I welcome this opportunity to address the Seanad on the challenge facing European and Irish agriculture in the negotiation of the next WTO round and the importance of protecting the gains from the Agenda 2000 agreement.
I am sure I need hardly point out the continuing importance of agriculture and the food industry to Irish society and the economy. Sometimes one is led to believe that other sectors of the economy are far more important than agriculture and food. Agriculture is the cornerstone of the economy and it will remain so for the foreseeable future. For example, it currently generates about one third of Ireland's net foreign earnings and provides employment for almost one in eight people in the workforce. The value of exports of agricultural products and food this year will be almost £6 billion and the figure is increasing. Critically, the industries associated with the agri-food sector are well located geographically and regionally. Therefore it is crucially important that we plan the development of the agri-food sector and that we are well equipped to deal with the challenges arising, particularly from the WTO negotiations.
The single most important development in agriculture at EU level in recent years has been the agreement which was reached on Agenda 2000. It is easy to overlook at this remove the anxiety caused by the original proposals which the European Commission brought forward in March 1998. As I pointed out to the House at the time, I faced major difficulties in the negotiations in that the Commission's proposals represented a severe loss for Irish agriculture and would have been a severe set back if they had been accepted as proposed. From the outset, I rejected the Commission's proposals because of the serious damage they would inflict on Irish agriculture and on the economy.
As Members will know, we had a very successful outcome to those negotiations and the Agenda 2000 agreement forms a very solid framework for the agriculture and food industries into the new millennium. I accepted the principle of CAP reform at the time because I felt that European agriculture had to be positioned to cope with the changes which lay ahead, in particular the challenges which will inevitably arise from the enlargement of the Union and, more particularly, under the next round of the World Trade Organisation negotiations.
The gains negotiated in Agenda 2000 were too hard won and are far too important for the well- being of Irish farm families to allow any erosion of them in the future. I was particularly pleased, therefore, that the Heads of Government meeting in Berlin in March 1999 agreed that the decisions adopted regarding reform of the CAP within the framework of Agenda 2000 would constitute the essential elements in defining the Commission's negotiating mandate for the future multilateral trade negotiations at the WTO.
In agreeing this approach, the 15 member states were setting out, at the highest possible level, the negotiating position of the EU for the next round of international trade negotiations. The decision of the Heads of Government was subsequently reflected in the negotiating mandate for the Commission that was agreed by the Council of Agriculture Ministers in September 1999 and later endorsed by the General Affairs Council. The opening statement of the mandate demonstrates the importance which the Council attaches to the role of agriculture and is one with which I believe we can all agree. It states:
The Agriculture Council stresses that safeguarding the future of the European model of agriculture, as an economic sector and as a basis for sustainable development, is of fundamental importance because of the multi-functional nature of Europe's agriculture and the part agriculture plays in the economy, the environment and landscape as well as for society. Thus the contribution of agriculture remains vital to the European economy and society.
That is the framework and the basis on which the negotiations will be carried out. The Ministerial Council of the WTO, which met in Seattle at the end of last year, endeavoured but failed to reach agreement on the launch of a comprehensive round of multilateral trade negotiations.
Following the failure to launch this general round, the negotiations on agriculture got under way in March this year under Article 20 of the Agreement on Agriculture of the previous Uruguay Round. To remind ourselves, Article 20 is quite specific in its mandate for further negotiations. It states:
Recognising that the long-term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process, Members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period . . .
The period to the end of this year is being used for the purpose of examination, analysis and debate in Geneva on the various issues arising. This work is being carried out on the basis of submissions from the WTO members as well as papers produced by the WTO secretariat. A comprehensive EU negotiating proposal, which is based on the Agenda 2000 Agreement, is under discussion and is likely to be finalised at the Council of Agriculture Ministers meeting later this month.
Substantive negotiations will not get under way under the Article 20 mandate until early next year. It still remains to be seen whether a comprehensive round of trade negotiations will be launched. In that event, the agriculture negotiations will be subsumed into the comprehensive round.
The outcome of the WTO negotiations will establish the world trading framework within which EU and Irish agriculture will have to operate over the next decade or so. As a major exporter of agricultural products, the outcome of these negotiations will be of immense significance for Ireland. The outcome will determine the conditions under which we will export to non-EU countries and also the level of competition we will face on EU markets.
The main issues which are likely to arise in the WTO negotiations include exemption from reduction of direct payments to farmers – we all know how important direct payments are in that they are valued at £1 billion per annum; recognition of the multi-functional role of agriculture and the manner in which such recognition is to be expressed; recognition of the impact on competitiveness of food safety and animal welfare standards and the manner in which such recognition is to be expressed; the future arrangements to apply to export subsidies; the introduction of a discipline on export credits and other less transparent forms of support; the extent of the liberalisation of market access, including tariff rate reductions and tariff rate quota increases and the arrangements to apply to developing countries. I do not propose to go into detail on all these issues today but I would like to underline the importance to Ireland of two of them in particular.
