JOINT COMMITTEE ON COMMUNICATIONS, NATURAL RESOURCES AND AGRICULTURE debate -
Thursday, 19 Jan 2012

CAP Reform: Discussion with EU Commissioner Dacian Ciolos

Chairman

I am informed by those who must be obeyed that the Commissioner has one hour for this meeting so we will proceed without delay. I ask that all mobile telephones be switched off as they interfere with the broadcasting of proceedings.

On behalf of the Joint Committee on Communications, Natural Resources and Agriculture, I welcome the EU Commissioner for agriculture and rural development, Mr. Dacian Ciolos, to the meeting. We appreciate the Commissioner's attendance. He attended committee meetings during the term of the previous Dáil. I also welcome the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney. Accompanying the Commissioner is Ms Barbara Nolan, head of representation, European Commission Representation in Ireland; Mr. Gwilym Jones, a member of the Commissioner's cabinet; and Mr. Claus-Dieter Borchardt, director of DG AGRI, European Commission. Accompanying the Minister is the Secretary General of the Department, Mr. Tom Moran.

In the Gallery is a delegation from the Northern Ireland Assembly committee on agriculture and rural development. I welcome Mr. Paul Frew, chair, Ms Dolores Kelly, deputy chair, Ms Jo-Anne Dobson and Mr. Oliver McMullan.

I invite the Minister to make an opening statement.

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

I am conscious of the Commissioner's time constraints so I will be brief. I welcome the Commissioner to the meeting and I thank him for taking time to come to Ireland for two days. He met many of the stakeholders yesterday who are interested in CAP reform. He has met farming organisations and he spoke at length and took a lot of questions at the IFA annual general meeting yesterday. He is here to take seriously Irish views and concerns relating to the opportunities and potential threats regarding the reform of the Common Agricultural Policy. I welcome him to Ireland and I thank him for his time and the serious way in which he has dealt with matters over the past two days. I urge members to be blunt and honest in their questioning. If they are, they will likely find this meeting very useful.

Chairman

I thank the Minister for his introductory remarks. I now invite the Commissioner to address the committee.

Mr. Dacian Ciolos

I thank the Chairman. I understood we are subject to different treatment today, the Minister and I, because he has the right to address the committee but is not obliged to answer questions.

Chairman

We get plenty of opportunities to question the Minister.

Mr. Dacian Ciolos

I will be very happy to answer any questions members may have following my brief introduction. I am here in Ireland for the second time during my mandate as Commissioner in the context of the proposals set out in October 2011 for reform of the Common Agricultural Policy. Members are no doubt already aware of the objectives of this reform, but I wish to detail them for the benefit of the committee.

For me, an essential element in encouraging this process of reform was the fact that the Commission proposed a strong budget for the Common Agricultural Policy. In other words, even in these difficult economic conditions, the Commission considered that the European Union must maintain a strong budget for agriculture, taking into account not only our ambitions in regard to food production, but also, in the meantime, to ensure a better management of natural resources. It is our view that agriculture and the agrifood sector can create jobs and contribute to green and smart growth in the European Union. The results the agrifood sector in Ireland is attaining are encouraging of the ambition we have for all of the European Union in regard to the Common Agricultural Policy.

We have decided to maintain a strong Common Agricultural Policy with a direct payment system, albeit a new system of direct payments, and with a strong rural development policy which is more open than in the past. The objective is not only to preserve and develop economic activity in rural areas, but also to stimulate the farming and agrifood sector to play a more important role in economic development of rural areas. We are also seeking to maintain market measures in order to be able to act very quickly in crisis situations and to contribute to increased competitiveness in the agricultural sector, especially by stimulating farmer organisations.

Regarding direct payments, I have said since the beginning of my mandate that if we want to maintain direct payments, we must be credible in our attitude to historical references. We cannot justify for the next period, 2014-2010, a situation where farmers have a level of payment linked to the historical level from ten or 15 years ago. I am aware of Ireland's specific difficulties in implementing the flat payment at regional level. However, it is clear in our proposal that member states already have a flexibility in regard to the definition of the flat-rate payment. It is not the case, for example, that we have only one level of payment for all hectares in Ireland. Rather, each member state has the right and possibility to define regions, taking into account several types of criteria or combinations of criteria. It will be up to member states to define the level of a region, the number of regions and the criteria they wish to use, including administrative or economic criteria, natural condition of production criteria, and so on. We have also allowed for a transitional period whereby we are not asking that the flat payment be implemented in a region from the very beginning, that is, from 2014. Instead, we are offering a flexibility until the end of the budgetary period to progress through the flat payment.

Together with the direct payment system to support basic income for farmers, we are also introducing a green payment. The objective of this is not to affect the competitiveness of our farmers; we have many instruments within the Common Agricultural Policy to deal with competitiveness. When we talk about 30% of direct payments for the greening component, it should be clear that the 30% is for farmers, not for other stakeholders in rural areas. My objective in this was to keep all of the budget in the CAP instead of moving it through other policies such as environmental policy or climate change policy and to have other instruments dealing eventually, perhaps, with farmers in order to attend to this objective. The 30% remains for farmers but will be linked to some agricultural practices enforced across the Union. This is the difference between greening under the first pillar and agri-environmental issues under the second pillar.

