JOINT COMMITTEE ON AGRICULTURE, FISHERIES AND FOOD debate -
Wednesday, 7 Jul 2010

Common Agricultural Policy Reform Post-2013: Discussion with IFA

Chairman

I welcome Mr. John Bryan, president of the IFA. Before we begin, I extend my congratulations on behalf of the committee to Mr. Bryan. This is your first appearance before the committee and I wish you every success in your new role as president of the IFA. We all know this is a challenging time for the farming community. There is no better man to lead it in these challenging times. You have left your trademark in other areas, particularly in respect of Brazilian beef. I am sure you will make your mark as president of the IFA.

You are accompanied by Mr. Pat Smith, general secretary and Ms Rowena Dwyer, chief economist of the IFA. You are all very welcome to make a presentation on reform of the Common Agricultural Policy post-2013.

By virtue of section 17(2)(l) of the Defamation Act 2009, you are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice 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 as to make him or her identifiable.

I now call on Mr. Bryan to make his presentation.

Mr. John Bryan

Thank you, Chairman, and committee members for giving the IFA the opportunity to make this presentation. I know that you are busy, but the CAP debate is so important that we felt we had to get in here before the Dáil recess.

In the ongoing negotiations on reform of the CAP post-2013, there are three key issues for Irish farmers and policy makers. These are the maintenance of a fully-funded EU CAP budget, the retention of Ireland's national envelope both for Pillar I and II and the distribution of CAP funding within Ireland.

Farming in Ireland in 2010 is beginning to recover from a horrendous two years, during which time farm incomes fell by 40%. In 2009, average farm Income fell to €12,000, or about 35% of average industrial earnings. Total direct payments from Europe, including the SFP, REPS, disadvantaged areas and other national payments, such as the suckler cow premium, were worth more than €1.8 billion in 2009, while national farm income was only €1.6 billion. Farmers in all sectors found themselves producing below the costs of production. Even with recovery, the reality is that for many sectors, particularly the livestock sector, farm incomes will remain dependent on direct payments in the future. The livestock sector is very important in supporting thousands of jobs in rural communities and providing the raw material for our €2 billion beef export industry.

Agriculture and the agri-food sector play a very important role in the Irish economy and society. Farm households account for 25% of all households in rural Ireland. Irish farming and the agri-food industry and related services provide about 250,000 jobs, most of which are located in rural Ireland. Ireland's agri-food industry is the largest Irish-owned productive sector, accounting for more than 60% of exports from Irish-owned manufacturing.

Agriculture is playing a key role in contributing to Ireland's export-led recovery. Figures for 2010 already show a recovery in export values for our food and drinks exports. The agri-strategy 2020 committee has set ambitious but achievable targets for the sector over the next decade in recognition that global population and demand for higher value food is increasing and Ireland is well positioned to meet this demand. There are many opportunities, but a fully funded CAP is essential to realise the potential of the sector.

The CAP remains a vital support for producers and provides European consumers with a plentiful supply of high quality, environmentally sustainably produced food. It has a multi-functional policy role, and provides benefits in several key areas. For consumers, the CAP provides security of food supply, price stability, and guarantees on food traceability and environmental and animal welfare standards. The CAP has delivered on its target to ensure reasonable prices for EU consumers, who now spend less than 13% of their household budget on food, compared with 30% in the early 1980s. Farmers under the CAP meet high environmental standards for sustainable food production and the provision of public goods, including water quality, landscape management, biodiversity and provision of carbon sinks. Funding received by farmers through the CAP is redistributed throughout the rural economy, through expenditure by farmers on locally provided inputs, labour, goods and services.

Over the decades, the CAP has undergone significant reforms to reflect changing consumer preferences and an increased focus on environmental and rural development issues. For the farmer, the major reforms began in the early 1990s with the MacSharry CAP reform, which involved a switch from price supports to production-linked direct payments. In the 2003 CAP reforms, the direct payments were decoupled from production, and allocated upon a historical level of production. For the producer, price and income volatility has increased greatly with the decoupling of payments from production and greater exposure to an increasingly liberalised world market. This is threatening the viability of the European family farm model. The CAP post-2013 must support active family farms through ensuring a fair income that rewards labour and capital input; maintains and supports the production base to underpin the rural economy and grow exports; supports sustainable grass based production systems; allows farmers to respond to the demands of European consumers for high quality, environmentally sustainable food production; ensures that imports satisfy EU-equivalent standards on food safety, traceability, animal health and environment; and ensures that climate change goals are met while maintaining the production base.

Ireland's national envelope must be maintained post-2013. It is vital that Ireland retains sufficient funding to ensure the continuation of a viable family farm production system. The SFP must be directed at supporting active farmers while encouraging the entry into agriculture of talented young farmers under the system that currently operates.

Farmers require certainty of funding. There must be no further erosion of the single farm payment through diverting of funds into pillar II through modulation. Rural development programmes must improve the competitiveness of farming through investment support, restructuring measures, and funding of less favoured areas.

Future agri-environment measures must maintain and build upon the environmental achievements of the REPS programme. In addition, farmers must be supported in meeting new challenges identified in the CAP health check — climate change, renewable energy, water management and biodiversity.

