JOINT COMMITTEE ON COMMUNICATIONS, NATURAL RESOURCES AND AGRICULTURE debate -
Tuesday, 8 May 2012

Reform of Common Agricultural Policy: Discussion with Irish Cattle and Sheep Farmers Association

Chairman

We will continue our discussion on CAP reform with representatives from the Irish Cattle and Sheep Farmers Association, ICSA. I welcome Mr. Gabriel Gilmartin, president, Mr. Eddie Punch, general secretary, Mr. Edmond Phelan, beef chairman, and Mr. Billy Gray, CAP committee chairman, and I thank them for attending. The delegation is probably aware that the committee will hold a series of meetings with the main stakeholders that will provide us with an opportunity to tease out various positions and concerns, specifically with regard to five draft legislative proposals that are under scrutiny and any wider CAP reform-related matters. Following the completion of all of the stakeholder meetings the committee shall forward a short political contribution to the European Parliament at the end of May.

Before I call Mr. Gilmartin to make his opening statement I am obliged to refer to privilege. I draw to the attention of witnesses that they are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they do not criticise or make charges against a person or an 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 to the effect that they do not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Gilmartin to make his opening statement.

Mr. Gabriel Gilmartin

I thank the Chairman and members of the joint committee for the invitation to address them on reform of the Common Agricultural Policy which, undoubtedly, is the most critical policy issue facing farmers. The Irish Cattle and Sheep Farmers Association, ICSA, took the lead on CAP reform in 2003; it was the first and for a long time the only farm association to support decoupled payments. It is no surprise, therefore, that we have worked very hard to make the case for an historic single payment. We continue to argue that if change must come, it must be gradual and phased in over a long period because in that way it would not result in significant losses for farmers who have continued to farm in a productive manner since the previous reform was undertaken in 2003.

It is fair to say there has been much concern among our members about the implications of what Commissioner Ciolos has proposed. Cattle and sheep farmers are especially dependent on the single payment. In 2010 direct payments accounted for up to 160% of family farm income on dry stock farms. Many of the farmers concerned have now exited REPS and either entered a much less valuable AEOS scheme or, in the case of those who left REPS after May 2011, have no scheme to replace REPS.

The key concerns are that the EU budget be sufficient to retain the current level of CAP support across Europe and that Ireland receive, at least, a similar amount to what it receive at present; that the flat rate payment will not work in this country and that a significant flattening of payments across the board would hit too many farmers too severely; that we do not end up with a whole new regime of extra bureaucracy and restrictions, in particular in regard to greening measures. There is also concern about what is happening to the land rental market as a result of the uncertainty around reference years. The budget remains undecided and it seems there is no great urgency to reach a decision on it. The economic crisis and elections in France are partly to blame, but there is also a range of views on whether the European Union budget should be reduced at a time when austerity is the prescription for many member states.

The problem is that progress in the negotiations is delayed in the absence of certainty on the budget. As it stands, it seems to us that we are not on target for a deal to be done under the Irish Presidency of the European Union in the first half of next year. In turn, it is increasingly possible that the reforms will not be in place for 2014 as planned, which raises questions about reference years. In the Ciolos proposals 2014 is the base year, with eligibility linked to whether a farmer made an area aid application in 2011. That begs the question of whether the relevant years will be 2012 and 2015 rather than 2011 and 2014.

One thing on which we are clear is that there is no possible justification for going back to any form of coupled payment. A campaign is being run by the meat industry which would like to see a reversal of the implementation of full decoupling measures. That is precisely because decoupling created the conditions that allowed the price of beef to pass €4 per kilo and gave us a much improved sheep price in the past 12 months. The sharp drop in lamb prices in recent weeks shows that we are still vulnerable to fluctuations in supply and demand.