Our objective under the first pillar is to use three simple measures which, because they will be enforced in all member states, will have a mass effect. The agri-environmental measures in the rural development programme will allow us to deal with specific situations in an area and to pay farmers more for these specific agri-environmental measures. We decided to propose three measures and not a menu of measures in order to have the same treatment for all farmers in the Union. If we proposed a menu of measures, we risked a situation where one member state's measure is under the first pillar, that is, greening, while in another member state the same measure would be under the second pillar, that is, agri-environmental measures. Farmers might complain that their member state had imposed a more complicated measure by which they were obliged to abide.

Instead, we wanted a uniform system. As such, we proposed three simple measures that could be easily enforced from Spain to Finland and from Ireland to Poland. There was some argument that the measures were too simple, could not obtain a result and that it would not be a great effort for some farmers - in Ireland, for example - to maintain permanent pasture because permanent pasture is already there. However, this is the very point. Our objective in using these simple measures is to avoid influencing too much the decisions of farmers in terms of structure of crops and so on. The intention is to obtain a mass effect and to show that agriculture across the European Union can meet the common economic objectives and encourage greater competitiveness on the market in a sustainable manner.

This objective was one of the main points I put to the college of the Commission when I asked it to maintain the budget for the Common Agricultural Policy. It was not easy, but I succeeded because we could prove that the future CAP can offer economic competitiveness in a sustainable way and allow us to introduce new measures and elements in order to increase competitiveness, such as research and innovation. I finally secured a strong majority in the college to maintain the budget.

There has been a great deal of discussion on the question of maintaining 7% of the overall area of farms as ecological focus areas. It has been stated this means there would be 7% less land available for agricultural production, but that is not the case because a certain proportion of agricultural land already does not qualify for payment. This is owing to the fact that there may be vegetation - trees, etc. - on the land and it is, therefore, not eligible to be considered for payment. My proposal is to make this land eligible and support farmers in maintaining it. This matter does not relate to the 7% of land set aside but rather to land which is less fertile. Such land may be less important when it comes to production, but it can be important in maintaining, for example, balanced development in the context of biodiversity.

The three measures we have proposed will not create further administrative bureaucracy because when completing application forms for direct payments, farmers will be able to list matters relating to crop production, areas permanently devoted to pasture, etc. The three measures can be checked when the requirements relating to the rest of the payment are being examined. We took a cautious approach in this regard when we made the decision to propose these measures.

On entitlements, we proposed 2014 as the new reference year for eligibility requirements relating to land. Owing to the fact that I was aware of the problems to which this reference year could give rise in Ireland, just before the adoption of the legislative package we gave a commitment to introduce a second reference year - 2011 - for farmers. Only a farmer who was already involved with the system of payments in 2011 could request a new entitlement in respect of his land in 2014. We took this action in order to prevent people who might use the new reference year of 2014 to claim entitlements, even if they were not working as farmers in 2011. We tried to deal with the specific matters affecting Ireland in this regard. I am aware that particular legislation applies in this country in the context of the utilisation of land. However, the new reference year is required because it cannot be the case that someone who was or is working as a farmer in 2010, 2011 or 2012 and who will not have land in 2014 can request a new entitlement in the latter year for a period of a further seven years. That is why we need to take into account the position in 2014 in the context of land being used for agricultural purposes.

On the flat payment, I have explained that both regionalisation and the criteria that will apply are the responsibility of individual member states. I took notes yesterday during several discussions and meetings in which I was involved with the Minister, Deputy Coveney, and farmers. I am aware that even in homogenous areas there can be differences and that people do not want the competitiveness of farms to be overly affected in a very short period as a result of the redistribution. We will consider how we might deal with this matter next month in the context of the negotiations due to take place.

We want to maintain a strong rural development policy. We have given more flexibility to member states because under the system of axes, there is compulsory utilisation of budgets in respect of axes or orders. Some member states have encountered difficulties in the context of moving budgets from axes to orders. We are now proposing only six priorities and each member state will take these into account when defining its strategy for rural development. I accept that member states will deal with these priorities in differing proportions in the context of both their objectives and specificities.

We have also introduced new instruments under the second pillar in order to support farming organisations in the creation of producer groups and organisations. This is essential for all sectors in the European Union, not only that which produces fruit and vegetables. There is already a system in place to support producer groups and organisations in that sector. It is vital that all sectors encourage farmers to work together. In the context of proper management of volatility of prices and particular crises and the bargaining power of farmers, the organisations to which I refer are essential. With the new measures, we want to stimulate farmers to organise themselves in order that member states can finance the creation of the producer organisations to which I refer. In addition, it might also be possible to fund common activities among these organisations.

