Common Agricultural Policy

Dáil Éireann Debate, Wednesday - 26 May 2010

Wednesday, 26 May 2010

Questions (16)

Sean Sherlock

Question:

28 Deputy Seán Sherlock asked the Minister for Agriculture; Fisheries and Food his views on the mechanisms that are needed to address the diversity of production systems and range of risks across the 27 member states in the context of Common Agricultural Policy negotiations; his further views on the need to address increased market volatility and the effective mechanisms that are needed to manage this post 2013; and if he will make a statement on the matter. [22117/10]

Oral answers (5 contributions)

Deputy Brendan Smith

The continuation of a strong decoupled direct payments system is of fundamental importance, in my view, to stabilising farm incomes at times of market volatility. Decoupled payments remain the best way of underpinning the incomes of small family farms, while allowing them respond to market opportunities. In this context, it is essential to acknowledge the linkage between the income stabilisation role of direct payments and the market stabilisation role of our current market management measures.

I consider that existing market support tools are appropriate and I believe there is broad agreement on this among member states. The application of intervention and APS in the dairy sector during 2009 illustrated the usefulness of these measures in contributing to market recovery and stabilisation, albeit at very low prices, and the need for them to remain in place. There may be a need for additional flexibility or adjustments, for example, in periods of application and volumes. Nevertheless, these measures are pitched at safety-net level at present and should remain available to us after 2013.

In addition to the current market supports, there is an increasing emphasis on risk management mechanisms such as subsidised insurance and mutual funds. I believe we should look closely at the possibilities offered by such measures. Ireland does not have extensive experience with insurance systems and I would be cautious about the benefits of establishing EU wide insurance regimes. My main concern is that the diversity of production systems and range of risks across the 27 member states are too wide to accommodate a single EU-wide scheme. Therefore, I would like to see a suite of options available to member states to use at their own discretion within funding limits.

There is also a need to address increased market volatility and to have effective mechanisms to manage this. I believe we should consider the potential usefulness of new, additional tools to combat increased market volatility. In that regard, I am open to examining in greater detail the mechanisms used by other countries such as the US, particularly those concerned with underpinning farm revenue or income. I am not suggesting that we immediately adopt similar measures in the EU but I would like us to examine them in greater detail to see whether they would deliver benefits on the EU market.

Deputy Seán Sherlock

I welcome the Minister's response and I am seeking to ascertain definitively whether he is giving any credence to the idea of introducing a de facto minimum income for every farmer so as to buttress against potential market instability in the future. The recent volatility in the dairy sector showed us, along with other factors, just how volatile farm incomes are at present and the fact that there will have to be an EU-wide response to this.

What I am really trying to ascertain is whether the Minister is giving credence to the notion of a minimum payment for farmers and, if so, whether there is EU-wide support for such a measure.

Deputy Brendan Smith

The point made by Deputy Sherlock is that, regardless of the mechanism, we need to have some stability in income. We need to put a floor on farmers' incomes. The best way this has been achieved to date is through the direct payment system. Allied to the stabilisation of income, we also need to achieve stability through anti-volatility measures. As I have said in the House a number of times, there will be a major effort to retain the budget for CAP. We have all discussed that and agreed that the first priority for CAP post-2013 is to ensure the system is adequately resourced.

There are conflicting views around the table at the Council of Ministers about how payments should be disbursed. We are in favour of retaining the historical model of direct payments and ensuring that pillar 1 of CAP is the prime pillar. There is also the provision of public goods through the wider rural development programme and the environmental pillar. We must try to make the industry more competitive throughout Europe.

Deputy Seán Sherlock

The Minister mentions the historical model of payments, and I acknowledge the speech he gave to the Seanad recently in which he expressed a preference for the retention of this model. What I took from that speech, however, was that the historical model would come under increasing attack and that it is not guaranteed into the future. That is the basis upon which the Minister could state, at least, that there is a degree of stability of income, but it is not necessarily guaranteed to continue if the model changes, unless the Minister states otherwise. If the historical model changes, will that compromise basic incomes to farmers?

Deputy Brendan Smith

Deputy Sherlock makes a valid point about the divergence of opinion. We are much in favour of direct payments, but some within our own country will argue that the reference period should be changed. If we did an analysis of agriculture overall, we would see that not much has changed over a period of eight to ten years in terms of the number of people participating and the types of activity in which they are involved.

What are the options for the single payment? Most member states, including Ireland, are carrying out their own analyses to determine which system would suit us best. Among the potential payment models that are under consideration in the informal process are the historical model, an EU-wide flat rate, or a payment to cover the cost of purchasing power. We have outlined our total opposition to the idea of a flat rate. Other options are a regional or national flat rate, a base flat rate plus tiered additions, upper and lower limits, caps on payments, the application of the single area payment system to the 27 member states, more targeted payments linked to the delivery of public goods, and counter-cyclical payments. Thus, there is a wide range of alternatives to the existing system.

Overall, the existing system needs adjustment in some areas to ensure that young people and farmers who are active today but were not in 2002 are not discriminated against. There is much work to be done and I appreciate the work of the different political parties in bringing a greater awareness to the public at large, be it through regional meetings, conferences in south Tipperary, or whatever. All of that is important in creating a greater awareness of the need for adequate resources.