Separately funded and effective market support and management measures must be maintained post-2013 to minimise the effects on family farm incomes of price volatility. Farmers' position in the food chain must be strengthened, including enhanced producer groups. At home and in Europe, regulation of the retail sector is critical, and the IFA continues to put pressure on the Government for the introduction of a statutory code of conduct and independent ombudsman.

For the individual farmer, and to improve the efficiency of the CAP, the payments and cross-compliance system must be simplified. The majority of the EU 15 member states adopted the historical model when implementing the single payment system. These countries included Ireland, France, Spain, Italy, Portugal, Greece, Belgium, Scotland and Wales. The present system of payments, while not perfect, has delivered on maintaining production and sustaining family farms in Ireland and the IFA can see no alternative system that will better deliver for the Irish agriculture sector and economy. At an aggregate level, a move away from the current system of allocation towards other systems has the potential to significantly reduce the overall CAP funding that Ireland would receive.

The current system of allocation reflects the pattern of agricultural production in Ireland and a move to a flat rate would result in a reduction in national agricultural production and output and a consequent fall in exports and national income. At individual level, a move to a flat rate could lead to an income collapse among individual farmers and in certain sectors, with implications for employment and maintenance of farm businesses.

It must be a priority for Irish policy makers to secure the maximum CAP budget for Ireland in the ongoing negotiations. I believe our strongest argument for retaining the maximum budget for Ireland is through maintaining the existing system of allocation.

The Irish agriculture sector has enormous potential to meet the growing demand for high quality food production and has a major role to play in driving the rural economy, creating and sustaining employment and maintaining viable rural communities. The agri-food sector provides employment for 250,000 people, with €8 billion worth of exports and output of €25 billion annually. With 9 million farmers, and a further 30 million employed in agri-food and related enterprises across Europe, it is vital that the CAP post-2013 supports the continuation of the family farm model of production. A strong CAP is critical to ensuring sustainable and viable food production across the EU, and a secure supply of high-quality food for European consumers at reasonable prices.

The CAP has delivered for EU consumers, providing security of food supply at reasonable prices, and guarantees on food traceability and environmental and animal welfare standards. In the debate on CAP, the importance of retaining it, and retaining agriculture in Ireland, has come to the fore. With the economic downturn, agriculture is being properly appreciated in the economy. This committee has always realised that and put agriculture at the centre. For us to retain that, and to make the contribution we want to make to the economy, it is essentially that we protect the CAP. In this, the IFA, this committee, the Government and our MEPs have a vital role to play. I thank the committee for its support in the past. Any time I have appeared before the committee, it has always been exceptionally supportive of agriculture.

Chairman

We would like a few words on the nitrates directive following yesterday's lobbying session. We cannot spend too long on it but it would be useful to hear what the IFA is looking for.

Mr. John Bryan

The whole debate on agriculture in the economy is based on the contribution we can make to employment, with growth in jobs and exports. Our 2020 committee report has highlighted the opportunity to grow dairy post-2015 when dairy quotas are gone. Now that we are selling 100% of our beef in real European markets, there are opportunities to grow our beef exports to the top markets in Europe. There are opportunities in pork and vegetables as well but all of these opportunities are dependent on reducing production costs. When the economy was booming, people did not watch costs closely enough. If 2009 taught us anything, it is that we must reduce costs.

Regulation creates many unnecessary costs and that is why we must get the compromise between meeting our environmental commitments to Europe while still allowing farmers to operate. As the nitrates directive stands, there are elements that are overly onerous, placing costs on farmers.

I thank the committee members for attending the lobbying session yesterday. We highlighted a few areas that must be addressed. Calendar farming, with rigid dates chosen seven or eight years ago that bear no relationship to the weather or the land type, must be examined. The Chairman is also aware of the cost of the ban on winter ploughing. We grew up with traditions and our fathers and grandfathers were not stupid, they knew what they were doing. They ploughed the land and let nature break it down. Some genius somehow came up with the idea to ban that.

The extension we got on the dates last year was helpful. That, and improvements on the green cover, could allow nature to do more of the work, reducing the amount of fuel used growing the corn, which should reduce greenhouse gas emissions. The committee is also aware of the derogation for intensive farmers about 170 kg of nitrogen. Teagasc in Moorepark has done excellent work to show the high stocking rates on intensive grassland do not lead to extra leeching.

The derogation on phosphates was a major issue for those in the pig and poultry industries. That must continue because otherwise transport will add huge extra costs. The way phosphates are counted in intensive beef and dairying is also a problem. There are a few areas where there is no environmental risk in terms of buffer zones around water strips, but there could be a drastic reduction of unnecessary expense for farmers.

We appreciated the support of the Chairman and the committee in last year's budget. I probably will not address the committee again before the outline of the budget is discussed in September. Farmers took huge cuts last year and cannot afford to take any more. When acknowledging the contribution agriculture is making to the economy, it is important all the schemes are maintained and proper funding is put in place for the 23,000 farmers exiting REPS.

Chairman

I thank Mr. Bryan for his comprehensive presentation.

Deputy Andrew Doyle

I welcome Mr. Bryan, Mr. Smith and Ms Dwyer. This is my first contribution as spokesman so I might not be as finely tuned as I should be.