The critical point is that the only sensible means of increasing output is to do so in response to improved market conditions. Putting in place artificial incentives to increase numbers is a roadmap to disaster for farmers. The options for recoupling are limited. The proposals would allow Ireland to use 5% of the total national envelope for coupled payments. That amounts to less than €65 million. If it was allocated to the suckler cow scheme, it would amount to a payment in the region of €65. However, there would be an equally strong case to allocate it to the ewe scheme. The question is whether that would be of any benefit to farmers. When we had a suckler cow premium, beef prices were typically €2.50 per kilo, while quality weanlings made €1.90 a kilo live weight compared with €2.50 and €3 per kilo this year. The problem is that if one goes back to a coupled payment, farmers tend to all run in the same direction, with the inevitable consequence of oversupply benefiting the factories but nobody else. The alternative is to limit it strictly with a suckler quota, but it would mark a return to needless bureaucracy for a very small payment which would not be extra money but a deduction from the national envelope. It would be a case of robbing Peter to pay Peter.

The ICSA believes the only strategy is to build alliances to ensure the proposals are watered down sufficiently. At the April farm Council meeting Portugal proposed that no member state or individual beneficiary be subject to a cut greater than 8%. This proposal was supported by Italy and the Minister. The ICSA believes this is a positive development on which we must build. Contrary to our worst fears, there are grounds to believe the Commissioner will have to compromise a lot more than he intended and that we can retain more than we had hoped for. We accept redistribution may have merits, in particular in the case of young farmers or farmers who had enterprises which attracted little or no premiums such as calf rearing. However, we are clear that the gains should be limited in the sense that only those who are actively farming and who continue to do so would receive increases. It should also be limited in terms of the total number of hectares involved. It would be inappropriate to increase payments significantly for farmers with more than 100 hectares when farmers with smaller holdings are suffering cuts.

On cutting per hectare payments, the EU proposal constitutes revolution, not evolution. It is unacceptable that the Union wants a flat rate payment within member states by 2019, yet it has admitted that a flat rate payment between member states is not attainable until 2027. Therefore, the objective must be that reform is about reducing the extremes between now and 2019, not about having a flat rate payment that sounds plausible in theory but which will not work in practice. An acceptable arrangement would be one where farmers who possessed entitlements in excess of €270 per hectare would witness some adjustment on a gradual scale. In this model farmers with entitlements worth between €270 and €600 per hectare would see a cut of 3% per annum on the amount above €270, while those with entitlements worth above €600 would see a cut of 5% per annum on the balance above €600. Entitlements worth above €800 would see a cut of 10%. In this way, there would be a gradual move towards more even payments, while respecting the principle that almost no beneficiary should lose more than 8% in the period 2014 to 2019. The money saved by these cuts would be much lower than through the cuts envisaged by Commissioner Ciolos. Accordingly, we would limit the beneficiaries to deserving cases only using objective criteria to limit the gains to active farmers and in setting a maximum of 100 hectares on which the extra rates could be paid.

On greening measures, the proposal is confused and unclear. The greening element was initially seen as a voluntary top-up, but now it seems it will be compulsory for all. This makes setting aside 30% for a greening component meaningless. The main concerns are that the 30% will be immediately reconstituted as a flat rate payment, thereby accelerating the move towards a full flat rate payment. There is much concern that greening measures will lead to more red tape. Being required to allocate 7% of an area for such measures is most worrying. In addition, we consider the idea of compulsory rotation of three crops as not workable on a typical-sized Irish farm. In a strange way, we take some consolation from the reality that there is widespread hostility to greening measures across many member states and that, therefore, the measures are likely to be watered down.

One point concerns whether farmers will be allowed to resubmit for consideration land currently classed as ineligible such as hedgerows and scrub. We would like to know whether such areas could be included in the figure of 7%. One thing which must happen is that the contradiction between the single payment and agri-environment schemes must be resolved. Farmers are losing ground and incurring penalties under the single payment scheme for marginal land that is being encroached on by scrub but they are blocked from dealing with that under the rural environment protection scheme, REPS, designated areas and now under the land reclamation regulations.

While much of the focus is on pillar 1, we must not lose sight of pillar 2 reforms. Oireachtas Members have a special role in ensuring the Department of Finance faces up to the need for co-funding to ensure maximum drawdown under pillar 2. Under pillar 2 we would prioritise a return of the young farmer scheme, retention of the disadvantaged areas scheme and a new, more viable agri-environment scheme.

