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since the beginning of my mandate that if we want to maintain direct payments, we must be credible in our attitude to historical references.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.