organic Farmers and Growers Association. However, the new regulation will formalise the position by setting down standards for organic aquaculture. It will clarify the rules on GMOs, which is a contentious issue in the organic sector. It will introduce a labelling requirement, probably providing an alternative of using either an EU organic logo or simply a typographical indication that the product is certified to EU standards. It will develop more streamlined and transparent rules for the importation of organic products from third countries and it will lessen the restrictions on ingredient labelling. There are also proposals for replacing the current structure for regulating the sector, which we do not support.
I am conscious of not wanting to speak at length on these proposals. There are a number of issues involved, including the scope of the regulation, the GMO issues, third country imports, the logo and the control procedures. There is considerable detail on those issues in the paper circulated but we should not go into them at length at this stage. I will leave it at that and will be pleased to take up any points or questions members want to raise.
I thank Mr. O'Donovan for his report on the proposals.
I thank Mr. O'Donovan and his colleagues. I hope Mr. O'Donovan will get an easier time today than he got the last day he appeared before the committee. I am sure he will; we will not be as hard on him.
I thank Mr. O'Donovan for coming before the committee and updating us on the issues involved in the organic sector, a potential growth area, especially when, as Mr. O'Donovan said, its value in expenditure terms is approximately €66 million. Currently, a significant amount of organic produce is imported. Mr. O'Donovan spoke about developing production and expanding the sector by relying very much on diverging funding from REPS for small horticultural producers and large arable farmers. Does the Department believe that step will meet the deficit? What is its target over the next five or six years to address the deficit and can it reach that target?
Will the officials elaborate on the issue of labelling because there is huge confusion in this regard? This committee has raised concerns with the Food Safety Authority of Ireland with regard to the policing of farmers' markets to ensure adequate enforcement. If, for example, someone says a product is organic, it should be so. Deputy Upton gave an example of how the character Dinny Byrne of "Glenroe" purchased eggs in a shop and made them look like organic eggs. With the Department trying to promote farmers' markets, it is important that consumers are not misled if they are to have confidence in those markets. At the same time, we must ensure that to encourage the development of such markets we do not have an over-bureaucratic system in place.
What progress is being made in Ireland to have a single organic food label? We have three agencies involved in certifying organic farmers which leads to confusion. Has the Department made any progress in this area? The officials have gone into some detail on the proposal for an EU label or to label food as EU-Organic. What is the Department's view? Should we go for a symbol or should we just type the words "EU-Organic"? Do the Department officials envisage a situation arising where a third country product could come into the European Union and be labelled EU-Organic if it meets the equivalent standards for organic food within the Union?
On the issue of equivalence, there are strict criteria here on organic production and on what entitles a product to be recognised as having met those standards. The word "equivalent" sends warning bells to this committee because we have seen allegedly equivalent third country imports of food into the European Union — beef from Brazil being the prime example — that does not meet the same standards we have. There would be huge concern if the word "equivalent" was used for organic produce coming into the country. It is critical that consumers have confidence in the label on the food product. If we are talking about "equivalent" standards we are going down a very dangerous route.
On the issue of GMOs, the submission points out that the operator must be in a position to supply evidence to satisfy the competent authority that appropriate steps have been taken to avoid the presence of such material. How does this tie in with the Department's plans for co-existence rules? My understanding of the rules, although the Department has not yet published its proposals, is that the responsibility will be on the farmer who grows the GMO crop to ensure it does not cross-contaminate adjoining crops. However, according to these rules, it seems the organic farmer must provide the certification. This seems to contradict the principle whereby the GMO farmer, rather than the organic one, would provide the protection.
The tolerance rate for organic food produce is 95%. Why is this different to the tolerance for GMO foods, which is at 0.9% of the threshold for GMOs, yet it is 5% for organic foods? I ask Mr. O'Donovan to explain in plain English what he means by the management committee as opposed to the regulatory committee.
I thank Mr. O'Donovan and his colleagues for making the presentation to us. There has never been greater awareness of food safety and quality. The third aspect that needs to be addressed is that of value for money and price. While considerable effort has gone into making people aware of quality food etc., the limiting factor will always be the cost. Until we find some balance between the value for money and the cost of organic foods, it will be extremely difficult for that market to increase. I would like to hear Mr. O'Donovan's views on the matter. I have a tendency to move to the organic section in a supermarket. However, when the prices are compared they are impossible for the average householder to afford. It is no great surprise that the market share is so small.
