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Joint Committee on Agriculture, Food and the Marine díospóireacht -
Tuesday, 23 Jun 2015

Agriculture Sector: European Commissioner for Agriculture and Rural Development

Apologies have been received from Deputy Michael McNamara. I remind members, witnesses and persons in the Visitors Gallery to please turn off their mobile phones. There is one item on the agenda, which is the address by Mr. Phil Hogan, European Commissioner for Agriculture and Rural Development. I am very pleased on behalf of the committee to welcome the Commissioner to our joint committee to give us an overview of the developments in the agriculture sector since his appointment last November. This committee is following closely the process of Common Agricultural Policy simplification proposed by the Commissioner at the outset of his term. The committee submission, which I presented to the Commissioner on behalf of the committee for his consideration, contains our views on the process of simplification. We prioritised simplification in our work programme for 2015 and we will be following the measures associated with this as they emerge from the Commission.

We have been actively engaged in other issues, including proposals contained in each COM as part of our ongoing process of EU scrutiny. The committee most recently sent a political contribution on COM (2015) 177 regarding changes to the process of GMO use within the EU. The committee notes that several other member states have likewise sent contributions on the topic to the Commission. We look forward to receiving from the Commission a response to our contribution and to the proposal, and we will continue to monitor its development and developments in the GMO sector.

We are also aware that the Russian ban on EU agricultural products presents an ongoing challenge to the EU agriculture sector. The committee welcomes the measures introduced by Commissioner Hogan to mitigate the impact of the ban and is interested to hear the Commissioner's views on how the situation might develop over the next few months. The committee scrutinised closely the impact of the abolition of milk quotas earlier in the year and we compiled the Managing Market Volatility in the Dairy Sector report in which we advocated a cautious approach to the expansion of the dairy sector. We are also interested to hear the Commissioner's views on the industry after the removal of quotas.

Earlier today, the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, came before a joint meeting of the Committees on Jobs, Enterprise and Innovation, European Union Affairs and Agriculture, Food and the Marine to brief members on the current position regarding the transatlantic trade and investment partnership, which may turn out to be the largest trade agreement ever negotiated and will have significant impact on Irish agriculture. The committee is also monitoring closely the developments on the negotiations. Another area which we have covered is the equity in prices along the chain in the food retail sector. The committee is very interested to hear the Commissioner's strategy for developing producer organisations in his term, as was outlined in the previous Common Agricultural Policy agreement.

A delegation of the committee met Commissioner Hogan in Brussels in March before undertaking a visit to the European Court of Auditors in Luxembourg, demonstrating the committee's commitment to engage with European agricultural policy. On that occasion, we presented the Commissioner with a copy of our Land Use - Maximising its Potential report, which we have identified as a further key area for ongoing negotiations. I look forward to hearing, as I am sure my colleagues do, the Commissioner's views on the topics outlined. No doubt members will have questions on the basis of the issues raised. We have no non-members present.

As I said to the Commissioner earlier, I have to bring the matter of privilege to his attention. Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if directed by the committee to cease giving evidence in relation to a particular matter and the Commissioner continues to do so, he is entitled thereafter only to qualified privilege in respect of his evidence. He is directed that only evidence connected with the subject matter of these proceedings is to be given and he is asked to respect the parliamentary practice to the effect that where possible he should not criticise or make charges against any person or 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 should not comment on, criticise or make charges against either a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I understand a copy of the Commissioner's opening statement is being circulated to members. I invite the Commissioner to make his opening statement.

Mr. Phil Hogan

I thank the Chairman and the committee for the invitation to be here today. It is an honour to be here today to engage with the committee on matters affecting Irish and European agriculture. The Chairman has touched on a few of them himself in his opening remarks.

Since taking up office in November 2014, I have prioritised my engagement with national parliaments and, in particular, parliamentary committees on agriculture. To date I have met agri-committees in ten member states. As a former elected representative, I am keenly aware of the importance of reaching out to parliaments and listening to perspectives and feedback on the state of play on the ground in agriculture. Whereas European agriculture is as diverse as the European climate, from the olive groves of southern Europe to the reindeer farms in the far north, the issues raised by public representatives are often quite similar. Issues such as how to simplify the Common Agriculture Policy, how to ensure a good living for producers in order that they can continue to produce their product and how to gain new opportunities for our high quality produce in global markets are the ones I am prioritising; therefore, it is essential to receive feedback from those closest to the citizen, namely, elected public representatives.