I wish to comment on the rental market. The disastrous decision to announce a reference period of 2014 in advance has played havoc with rental markets. The subsequent decision to announce that only those who made an application in 2011 will be affected has only marginally resolved the problem and is storing up many hardship cases in terms of farmers who start in 2012 or 2013.

We see there is a growing need for land use and tenants' rights reform to give more protection to farmers who are renting ground. The current system is not working. In my part of the world land is just not available and we are forced to travel to rent ground. With land making up to €200 per acre, there is no sense that we are facing up to this problem. What are young, trained farmers to do?

As a general principle, reference periods should only be announced when the period is passed to avoid the mess we have now. I fear the damage is already done in terms of CAP proposals but I believe that placing limits on those who will gain from the reform will be an essential part of tackling this problem. That will ensure the land is in the hands of active farmers who have a progressive plan for the long term.

I commend this committee on its interest in this vital topic. We will be working closely with the Minister and the MEPs as well as lobbying officials here and in Brussels. We need a strong campaign by the Taoiseach to get movement on the issue of the budget and to get the more extreme elements of this CAP proposal reversed. I thank members for their attention.

Deputy Michael Moynihan

I welcome the members of the Irish Cattle and Sheep Farmers Association. Mr. Gilmartin pointed out rightly that this is a crucial topic for farmers who are at a crucial juncture in terms of discussing the Common Agricultural Policy and how we will progress on that. They have condensed their concerns neatly into four areas that cover the issue. The key concern is the budget, on which a huge effort must be made both at an official and political level in the European Union to get clarity. When it was announced last July that the budget would remain at the same level there was huge concern among the farming organisations as well as the public who see the CAP as a vital tool for investment and so forth. It is vital we get clarity on that.

I share the view expressed by Mr. Gilmartin on the 2014 reference year. The talk was it would distort the market. The market has been hugely distorted this spring and a huge amount of money has been paid for land, which is not viable into the future. Farmers are looking at different periods and so forth and it must be asked what was gained in that regard. In my part of the country and elsewhere I have heard reports of land making far in excess of its value. We must issue a word of caution on decisions that are being made but some farmers have entered into five-year leases. Even if they get seven-year leases it adds another €10 or €20 to the hectare if they can get their hands on it.

On the issues of bureaucracy and the greening element, every time the CAP negotiations come around it is almost inevitable that while the first words spoken about it are that bureaucracy at the farm gate will be reduced, the CAP reform proposals which are put before the agricultural community result in more bureaucracy. In terms of the greening element, I am aware there were some indications from the Department's officials last week and from others on the greening element, but in my opinion that is further bureaucracy.

The first thing farmers who contact the members and us do is look at where they are currently in terms of their single farm payment entitlements and where they will be in the future. Many people were badly affected because of reducing amounts of land and perhaps afforestation in some places and have stacked good single farm payment entitlements on their home farms. In terms of the proposal before us, especially for the cattle and sheep side, their single farm payment will be decimated. The witnesses have pointed out figures to us, and they stack up with those from individuals who also have been in contact with us. There is a fear that the condensed economic unit, the family farm unit that has stacked its entitlements onto the home farm and has made decisions to ensure they are farming in the most economic way possible while keeping costs at a minimum in terms of rental land and so forth, will be very badly affected by these proposals.

I commend the witnesses on the work they are doing but the crucial issue for the entire agriculture community, and for the entire economy, is when clarity will be got on the budget. They referred to the outcome of the French Presidency and so forth. That is now out of the way and it behoves everyone involved to try to get clarity on the budget as soon as possible. There must be clarity also in terms of trying to get this process to work to 2019, which is simply not possible. There will be major casualties if this reform package is not brought in over a longer period of time.

Deputy Michael Colreavy

I welcome Mr. Gilmartin and the other witnesses from the Irish Cattle and Sheep Farmers Association. They have the experience based on advice and talking to farmers. It is welcome that they can come before the committee and give members the position at first hand. They represent many people and their views reflect the views of many people. It is important we take on board their concerns and the suggestions they make.

There is very little in this document with which I would disagree. I commend the witnesses on it because not only have they identified the areas of concern but they have also proposed possible solutions to those areas of concern.