At the same time Ireland has a tremendous advantage in what we always promote as our clean environment and has opportunities for the development of organic products. What are the factors that have prevented people from engaging? What else needs to be done to encourage farmers to engage in organic farming? How can the price differential be addressed? While I accept that a farmer thinking of getting involved in organic farming faces a big cost, and many regulations and conditions rightly must be met, there seems to be a substantial mark-up between the farm gate and the consumer. That gap needs to be closed as it adds to the final cost for the consumer.
Many of the questions on labelling, etc., have already been asked. What are Mr. O'Donovan's views on the inspection process and in particular the testing regime? On the basis of a test how can one define whether a product meets the organic requirements? What level of testing is required and how difficult is it to carry out? I presume it is not merely a question of looking at the product and saying that it looks organic. I presume there is a significant inspection and laboratory cost. It is important for us to have verifiably high standards. If we have any more sleight of hand resulting in product turning out not to be organic, we will be in big trouble.
On the level of imported versus home produced produce, while our consumption of organic products has increased, they are predominantly imports. We need to consider competitiveness and what we need to do to promote it further. One statistic revealed that the highest consumer prices for organic potatoes were paid in Ireland — I believe it was in 2003. Why should Ireland be bottom of the European league for a product like organic potatoes? It again goes back to cost.
I am pleased to hear that aquaculture is being brought in, as I believe there are great opportunities. While we have all come across organic salmon and trout, how are they defined and identified?
I appreciate what is happening at European level on branding and labelling. Surely a case can be made for a strong Irish brand, as we have been very successful with branding such as Baileys, Kerrygold, etc., that have successfully promoted Irish images abroad.
I thank Mr. O'Donovan for his presentation. I ask him to explain the significant increase in 2005 on the number of hectares converted. Is it related to the decoupling and single payment process? Has the Department carried out any analysis on the incomes of farmers in the organic sector as compared with the incomes of farmers who work in the conventional manner? If we could demonstrate to farmers that there was an income benefit, it would encourage them to move in that direction.
It was suggested the retail value was of the order of €66 million in 2005. Do we know what the breakdown is of domestic, EU and third country produced items? What sort of market research has the Department carried out to quantify future demand? While we can predict demand will grow as the economy continues to do well and affluence is maintained, can we quantify the level of increased demand?
I welcome our guests. Can the witnesses set out for the committee the percentage of imports from within and without the European Union? I come from a background in which Irish production is, with some justification, considered to be as close to organic as possible. Most beef and dairy products are produced on grass unlike the case in Germany, France and other European countries. Our product is of extremely high quality, which brings us back to the issue of labelling. Irish poultry producers have discovered imported product with misleading labels attached. Is the new legislation strong enough to ensure a foolproof labelling regime?
The notion of equivalent standards and the WHO rules was referred to. When our IFA colleagues visited Brazil and some parliamentary colleagues and I visited Chicago some years ago, it was found that the WHO standards were not applied as we understand them here, which is a significant obstacle to the growth of our industry.
Testing and inspection is vital in the context of the development of country markets which allow smaller, home producers of cheese and milk, etc., to market their products locally. Products must meet the health and safety standards that apply while being allowed to be produced in the traditional way. The new markets have been the first opportunity in a long time for farmers to produce inside the farm gate and sell directly to the consumer.
Mr. O’Donovan
I will ask my colleagues to respond to a number of the points raised. Mr. Carew sits on the committee in Brussels on Ireland's behalf and is a master of the detail of the regulations.
If that is not a poisoned chalice, I do not know what is. It is definitely a curve-ball.
Mr. O’Donovan
I will try to respond to Deputy Naughten's questions and apologise in advance for any I appear to overlook. It will not be deliberate and I will be happy to be asked again.