I am here to update the committee on a number of issues of interest to members and their constituents and will be glad to answer some of their questions immediately afterwards. I will start by giving an overview of the beef data and genomics scheme. The scheme is an agri-environment climate measure under Ireland's rural development programme. A key requirement of any agri-environment climate measure is that farmers must undertake commitments for a period of five to seven years. These are the regulations and legislation that govern that scheme. The terms and conditions of the beef data and genomics scheme could be revised but only by way of modification of the rural development programme.

A vote has been called in the Dáil.

Will we suspend the sitting before the Commissioner gets into the thrust of his presentation? Is it a deferred vote?

Is it agreed that we suspend the sitting until after the vote and ask members to return without delay? Agreed. I apologise to the Commissioner, but, as he knows, that is how it works.

Mr. Phil Hogan

I have seen it all before.

Sitting suspended at 5.15 p.m. and resumed at 5.40 p.m.

I invite the Commissioner to continue his opening statement.

Mr. Phil Hogan

I was referring to the beef genomics scheme and the fact that it was an agri-environment climate measure. That means that under the regulations farmers must undertake commitments for a period of five to seven years. Changes in terms and conditions would only apply to those farmers who joined the scheme after the programme modifications had been notified to the Commission.

Turning to the milk market, this has been an historic year for the milk sector, with the ending of milk quotas on 31 March. This followed a bumper 2014 which saw prices reach new highs. Following this period of record high prices, the milk sector is undergoing a correction as a consequence of global oversupply and weaker demand in important markets such as China and Russia. The Commission has remained attentive to these developments, especially since the introduction of the Russian import ban last summer.

The measures deployed by the Commission in recent times included opening private storage schemes for butter and skimmed milk powder in September 2014, which will remain open until September this year. We also guaranteed the uninterrupted availability of the safety net by extending the intervention period in 2014 and anticipating it in 2015. We have granted targeted support to farmers most hit by the Russian ban in the Baltics and Finland and have more than tripled the budget dedicated to promotion schemes to expand EU penetration into third country markets. We have alleviated the burden of the surplus levy in the 2014-15 quota year by allowing deferred payments over a three year period at 0% interest. We have also enhanced market monitoring in the post-quota era, with monthly meetings of the Milk Market Observatory economic board. As confirmed by the board at its last meeting, market sentiment is uncertain, with no clear signs of recovery in the short term.

There are two main market fundamentals that potentially are still of concern.

In terms of supply, worldwide milk production has not dropped substantially, with better than expected output in Oceania. In terms of demand, a lifting of the Russian import ban seems increasingly unlikely and Chinese imports are still 40% down on last year. The positive news is that the peak of milk production in the EU has passed, the euro exchange rate remains favourable, and the EU export performance in the first quarter of 2015 has been remarkable. In addition, EU stocks seem to be at an appropriate level for this time of the year. For instance, no offers to public intervention have been reported so far. Prudence is needed in these times. Operators in the milk sector have to act responsibly and react to market signals. Let us endeavour to produce what the market can absorb. As price pressure is expected to persist in the short term, the Commission forecasts a rather moderate milk supply trend with a 1% overall EU increase in 2015 which comes after having close to 5% of an increase last year. The US Department of Agriculture has also scaled down its 2015 projections to 1.3% of an increase. Sources point to increases of 0.6% in New Zealand and 2.9% in Australia. All in all, there are about 3.7 million tonnes of additional milk to be absorbed, mostly by importing countries.

In the long run, global demand for dairy products remains promising. The EU in general, and Ireland in particular, is in a good position to benefit from the new opportunities coming from world markets. In addition, on the supply side, feed prices are projected at lower levels than those observed since 2010. The sector will be unavoidably confronted with some periods of short-term volatility as we are experiencing now. Thankfully, we have a comprehensive toolkit under the CAP to support the dairy sector in this new era. In parallel, the sector itself needs to explore and develop private initiative tools for risk hedging, such as integrated supply chain contracts, forward contracts, fixed margin contracts and price differentiation according to volumes.