We have also introduced a new instrument to ensure the results of research and innovation will be taken into account in the context of the Common Agricultural Policy. It is a completely new development to have a clear deal - not only in terms of procedure but also in the context of budgets - and a clear link between research and innovation policy at European level and the Common Agricultural Policy. I worked well and in an extremely efficient manner with the Commissioner, Ms Máire Geoghegan-Quinn, on this matter. For the coming period we have in place a specific research and innovation policy for agriculture and the agrifood sector. Attached to this is a specific budget and particular procedures. In addition, there will be a clear link between the decisions and choices of member states, in the context of the rural development programme, to support investment in one sector or another. This will assist in stimulating work in the area of research and development. The new instrument will be managed at European level and we will deal with the priorities already established under the Common Agricultural Policy.

There remain some matters to mention in the context of the market orientation of the Common Agricultural Policy into the future. Members will be aware that we have some mechanisms in place which are specifically designed to deal with crises. There is also a separate budgetary line devoted to dealing with such crises.

I will be happy to answer any questions members may wish to pose.

Chairman

I thank the Commissioner for outlining his position. On the previous occasion on which he came before the joint committee he did not have the opportunity to do so. In view of the fact that so many members are present, I propose to call first on the spokespersons for each of the groups and then the Vice Chairman. I ask members to keep their contributions as concise as possible in order that everyone might have an opportunity to speak. We will stop taking questions at 10.25 a.m.

Deputy Michael Moynihan

I welcome the Commissioner and the Minister. On the Common Agricultural Policy, one of the main issues about which farming organisations and farmers are concerned is the reference year of 2014 and the distortion that has already occurred in the market. People are making decisions prior to 2014 which might not be in their best interests in the long term. The Commissioner referred to the second reference year of 2011 at his press conference in Government Buildings. I do not believe this is having much of an impact in terms of distortion in the market.

The proposals were published on 12 October and people are making their business decisions based on them. A serious look needs to be taken at the use of 2014 as the reference year, as we need clarity on the issue. Making a future date a reference year means people will actively pursue ways to exploit or use it to their best advantage. I have seen this happen everywhere I have been recently, particularly since the beginning of January. People who have rented land for 20 or 30 years are ceasing to do so. This is having a huge effect on the viability of some farms. There are concerns about greening and other issues relating to the budget, but the major issue I would like the Commissioner to seriously re-examine is the use of 2014 as the reference year. I do not accept that what was included in the proposals prior to their publication with regard to 2011 being the reference year will have a serious impact. A farmer with an entitlement can receive multiples of it. This needs to be seriously re-examined. It will be 12 or 14 months before the proposals are finalised. That is my major concern; it is also a major concern of the industry. It is seen as a very important issue. Another issue is flexibility for member states in these matters and in dealing with coupled payments.

Will the Commissioner outline to the committee his opinion on the beet industry? Serious efforts are being made to re-establish the industry in Ireland after 2015.

Another issue, slightly outside CAP reform, is the abolition of milk quotas in 2015 and a soft landing for Irish farmers. Many decisions have been made at farm gate level in the past four or five months to reduce production because the national and individual quotas are being exceeded, although the European Union is under quota, which is farcical. Ireland was slightly under quota at the turn of the year, but that was due to drastic decisions taken at farm gate level in previous months.

Negotiations are taking place on front-loading the butterfat-adjusted calculation which other countries, as well as Ireland, have been seeking. I ask the Commissioner to examine this seriously. Between now and 2015 people will be gearing up to ensure they will be in pole position to maximise their output from the dairy industry and as such, it is important that everything is done to ensure people will not make decisions whereby their herds will not be reduced or decimated after 2015.

Deputy Michael Colreavy

Bine ati venit in Irlanda, Commissioner Ciolos.

I welcome the clarification provided by the Commissioner. Our job in opposition is not to oppose everything; rather it is to strongly support what we believe is good; identify areas in which we consider there may be problems; and, where we can, suggest alternatives to proposals made. Farmers and farming organisations in Ireland are very conscious of the value of the Common Agricultural Policy in promoting the agriculture sector, food production, fisheries and rural development not only in Ireland but throughout Europe. It is of benefit to the peoples of Europe and throughout the world.

We have the Food Harvest 2020 strategy; without the support of the European Union, it would be a wish rather than a strategy. We are very conscious of the value of the Common Agricultural Policy and the depth of the Commissioner's responsibility in ensuring it continues and that we have sustainable agricultural practices, a secure food supply, quality food and environmental sustainability for the next generation.

This is a very challenging time economically in Ireland and the European Union. I have no doubt Members of the European Parliament will look at the overall budget available for the Common Agricultural Policy and that some will try to have it reduced and the money invested in other areas. However, we must protect the overall budget. The Commissioner certainly has our full support in ensuring it will be protected in coming years.

