I thank Senators for requesting this debate, which is particularly timely.
On 1 January 2004, Ireland took over the six-month Presidency of the European Union. The theme of the Irish Presidency is "Europeans — working together". This theme is particularly appropriate in the year in which ten new member states will accede to membership of the European Union. Our broad overall objective for our Presidency from the point of view of agriculture is to support the European model of agriculture. This must remain at the heart of all actions of the Council because it reflects the social, cultural and economic realities of European agriculture and rural life. Within that broad objective, we have identified three specific objectives for our Presidency, namely, to facilitate the application of the CAP to the new member states; to continue the process of simplification of the CAP, initiated by the mid-term review decisions of June 2003; and to enhance food safety standards.
We have been working closely with the new member states on procedural and substantive issues that may affect them with a view to finding acceptable solutions. The simplification of the CAP commenced with the reform decisions taken in June last year and that process is continuing with the reform proposals for the olive oil, tobacco, cotton and hops sectors. Last week's special Council meeting in Luxembourg reached agreement on the proposed reform following several months of negotiations. It represents the integration of the Mediterranean products and hops into the new CAP framework and marks a shift from the current production-linked payments to the decoupled single farm payment scheme while taking account of specific production circumstances of the products in question.
The enhancement of food safety is a major element of the Presidency programme. The Commission, the European Parliament and the Council under successive Presidencies have worked hard to implement the demanding and comprehensive programme of work set out in the Commission's White Paper in 2000. When this programme is completed, the EU consumer will have the protection of what will be almost certainly the most comprehensive and up to date set of food safety standards and controls in the world. It is, therefore, one of our top priorities to maximise progress on the legislative measures in this six month period.
I am happy to say that we have already made substantial progress. We have secured First Reading agreements with the European Parliament on official feed and food controls and on a feed hygiene regulation which will establish a comprehensive registration system covering all feed business operators and set out clear obligations for each part of the production chain from primary producers to businesses. Following the European Parliament's Second Reading, we have finalised the proposals in the hygiene package. These measures will consolidate and simplify existing legislation and provide a high level of consumer protection and a "farm to fork" approach to food safety.
There are many other detailed issues which we intend to progress. The programme of work is a challenging one and I am confident that we will have a productive Presidency and that the measures I have outlined will make a significant contribution to the well-being of European agriculture, safeguarding the health of our consumers and preserving the environment and the welfare of animals.
Each year brings its own challenges and circumstances but this year Irish agriculture is on the threshold of a completely new era. It will be an era of not alone great change, but one which will be rewarding for Irish farming. The reform of the CAP agreed last June will substantially free farming from the straitjacket of bureaucracy and allow it to realise its potential from the marketplace. Just over 30 years ago, we joined the then EEC on the basis of exploiting our natural advantages as an agricultural country producing quality food on a competitive basis in European markets.
The apparent attractions of intervention and other artificial market supports overshadowed the longer-term advantages of access to some of the most high value consumer markets in the world. The situation was worsened due to the fact that much of the financial benefits of the CAP did not trickle down to farmers. The 1992 reform of the Common Agricultural Policy rectified this weakness by switching the emphasis to premia payments. While this improved the situation in so far as support payments were made directly to farmers, the system tended to encourage what became known as the farming of premia. This distorted both the function and perception of farming. Farmers want to be engaged in worthwhile and coherent economic activity serving markets and consumers. Agriculture, because of its very nature, needs and deserves support through public funding. However, the support system must be such as to allow farmers concentrate on producing high quality food for real markets. Anything else is unsustainable.
Agriculture remains of major importance to the economy. It has also to contend with the changed expectations of modern society on issues such as food safety, environmental concerns and animal welfare standards. Against this background, the CAP mid-term review involved difficult and protracted negotiations. The outcome agreed in Luxembourg last June represented a significant improvement on what the Commission had proposed a year earlier, and in particular provided a degree of flexibility for individual member states. The new CAP architecture will allow agriculture develop in a sustainable and acceptable manner. Cushioned by the single farm payments in recognition of the costs of compliance with societal demands, farmers can get on with the job of supplying markets, focusing on minimising production costs and maximising their incomes. Indeed, farmers very quickly recognised the advantages of farming in a framework free of the many constraints associated with the various premia schemes.