Another issue which is the subject of debate at EU level at present is the issue of origin labelling, which is a complex and politically sensitive matter. In the framework of the Better Regulation drive, the Commission is keen to propose new mandatory legislation only where such legislation serves a purpose. The consumer interest in origin information on milk and meat categories under the remit of this Commission report can be adequately addressed by voluntary labelling, which avoids imposing unnecessary burden and compliance costs. Mandatory origin labelling would entail a higher regulatory burden and additional operational costs that could not be justified. In the framework of the Commission's priorities and the benefit of the Single Market, voluntary labelling for dairy products appears to be the most suitable option. Currently consumers may, if they so wish, opt for milk and dairy products where origin information is voluntarily provided by food business operators. Introducing mandatory origin labelling would unevenly impact operators. The burden would be particularly heavy on those located in border regions and in areas that are not self-sufficient in milk, manufacturers of highly processed products, and processors receiving milk from different origins with multiple manufacturing stages. Mandatory origin labelling would also impose more control burden on public authorities and push food business operators to change their sourcing practices.

With regard to the beef sector, Irish reference prices are now well above EU average prices. The good performance of extra EU exports, the improvement of demand on the Continent and the tight supply in the UK are the main reasons for an improvement in Irish prices. Ireland is, for the moment, the only EU member state allowed to export beef to the United States, which is good news. Given the US internal market situation, where prices are near an historic high due to drought in the main beef producing regions, there is a good window of opportunity for Irish beef.

Opening the Chinese market for EU beef is a priority for the Commission. Efforts are being made at all levels and we are making progress. China lifted the BSE ban for Ireland last February, which is a very important step in the Chinese procedure to allow market access. We will continue with the efforts to secure this big new market opportunity for Irish and EU exports. China has just opened its market to Brazilian beef. Brazil is certainly a big competitor, but China's beef demand is enormous, so there is a place for everyone. On the other hand, the need for Brazil to access additional markets is already having an effect. EU imports from Brazil have experienced a significant reduction of eight percentage points in the first quarter of 2015. The prospects for the near future are positive. Our projections show that 2015 should see a general moderate recovery in EU prices and they should stabilise in 2016.

I know that farmers are increasingly exposed to the impact that increasing input costs such as fuel, energy and fertilisers have on income. I am aware that EU fertiliser costs have not followed the decrease in energy prices. However, the main input for the production of fertilisers in the EU is natural gas, not oil, the price of which has not decreased to the same extent as the significant reduction in the price of oil. The gas market is segmented at global level, as opposed to the oil market which follows global price trends. The differences have been exacerbated by the shale gas revolution in the United States. For instance, gas prices in the EU depend mainly on our import demand from Russia, which is on the basis of between six and nine month contracts, and from Norway which normally has on-the-spot prices. Since gas prices only started to decrease in April, in particular in Germany but not across the EU, they have not resulted in a significant decrease in fertiliser prices in the short term.

With regard to nitrogen fertilisers, the EU market is not self-sufficient and imports about 20% of its needs. Ireland buys fertilisers on the EU internal market, mostly from Belgium, the Netherlands, the UK and Germany, and, on the other hand, from Russia, Egypt, Iran and Turkey. Most of the imported nitrates fertilisers come from Russia, which accounts for 68%, and from Turkey, which accounts for 17%.

The decrease in Russian gas prices in April is not yet reflected in fertiliser prices. In the UK, where fertiliser prices follow the UK NBP gas prices, we noted a slight decrease in granular urea price, from €394 per tonne down to €388 per tonne. Since January both urea and nitrates prices have shown an increasing trend. I wrote to my colleague, the European Union Competition Commissioner, Margrethe Vestager, to look into possible anti-competitive practices in the fertiliser and energy sectors. Our two services are working together to follow up and monitor agricultural, fertiliser and energy prices to detect any possible market disruption.