Agriculture in Ireland is doing well; we are very proud of the sector and our food production. The level of exports has reached €8.5 billion, a significant achievement. We intend to increase this figure year on year. However, we must never lose sight of the fact that the average farm income is still well below the average industrial wage. In some of the more marginalised parts of the country the average farm income is well below half the average industrial wage. We must ensure those involved in agriculture will continue to be supported to remain in the sector, as well as to attract new entrants to the industry. The national contribution to the overall EU budget must at least be preserved.

I welcome the clarification that the rules, procedures and bureaucracy associated with the Common Agricultural Policy will be streamlined. However, to be frank, we have heard before that attempts would be made to streamline and simplify them, but these promises have not been delivered on. One of the areas in which I foresee an increase in bureaucracy concerns the definition of "active farmer". The last thing the country wants to see is another process of application, refusal and appeal. Appeals would quickly back up and the number of staff available to deal with them would be reduced to reduce the public service pay bill and this would lead to frustration. We need to re-examine how "active farmer" is defined, as the last thing we want to do is exclude genuine farmers, particularly small farmers.

I accept and welcome the clarification provided by the Commissioner on a reference year of 2011. We believe there is still a risk that the use of reference years could work against the objectives the Commission has set. While I cannot present a solution because I do not have one, perhaps it might be possible to do something other than using a reference year which might meet the objectives of the Commission, which I understand, but in such a way that it would not destabilise the Irish market or others throughout Europe.

The transition period applying to flat rate payments needs to be extended. It is a significant change which will impact adversely on some farmers. Perhaps the upper limit might need to be changed. I welcome the clarification on the need for the greening proposals to be considered in the context of Irish farming ways. Farmers and their families have always been good and trustworthy custodians of the land. Farmers work for the next generation not for today or tomorrow and they will continue to do that.

Once again, I thank the Commissioner for attending the meeting and listening to our views. He can rest assured that we will work with him and everyone who is promoting positive agriculture and food production here and throughout Europe.

Deputy Mattie McGrath

I too welcome the Commissioner, the Minister and our colleagues from Northern Ireland to the meeting on behalf of the Technical and Independent Group. I wish them a ceád mile fáilte.

Much has been said by the previous spokespersons and I will not repeat it. I am pleased the Commissioner is present and that he is so forthright. I heard reports of his engagements yesterday with the farm organisations. We are lucky to have a Minister who is so much on top of his brief.

Europe and the world are in recession but in the previous two recessions here it was the farmers who brought us out of recession. They have the potential, tenacity and vision. They also have the assets to develop and improve our exports, which we must do. They have the capability to lift us out of the recession. While the Celtic tiger was roaring across Europe, certainly here, we took our eye off the ball. We might have neglected farming but we must go back to basics. It is our primary industry. Direct payments must be ring-fenced and linked to ten or 15 years ago. We must know the drivers of the economy, namely, the active farmers. I welcome the Commissioner's view that he wants to support small, medium and large enterprises that are actively involved in farming, not casual farmers. They have the necessary long-term vision and passion.

Speakers referred to greening. Farmers are wonderful custodians of the land, of nature and many areas connected to the wider economy. Whatever reforms are introduced we must cut out excessive bureaucracy at European level and at national level. Although we are on the same small island, farmers in Northern Ireland have different notional dates for certain activities rather than dates based on practice. We must put our best foot forward and be allowed to have the tools of the trade so that farmers can use their energy to farm to their best potential.

It is a pity about the reference days because, as has been indicated, people are curtailing themselves in terms of milk quota to meet deadlines and comply with certain dates. We must get away from that and allow those who are able to produce good, clean food and support themselves, the broader European economy and the world economy to do so and to be economically competitive. They should be allowed to farm to the best of their ability and do what they are good at, and we should not tie them down with bureaucratic measures and calendar dates.

We have made efforts in the context of Food Harvest 2020. I thank the farm organisations for their continuous engagement and leadership. I thank the delegates for being so hands-on and interested, for coming to listen to us and asking us to be frank, which we have been.

The sugar beet industry was a vital part of the economy. It was a staple of the agriculture industry. It is important for us to re-engage with that, especially given the world market conditions. It is a fabulous industry. I was involved in it as a young boy. The spin-offs from the industry were tremendous. We got a bad deal, which is a pity, but we probably handled it badly here.

We must have positive recognition of our ability to do research, be innovative, have new ideas and for farmers to be progressive. I wish the Commissioner a happy visit to this country.

Deputy Pat Deering

On behalf of the Fine Gael group I welcome Commissioner Ciolos to the committee. We are all aware that agriculture is a key to restoring our economic recovery. We are going through a bad spell in the same way as everywhere else and agriculture can lay the foundations for future success.

The reference year 2014 will have a detrimental effect on the country. We are unique in that we have much land rented. The figures speak for themselves. Our land turnover is only once in every 400 years compared to once in 75 years in most other European countries. That could have a negative effect on future production here. I welcome the clarification on the greening proposals but it still does not go far enough in terms of bureaucracy. Time and again we have heard that there would be less and less bureaucracy but that has not been the case. We are only getting lip service. It is important that the issue be clarified once and for all. I also welcome the important initiatives for young farmers. It is vital that we get more young farmers into the system here and in every other country in Europe.