We are facing a period of major adaptation and change at farm and processing level and indeed for the administration which supports the sector. The early decision to opt for full decoupling, where Ireland has shown the lead to Europe, allows us to move ahead with certainty. The fact that after extensive consultation we took the decision at an early date to opt for full decoupling allowed us to have the detailed implementing rules for the new single farm payment tailored to meet Irish farming requirements. The requirement that, in order to draw down the single payment, farmers would have to have 100% of the average land area that they had during the reference period would have resulted in serious problems for certain categories of Irish farmers. For instance, approximately 50,000 hectares of land was planted with forestry between 2000 and the end of 2003 and quite an amount of land has been acquired under compulsory purchase order by local authorities. In addition, certain farmers who had land rented in or leased in during the reference period may no longer have access to that land. The 100% requirement would therefore have undoubtedly contributed further to an increase in the cost of rented land from 2005 onwards. I believe the balance has to be tilted in favour of active farmers who want to expand. In addition, the "freedom to farm" concept would have sounded hollow if farmers who may wish to reduce output were nevertheless forced to retain 100% of the land that they had during the reference period in order to maximise the single payment. It was for these reasons that a derogation from the 100% land requirement was sought. I am therefore happy that the final text of the Commission's implementing rules addresses these issues. The position now is that farmers who, for specific reasons, do not have access to the average amount of land they had during the reference period can apply to have their entitlements stacked on the available land in 2005 or thereafter, provided that they have at least 50% of the average land that they had during the reference period. The concession can only be applied provided the farmer has not disposed of land by sale or lease since the reference period and provided he declares all the land available to him each year.
The concession on land availability will obviously have a major positive impact in the forestry sector. There has never been a better time to consider planting. Farmers can effectively plant up to 50% of their land, retain their full single payment and also qualify for a tax-free forestry premium of around €390 per hectare for 20 years. The report in the farming section of the Irish Independent today indicates that farmers have moved in that direction, thereby showing confidence in the decisions made in the reform package.
My colleague, the Minister for Agriculture and Food, Deputy Joe Walsh, has ensured that top priority is being given in the Department to prepare for the changeover to the single payment system. It is intended that each farmer will be notified of his or her single farm payment entitlements as soon as possible this year. Given the nature of the transition, it is inevitable that certain anomalies and technical issues will arise. We will address these issues to the best of our ability and we have been diligent in bringing them to the attention of the European Commission. Some 14,000 cases are currently being processed in the Department under the force majeure rule and we hope to make decisions on those as soon as possible.
While the introduction of the single farm payment is our strong focus, we should not overlook the new WTO round which will also have a major impact on our future. Ireland is an open economy and we have much to gain from a well-ordered, rule-based world trading system. We remain committed to the multilateral process and to securing a new WTO agreement. We were disappointed with the breakdown of the fifth WTO ministerial conference in Cancún last September. Contrary to some reports, the EU was not responsible for the breakdown nor, indeed, were the negotiations on agriculture the stumbling block. The EU participated in the negotiations in a constructive manner and will continue to do so. That is Ireland's position also.
The negotiations resumed at the end of March and there is renewed impetus to conclude a framework agreement for the next round by the end of the summer. This would represent a significant step forward. The reality is that the US presidential election and the appointment of a new EU Commission later this year will intervene and, therefore, there is no prospect of a new agreement being finalised this year.
As current holders of the EU Presidency, we will of course do what we can to facilitate progress. However, there must be a fair and balanced agreement in so far as agriculture is concerned and there is no question that agriculture can be sacrificed to pay for achieving an overall agreement.
The negotiations between the EU and the Mercusor countries of South America on a new free-trade agreement are also reaching a critical stage. Here again, agriculture will be crucial to the outcome. Our concern relates to the importation of agricultural products, of which Senators will have heard much, both in the media and in recent debates on agriculture.
The EU has undertaken two major reforms of the CAP, in Agenda 2000 and in the mid-term review, in preparation for the WTO negotiations. We will not be prepared to accept new agreements which would be so damaging to the prospects of European and Irish farmers that they would necessitate further reform of the CAP.
In this historic week, I am conscious of the benefits Ireland has enjoyed from EU membership and I believe the new member states should also have the opportunity to benefit significantly from their membership in the coming years. When completed, the current programme of enlargement will add over 100 million people to the population of the EU. This will create a new impetus for growth in the market with increased possibilities for all member states, old and new. The absorption of such a huge addition to the Union's population and land area, with all the economic, social and cultural diversity it will bring, will be a major challenge. An enlarged EU will also bring many opportunities both for existing and new members. As a major exporter of agricultural and food products, Ireland will have an enormous new potential market opening up to it.
We are on the threshold of a new era. By this time next year, we will be operating within a Union of 25 member states and within a fundamentally reformed CAP. We have shown ourselves to be ready to embrace change and to adapt to new circumstances and challenges. The market opportunities presented by the reformed CAP and the enlarged Union must be taken and I am confident that they will be.