I recently had the opportunity to make some observations about this area, describing the agri-food sector as the slumbering giant in the economy. For the past ten or 12 years, food supply was taken for granted, with the masses not understanding the fragility of the world's food supply. While other areas of the economy were booming, the agri-food industry was not taken as seriously as it should have been. Given that it is the only industry where we produce and provide the raw material, there is potential for any number of jobs if we really expand the area.

We should move food security to the centre of the debate, and educate the citizens of the EU of the importance of having as much food as possible produced by EU farmers under the family farm structure. It is the most efficient way to produce food with high levels of traceability, quality production and animal welfare maintained. If we can persuade the public that the CAP is good for them, while putting the overall cost of the CAP spend in context, we can show how little it costs EU citizens.

There will be a CAP. We must, however, maintain the historic budget Ireland has had and determine how we allocate it. A flat rate will probably be rejected. Twice Mr. Bryan mentioned active farmers. The farm organisations must deal with how activity is determined. The references are almost ten years old so we must devise a system that gets the most of the potential that exists, attracting as many qualified, energetic young people into agriculture as possible. That challenge exists for the organisations as much as everyone else.

Climate change was mentioned. We have just endorsed a Green Paper on protecting forestry from climate change, in which we argue that Ireland should be allowed to deal with its carbon obligations and agricultural obligations by having offsets in forestry. We must up our afforestation rate from 7,000 ha per year to double that. We should look at a carbon afforestation scheme that uses the carbon costs as a rationale for funding afforestation.

The nitrates directive and fair trade legislation were mentioned. We cannot deal with the CAP without addressing the market price take. If we do not, all that will happen is that others within the food chain will take more of the share. In ten years we have seen the percentage reduced from 30% to 20% of the housewives' price. We must erect a barrier and put in place a statutory code of conduct to prevent people from raiding the system. If the CAP only gives a farmer an income, while subsidising someone else in the system to take more of a share, it is futile, it goes back to the multinationals.

The nitrates directive needs fine tuning. There are costs inside the farm gate involved in food production that must be examined, along with those outside the farm gate that are unnecessary, such as red tape and the nitrates directive. The presentation yesterday showed the common sense approach, particularly regarding winter ploughing and calendar farming. There is no evidence that the nitrates derogation has led to a decline in the quality of water; that is the point that should be made when lobbying. This does not need to descend into an ideological contest between those who have an opinion and those who understand the reality.

In the overall context, a level playing pitch is all we seek. For chicken fillets, the obligation is that they have either the date of slaughter or the date of packaging but in reality they should have both. While it might not be a food health issue, it is a food quality issue. For our native producers to compete on a level playing pitch, they can have chicken fillets prepared for long weekends with a three day turnover as opposed to a seven day turnover. Chicken fillets that are packaged in Europe are packaged on the day they would go out of date if they were packaged in Ireland. That is a stark example of the distorting impact of misleading labelling. Chicken is the meat we import and consume most of so we must look at this and take the consequences that if we send beef to Britain or France, and it is labelled Irish, the preference will be for indigenous produce ahead of us but we must compete on quality, price and competitiveness. At least the housewife has a true impression of what she is buying.

Are we obliged to have an installation aid scheme in place? If so, how long can we leave it suspended? I was under the impression that the scheme should be active as one of our obligations. The statistics indicate that 23% of the land is owned or operated by those over 65, with only 7% owned or operated by those under 35. This must be reversed if we are to develop a food industry based on agricultural output.

Deputy Seán Sherlock

It is hard not to disagree with what is contained in the document in terms of the aspirations of the IFA in relation to CAP, namely, supporting family farms, maintaining and supporting the production base, sustainable grass based production, response to demands of consumers, EU equivalence on food safety and climate change goals. It is not often I or this committee would disagree with the IFA. There is a sense that the future of agriculture and this economy is predicated on a strong agricultural base and that this will form the basis of the recovery we need.

I am at variance with the IFA's position in relation to the preservation of the historical model. I do not believe the historical model as the IFA sees it will be preserved. I do not believe there exists the political will within the European Union group of member states to preserve the historical model as espoused here. I wonder if the political realities are such that the historical model will not be preserved and if this is the IFA's negotiating position at this juncture — it is still early days. What will be the IFA's fall-back position in the event that there is no political support for the preservation of the historical model?

The Labour Party agrees that we must try to preserve the envelope. Of that, there is no question. Perhaps Mr. Bryan will clarify the following for me. I do not understand how the IFA can on the one hand preserve the historical model and at the same time encourage the entry of new farmers into the sector. I believe there is an imbalance in this regard. CAP needs to be structured in a way that pertains to Ireland and in such a manner that ensures those farmers who innovate and continue to push out the boundaries to grow their enterprises are rewarded. Such people are in the main the younger generation of farmers who entered into the sector in recent years. I do not wish to be at variance with the IFA but I am trying to open up a debate on whether it is realistic to assume the historical model as we know it which we would like to see preserved if the political winds are blowing against it.

The Minister, when addressing the Seanad, appeared to suggest that preserving that model of payments will be an uphill battle for the Irish Government. I am interested to hear the IFA's response. I stated at the last meeting of this committee attended by all the farm representatives that I feared for the way in which modulation might go in that if payments were to be diverted through pillar 2, they might be diverted away from directly benefiting farmers, farm holdings or primary producers, thus falling into the black hole of the Leader groups and other such representative organisations, something which I would be against. My party would not countenance any situation whereby the farm effort in terms of primary producers would not be directly funded.