Of course 2015 is a crucial year in the area of climate change with the Paris Climate Conference set to be a landmark event. The European Union has committed to reducing its overall greenhouse gas emissions by at least 40% by 2030 to avoid an increase in temperature above 2° Celsius above the pre-industrial level. This is a very ambitious target, and to achieve it, all sectors will have to contribute. Emissions from land, mainly agricultural and forestry lands, will also have to be reduced, starting from 2020. The Commission is working on the question of how to deal with agriculture and land use, land use change and forestry, or LULUCF, in the future climate policy framework up to 2030. A stakeholder consultation ran up until 18 June last. A policy proposal will be presented in 2016 which will be based on a solid impact assessment of the different options and COP21 outcomes. The multiple objectives of agriculture and land use and its reduced mitigation potential and higher costs compared with other sectors need to be acknowledged. We need to strike a balance between the EU's food security and climate change objectives. Encouraging the sustainable intensification of food production is one effective way to achieve this balance. For some member states like Ireland, the mitigation potential provided by afforestation is important. The Commission has to work out how to include that aspect in the climate change framework.

The Irish rural development programme includes measures, some of which are rather innovative, such as the aforementioned beef data and genomics scheme, which are needed in future to improve the mitigation and adaptation potential of the sector and, at the same time, its productivity. These measures must be assessed and refined, as appropriate, to be prepared for the 2030 challenge.

I wish to say a few words about the Transatlantic Trade and Investment Partnership, TTIP. International trade negotiations in general, and trade deals with the US in particular, are of key importance for European agriculture. The United States already represents a key outlet for EU agricultural production and is the destination for 13% of our exports. This negotiation offers opportunities and challenges. In any scenario, the Commission is determined to defend and promote the EU's interests and, crucially, agriculture. I for one am personally and directly involved. I have visited Washington twice to engage with the US Administration, the US Congress and farm sector stakeholders. My key message to the US side has been clear and consistent, that the EU is strongly committed to having a deal with an appropriate balance and respect for our sensitivities.

TTIP will offer new market opportunities for EU agricultural products through the reduction of both US tariffs and non-tariff barriers in areas such as dairy, food preparations, prepared meats, sugar confectionery, chocolates, fruit and vegetables, beverages and juices. The reduction of non-tariff barriers is expected to bring the most benefits in TTIP. According to the impact assessment, most barriers relate to sanitary and phyto-sanitary measures. For example, there is currently an obligation to respect US grade A requirements for fresh dairy products. The measures are very stringent and hinder EU exports. The EU is seeking equivalence for EU production methods. The United States lifted the BSE ban for the export of Irish beef and the EU is still waiting approval for other member states, as well as for EU sheep and goat meat. The United States is currently approving individual member states, a process which is lengthy and unfair. The EU should be recognised as a single entity.

To allow EU producers to compete fairly in the markets of the United States and to provide quality products, TTIP negotiations must also bring enhanced protection for a selected number of EU geographical indications.

This is matched on the US side, where consumers are taking a greater interest in the origin of products.

The TTIP is a challenge owing to the differences between the United States and European Union production structures, environmental standards and approaches to food safety. EU sensitivities, for example, in the case of meats, must be respected. These elements will be taken into account to define the level of market access that can be granted in each sensitive sector.

Overall, the TTIP must be balanced and reasonable and the 28 member states must approve it. This means there must be appropriate quotas for sensitive products such as meat. It also means that a balance must be struck between key interests, with gains on both sides, and sensitive sectors protected. An acceptance of our respective legitimate choices with regard to environmental or health standards, including for GMOs, anti-microbial treatments and hormones, needs to be a part of any deal.

With regard to the TTIP process, working in parallel to address different areas in the negotiations is essential. For example, in regard to talks on tariffs where agricultural products are a key US interest, they should move at the same pace as those on the European Union's key interests, for instance, the talks on procurement, services, regulatory convergence and rules, including geographical indications. The European Union has made ambitious first tariff offers, but it has still received nothing in return in our key areas of interest. This is in the context of US difficulties in embarking on meaningful concessions before finalisation of its fast-track TPA procedure and the deal it is trying to do with the Pacific countries through the TPP. The bottom line is that substance should dictate speed and the step to a final deal should only be considered in that context.