Everybody present would share their concerns about the overall EU budget and the overall CAP budget. Some of us would have concerns that if the pace of progress is not as we would expect it to be, we may not be able to guarantee that crucial decisions will be made during Ireland's Presidency of the EU. That is something we must bear in mind. We must keep applying the pressure to ensure this process is completed quickly and properly. As long as the overall EU budget remains unclear, the CAP budget will remain unclear. That is a serious concern for all of us.

I understand the reference year of 2014 is a big problem. It is not just a problem of assigning a given year. It will continue to be a problem in Ireland because that is the way land use is in Ireland, and it is substantially different from land use in other European countries. We must get a level of understanding in other EU countries. We have family farms here, and this is the way work has been done and will be done for generations, and it is unlike the case in other European countries. I would like to see some flexibility in regard to the tagging of a reference year. We should have a different system and perhaps that is something we should be doing in conjunction with other European countries. I do not mean we should do the same as them but get them to understand that there are valid reasons for our concerns about the 2014 reference year in this country.

I agree with the witnesses that there should be no question of going back to coupled payments. There is not much evidence that there is serious intent on the part of the European Union in that regard but if there is any such serious intent on its part, it should be addressed straight away.

With regard to the issue of spreading the cuts for equalisation, it is good to see a model being suggested. When a model is suggested, it is a basis for discussion. If people's incomes are cut savagely, all that will happen is that they will be out of business. While I understand the proposals, I believe maximising the average while not hitting anybody too hard and bringing up the weaker elements is very good, but it must all be tied to production. In the area I represent, however, farmers have serious concerns about the definition of active farming. Some fear there is a move towards a definition such that, unless more than 50% of one's income comes directly from farming, one will not be classified as farming actively. People have legitimate concerns and they need to be addressed quickly. Otherwise, uncertainty will arise in regard to the whole project, especially among smaller farmers in the more disadvantaged areas. This concern needs to be addressed.

It was stated the EU proposal represents revolution rather than evolution. When the draft proposals were issued, they were described as exciting and challenging. I describe them more as indicating a steady-as-you-are approach, with changes in specific areas. I would have loved to have seen the extension of CAP reforms and better linking up with food production reforms in order that we could maximise income in Ireland. This may not be an area with which the ICSA is deeply concerned but it is one about which Ireland Inc. should be very concerned. There is much scope for the improved linkages I would like to see.

The compulsory rotation of tree crops is a crazy proposal in the Irish context and I agree it is unworkable. This will have to be explained to other EU member states.

On the question of whether farmers will be allowed to resubmit land that is currently classified as ineligible and on whether it can be included in the 7%, I presume the recent computerised mapping would facilitate that if it were to be brought in as policy. It would be an important element of the policy.

I agree the contradiction between the single payment scheme and the AEOS must be resolved.

With regard to pillar 2 reforms, we need a slightly more imaginative approach. While Ireland has benefited, it could benefit more from pillar 2 reforms provided we worked with people in rural areas and encouraged them to take advantage of what exists.

The proposal on the growing need for land use and tenants' rights reform is excellent. We should follow up on this at the committee. I would certainly welcome greater detail on it. Are there working papers on it? If so, I would welcome them.

I thank the delegates for attending. Their thoughts and proposals are experience-based and are very useful to us.

Deputy Pat Deering

I welcome the delegation, which is attending to discuss one of the key ingredients for rural Ireland. The Common Agricultural Policy, CAP, will form a large part of a stimulus for the coming years. As Deputy Colreavy stated, nobody would disagree with the majority of what is in the documents. We all want to achieve what is best. The biggest stumbling block at present is the budget, as we are all aware. Realistically, we will all be speaking in a vacuum until that budget is agreed. It is vital we have a target. It is crucial the CAP be agreed under the Irish Presidency. If it is not decided then, we will be on the back foot from the start.

There are four or five key elements, including the budget and the flat rate payment. If the latter is not gradual, we will be in serious trouble.

The rental market area is key. The reference year will not suit us, as others stated. Irrespective of the reference year, farmers are their own worst enemies in this regard. Even before any talk of CAP reviews, etc., farmers would cut one another's throats to rent land down the road and they would pay way over the top. One must look inwards in addition to outwards. There must be a set limit. What occurs distorts the market and will do so as we move on.