It is easy for me to proffer an argument that suggests the historical model might be dead. The question that arises then is what is the alternative. I believe it is still early days in this regard. We need a model that ensures innovation is rewarded and there is no income floor below which any farmer or primary producer will fall. There must be a safety net in place and a floor below which no producer will fall to ensure at least an income. I do not know whether the IFA goes along with the argument put forward by certain sectors within the farm lobby that we should have a minimum payment for every farmer or a per hectare minimum payment. However, it is an issue that needs to be examined. I believe we still have a long way to go and that the Irish members of the European Parliament's agricultural committee will have a major bearing on how this negotiation pans out in the long run. I am glad to see that because of the Lisbon treaty, this is the case and that it will not be only a single voice, namely, the Minister, who will be negotiating. The co-decision procedure allows MEPs to have a strong say in how CAP progresses.

I would like to hear from the farming organisations what will be the alternative if the historical model is to be abolished because there is no political support for it. I would like also that we would all buy into that process and would not be behind the curve in relation to Ireland incorporated.

Deputy Bobby Aylward

I, too, welcome the president of the IFA and his officials. I take this opportunity to congratulate Deputy Doyle on his promotion as spokesperson in this area.

Chairman

The committee did so earlier.

Deputy Bobby Aylward

I personally congratulate him. I am sure we will cross swords a number of times during the next couple of years. However, that is what politics is about. I compliment Deputy Creed who, owing to a reshuffle in the Fine Gael front bench, lost his position as spokesperson, on the work he did.

The IFA presentation today is timely. The next 12 months in Europe will be the most important in terms of negotiation of the major issues to be decided in respect of CAP after 2013. It is important that debate commences here. As stated by Mr. Bryan, president of the IFA, we all have a part to play, including this committee, Government, individual Members and MEPs, in the future of CAP. Mr. Bryan has given many examples of the importance of agriculture to our country. In 2009, Ireland received €1.8 billion in direct payments from Europe, which illustrates the importance of CAP to the future of farming in Ireland. Farm incomes stand at €1.6 billion and, as such, CAP payments are 0.2% above what farmers are earning. We cannot emphasise enough the importance of CAP to Ireland.

The future of Ireland is dependent on agriculture. It was agriculture that brought us through the recession of the 1980s and it will be agriculture that will see us through the current recession and into the future. There are 250,000 people directly or indirectly employed in the agriculture sector, the output of which is €25 billion. This illustrates the type of money available in agriculture and its importance.

There are several reasons we need to retain CAP. Regardless of what system we choose for the future, it is important we retain as much of the envelope as possible for the next ten years. Our job for the next ten years will be to ensure we retain what we have. Regardless of what system is agreed, we will need to ensure we retain what we have. Agriculture will not survive if we do not. The consumers of Europe are looking for quality traceable agricultural products, which we can produce. We have one of the best systems in the world in terms of traceability and quality food production. With the right backing, we can continue to produce food.

As Deputy Sherlock said, an income floor level must be considered and we also have to examine capping the payments. It is an issue which is being raised a lot. Substantial amounts of money are being paid out, not necessarily to farmers but also to businesses. We know of them; some of them are in England. This issue will have to be considered. We might not have the same money to distribute next time because of the enlarged European Union, particularly given the last ten eastern countries which joined, and there will be a bigger demand on the money which will be available to us. We need to decide which system we will use. If we have a floor level we also need to have an upper level for the capping of payments because when one reads about some of the money being paid out it is a significant amount. I would like to hear Mr. Bryan's comments on that.

I think I have covered everything. We met the IFA on the issue of the nitrates directive. This issue comes up every year at the fall, as well as when we can spread slurry, what dates are involved and closing dates. In this country the weather dictates a lot of things such as when we can get out onto land. Land is closed in November or October when there could be constant rain. One could have a December where one could go out on the land. We have gone through this, year in and year out. We are getting extensions every year and we should have some policy in place. We should consider, through Teagasc or another body such as the IFA, whether we should go with the weather rather than the calendar of closed and opened dates.

I agree with comments on the green covering, to which Mr. Bryan referred. We all came from traditional farming. When farmers ploughed the land in November and December and left it turned down and red for the winter it was part of the process of good tillage. They then tilled the land in the fall. I cannot understand why directives are introduced that we must have a green covering. It does not make sense to me. I do not know if it is connected to carbon emissions but it does not make sense and is more red tape which is being applied to farmers in this country.

As far as phosphates are concerned, there is an issue with pig slurry, in particular. Pig producers have a problem and we need the same derogation as the one we currently have in place because they will incur a lot of costs in trying to get extra land to spread it as the nitrates directive is very restrictive on people and there are financial costs for them. We need that derogation to continue. I again emphasise how important CAP is for us and the negotiations for the next two years and the next year, in particular, will determine the future of farming in this country, on which we all depend so much.

Deputy Eamon Scanlon

I apologise for being late. I thank Mr. Bryan for his presentation, which I glanced at. I agree with previous speakers that this will be a very important year for agriculture and it is important that everybody keeps a close watch on what is happening over the next eight or nine months. It is important that the supports are geared towards active farmers. That is the problem with our current system. Some people are drawing down large amounts of money who are probably not dependent on farming and it is important that the money is geared towards farm families to keep them on the land and producing.