First, the exemption from reduction of direct payments to farmers is of particular concern to Irish farmers and the farming community. A central element of the Uruguay Round agreement was that the level of domestic support for agriculture would be subject to annual reductions over the years 1995 to 2000. However, there was an exemption from the reduction commitments for certain direct payments to farmers. These exempt payments, known as the "blue box" payments, are those made under production limiting programmes and are based on fixed area or yields in the case of crops and on a fixed number of head in the case of livestock.
About 50% of Irish farmers' incomes – I think it is 57% at the moment – fall within the blue box category and is accordingly exempt from reduction under the Uruguay Round rules. The importance of preserving the blue box exemption is, therefore, obvious in terms of the protection of the income of Irish farmers.
The blue box payments compensate for the price reductions agreed under the 1992 CAP reform and under the Agenda 2000 reform. They have, therefore, facilitated the reform of European agriculture, through the reduction of market supports which kept European prices significantly higher than world prices. In objective terms, there is an irrefutable case for preserving the blue box exemption under the next WTO round.
Direct payments have also performed another essential task. They have compensated farmers for the costs imposed on them by the EU's high environmental, food safety and animal welfare standards. When I visit other countries and they complain about European agriculture, I always point out that Irish farmers, the industry in Ireland and in EU member states have to have the highest food safety regulations and standards, the highest environmental standards and the highest animal welfare standards. In milk or beef production, many countries trading worldwide do not have the same standards in relation to enhancing substances used for production of milk or beef as we have. Therefore, they have a major economic advantage but we believe that in the interests of the consumer, food safety and purity, we have the correct attitude and the food should be produced in its most natural form. That, however, has limitations. The direct payments make up for some of those limitations and, therefore, they have to be protected within the blue box. These payments serve to preserve smallscale family farming in particular and the economic and social fabric of rural communities.
We all know rural communities are under threat and that a lot of the younger generations see opportunities for themselves outside their own regions and outside farming. We want to make farming and residing in and making a decent livelihood in rural areas as attractive as we possibly can so that if young people have an option, they will remain in rural areas and sustain rural communities.
These elements are part of the European model of agriculture and distinguish European and Irish agriculture from agriculture as practised in most of the countries which are major players on world markets. Agriculture in Europe has many functions and this multi-functional nature of our agriculture has to be respected in the arrangements to be negotiated in the next WTO round. The preservation and enhancement of the blue box is one way in which this requirement can be addressed.
The second issue is export refunds which are critical to Irish agriculture. We have to remind ourselves now and again that we export about 85% of the food we produce. We are dependent on markets outside our domestic economy, whereas in most other countries that is not the case. They are relatively self-sufficient and have much larger populations than we have, therefore, their main outlet is their domestic market. In our case, the main outlet is export markets. Therefore, export refunds are more critical to Ireland and to the agricultural economy than to any other member state.
Under the Uruguay Round, export refunds have had to be reduced annually, both in terms of volume of each product subsidised and the money value of the subsidies. For a number of products of importance to Ireland, particularly beef, respecting these volume limits has caused some difficulties. The nature of the commitments which WTO members agree to make in relation to export subsidies under the new round will, therefore, be of major significance to Ireland's ability to export its surplus production.
Closely related to the export refunds issue is the less transparent, but nonetheless significant, subsidisation of exports through export credits, the actions of State-trading entities and also the provision of food aid. While many WTO member countries have declared that the next round must provide for the ending of export refunds, they have been less vocal on these related issues. There can be no move by the EU on further reducing export refunds unless these issues are also addressed. This is one of the issues which the EU has highlighted in its submissions to the WTO secretariat in Geneva. Other trading nations have farm budgets. For example, the US invests massive amounts of money to support farming, yet it complains about our export refunds and direct payments. We are making this clear in Geneva. It may be called a type of farm rescue package, but support for farming and for agriculture is part of the economic model of most countries.
It is inevitable that the WTO negotiations will result in further liberalisation of world trade, with stiffer competition and better opportunities for Irish producers and processors on EU and third country markets. It is important that we are in a position to meet that competition and avail of those opportunities. We can do so by improving our competitiveness. There is no doubt that there is room for improvement. While many of our farmers are as good as, and better than, the best in the EU, there are many who fall short of the highest standards.
There is also room for improvement in the State's approach to agriculture. The success of the Agenda 2000 negotiations must not be allowed to induce complacency either at the level of the individual farmer or at State level. We must continue to strive for a high level of prosperity for farm families, the preservation of the economic and social fabric of rural areas and the maximisation of employment and exports in food processing. I am determined that, to the extent that it is within my power, the Irish agri-food industry will pursue and attain excellence, and will do so in a coherent and planned manner.