Deputy Naughten took up the point of the proposed change in the new rural development round where support for farmers will be separate from that available under REPS. I do not believe, however, that that in itself will meet the deficit. I will make a general observation. The organic sector is similar to farming in general in the sense that it is predominantly based on livestock, especially beef and lamb. However, on looking at a profile of what consumers buy, they tend to buy more organic fruit and vegetables than meat. Deputy Upton referred to the advantages associated with our clean, green image, while Deputy Crawford has stated much of our grass-based production is close to being organic. That is true and in a way it acts against the organic sector. Because the difference between conventional and organic beef and lamb is perceived to be so little there is much less of an incentive for the consumer to buy it than would be the case on the Continent. The deficit is in fruit and vegetables, the products the consumer wants. In the change we are making from the current REPS model to the new one we are not taking anything away from organic producers. Anyone in receipt of support will still receive it. What we are trying to do is give support to two sectors which have not taken the bait up to now. We believe this will do something to bridge the gap.
Deputy Naughten has stated there is huge confusion on labelling. I accept that is the case, although there is possibly less confusion than previously. We have three national labels. We also have a number of UK labels on imported products. We tried to secure a single national label on foot of the recommendations of the Agrifood 2010 Committee. The three labels are the property of three private bodies, the three organic bodies which were not willing to agree to a single label. The matter became the subject of legal proceedings and we have not progressed further on the issue. In general, we have an extremely good, professional working relationship with the three bodies which has improved in recent years following a somewhat rocky start in 1999 and 2000. On balance, we are of the view that at this stage we should not press the issue of subsuming the three individual labels into a single national one.
The national steering group for the organic sector is chaired by Mr. John Duggan, the former chairman of Glanbia. It includes representatives of the Department, the organic bodies, the main farming organisations, consumers, retailers and other stakeholders. At the request of the Minister, it examined the possibility of introducing a single national label that could possibly be used in tandem with the three individual labels. However, the groups could not reach agreement as there was no consensus on what the label should represent. Some interests believed it should represent mainly Irish organic produce, while others representing different interests which use imported organic ingredients in processing food wanted to be able to use the Irish label on their produce. On balance, the steering group advised the Minister that this was not the time to proceed with the idea of having a single national label.
The question was asked if we could have organic food from third countries labelled as being EU produced under the existing proposals. That is a possibility and something we are resisting. The discussion remains to be completed on the issue.
Deputy Naughten referred to the word "equivalence" and the fact that it had unsatisfactory connotations because of the situation regarding Brazilian beef. Equivalence is strictly defined in the organic sector and is something in which the consumer can have a reasonable amount of confidence.
All food produced within an EU member state must be produced at least to the standards set down under current EU regulations. Our national regulations go further than EU regulations in some respects. Outside the European Union, seven countries are currently recognised as having standards that are as strict as those that operate within the Union. With regard to any other third country, apart from those seven, each proposed import is examined on a case by case basis. One of the 25 competent authorities of the European Union in each of those cases is given the task of scrutinising the proposed import to determine whether it is acceptable or conforms with EU standards. The system is more strict and effective than Deputies Naughten and Crawford have suggested with regard to the beef sector.
Mr. Carew will deal with the question of genetically modified organisms, the 95% figure and the comitology proposals. Deputy Upton focused on the issues of value for money and price. A farmer who switches to organic production methods will not produce as much as a conventional operator and will have higher labour and input costs. Therefore, for the switch to organic production to be viable, there must be some sort of price differential, although that differential can vary considerably. The differential with organic beef and lamb over good quality, conventional produce is not substantial. On the other hand, because of the shortage of organic cereal for feed, organic poultry and pig meat is vastly more expensive than the conventional equivalent. Under the conventional system, the bulk of the market is intensively produced pig meat and poultry and prices are low. There is a limited amount of free range poultry, which tends to be in the middle, in terms of price. The organic product is very expensive and reflects fairly the input costs to the farmer. If we can produce more Irish organic cereal for use as animal feed, that will be reflected in falling prices.
The mark-up between the farm gate and the consumer is significant and that is where the farmers' markets can make a big difference. If one buys organic meat, eggs and so forth at farmers' markets, such as the one in Wexford every Friday, one finds it is a good deal cheaper than in the supermarkets. The farmers' markets are an important outlet which makes it all the more important to keep them under tight control. We have had complaints of incidents where people appear to be trying to pass off conventional food as organic. We are at the point of prosecution in one such case. We have increased our presence at farmers' markets.