I note the presentation states the current structure is not perfect but it has delivered in maintaining production and sustaining family farms. Many of them are struggling but I would like to see the significant money being paid to people who are not in active farming redirected to smaller farmers who are actively farming and rearing their families on the land because those are the people we need to support into the future in order to continue to make sure we have good quality food product. The benefit of agriculture to this country is important. We are beginning to realise how important it is, in particular over the past 12 months when we saw other industries and businesses collapsing but agriculture seemed to be holding strong.

How does Mr. Bryan see this playing out? When will the decisions be made? What will the committee be able to do to try to ensure that we get the best deal for Ireland?

Deputy Seán Sherlock

I have been called away. I apologise for being rude and not staying to listen to the response to my questions. I will read the Official Report.

Chairman

Would the other members mind if Mr. Bryan responds to Deputy Sherlock? I ask Mr. Bryan to reply.

Mr. John Bryan

The historic model is far from over. Many people lived under the fallacy that in 2013 we would be farming without premiums. I heard people ask how we would manage without it. They were self-defeatist and digging a big hole. The French, Germans and Austrians are not saying it is over. Many people are saying it is hard to defend. On the comments other people made, the reality is that where the historic model has operated, production has been maintained. In the countries which went for a flat model, such as Poland and Latvia, production has collapsed. The number of cows is one third of what it was. Flat payments have serious consequences for production.

People should bear in mind that during the height of the last debate in 2003, Commissioners Fischler and Boel and the Commission said coupling was gone and would never happen again. In 2010 six or seven countries still have coupling. I can guarantee the French will still have coupling in 2015 or 2016. From our point of view, we should start to consider what is best for Ireland. The historic model reflects agricultural activity better than most others. If the Department did an analysis it would show most farmers have the same level of activity. The theory is that lads sailed off into the sunset with the payment. That has not happened in Ireland.

There was a reference to the active farmer. The reality is that if one goes to the Department, gets an analysis of the payments from the computer and picks out 100 farmers, they will probably have the same level of activity which they had during the reference years, but if one goes to flat acreage payment, production will be decimated. I am not saying it was suggested. Some people said a minimum payment could be €40,000. With 130,000 farms the budget today is €1.3 billion. The Irish envelope would have to rise to more than €5 billion. People who are making suggestions like that are living in Disneyland.

Some people might not be sure where we are but the reality is that we have sat down with the Germans and the French. Klaus-Dieter Borchardt from the directorate of agricultural policy attended a meeting in Tullamore last night which more than 400 farmers attended. We spoke to Michael Treacy and Aidan O'Driscoll, who said he sees no other mechanism which can deal with the Irish situation.

In Ireland we have the family farm. We have 130,000 farms. In general, the draws are medium. People work and manage the farm, unlike on the Continent, where there are big feed lots and factory farms. There is strong talk in Europe about capping it. The day the grants are capped those on Italian feed lots who buy our calves will cease to exist. Ireland will not make that decision, rather it will be made in Brussels. East Germany is where the biggest payments are. Some 60 cent in every euro that goes into CAP comes from Germany. We have 230 farmers above €100,000. I am in favour of a link to production in which a stock rate might be built in to reflect it. We will support the active farmer.

The current system has a national reserve for new entrants who can apply to get the DED average which is a fair reflection of the activity in the area. I apologise for holding everyone up, but I wanted to be clear. People might believe the historical model is dead. It might be sick, but it is not dead. A long battle is still to be fought and one must consider matters like legitimate expectation when negotiating with Brussels to retain a scheme for a substantial period. The European Commission has accepted that the debate we started three years ago on a flat acreage payment across Europe is over. The debate on whether CAP could be defended is over. The roles of security of supply and the environment have been accepted.

As Deputy Aylward and others stated, this battle will continue for a couple of years and might only be sorted during the 2013 Irish Presidency. We must adopt the approach of defending the CAP budget, the Irish national envelope and active farmers. The best model is the historical one used by the Department, which has statistics on all of the 128,000 farmers. This is not to say that developments will not occur at 11.55 p.m. on 1 May 2013, but it is dangerous to claim the historical model is dead and buried.

Chairman

I thank Mr. Bryan. Before Mr. Smith contributes, I ask Deputy Aylward to take the Chair, as I must attend another function.

Mr. John Bryan

We appreciate the Chairman's support in recent years.

Chairman

Mr. Bryan is welcome.

Deputy Bobby Aylward took the Chair.

Mr. Pat Smith

Picking up on a number of points, I reiterate the importance of a united position. Everyone has an opinion, but one could talk oneself into a serious situation by deciding that the game is over half way through. The facts support the position adopted by the Department and the IFA on the historical model being the best way to retain our national envelope. We are united, as there is a long battle to be fought.

I agree with the point on retailers that was made by a number of members. This matter relates to CAP, under which the food supply chain is broken and farm incomes are under pressure. A part of the fix must involve equity in the food supply chain. I do not want to undermine the need for regulation at Irish or European level to which Deputy Doyle referred, as it will play a key role in ensuring viable incomes for farmers. I agree that more work needs to be done in terms of labelling. England's Secretary of State for Environment, Food and Rural Affairs, Ms Caroline Spelman, MP, wrote to her Cabinet colleagues and claimed that English hospitals and so on should be prioritising English quality food. Fair play to the UK, as Ireland should be doing the same. That contracts are being lost in jurisdictions where the same quality mark is not being used is a major annoyance for family farms that are trying to survive.