The flat-rate payment could have a detrimental effect on production. We are trying to achieve a target for Food Harvest 2020. A flat-rate payment would have a negative effect in that it would discourage farmers from trying to increase production in certain parts of the country that are currently productive. The issue must be addressed.

Previous speakers referred to the sugar beet industry which was forced into extinction in recent years. A sugar industry could create a necessary stimulus in its own right and in terms of bio-fuel and related industries. In the past it created a lifeline at certain times of the year when things were quiet. It was the only industry in the country that was making money when it was closed down. I would welcome the opinion of the Commissioner on what we as a country should do next to try to stimulate the industry again.

Does Mr. Ciolos expect a phased introduction or closing down of the current quota regime to try to alleviate potential pressures? We are in a unique situation in that our farmers are keen to increase production as soon as possible but we need a step-by-step approach to ensure that we will not face serious fines.

Deputy Ann Phelan

On behalf of the Labour Party group I welcome the Commissioner. Given that we are under time constraints I will endeavour to be brief.

The sugar beet industry was located in my constituency of Carlow-Kilkenny. I cannot stress enough the effects of the disappearance of the sugar industry, through bad decisions. The effects were felt not only in the farming sector but throughout the entire country. I am delighted we are now beginning to focus again on it.

The Commissioner referred to his six priorities under the rural development heading. I accept that it is difficult working under the various axes given that one axis had a budget but another one did not which led to much frustration. It caused a great deal of frustration in that we were trying to get fruit and vegetable producers together, but even as we were trying to develop food, the budget for some of the produce disappeared in one axis. Is the Commissioner stating that member states will have complete flexibility in determining budgets around the different axes? Will the member states decide on those axes?

Deputy John O’Mahony

I welcome the Commissioner to the meeting which gives him an opportunity during his visit to Ireland to hear at first hand from all the stakeholders who are re-emphasising many of the points our Minister has made to him since he took office. We are all aware that these discussions are ongoing but it is vital that we get it right as a policy from Ireland's point of view, especially in the current economic circumstances. We hear a great deal about austerity and the need for growth. Agriculture is providing the opportunity for that growth here in Ireland and what happens in the coming years with regard to these discussions is crucial. Agriculture is the vehicle that can take Ireland out of its current difficulties.

I will not repeat some of the points but the Commissioner mentioned that there will be flexibility, which is a crucial point, but he also spoke about the need for uniformity. They are in direct conflict. It is important that the Commissioner should realise that one size does not fit all. I emphasise that.

Regarding the reference year, our economic circumstances are such because we have come out of a property and construction bubble and it is important we do not let that happen in agriculture.

Chairman

It is 10.22 a.m. and six members are offering but if we want the Commissioner to respond, I must call him now. I apologise to the members. I appreciate everybody wants to contribute. Would the Commissioner like to respond?

Mr. Dacian Ciolos

We can take another two or three questions.

Chairman

To be fair I will give members one minute each. I call Senator Ó Domhnaill followed by Senators O'Neill and Comiskey, Deputies Barry and Harrington, and Senator Ó Clochartaigh.

Senator Brian Ó Domhnaill

The reference year of 2014 and the 2011 year of entitlements criteria will create difficulties for younger farmers and new farmers coming into the system. I welcome what is being done within the CAP for small and young farmers in that 10% of the national envelope will be set aside for small farmers, but only 6% of farmers within the European Union are under the age of 35, and approximately 5 million of the 13.7 million farmers across Europe intend to retire in the next ten years, yet there is nothing in the CAP proposals for farmers who may want to retire and hand over the family farm to younger farmers. That is a mistake. I welcome what the proposals contain for younger farmers but there is nothing in them to entice older farmers to hand over to younger farmers.

On the greening issue, greening will create difficulties regarding food security. It will make Europe less attractive in terms of creating additional food to feed the world. The greening issue might have been addressed under pillar 2 rather than pillar 1 of the CAP negotiations. That may have been a better way of dealing with it rather than placing what is effectively green tape on farmers when it is currently a bureaucratic industry.

Senator Pat O’Neill

The Commissioner is very welcome. I will make some brief points. I commend the Commissioner on defending the Common Agricultural Policy budget in the EU but as some members mentioned, with the CAP we must make sure we protect food security. We pride ourselves here on our safe food but we must make sure that the EU, under the Common Agricultural Policy, protects that food security. It is a world issue but as a continent we must be able to make sure our people are fed.

The main message the Commissioner must take back from his visit here is the question of the reference year of 2014. As Deputy O'Mahony stated, we do not want to hear speculation at this stage either in regard to short or long-term land leasing or the purchase of land because if the dairy industry, which is operating well, continues to do as well but the 2014 reference year is allowed, we may see producers of beef, sheep and tillage being forced out of the market in regard to leasing and so on. Also, smaller producers may not be able to compete against the larger producers. Farmers would have preferred if Santa Claus, or St. Nicholas in the Commissioner's tradition, had come up with a surprise year but everybody will be geared now to 2014 and it will cause problems.