The key element to the CAP discussion concerns our need to continue to develop alliances within Europe, be it at political or farm level. If we cannot do so, we will be in serious trouble. A number of countries have views similar to our own. Policy must be developed further in order that we can get as much leverage as possible in the relevant areas, for example, in respect of greening. Greening could have serious consequences for us, as outlined. This must be watered down substantially for us to be a serious beneficiary.

The average age of farmers in Ireland is quite high and this needs to be addressed. Fortunately or unfortunately, as the case may be, there was a queue of people trying to enter agricultural college last year. When the students emerge, they need to be able to engage in the modern business of farming. They need further encouragement in this regard. I would like more emphasis on this in order that an increasing number of farmers will see a viable alternative, namely, progressing their own businesses, once they leave college.

I welcome the proposals made today. From the delegates and others, I note there is now acceptance there will be some redistribution of funds. The key is ensuring it will not affect substantially or seriously those who are more productive. I look forward to continuous engagement with the delegates in order that we can together achieve what is right for Ireland.

Senator Pat O’Neill

I welcome the members of the ICSA. It was very interesting to hear them make concrete proposals. As we all know, the CAP negotiations over the next year and a half may define the future of agriculture in Ireland for the next ten or 15 years. The policy will have serious implications. As members stated, it is very difficult to discuss something when the budget has not even been decided. We are relying on the Taoiseach, the Minister for Agriculture, Food and the Marine and the Minister for Finance to ensure the CAP budget will be retained. If it is not, it will have serious implications. As was stated, there will be some redistribution within Ireland but also within other member states. There are 12 new member states looking for part of the pot since the last CAP reform.

How will the delegates' vision for the single farm payment or CAP reform tie in with the vision for agriculture in Ireland with regard to the Food Harvest 2020 report? Regarding redistribution, I read with interest the statement on different types of cuts for different types of payments. If somebody loses 3%, 5%, 8% or 10%, how will the money be redistributed among other farmers? Would the delegation see this being redistributed to younger farmers or farmers with lower entitlements who may not have been in full production during the previous CAP reforms? Has the Irish Cattle and Sheep Farmers Association met the other farming organisations? It is important this time that we have a united front from all the farming organisations. If changes are to be made to the flat rate payment or a greening element is to be introduced in the proposed CAP reforms, it is important we are singing from the one hymn sheet.

When the committee met the Commissioner for Agriculture and Rural Development, Mr. Ciolos, several months ago on CAP reform, one issue that came up was the problem the reference year, 2014, will cause in Ireland. Several years ago we were chasing premium by buying cattle at ten and 22 months. Now we are looking as if we are going be chasing entitlement as there will a flat rate payment on the amount of a land a farmer holds. Different land has a different value when it comes to production. How does the delegation feel CAP reform will impinge on the Food Harvest 2020 strategy and the continued expansion of the agricultural industry?

Deputy Martin Heydon

I thank the association's representatives for addressing the committee on this crucial issue facing the agricultural sector in the coming years. I agree with many of their points and share some of their concerns. The prospect of massive fluctuations in what farmers are paid is not healthy. Even though there will be winners and losers, this will not be good for agriculture, especially when one sees the ambitious targets set down in Food Harvest 2020. Stability is needed in this area.

As my colleagues stated, the overall issue of the EU budget is crucial. The delegation made the point that if greening were not voluntary, it would be meaningless. The Commissioner was clear with the committee that the overall EU agriculture envelope will be reduced. The only way to bring it back up is to get the environment Commissioner to agree to a greening aspect of the budget. If we shoot down greening completely, we could be shooting down an amount of the overall envelope. There needs to be an element of negotiation in this area. I share the concerns that in its present format, it could be even more bureaucratic. Simplification is a key word that needs to be constantly pushed in any measure introduced.

We are told regularly the reference year is not an issue in other member states. When talking about building alliances and partnerships, this is the one area in which we do not have a large amount of support. I was interested in the association's proposals on the growing need for land use and tenants' rights reforms. Will the delegation expand on this?

Another point the Commissioner was strong on was that the majority of member states have a problem with the historical payment. Being aware that this is their starting point, it will make our negotiations all the more difficult.