The TTIP's overall result must be balanced between reasonable key interests that respect the sensitivities of some of our products, with acceptable quotas for these products. The TTIP will not affect our respective food safety standards such as for hormones and GMOs or in other areas. The Commission continues to pay great attention to transparency in trade negotiations to respond to increasing public attention and concerns.

With regard to the timing for the conclusion of the talks, this is an important year. We are ready to make as much progress as possible in 2015, but it is unlikely the process will reach a conclusion by the end of the year. The sequencing on the US side appears to be the adoption of the trade promotion authority which is due to occur before the end of June; finalisation of the Trans-Pacific Partnership and the TTIP later in 2015. Therefore, there is a short window of opportunity before the US elections get into full swing.

It has been a pleasure to update members on the latest state of play at EU level on agricultural matters. As can be seen, despite short-term volatility in agricultural markets, there is much to hope for in a world in which the population will reach over 9 billion by 2050. Demand for the high quality agricultural produce of the European Union is the hallmark of what we are trying to achieve. It will only increase in a world in which the middle class is growing by 150 million people every year. Ireland is positioning itself well to meet this demand. Nevertheless, we must remain vigilant in terms of short-term market and political challenges. I am committed to working with the committee throughout my mandate, in the interests of EU citizens, rural dwellers, producers, consumers and the agrifood sector as a whole.

I thank the Commissioner, Mr. Hogan, for his detailed report and taking the time to brief us on the issues involved. He said the ban on sending beef to China would be lifted in February, but will the BSE case that occurred two weeks ago affect this? Also, will it affect our status in the export of beef to the USA?

The cost of fertiliser and gas is an issue, as is the importation of gas into the European Union, in particular. Russia has 68% of the market and Turkey, 17%. In the case of Russia, how are the ongoing issues in Ukraine affecting that supply? Is it secure or might we have to seek that 68% elsewhere?

I welcome the Commissioner, Mr. Hogan. This is my first time as a friend and colleague to address him in public as European Commissioner. In Kilkenny we are very proud of his achievements. It is a long time since he donned the under-14 jersey for Tullaroan, but I heard he was as big then as he is now. It is a long time, too, since he hunted cows with his late father in Gaulstown. These experiences gave him great life experience.

In his opening remarks the Chairman raised many of the issues involved. The Commissioner has pointed out that one of the serious issues involved is the Russian ban on Irish beef. I have two main issues to raise in that regard. One thing any farmer or anybody involved in agriculture is afraid of is an inspection. The Commissioner has said one of his priorities is simplification of the CAP. We do not condone fraud or serious breaches of the regulations, but we need a yellow card to be introduced for inspections. People should not be penalised so heavily for minor breaches. I, therefore, ask the Commissioner to consider looking at a system such as a yellow card to deal with this issue.

One of the priorities of the Commissioner on taking office was the food chain and transparency in food production. Food security and traceability are important issues for the European Union, particularly for Ireland for which traceability, food quality and safety are vital. The Commissioner has mentioned that EU beef prices have reached a record high, but last year the beef sector in Ireland faced a serious challenge owing to the specifications being imposed by factories, producers and retailers. The Commissioner has said he intends to set up an independent body to consider how everybody involved in the food chain can be rewarded properly. Has there been any progress on that issue, food chain security and guaranteed prices for farmers who are the primary producers?

I welcome the Commissioner, our former colleague, back to the Oireachtas and wish him well in his endeavours in the future.

Simplification of the CAP is a significant issue. Every year when a new CAP is negotiated, we look for less bureaucracy, but, unfortunately, we always seem to get more. This tends to irritate many of those involved in the agricultural community. Will decreasing bureaucracy be a priority in the mid-term review and the future?

Senator Pat O'Neill mentioned inspections and penalties. Again, these issues are a source of irritation for the agricultural community. Is a more streamlined version of the CAP on the horizon or will it be part of discussions to be held? Many farmers live in fear of the knock on the door, the letter in the post or the unannounced inspection. The single farm or basic payment makes up a large part of a farmer's income and farmers are concerned that it may not be available in the future if, for some trivial reason, they are not in compliance with the increasing number of regulations.