On the 7% greening or ecological measures, we are not allowed to use permanent pasture. Are we allowed to count our hedgerows as part of that 7% ecological measures? Also, in terms of the Commission's definition of "permanent pasture", for how many years must it be in grass?

Senator Michael Comiskey

The Commissioner is very welcome. The 2014 reference year is a problem for me, and that has been outlined. I am aware the Commissioner is taking some steps towards using 2011 as the reference year but it is not enough. We are concerned it will reward people for ownership of land rather than productivity.

I welcome the Commissioner's moves regarding the position of young farmers. Can the Commissioner indicate how much of the EU budget will be ring-fenced for agriculture innovation in the next financial framework from 2014 to 2020?

Deputy Tom Barry

I thank the Commissioner for coming before the committee. As a commercial farmer, these new measures do not work. A 2011 reference year will work but a 2014 reference year will not work. I have lost 20% of my current land base because of these new CAP proposals and as a commercial farmer that is not good. The land that has been taken has gone back to less skilled, less productive people who are essentially looking for it to claim payments. The Commissioner must take home that message.

We are the emerald isle but we did not get that name for nothing. It is because we are naturally green. Applying a greening process to car production in Germany would devastate Germany but it would not devastate Ireland whereas the effect of a greening process can devastate Ireland but will not devastate other countries in the EU. It does not fit into our process here.

With regard to beet production, I have been an advocate of getting back into beet production for many years. We should never have got out of it. There is a beet processors fund, 90% of which is used but 10% of which remains in the EU. Before that goes back into the agricultural budget I ask that the EU would look at Ireland in terms of the specific situation that happened here and allocate a portion of that budget to us to allow us get our capital structure up and running again in some way.

The stranglehold of the retailers has not been mentioned. Retailers are dictating the price farmers should get for their products. It is disrupting production. Food security will be an issue if that is not tackled. Food inflation will become a major issue in Europe and at times we are running very tight on supplies. I thank the Commissioner for coming here and I appreciate him giving of his time.

Deputy Noel Harrington

I join with other speakers in welcoming the Commissioner and his officials, the Minister and his officials and our colleagues from the Northern Ireland Assembly. I will be brief. I congratulate the Commissioner on maintaining an agricultural budget from the college of commissioners. That is a significant achievement, particularly for Ireland, and will maintain our envelope in terms of an agriculture budget for this county. My question is specifically on flexibility and whether the Commissioner would allow member states, especially Ireland, the flexibility to make their own decisions on the distribution of the budget.

With regard to greening, it is a question of recognising that many of the measures we have taken have had a positive environmental impact, not directly in pillar 1. As much flexibility as possible should be allowed to member states to allow them to adopt an environmental policy on the distribution of funds to farmers and still achieve the objectives the Commission desires, not just for Ireland but for Europe as a whole. If given the flexibility, we could achieve the objectives.

Senator Trevor Ó Clochartaigh

I thank the Commissioner for attending. I want to raise a broader issue. I am from the west, which is very beautiful and which has very small farms. On the rural development issues, we find in Ireland that there is great tension between environmental groups, the individuals behind the environmental directives, and those trying to develop rural areas, farms and fisheries. I would welcome comment on how the Commissioner for Agriculture and Rural Development can deal with the Commissioner for the Environment in this regard. Sometimes many of the projects we try to put forward under the rural development and agriculture remit are hindered or made much more difficult by the very stringent directives put in place with regard to special protection areas, SPAs, special areas of conservation, SACs, natural heritage areas, NHAs, etc. We are finding it very difficult to negotiate our way through them. What makes sense at European level does not necessarily work in small rural areas, particularly on the peripheries in the west and other areas of Ireland. These concerns should be relayed to the Commissioner for the Environment. Commissioner Ciolos should fight his corner for us in that regard.

Mr. Dacian Ciolos

Some issues were raised several times. With regard to the reference year, if we are not able to take into account the reality in 2014, how credible can we be with the direct payments? One will know that the main criticisms of direct payments is that we give money to the non-farmers and those who do not work in agriculture. We maintain their right to a payment just because they had an entitlement to one ten years ago. If we are not able to deal with this problem, we will not be deemed credible.

I do not know if the committee realises the difficulties that arose, even in the Commission, in regard to maintaining the budget. The process is not yet finished because we must determine whether the Council and Parliament agree with the proposal of the Commission. If we are not able to deal with the criticism that we are not using CAP money efficiently to deal with the relevant social objectives, we will be without a budget. We can discuss it among ourselves. One of the problems is that, based on the historical reference years, we have been giving money to some former farmers. If we are not able to clarify the issue, these farmers will maintain the right to the payment even after 2014. This is why we propose to ascertain the reality of the picture of the land in 2014 and not give money to some farmers who had land two, three or four years ago but who will not have it in 2014 or 2015. With this objective in mind, I was ready to ascertain solutions to deal with specific situations. I will not accept, however, that in 2014 we will establish a new entitlement for a farmer if we are not sure he is still a farmer with land in that year. To deal with the Deputy's specific problem, we referenced the year 2011. We will see whether we can still make progress in this regard or improve the proposal but I must be clear on the objective.

