Ceisteanna – Questions. Priority Questions. - Common Agricultural Policy.

Billy Timmins

Ceist:

1 Mr. Timmins asked the Minister for Agriculture and Food the form of decoupling he intends to implement; and if he will make a statement on the matter. [19255/03]

We agreed to a later sitting time for Question Time today to facilitate the House, which I am aware caused some inconvenience to Members. If it is agreeable to the House, I would not have any difficulty with finishing by 7.30 p.m.

Is that agreed? Agreed.

In the day that is in it, consensus is overflowing.

In reply to Question No. 1, the agreement on the mid-term review reached by the Council of Ministers on 23 June 2003 provides for the option of full decoupling of direct payments and for various partial decoupling options. I will soon commence a process of consultation with the social partners and any other interested groups and individuals before deciding on which options to implement.

I thank the Minister for his reply. Can he give any indication of when he will get the full legal text of the various decoupling measures?

Does he agree that if various conditions attached to decoupling are overly draconian or there is too much emphasis on reproducing the production levels people had during the reference year period, we may have to look seriously at the concept of full decoupling?

We have been given an indicative date of the end of this month for the legal services of the Commission to produce a legal text. I hope that will be done, as I accept that people are anxious to have some certainty and security into the future. As I said, I will then sit down with the farming organisations and the social partners and other interested parties. If it is not available by the end of this month as August is a holiday month in the Commission, it would then slip over into September. We really do not want that to happen. We want to get it as soon as possible. There are many issues such as entitlements and hereditary rights, people with land leased and those in pension situations which need to be sorted out. Some type of model or facility may need to be devised to allow young people to gain access to quota rights. We have to put a reserve aside for them and we have yet to decide on the size of this. There are still outstanding technical matters.

I thank the Minister. Does he agree that it is vitally important that the size of the reserve is adequate, particularly to facilitate young people who are entering farming so that they will not be handicapped relative to other farmers?

Deputy Timmins has raised an important point. There will be hardship cases and there will be younger people who have taken over with an inadequate quota. In respect of milk quota we have some experience of that. Having an adequate reserve is a prudent thing to do and this is a matter I will push for in the discussions with the social partners.

Mary Upton

Ceist:

2 Dr. Upton asked the Minister for Agriculture and Food his views on the agreement reached on the reform of the Common Agricultural Policy; his assessment of the impact of the agreement on farm incomes here; when he will meet farm organisations and the social partners to discuss the implementation of the agreement; and if he will make a statement on the matter. [19183/03]

The agreement reached on 26 June 2003 by the Council of Ministers on the mid-term review of the CAP represented a successful outcome for Ireland. My prime objectives were to safeguard the benefits to Irish agriculture and to rural communities achieved under the Agenda 2000 agreement and ensure the best possible level of support and protection of our production base into the future. These objectives have been met and the potential negative aspects of the Commission's original proposals have been either eliminated or minimised.

There will be no loss of income to Irish farmers arising from the changes agreed to the market regimes if sales to intervention are replaced by sales to higher-priced markets. If farm-gate prices fall in line with the reduction in the intervention price in the milk sector, the loss would be €14 million or about 1% of the farm-gate value of milk output. In the cereals sector, the effect on farm incomes of the 50% reduction in the monthly increments is estimated as negligible. In so far as decoupling is concerned, the effect on farm incomes will depend on which of the decoupling options is implemented. In this regard, I will shortly commence a process of consultations before deciding on which option to implement. There will be a loss of €6 million a year, or less than 0.5% of direct payments from the modulation arrangements. The Commission's digression proposals, which would have involved an annual loss of €56 million a year, have been dropped.

The agreement reached by the Council of Ministers, and, in particular, the decoupling arrangements, will considerably strengthen the EU's negotiating position in the forthcoming WTO negotiations in Cancun in September and will enhance the security of direct payments to Irish farmers. It will also strengthen the sustainability of the Common Agricultural Policy into the future.

When the Minister says there should be no loss to the farming community arising from the reform, does he plan to put in place support systems such as marketing supports? There will clearly be a need to divert the marketing of products generally.

My second question relates to consultation with the farming organisations. Does the Minister plan to have consultations with all the farming organisations, whether or not they are in the partnership agreement? The Minister's Department issued a press release yesterday announcing public consultation. I welcome this as it is a good idea. While I do not know if it is by accident or otherwise – I am sure it is an accident – the food processors are absent from it. The rural community and consumers are mentioned but not processors. Perhaps the Minister will comment on this.

Direct farm supports amount to €1.3 billion per annum and these have been safeguarded in the context of the WTO talks. A consensus is emerging that there will be decoupling in Ireland. I will wait for the outcome before we decide on the ultimate model. Breaking the link with production will mean that those payments go into the green box in the context of the WTO and are thereby secured for the future. We make payments of about €1.6 billion per year and the rest is made up of REPS payments and the farm retirement scheme.

Regarding the dairy industry and the reduction of an additional 4% in intervention support, this is compensated for by a dairy cow premium that makes up about 80% of the loss. I have asked the dairy industry to go closer to the market place and produce for the ultimate consumer. Last year, I set up the Prospectus study. This study clearly shows what needs to be done by the dairy industry. Grant aid, particularly research and development grants, is available from Enterprise Ireland to allow the industry get its house in order. There will be a five year lead in period in that butter in intervention starts off at 70,000 tonnes next year declining to 30,000 tonnes over five years. I hope and expect that the dairy industry will take on board the recommendations of the Prospectus report and avail of Enterprise Ireland research and development grants to tackle opportunities in the market place into the future.

On the partnership and the talks with the farming organisations, will they be all-inclusive and will those farming organisations and bodies that are not within the partnership be included in the talks?

Yes, I can give Dr. Upton a commitment that all organisations and individuals who have a contribution or a submission to make, will be heard and listened to. I will meet with them and it will not be exclusive to social partners.