A big issue in Ireland and elsewhere in Europe is the relationship between primary producers and supermarkets. The committee did some work on this issue two years ago when it published a report on it. In England there is an independent arbitrator to deal with the issue. Does the Commissioner have any knowledge of how that system works or does he believe we need a European statutory code of conduct? As he is probably aware, a new Competition and Consumer Protection Act was signed into law about a year ago, but it has not been brought into force because regulations have yet to be introduced. There is a very uneasy relationship between producers, retailers and supermarkets here, but does the Commissioner believe that, in order to have greater transparency, European legislation is required to fit in with what we have in place?

It was very welcome that milk quotas were abolished at the end of March. We suggested a fairly cautious approach in Ireland but the superlevy has put a bit of a dampener on our progress and this is one of the biggest challenges in the short term. Mr. Hogan outlined the strategy regarding the payment of penalties. Is there any possibility of a softer landing?

The age profile of farmers is not just an Irish issue but a Europe-wide one. Only 7% of Irish farmers are under 35 and more farmers are over 80 years of age than under 35, which is a damning statistic. Last week a group calling themselves the forgotten farmers were before the committee. There is a legacy issue in that there are some 3,500 of these farmers who, in years gone by, did not receive payment and now find it very difficult to compete against those who receive single farm payments in regard to leasing and renting land and so forth. Most of them are young farmers under 40 years of age and still do not qualify for anything. Is there any possibility they could be facilitated in the future?

Mr. Hogan said there was a good outlook for the beef trade although it is a very volatile sector. Can anything be put in place to ensure the ups and downs are addressed so that in the event of a bad year, and there are more bad years than good years, the blow to farmers in the sector can be softened?

There are three questions. I propose that we get the answers to them and then take Deputy Barry, Deputy Heydon, Senator Comiskey and Deputy Connaughton. A couple of issues have not yet come up.

Mr. Phil Hogan

In answer to Deputy Ferris's question, if the BSE situation remains as it is, with one isolated case, I do not foresee a difficulty regarding our disease status or any impact on our export potential. There are always a few isolated cases throughout the European Union and as long as there is not a significant number in any region or location, it should be okay. It is an anxious time for the industry as we wait for results to come back. It is hoped that in the next day or two the Minister for Agriculture, Food and the Marine will be able to get those results and clarify the position. Based on my knowledge of matters in Ireland, I am positive about the outcome.

Fertiliser prices are linked to gas rather than oil, unfortunately. There is evidence in recent weeks of a reduction in fertiliser prices for the first time as old stock is eliminated and new stock comes in. There is always a temptation on the part of people who have bought early to hold the price as far as they can, even though there is an unanswerable case for a reduction in prices. We continue to make representations and to highlight the issue to the Commissioner for Competition because this is the only area where we might be able to get some traction. The fertiliser industry had difficulties in 2004 when evidence was produced to show there was collusion in the marketplace to keep prices high and it was fined, so I do not think the industry wants to go down that road again and be the subject of an investigation that might lead to a sanction. Its participants are more mindful of making some moves in this regard and I have seen some evidence in recent weeks that they are starting to move, albeit that they could do better than what they have offered so far. It is tied up with the Russian gas situation.

Senator O'Neill mentioned the Russian ban. In spite of the Russian ban and an embargo of nine months, total agricultural food exports in the EU to third countries increased by 5% in value between August 2014 and April 2015 compared with the same period in the previous year. In April 2015, EU agrifood exports to third countries increased by 10% compared with the same month in 2014. This result is partly down to the weakening of the euro against other currencies but it is also down to the more aggressive promotion and marketing of the European Union in third countries, particularly China and the United States. Overall European Union agrifood exports to Russia over the period decreased from €8.6 billion to €5 billion, which is a reduction of 42%. We were able, however, to increase sales to some markets in the Far East, for example, of pigmeat to the Philippines. Exports to South Korea went up by 32% and to Hong Kong by 27%. China is now the second export destination for European Union products and we were up by 26% there and 64% in the month of April 2015 compared with the same month the previous year. We have also reopened live cattle exports to Turkey, which is producing some of the additional competition in the beef trade. Our agrifood exports to Turkey went up by 45% in the month of April 2015. We are making a lot of progress and these figures give a significant indication that other markets are being secured.