Regarding the flat payment and flexibility, I was anxious to give as much flexibility as possible to member states. That is why we decided to leave to the member states the power to establish regions and establish criteria to define them. I will not accept that a farmer should maintain a right of payment in 2014 just because he had a very high reference in 2003.

One should think of the case of a young farmer who will inherit a low payment in 2014 based on his father or another relevant farmer having had a low payment in 2003 or before that year. He ought to be allowed to be competent and invest like others. We must deal with this issue because if we justify direct payment as basic farm income, we must also take into account new criteria. It is difficult if two farmers in the same region who work in the same conditions and have the same produce have very different payments just because of historical reference points. When members say the new system will affect competitiveness, they should please look to other member states or regions in Europe where there is a flat payment at regional level. They will note they are very competitive. It is not that the farmers are not competitive because of a certain system of payment.

I understand the need to have a transition period and to take into account some specific circumstances. We will analyse these. I took note of the remarks in this regard and have promised the Minister that we will determine together how we can make improvements. The members should please forget historical reference points if they still want to maintain direct payments. Not doing so is not credible. In 2003, when there was decoupling, perhaps the system was justified. In 2014, it will not be justifiable according to historical criteria.

With regard to greening, it is not in the interests of farmers to have a contradiction with regard to food security and the environment. We must be aware that we are in the European Union, not Brazil, Argentina, Australia or China. In the Union, agricultural land is an economic element for farmers but also of public benefit to cities and taxpayers. If one considers the Eurobarometer surveys we prepared in respect of reform, one will note the majority of European citizens are ready to support agriculture and the agrifood sector with money but on condition that farmers take care more of the natural resources. As Commissioner for Agriculture and Rural Development and a politician, I feel obliged to prove we can have competitive, sustainable agriculture in Europe and put more emphasis on all the work farmers do in this regard. This is why we are linking part of the direct payment - the biggest part of the CAP budget - to green measures. We took care to choose some simple enforcement and control measures.

Permanent pasture is not too complicated to achieve; we just have to maintain it. The diversification of crops is not too complicated for a real farmer with an agronomic grounding. For those farmers who carry out this activity in an agronomical manner, diversification of culture is normal for the fertility of the soil, to manage some production problems and so on. Consequently, it is not in our interest to state that because of greening, we will be obliged to reduce production as that will not be the case. We performed an impact assessment for each of the three measures we proposed and I assure members that I wish to be and am responsible, economically speaking, for our sector and it was not my intention to propose measures simply for the political pleasure of environmentalists. I really seek to prove that we are able, in the same Common Agricultural Policy and with this budget, to carry out this complex mission we have for our agriculture.

As for active farmers and bureaucracy, the definition of "active farmer" has enough flexibility to deal with the specific situations of part-time farmers, small farmers and so on. We also give to the member states a flexibility in this regard because we ask that in order to be recognised as an active farmer, one should have a minimum income coming from agriculture and should have a minimum activity on the land one manages. As this minimum activity will be defined by each member state, in this instance the Commission is giving flexibility to member states to define such minimum activity on the farm to be recognised as an active farmer.

I refer to bureaucracy in respect of greening, active farming and other measures. We tried to reduce bureaucracy as much as possible, while at the same time being able to deliver with regard to the Common Agricultural Policy. This is because at the end of the budgetary period, the Commission must prove to member states that the budget of the Common Agricultural Policy was used in an efficient manner and that we obtained results. Unless we ask for some minimum information from farmers or from member states to be able to prove results at the European level, we are merely a kind of bank that distributes money but without results. This is the reason we need a minimal amount of bureaucracy but we try not to develop it too much. I hope members are aware the bureaucracy faced by farmers does not merely come from Brussels as member states also add some bureaucracy. While I do not suggest that Ireland adds bureaucracy, I note Ireland is highly attentive in this regard.

Deputy Simon Coveney

Perhaps a little.

Mr. Dacian Ciolos

However, in respect of the same European measure, I can demonstrate differences in levels of bureaucracy between one member state and another. This proves that if we pay attention, measures can be carried out in a more simple or a more complicated manner. In this regard, I will try to take on my responsibility. My intention is to establish within my directorate at the Commission, DG AGRI, a team that will examine how all member states or regions enforce some European measures. At the same time, it will try to create a guide to good practices and bad practices and to present to citizens and to member states how a measure can be enforced in a bad or a good way. It is to be hoped that in this manner, we also will encourage member states and their administrations to pay more attention with regard to the enforcement of some measures.

As for sugar, members are aware the Commission's proposal is to finish with the quota system by 2015. If this proposal is accepted by member states, the Council and the Parliament, starting in 2014 it will be up to Ireland or its sugar industry to decide whether it is sufficiently competitive to restart the production of sugar. It will not be a problem for the Commission but we hope there will be a majority in favour of accepting the Commission's proposal to eliminate the sugar quota by 2015.