The strongest and simplest safeguard for a consumer at a farmers' market is the fact that somebody purporting to sell organic food should be able to show, without any hesitation, his or her certification from one of the organic bodies. If one is in a shop or at a stall in a farmers' market and there is any equivocation about showing an organic certificate or any suggestion that a farm is "the same as" or "becoming" organic, one is not encountering the real thing.
Anyone who has a problem with showing a certificate from one of the organic bodies is not a genuine dealer. The certificate is a robust control.
Deputy Ó Fearghaíl is correct in speculating that the 2005 increase in land area was because of decoupling. Decoupling probably represents the biggest opportunity for the organic sector in recent years. The decoupling of farm supports from production means that farmers can look at new opportunities and, with the help of Teagasc, we are trying to encourage the growing awareness of organic farming as an opportunity. While we should be realistic in that it will never involve more than a minority of farmers or a limited share of the market, there is scope for considerable growth. We are reluctant to set targets because the growth will be largely determined by the market but we see no reason the area in organic production cannot be doubled by 2010.
I do not have figures to hand on the breakdown of imports from European Union and third countries but can supply them to the committee at a later stage.
Did Mr. O'Donovan say meat could be bought in the markets in Wexford?
Mr. O’Donovan
Organic beef is seldom sold in the farmers' market in Wexford, although certain farmers sell free range Angus beef, lamb and dry cure bacon.
My colleague, Mr. Jim Carew, will now address the committee.
Mr. Jim Carew
I thank my colleague, Mr. O'Donovan, for his kind introduction. Labelling is policed by three inspection bodies and, once people become educated in the system, they should not encounter significant difficulties in identifying authentic products. They should look for the codes "IRL" and, depending on the relevant inspection body, "OIB1", "OIB2" or "OIB3" on the label. The product should also be identified as "certified organic" or "organic certification".
The issue of equivalence was raised by Deputies Naughten and Crawford. This is a difficult area that has undergone a great deal of debate with regard to the new regulations. We can have confidence in the present system for regulating products imported from third countries. As Mr. O'Donovan noted, there are two possibilities for the operation of the system. Six countries have already been listed and a seventh, India, was added on 1 July in respect of plant products. Those listed go through a rigorous process at Commission level which is backed up by member state experts. Ireland is one of the experts that deal with an application for a product from Australia. The level of detail is such that it refers to the inspections carried out at farm level to ensure everybody can have confidence in the countries listed. On imports from countries not on the list, for example, Brazil, the application comes through the organic unit of the Department and goes through a rigorous process. It includes full details of the application back to the production unit in which the food is produced. We receive a copy of the inspection report on the operation at farm level. We bring it through the processing level, right back to the country of origin. We also access the EU database that will have identified any similar products coming into the European Union. It is a rigorous process and we can have solid confidence in the system.
Mr. O'Donovan has asked me to deal with the management versus the regulatory committee. Regulation of organic farming occurs at EU level through a regulatory committee, on which each country has a representative who is expert on the technical detail of the discussion. For any change to be made in regulation, there must be a qualified majority in favour of it. A management committee — there are such committees for the other CAP products — can change legislation if there is no qualified majority against the change. That is the genesis of the impact. Although the Commission favours moving towards a management committee that would facilitate change, all countries, including Ireland, as well as the certification bodies such as IFOAM favour the retention of the regulatory committee. I hope this clears up the issue.
I may dwell on other aspects. There are many possible ways to ensure confidence that the system guarantees an authentic product. An inspection body carries out a minimum of one inspection per year of each production unit and more than one of larger units. As such, inspections are risk based; if there is potential for a difficulty, there will be more than one inspection per year. That will be a major change and should allow increased confidence in the system. The Commission has undertaken that it will maintain the minimum of one inspection per year and augment it by carrying out additional inspections where required. These inspections will examine total inputs for the year. The operator must produce the full details of all inputs for the year in order that the inspector can see all the products bought in. If the farm produces more than was bought in, one can see a difficulty in production. Parallel regulations on residue testing operate on plants and livestock products such as meat. This means that organic products will be included in the testing regime. The results for organic plants and meat products, imports as well as home produce will be available and any residues found will be reported to us in the organic unit.