With this objective in mind, I established the agri-food 2010 group, with a wide range of expertise to propose a broad strategy for the development of the agri-food sector over the next decade. In addition to changes in the trading environment, which may result from the enlargement of the EU and from the WTO negotiations, I was conscious in setting up the group of factors such as changing consumer tastes, new food distribution channels and general technological developments. That group's report entitled Agri Food 2010 was completed this year. I have approved and published a plan of action for the implementation of its recommendations, of which there were 200. My aim is to ensure the agriculture and food industries can maximise their contribution to Irish wealth creation and employment and to the development of our rural areas over the next ten years. As a result, I expect that the agri-food sector will be well prepared to deal with the challenges arising from the WTO negotiations and from enlargement of the EU, as well as the many unforeseen challenges that inevitably lie ahead.
Ireland, like other member states, will be participating in the WTO negotiations as part of the EU, which will be negotiating on the basis of the mandate agreed by the Council. I am satisfied that the mandate leaves no room for doubt about the importance which the Council attaches to the role of agriculture and the need to protect the Agenda 2000 outcome. A satisfactory WTO agreement is not guaranteed but I assure the House that I will be striving to ensure that whatever WTO agreement is reached will provide the environment to allow Irish agriculture to reap the benefits of the Agenda 2000 agreement and to fulfil its full potential. That full potential means a percolation of the benefits to every parish and townland throughout rural Ireland. This is not easy, but there is a White Paper on Rural Development, direct payments and mechanisms such as Leader funding and agri-tourism funding to ensure this is the case.
Apart from the overall 2010 plan, I also had study groups and recommendations on a number of key areas. One related to education and training. That task force reported to me recently and pointed out changes that need to be made in relation to education and training for younger farmers. Technically when a young person on a farm completes his or her secondary education, he or she has the option of going on to third level education, including an institute of technology, university or agricultural college. In recent years, the majority of young students opting for additional education have gone to either university or technological college. The result of this is a reduction in the number of younger people opting for agricultural training and education. I appointed a task force which reported to me that agricultural education will have to be brought into the mainstream of education. We cannot tell students to go off and get a green cert or do one year in an agricultural college. This is not good enough for the present generation of farmers who have to deal with many standards, regulations and criteria relating to animal welfare, food safety, accounting and so on.
People taking up agriculture and farming nowadays need to be well qualified in a whole range of areas. One would almost need to be a senior counsel, chemist and environmentalist, given the criteria that must be followed and the plethora of forms which must be filled correctly in order to avoid penalties. I am pleased the EU Commissioner agreed that the penalty system was unfair and unjust, that the penalties did not fit the crime and that the issue would be addressed. A new system of education, including new courses, is being put in place for young people about to enter farming.
In April this year Teagasc commissioned the ESRI to undertake a study of the future requirements of agricultural training, particularly through the agricultural colleges. This ESRI report was finalised in September 2000 and is currently being considered by the Teagasc authority. Teagasc management has had consultations with all the colleges on the main aspects of the report. It will be a matter for each college to decide its future direction. I emphasise that no request or proposals were made to me to change any aspect of agricultural college education in our agricultural or horticultural colleges, nor have I made, nor am I about to make, a decision in relation to these colleges. If student numbers are decreasing, it is a matter for each college to decide whether to go into aspects of horticulture or agriculture, such as organic production, animal breeding or whatever, to ensure they modernise and address the changing needs of farming.
Teagasc will continue to support all the colleges which intend to provide agricultural and horticultural training in the future on the same basis as heretofore. Last year I made a special allocation of £10 million to upgrade the colleges, both Teagasc and private colleges. They are embarking on capital investment programmes to provide improved training facilities in both Teagasc and private colleges. All colleges constitute a significant resource in rural communities. Apart from young people who are seeking education and training, rural people wish, for example, to do business with Departments electronically, to qualify for an EU driving licence or to avail of the various courses offered in the colleges. The principal of each college should investigate its usefulness locally. There is no use in having a college if students are not coming through its doors.
We all know that people do not attend churches as frequently as they used do. In my own town, for example, one church has become a thriving post office. The structure is, at least, being used. There would be no point in leaving it empty and unused. The same is true of the agricultural colleges. There is a range of activities which should be carried on there. The principal and management of each college must be aware of the £10 million package for the modernisation and upgrading of the colleges.
There is a task force report on the modernisation of the curriculum and the mainstreaming of education. Some colleges have linked with their local institute of technology or with the Thurles rural college, for example, to provide distance education. Kildalton has linked with the Carlow Institute of Technology to provide courses electronically by video conferencing. It is up to each college to use the available resources in the most suitable way.
I have not received a request or proposal to close any college, not that I propose to do so. That would be out of the question. I want to see them thriving as resources in rural areas. The colleges constitute significant development centres for rural communities. I want to see them broaden their activities beyond conventional agricultural education. In that way, there will be an assured future for every college in the context of Agenda 2000 and in an industry whose philosophy is to include all sections and regions of the country, linking with agricultural co-operatives and PLCs. I detect a confidence in the future which has not been evident for some time.
It has been my privilege to attend this august body and to speak to the Members.