We must be careful in the debate on carbon and forestry. Permanent pasture forms part of our carbon sink. We do not want forestry to get a carbon credit that is paid for by someone else. The debate is complex and we do not want to rob Peter to pay Paul. If we argue the carbon sink point by way of forestry and if permanent pasture installation aid is accepted, the restrictions placed on us by the climate change debate could be reduced. There is no legal obligation in terms of installation aid, but there is a moral one. Right is on our side in our desire to retain the aid by way of encouraging new farmers into the system.

The budget was mentioned. Agriculture is a social partner. There has been a degree of recovery in commodity prices, exports are being driven and jobs are being maintained. The Government has given other social partners some degree of certainty regarding cuts, but the farming community, particularly its members along the western seaboard, has taken severe cuts in terms of headage, REPS and so on. We want the committee to assure farmers that there will be no further cuts. Farmers cannot afford them. In the context of equity and fairness, we have accepted cuts in the past two or three budgets. The replacement for REPS is a 30% reduction on the previous scheme. We have taken enough cuts. We have the same case for certainty as other social partners and would like the committee to support our view.

Acting Chairman (Deputy Bobby Aylward)

I spoke with the Minister regarding the loss of the Army contract to Northern Ireland. He told me that, under EU regulations, the Army was required to put the contract out for public tender and accept the lowest tender. According to the Minister, the caterers — I will not mention names — assured him that they would source their product in the South. I do not know whether it is true.

Senator John Carty

An Irish solution to an Irish problem.

Acting Chairman (Deputy Bobby Aylward)

Yes.

Senator John Carty

Like other members, I welcome Mr. Bryan, Mr. Smith and Ms Dwyer to the meeting. Their presentation was timely and appropriate. I was delighted when I heard them state that we needed to be united. I recently attended a fisheries meeting in Brussels with other committee members, including the Chairman. The message coming across was that we needed to wear the green jersey and fight together. It is important that we give the Minister and Department all the support and advice possible leading up to and including 2013. I was interested in Mr. Bryan's comment on this decision possibly not being made until 11.55 p.m. on 1 May 2013. This possibility should be kept in mind in all negotiations.

We must be careful, given the many discussions on certain people receiving high payments. While there should be a cap on payments, we must ensure that the full-time, medium-sized farmer who derives his or her entire income from farming benefits more than is currently the case. In the part of the country from where I come, many farmers have off-farm occupations. They should not be penalised for them, as they would not survive without them. In recent years, off-farm occupations have dried up as well. According to farmers' wives, it is a pity their husbands have land at all because most of their wages are going into it. They would nearly be as well pleased not to have land. Be that as it may, we must be balanced and careful in our negotiations so as not to put anyone out of business. I am delighted by the news of a united front shown by the IFA, the Department and the Minister.

Senator Francis O’Brien

I join in welcoming the delegates and thank them for their presentation. I am concerned that active, medium-sized family farms be supported. At the same time, people engaged in off-farm employment should not be penalised. As everyone is aware, it is very difficult for those with farms of up to 150 acres to make a living. When the price of milk was very low last year, many farmers could not make ends meet. There are many individuals who are obliged to avail of off-farm employment in order to support their farming enterprises. People engaging in off-farm employment has become quite prevalent in recent years.

When I was growing up, people had no choice other than to survive on their farm incomes. The majority of farmers operated on a full-time basis in the period to which I refer. They sold potatoes, grass seed, flax, etc., in order to survive. I come from County Monaghan and when I was young it was very important to have two acres of potatoes, two of grass seed and, perhaps, two of flax. That was how people operated. However, we have moved on and machinery has taken over. Most farmers do not have their own machinery and are obliged to pay contractors to spread their slurry, cut their silage, etc.

As Mr. Bryan stated, we have gone over the top in respect of this matter and I do not know what action can be taken. Environmental officers and local authority officials can visit one's farm at any time in order to discover whether the gutters on one's out-buildings are in good order, manhole covers are in place and so on. In addition to everything else, farming has become an extremely expensive occupation.

As the Chairman and others are aware, I fought tooth and nail against alterations to the REP scheme. Nevertheless, the Minister was obliged to alter the scheme and that is how matters stand. As the Chairman stated, regulation has a major role to play in the context of farming.

I support what previous speakers stated. There must be a united front, going forward, in order that the best possible deal can be obtained for farmers in 2013. I am delighted that there is a united front among everyone present at this meeting. The IFA, the Minister, his departmental officials and everyone else involved must work together. If we stick together, we will survive. However, if we are divided, we will be defeated.

Deputy Christy O’Sullivan

I welcome John Bryan, president of the IFA, and his officials. I apologise for missing Mr. Bryan's presentation. I was obliged to attend another meeting.

I wish to highlight the issue of regulation as it relates to farm produce. Action in this regard must come from Europe. If it is done on a national basis, it will not have the same impact. Many of those who are abusing the current position are multinationals. It is absolutely disgraceful that many farmers have been put to the pin of their collars in trying to survive while the type of companies to which I refer are creaming it off at their expense. This is happening in respect of meat, vegetables, etc.