The tolerance rate of 95% for organic labelling arises because a few ingredients cannot be found organically. The regulation allows for such ingredients to amount to a maximum of 5%. Any such products will have to be listed in the annexes to the regulation as acceptable to the environment.
The new regulation beds in all the horizontal regulations on GMOs that have come into being since 1991. Two regulations, 1829/2003 and 1830/2003, set down requirements for the labelling of GMO products. The regulation which has provoked the most debate so far allows a product which accidentally includes a single GMO ingredient, amounting to less than 0.9% of the total, not to require identification as GMO. That will act as the basis of the organic regulation being finalised at the moment. We regard it as a pragmatic approach and we will have input into the regulation before it is finalised.
As I understand the Department's presentation, the organic producer must be in a position to supply evidence to satisfy the competent authorities that the appropriate steps have been taken to avoid the presence of GMO material. Will Mr. Carew clarify this? The Department and all EU countries appear to put the onus on the farmer of GMO crops to ensure there is no cross-contamination, though I accept the point Mr. Carew makes about accidental contamination. The requirement for the organic farmer to provide documentary evidence that he or she has put measures in place to avoid cross-contamination places an additional burden on the organic farmer over and above that on the traditional farmer. Is my interpretation correct?
Mr. Carew
This is a very difficult issue and is still under discussion at working party and special agricultural council levels, prior to the finalisation of the regulation. The current discussion has identified what will happen with the organic producer in the event of a trace amount being found. When the organic certification body examines the holding with regard to how this came about, it will examine purchases. For example, a producer may have bought in feed, and if the labelling showed the feed contained a GMO product, the producer would be in difficulty. If the labelling did not show the presence of GMO, an incident would have to be taken as accidental. That is a basic level.
With regard to how that would progress relating to the discussion on co-existence etc., the matter is at a fairly early stage. No documentation has been finalised either nationally or at EU level. What I have tried to identify is an exact basic problem. That is the level of detail that will be entered into to ensure the farmer understands exactly the labelling, particularly with regard to GMOs. It relates to the type of safeguards used to ensure a producer will not enter into any difficulty.
I accept what Mr. Carew is stating. I wish to leave that aside and specifically consider the issue of co-existence. Could it be possible at this stage, based on discussions taking place at EU level on labelling and at the Irish level on co-existence, that there would be an additional onus on an organic producer to certify that steps have been taken to reduce the possibility of cross-contamination from an adjoining land owner who may be using a GM crop?
Mr. Carew
The work being done with the new regulation is trying to avoid such a problem as that described by the Deputy. The thresholds being set for organic production are identical to the thresholds for traces within EU Regulations 1829/2003 and 1830/2003. We are looking to avoid the scenario described by the Deputy in our development of the regulation.
The horizontal regulations exist, and like residue testing, they will be all-embracing. They will relate to both conventional and organic production. There will be no specific or individual thresholds for organics. That should avoid any additional burden on the organic producer. The other regulations effectively take care of the matter.
Is it Mr. Carew's understanding that there will be no additional burdens on organic producers with regard to co-existence rules, where they would have to provide additional certification?
Mr. Carew
That is——
Is it still up for negotiation?
Mr. Carew
It is, but that is the basic aim of the new regulation. It will identify existing thresholds with regard to how traces are dealt with. The new regulation is looking to take a pragmatic approach to the GMO issue. It is looking to prevent the organic producer from being put out of business with the extra costs of testing. The overall costs of testing and the standard costs that relate to conventional production will also exist for organic production. That is the basic idea and principle on which the new regulation is being drawn up.
That concludes scrutiny of COM (2005) 671. I thank the delegates for attending today and the manner in which they responded to queries raised by members. The clerk to the committee will prepare a draft report on our discussions today for the next meeting. Is that agreed?
On that report, I wish to propose we recommend that as part of the discussions at EU level there should not be any additional responsibility placed on organic producers regarding potential co-existence rules that may be drafted at Irish or European level.
Is that agreed? Agreed.