There is a need for a united front to prevent any reduction in our allocation of the overall envelope. How it is redistributed here is a matter for ourselves. I welcome the association's outlines on how steps can be taken in this regard. Straightforward discussions in this regard will be needed.

Deputy John O’Mahony

I do not envisage going over the same ground. I would like to be associated with the remarks of my colleagues and thank the association for giving a very precise presentation on the importance for the future of the CAP discussions. The association also highlighted the importance of single payments and getting the balance right for its section of the farming community. It sounded a pessimistic note about a deal being struck during Ireland's EU Presidency term. At the same time, it will be a great opportunity for Ireland to dictate the progress at that stage and to get a handle on it. I have no doubt the Minister will push it as hard as he can to get a deal during our term. There is much work to be done in many areas.

There is much talk in other economic fields about the need for growth and stimulus. Farming and agriculture have given us a natural stimulus in recent years. It is important everyone sings from the one hymn sheet and we get a good deal in the CAP reforms in order that the stimulus from agriculture can continue to be provided to our economy.

Mr. Gabriel Gilmartin

I think we are all agreed the reference year issue has to be addressed. It is causing mayhem. In my parish, I am aware of 20 young fellows with their hands out looking for a garden somewhere just to get a herd number. That is not fair when there are many alternatives that could be examined. For example, there is land tied up in NAMA.

Farmers in many areas did stack their entitlements onto the home farm which put a huge increase on their payments. They were renting land to consolidate their whole enterprises. Under the current proposals, it now looks as if they will be severely punished for tidying up their act at home, cutting down on costs and building a bigger family income for themselves. When one looks back at 2008 and 2009 when farm incomes were literally on the floor, the option of stacking was there for them which they were entitled to use. They should not be penalised for that.

Mr. Eddie Punch

Land use is almost a separate issue but has become very pertinent because of the reference year issue. Sometimes, we have to look at what we can do ourselves. Oireachtas Members may have a role in this, rather than us looking to Europe all the time. It is obvious the reference year is not the same problem in other member states. One reason for that is that we have tended to work away with the 11-month conacre system. Accordingly, every year one is at the mercy of whomever one is renting the land off. When something like a reference year comes in, it causes a huge problem. That points to the need of some element of tenants' rights and longer term leasing. People are at risk of being thrown off land every year regardless of the fact they may have farmed it continually for nine years, for example. A new situation arises and the farmer is out on his or her ear, to be replaced at short notice. We are working on a document looking at solutions to this. The point is we cannot blame Europe for everything as we have been a bit remiss in how we deal with the question of access to land. Of course, we have the problem in Ireland of there being not enough land for the amount of people who want to farm. Now that farming has become attractive again, the problem has become worse. We must try to do better with what we have.

Deputy Colreavy referred to us saying "This is revolution, not evolution." I suppose the background to that remark is that we in the ICSA have attended regularly the meetings in Brussels and on several occasions we have seen Commissioner Ciolos come into the Parliament in the early days to give an outline of where he was going with CAP reform. We were there when he announced the initial communication for a change and we were also there when he announced the legal proposals here today. Each time Commissioner Ciolos speaks he states he wants evolution, not revolution. Our point is that he does not understand well what we mean by revolution or maybe we do not understand what he thinks is revolution. If this proposal was to go through at a national level, 76,000 farmers would gain on average 86% but 56,000 would lose 33%. Figures can often be misleading. One might say at the start that there are more guys gaining than losing and in a simple way, one might ask, "What is not to like?" Of course, in many cases the 56,000 are losing 33% of a significant sum that is vital to their enterprise on which they are either totally dependent or which makes a significant contribution to family income. For those who gain, in many cases although not all, it is 86% of a very small sum and will not make them viable, one way or the other, nor will it make a big difference to their position. Clearly, a loss of 33% from a payment that is vital to a family farm income is unacceptable, and that is why we have very much associated the proposal by Portugal as being a positive move or statement. We accept that people cannot have severe cuts imposed overnight and such cuts are not good policy. There is much talk nowadays about the word "stability", which keeps coming up in another context. We need stability in farming enterprises as well. Just as the marketplace craves economic stability, we need stability for farmers if they are to be able to contribute to the target set out in Food Harvest 2020.