The word "disappointing" is quite mild. However, I would use it in connection with the position as it relates to the beef sector. Ten years ago, the major players in this sector were supposedly bankrupt. Now, however, they are multimillionaires. These individuals made their fortunes off the backs of farmers. There is no doubt about that. What is happening cannot be allowed to continue, particularly if the beef and other sectors are to survive. These people can operate outside the country and they can do so to the detriment of Irish farmers.

Another matter which must be addressed is that of calendar farming. The sooner it is addressed the better it will be for everyone. We must use whatever farming methods are necessary to keep farmers in business. That is the bottom line for me and it should also be the bottom line for the Minister. In the past, if one was a big farmer or had 200 to 400 acres of land, one was well set. That is no longer the case. In many cases, big farmers are in even more trouble than their smaller counterparts because they have invested so much money in their enterprises that they are now struggling. It is they who are in danger of going under at present.

I was raised on a small farm. We owned only 28 acres of land and there were nine of us in the family. We survived through the use of good and prudent farming methods. Times have changed, however, and it is no longer possible to survive on 28 acres of land.

We are facing into two or three years of difficult negotiations. I am delighted that a man of the calibre of John Bryan will be leading the IFA during that period. As previous speakers stated, we must work together. The IFA, its staff and everyone else has a huge part to play. By working together we can achieve our goals. However, we must be careful and remain on our guard at all times. A couple of bad decisions would have major implications for several farmers and for farming in general. I look forward to working with Mr. Bryan.

Mr. John Bryan

Mr. Smith replied to Deputy Doyle's question but I would state that security of food supply is very important. We are examining ways of dealing with active farmers. The Deputy's suggestion in respect of stocking rates is one which we are discussing with the Department of Agriculture, Fisheries and Food. Mechanisms will have to be put in place in order that we might target active farmers in the best way possible. We have strong views on that matter. Anything that could be done to reduce the cost relating to the nitrates directive would be welcome.

During the negotiations, we will be obliged to examine several options. However, the major decisions will probably not be made for two years or so. As members stated, a united, strong front on the part of Irish interests will send a message to Europe. We held a meeting last night which was attended by more than 400 people and at which that message came across in very clear terms. The message to which I refer will be communicated to the European Commission because Mr. Dieter Borchardt, who addressed the meeting, is at the heart of policy-making in the Commission.

As one of the members stated, agriculture led the recovery. It has begun to do so again. With the support of the CAP and with some assistance in the forthcoming budget and through regulation, we can drive forward. Major opportunities exist in the agriculture sector. The capping of the payments will be a decision that will come from Brussels. It is not a major issue in the overall context. The percentage in this respect that will apply to Ireland is very small. We would not have a strong position on it either way, but if Germany moves on this, there will be a move in this respect. Germany is the biggest beneficiary of the high payment as there are big corporate farms in eastern Europe. It is tricky to work out an income floor level payment. We have talked about income volatility. If a floor price payment could be worked out for dairying, beef, lamb and vegetables, which would be tricky to do, such a development should be examined in the overall debate.

The Acting Chairman referred to calendar farming, green cover and a derogation for pig production. There are all issues in the debate and any assistance provided could have a huge effect in reducing costs. This year is an important one for farmers. We want to do everything we can to protect the family farm and active family farms, a point to which Deputies and Senators referred. Whether a farmer has 80, 100 or 200 acres, most farmers are dependent on their farms for their incomes and if they have off-farm employment, the income derived from it goes into the family farm. If farmers did not have off-farm income in Ireland, we would have land abandonment. Many such farmers have 20 or 30 cows or 100 sheep and an off-farm employment and the combination of the two incomes derived contributes hugely to the economy of rural parishes. Therefore, off-farm income is important.

The historical position was not perfect, but it reflected the level of activity. I am sure most Deputies and Senators would find that most of their neighbours engaged in farming have not changed their farming activity in recent years. If they had 50 cows in the reference years, they probably still have that number now and if they had 100 sheep or 30 dairy cows, they may now have 50 suckler cows now. Very few changes occur in farming in Ireland. The Commission has acknowledged that. Given the land quality we have here and our permanent grassland, there does not tend to be the level of changes that occurs on the Continent where there is intensive arable farming and intensive feedlots and where major changes have taken place.

Deputy Scanlon asked about the contribution that can be made by this committee. This committee has been helpful to the farming community in the past. The Chairman, Deputy Johnny Brady, before he left referred to the challenge posed by Brazilian beef imports. We attended meetings of this committee on a few occasions and the members were supportive of our concerns and helped to keep that issue live at Government level. I remember attending a meeting of this committee at which I discussed beef premium overshoots and it was helpful that the committee provided guidance on that to the Minister for Agriculture at the time. The fact that this is an all-party Oireachtas committee is important in terms of providing guidance and support to the Minister. If there is one message to promote — I am not sure who made this point — it is wearing the green jersey. That is a very good idea.

The reality is that this measure will involve €1.88 billion for Ireland but it will generate far more than that in rural economy. It is important for us to protect that allocation. I am pleased that the debate has moved on at European level. There is a belief in Europe that the CAP is essential. It is up to us to maintain the Irish national envelope. As Senator Carty said, we must present a united front and off-farm income is an important component.