In respect of the milk quota, Members are aware that a decision already has been taken by the Council regarding the soft landing. Consequently, it is no longer up to the Commission to reopen this file as the member states already have decided on the matter. I already have explained to the Minister that he has the opportunity to express himself in the Council and if a majority of the Council decides to reopen this file that already has been decided on by the Council, it can be discussed. However, as Commissioner, I cannot entertain arguments to reopen this file that was closed on foot of a decision made some years ago.

Briefly, regarding rural development, its axes and the budget limitations thereon, this is the case during the current budgetary period. However, as I mentioned, we proposed greater flexibility for the next budgetary period. For the current budgetary period, we must take into account the regulation that was adopted by the Council and consequently, we cannot change this regulation. However, for the next period, we do not have such a limitation. The only limitation will be the justification the member state or region must prepare to justify the reason it decided to give one priority more weight than another, taking into account the realities and the specific objectives.

I refer to the reason the Commission did not reintroduce the measure regarding retirement for the benefit of young farmers. It simply was because our analysis regarding the implementation of this measure in recent years proved this measure is not efficient. This is because in those member states that applied retirement measures, only very few dossiers were requested under this measure, with no effect on young farmer installations. This is the reason we decided to focus more on the specific measures for young farmers rather than on retirement measures. As many systems exist, at member state level or otherwise, regarding the system of retirement and the hand-over between farmers, comprising several juridical frameworks, we cannot deal with only one measure at European level with this specific juridical position. This is the reason we decided to concentrate the budget on the young farmers with a supplementary direct payment for the first five years. I note this is the first time the Commission has proposed this measure. In addition, the Commission also proposes to retain a measure of support for investment in the installation of young farmers with its premium for installation. In addition, we gave the possibility to member states to define within the rural development programme a sub-programme for young farmers and to have a higher intensity of financial or public support for all investments for young farmers. We now have a real package for young farmers' installation.

I thank members and hope I was able to give them some elements of an answer to all their questions. Discussions will continue over the coming months and I hope, during the Irish Presidency, to be able to have a final decision on the reform. Moreover, I hope to have the full support of Ireland in the Council and in the European Parliament for this improved proposal of reform.

Deputy Simon Coveney

I thank the Commissioner for his candour and straight talking in terms of what is possible, what is difficult and what is not possible. It now is our job collectively to try to put proposals before the Commission that are workable and that can improve the proposals from an Irish perspective, taking into account the broader agreement that will be required across 27 member states. We have a unique responsibility in this regard because this time next year, Ireland will have the Presidency of the European Union. Everybody hopes that the final compromise deal can be achieved during that period to conclude the CAP. I know the Commissioner will go back to Brussels having understood that this is a hugely significant and serious negotiation for our country. The Irish agri-food, agricultural and farming sector is central to our economy. As one of our key priorities during the Irish EU Presidency, we will put all the resources we can afford into trying to assist the European Commission to reach a final CAP deal that will be in the interests of Irish agriculture and the economy generally. We need such a positive news story. In addition, we need to work with the Commission in trying to reach agreement with other countries that have, in some cases, conflicting prioritises to our own.

We are past the start of the process and are in an important phase at the moment. I hope, this time next year we will be close to a conclusion. I thank all members of the joint committee for this meeting.

Chairman

I thank the Minister for his comments. I also thank the Commissioner for this full and frank exchange on his position. This committee has a cross-party approach and we sing off the one hymn sheet due to the importance of agriculture. We support the thrust of the principles under which the Commissioner has justified securing the budget in the first instance. We are conscious that the CAP agreement has to be acceptable to all 27 member states. The key objectives are to ensure that Europe can produce sustainable food supplies, and support rural communities. I hope therefore that the Commissioner will take on board the fact that some of the concerns emphasised today allow us to measure up to that objective. While we all understand there has to be compromise, the Commissioner should as far as possible take on board our genuine concerns which are expressed in good faith. It is important for the Irish economy - which, having been in the doldrums for some years, is just coming into the recovery ward and doing quite well - that such recovery and further expansion should not be jeopardised by anything that happens in the context of CAP reform.

Members of the committee will have an opportunity to put forward a written submission and observations to the current proposals as they stand. For the next 18 months, we envisage that we will continuously monitor progress and offer our opinion as a collective committee to the Commission, the Minister and the Department. We welcome the fact that the Commissioner is so open-minded and committed. We fully support the general thrust of what he is trying to achieve.

I thank members of the committee for attending this meeting. Before concluding, once the Commissioner has departed, we will have a brief meeting with representatives from the North of Ireland MLAs' sub-committee to reflect on what has been discussed here today. As many members as possible should join us in the Members' restaurant for half an hour at most.

The joint committee adjourned at 10.54 a.m. until 2 p.m. on Tuesday, 24 January 2012.