We were part of the Food Harvest 2020 debate. We are delighted to see recognition that farming and the agrifood sector can make a bigger contribution to the economy of this country and that the opportunity for increased exports exists. We would sound a warning note that the price increases we have seen in the past year should not be taken for granted and sometimes, maybe almost in the desperation that we want to catch on to a good news story, we all say that we can expand by 40% in beef. We would say that we need to develop our markets. We are making great strides. For example, the Minister visited China and there are positive developments on access to the United States market as well, but one should not take it for granted that we can achieve everything contained in the Food Harvest 2020 document. The first element is that we have a stable CAP funding regime in place for those who have been farming since the reference period and will continue to farm over the next number of years.

I would make a couple of points on the details. As we stated earlier, the budget is critical. There has been a proposal for a budget of €377 billion floating around for the past 18 months. It is disappointing that we have not yet got that resolved. Clearly, from talking to people in Brussels and talking to the MEPs, there is a worry that this is not being moved on quickly enough. One thing the committee can do is to keep the Taoiseach focused on getting some sense of urgency that this deal needs to be sorted out. Obviously, there was some delay with French elections, etc., but we need results in that regard so that we can get down to proper discussions. There is a type of phoney war where everybody is talking about CAP reform but there is nothing really happening at EU level because we do not know what the budget is. I suppose we included that warning. The fact that we hold the Presidency next year is only of use to us if the budget gets sorted between now and then.

Having said that, I do not want to be too pessimistic about it either. I was in Luxembourg in 2003 when the previous CAP reform was hammered out and over three weeks it went from a position where there was almost nothing happening to a deal being done. Of course, the way of these matters is the late night meeting. I recall it was 5 a.m. or 6 a.m. when the white smoke went up to say a deal was done. Even at the end, when the deal was announced there was this flexibility that member states had the option to go for various forms of decoupling. That tells us that also in this reform flexibility for member states may be a critical component in the end in getting a deal done. If we had sorted the budget we could make much more progress in getting our reform done in time. We need a sense of urgency at national level.

Of course, there is a united front in terms of our need for the maximum possible budget in this country. Obviously, the ICSA is on the Department of Agriculture, Food and the Marine CAP consultative committee and we are regularly involved in lobbying at Brussels as well. In the end there may be some differences between farm organisations in terms of detail and flexibility, but that is not a bad thing. As I say, there was a time when we were in favour of full decoupling. Not everybody was. That did not harm Ireland's ability to get the best possible deal but it ended up that we got a better deal for farmers because full decoupling worked. It is all about moving forward and getting something done on the budget to begin with so that we can then get into the real deal of working out the detail.

Senator Pat O’Neill

What of the changes in payments? Where does Mr. Punch envisage the payments would be redistributed?

Mr. Eddie Punch

One of the big fears is that if we moved to a flat rate of €270 per hectare or whatever in the round with everything taken into account, farmers would have severe cuts imposed. The typical kind of guy who comes to us has a family farm of 50 hectares receiving a payment of €400 per hectare resulting in total support of €20,000. Such a farmer could lose 30% or 40% under a reform. On the other hand, potentially there could be someone with 1,000 hectares of wilderness who could get a considerable benefit of €270,000. We must avoid that situation. We are also concerned that the sofa farmer or the person who has not been farming at all in recent years will suddenly get a windfall out of this. There are also tenants - we spoke earlier about land rights - being told by owners that they cannot rent the farms this year because the owners are returning to farming because they have a sense that there will be a reference year and they will benefit from it. We need to put in place objective criteria to try to prevent some of these scenarios happening. That means, for example, that there should be limit on the total amount of hectares on which one will gain an increase. If someone is below the €270 per hectare rate, he or she cannot just be brought up to that rate on an unlimited amount of land. Moreover, if someone has the required number of hectares, he or she cannot just receive the €270 rate because he or she has to be actively farming and have a track record to show this. To receive an increase, a farmer will have to comply with certain minimum stocking rate requirements.