Senator O'Brien referred to active family farms. The average size of farms does not matter. If a farmer is engaged in a little farming, his or her off-farm income is an important aspect for the farming community in rural Ireland. As Deputy Christy O'Sullivan said, a farmer with 300 acres might be no better off than a farmer with 60 acres down the road if he was lucky enough to have a job in the construction sector.

As one of the Senators said, environmental regulation and inspections are important. Anything that can be done to reduce farmyard pollution is important. However, a farmer who is working hard finds it intrusive when he suddenly finds a person in his yard looking at drainpipes and the like, as the Senator said. There is a lack of courtesy in not giving a farmer proper notice of such a visit. There must be a degree of tolerance and acceptance of natural occurrences in that nobody is perfect in all they do every day. There should be a degree of tolerance and people should have the right to rectify matters. That is important.

As one Senator said, in terms of REPs and the AEOS, it is essential the Government puts in place adequate funding in the 2011 budget. Savings will be made on the control of farm pollution in that the figure will fall from €220 million to €110 million and in terms of the 23,000 farmers who will no longer be in REPs, there will be a saving of €140 million or €150 million along with staff cuts and other savings. Huge savings have been made already within that budget. Therefore, adequate provision should be made. A farmer who was in receipt of €7,500 under the scheme for the past few years cannot suddenly find that he or she has zero income in that respect. Therefore, a properly funded AEOS is important. I agree with the Senator who said that we must present a united front in that respect and I also agree with the point made by Deputy Christy O'Sullivan in that regard. We need to work together. The Minister has a tough job to do in Brussels. It will assist him if he knows that the farmers of Ireland, Oireachtas Members and our MEPs support his position. It is important that we present a united front on this issue to Europe. I was pleased at the meeting last night that it was agreed that the message to be conveyed to the Commission is that Irish farmers are united on this and it has the strong support of the Government.

Acting Chairman (Deputy Bobby Aylward)

On a point of information, I wish to advise Mr. Bryan that a consultant has been appointed to prepare a report on the position post-2013. This was an initiative of the committee's. The IFA can make a submission in regard to this report. The consultant is in the Visitors' Gallery. The consultant will prepare a report for the committee by mid-September 2010. The report can be adjusted or amended as the situation develops. The consultant should keep the committee briefed on this. Submissions should be sought from the main agricultural organisations, including the food industry. The consultant should have the liberty to consult directly with the Department and stakeholders, which is includes the IFA, if necessary. Following agreement, the committee will take a decision whether to submit the final report to the European Commission in advance of its communication, to be published in November 2010. We are preparing a report and the representatives have access to the consultant, who is in the Visitors' Gallery. They should avail of this opportunity, which will help us in our deliberations to produce a report which we will forward to the Commission.

Mr. John Bryan

We will co-operate closely with staff members in the farm centre, Ms Rowena Dwyer, our rural development secretary and staff in the livestock and dairy sector. We will make a detailed report to the committee.

Acting Chairman (Deputy Bobby Aylward)

Does Mr. Pat Smith wish to add anything further before we conclude?

Mr. Pat Smith

I appreciate the interaction, the broad range of issues covered and the members' understanding of our position. One is quick to pick up if a person does not know what he or she is talking about. We appreciate the fact that people are taking an interest in what is happening on the ground. If farmers have a bit of an income, they will get on with it, but they would find it very difficult, if they have no income and no prospects. The key message on CAP reform, the budget and the nitrates review we want to leave with the members is that farmers need certainty. The changes made in respect of the nitrates directive did not cost any money. We need to work on those few issues. We need to create some certainty for farmers and farming will reward rural communities and the economy by driving production.

Deputy Andrew Doyle

In terms of land use and land-use climate change and forestry, the totality of land use potential is used to consider carbon emissions. I would not be advocating forestry at the expense of grassland. There is a menu of initiatives such as anaerobic digestion further down the road to remove carbon emissions in agriculture through the harnessing of methane. There is a host of such initiatives. This relates to the total land use.

As a rough rule of thumb, 80% of profit from a multinational is repatriated out of the country while 80% of income to the farming community is used within the general local community. We need to bear that in mind. That is not said often enough. While that point is made the message has not been got across. I am referring to the availability of income in agricultural communities. Some people would say that practically all food is subsidised in some fashion, and in America this is done in a different way. We have to guarantee a properly regulated food supply chain to ensure that people do not grab from it at the expense of others. One option is to move to a system where multinationals control the food production system, but if we allow that to happen, animal welfare and food production at the primary source will be in jeopardy.

Acting Chairman (Deputy Bobby Aylward)

I thank the president of the IFA, Mr. Bryan, Mr. Smith and Ms Dwyer for attending this meeting and for their presentation. We all have a job to do over the next year or two, and we have to row together from Government level to committee level and on to the level of Deputy and Senator. We have to convince the powers that be that we need the envelope, we need as big an envelope as we had in the past and we need to maintain that. That is our task in the coming period.

We will keep in contact. The IFA might put in its submission in regard to this report, if it has anything to add. Hopefully, we can all row together and get the conclusions we want. I thank the witnesses once again for attending and for their presentation. This is the start of the process, and we will move on from here.

The joint committee adjourned at 1.50 p.m. until 11.30 a.m on Wednesday, 21 July 2010.