In the overall sense, we are not moving to a flat rate of €270 for everybody and we envisage it being a gradual process. We have to consider what the share of the cut will be for farmers above the rate of €270 and then see what funds are available for redistribution to those below that figure. Let us target that area. As an example, a man in our national executive was involved in a calf rearing enterprise during the reference years. He was buying and rearing calves. Anybody who has done this knows there is plenty of hardship and work involved in this. He was then selling the calves, but as he was not receiving slaughter premium or the 22 month premium, he was well below the average figure for the single payment, although he was and continues to be an active farmer.

Those with a track record in farming who, because of anomalies, are below the average figure deserve to be brought up. There are many below the average figure because they have not been actively involved in farming. Using objective criteria, we must look at ways to narrow down the number who could benefit in order to ensure there would be no windfall gains. We must ensure somebody receiving €1,000 does not suddenly receive €27,000 at the expense of the typical family farmer who will perhaps have a €20,000 payment cut to €12,000 under the current proposals. We have to water down the impact for those above the limit and better target those who receive the increase, rather than having this measure apply across the board.

While I know that is quite different from what Commissioner Ciolos wants to do, if we look at what is happening at the Agriculture Council and the events taking place in Brussels, even though Commissioner Ciolos talks a good game and says this is his proposal, there has been a lot of negative reaction to the extremeness of the proposal. Therefore, there is plenty of ground for negotiations and, although we will not receive an admission from the Commissioner, that is the reality.

Chairman

I thank Mr. Gilmartin, Mr. Punch. Mr. Phelan and Mr. Gray for attending. On the issue of coupling, if active farmers are prioritised, there is no need to couple because active farmers will be the ones engaged in food production. There should be some way of incentivising young farmers to become involved in order that having land does not trigger entitlements without somebody having a track record of actually farming it. On the definition of "active farmer", Mr. O'Driscoll from the Department made the point that it might be better to use a system of exclusion rather than inclusion; in other words, it would be preferable to have certain categories who would be deemed not to be active farmers.

It is important to note this is the first CAP reform process that will involve co-decision. We had three MEPs before the committee in recent weeks to give us an in-depth insight into the way the Parliament's discussions and deliberations were continuing. There is also, of course, the Council, and it will be up to the Heads of State and Government to agree a budget - the sooner, the better. It was considered that if the budget could be agreed in the early part of the Irish Presidency, it would be realistic to believe a deal could be concluded during our Presidency.

Mr. Punch has made the point that things happen very quickly and the model he has proposed is certainly one to work from. There is a strong argument for having a convergence system, which does not necessarily mean everybody should be on a flat rate in the next CAP round. That is the key point. As Mr. Punch said, we are talking about stability; that would bring too much instability into the equation in terms of incomes, as well as for those who wished to invest or take financial proposals to the banks. Too much instability would probably result in their being reticent to provide capital development moneys.

The issue of land use and a tenant's rights is an interesting one, but we need to be careful in this regard. The last thing we want to do is put landlords or potential landlords back into a box. We should consider the issue of taxation, particularly new and imaginative ways of introducing taxation measures to encourage farm partnerships and share farming, which would mean everybody would benefit when land was used by somebody who was active and had certain qualifications. While that is another day's work, no matter which way we do it, it is in our own hands. However, when one considers the statistics for those who are and are not included, as well as the age profile of persons involved in farming, it is something that needs to happen either way. As has been said, in Ireland a field changes hands every 300 years on average, whereas the figure is 70 years in France. That gives us some indication that it is not just an issue of tenant's rights; it is ingrained in our psyche not to sell land. As a result, it is sometimes not used as well as it might be.

The ICSA has brought forward some novel ideas and proposals to be considered and worked on. They include the model for a graduated increase and the proposal on tenants' rights reform. I thank the delegates for their proposals. We will put all of the information together and when we have our document to be sent to the European Union, the ICSA will be included in the communications list. We will forward a copy to it. I am sure we will have its representatives before us again. I again thank Mr. Gilmartin, Mr. Punch, Mr. Gray and Mr. Phelan for attending.

I ask members to remain, if possible, for an informal briefing by officials of the Department of Agriculture, Food and the Marine on the Animal Health and Welfare Bill.

The joint committee adjourned at 3.20 p.m. until 10 a.m. on Thursday, 10 May 2012.