Senator O'Neill and Deputy Deering raised issues regarding the food chain, which is a critically important matter I have highlighted on a number of occasions. It is the Commissioner for the Internal Market, Industry, Entrepreneurship and SMEs, Ms Biekowska, who is in charge of the regulatory side of this matter, and I will continue to get the evidence to assist her to do something to ensure the producer gets a fair price in an open and transparent way vis-à-vis other actors in the food chain. We are examining what is happening in the UK under the groceries adjudicator and in Spain where they have a similar type of system. At the end of this year we will have carried out an evaluation of what these two countries are doing in the food chain and we will also have the benefit of a report by Mairead McGuinness, MEP, who is doing a report for the European Parliament committee. In spring 2016 we will decide what action is necessary and whether that includes European legislation or a European-wide framework for fairness to the producer in the food chain, because if one does not have a producer one does not have a product.

Inspections are a contentious but hugely important issue. As part of the simplification of the Common Agricultural Policy I am looking at this area very carefully to see what we can do, especially for smaller producers and small farmers. The disproportionate penalties for small farmers are not fair and need to be examined very carefully, which I am doing. A farmers' charter has been agreed in the past 24 hours between the Department of Agriculture, Food and the Marine and stakeholders, and it will be interesting to see its contents and how it will feed into the yellow card system or whatever system we use for inspections. I agree with speakers who said too much bureaucracy was attached to the CAP, but when one considers that the legislators, the Council of Ministers and the European Parliament, had 8,000 amendments during the course of the 2013 discussions, this can hardly make it simple. I am then expected to resolve these issues.

Deputy Deering asked about the superlevy. The Minister, Deputy Coveney, made an effort last July in the Agriculture and Fisheries Council to bring about a soft landing, such as with a butterfat adjustment, but it failed because there was very little support from other member states who had abided by the rules while we were one of the countries that did not. In typical Irish farmer fashion, we were afraid to miss out on something so farmers decided to put their cows in calf in 2013 and then wondered why they had a superlevy in 2014 and 2015. They produced the milk and they knew what they were doing but they have now paid €69 million in a superlevy. All I could do was to get it paid in instalments over a three-year period, interest free. That is the best I could have done.

On generational renewal, member states and Ministers make choices on reserves and the choices are a matter for the member state. This also applies to the ratio of old to young farmers so the Deputy will have to speak to the Minister, Deputy Coveney, about that.

Generational renewal is hugely important and we are certainly anxious to promote financial products, which we have done today in the convention centre. We are rolling out a new financial instrument that will give low-interest loans for longer periods of time to younger farmers taking over who need some capital investment. So a farmer could get money at approximately 3% over a 15 or 20-year period for various measures on their farm in terms of capital investment.

Could the Commissioner clarify whether they must qualify under the systems that qualify people for grants as defined under young farmer or will it be a simpler process? That has been part of the problem. If you are out for one, you are out for all.

Mr. Phil Hogan

I cannot provide clarity on something that is not finalised. The Government must include it as part of its rural development measure in order to get over the State aid issue. Once it does that, it will enter into negotiations about the matter the Chairman asked about with the European Investment Bank directly and will find the distribution channel or financial institution that will do that in the member state. We are at the principle stage today in the launch of this new initiative. Ireland has not formally decided to get involved but I presume it will. That includes the market volatility mentioned by Deputy Deering. He mentioned the beef industry. It is very difficult to give market certainty in respect of beef without looking for the assets of the farm. What we are trying to do with milk is to deal with price volatility on the basis that the milk cheque is for security so we are discussing that. We had discussions today with the European Investment Bank about it.

The Commissioner is very welcome. I thank him for making time in his schedule to meet us. I am disappointed that he did not mention grain. There is a love affair with milk at the moment. We will fall into a trough of milk and not get out of it. We need to realise that there is a tillage industry in this country that, albeit small, is significant. I am sure the Commissioner is well aware of that. The problem is that world market prices, about which the Commissioner can do nothing, are lower than ever. If we went back to Irish pounds, we are at €100 per lb for green grain for this harvest, which is shocking. This is what we received 30 years ago. There would not be an industry but for single farm payments.

I am very grateful for the support for protein crops. It is a help but many grain farmers are telling me that if their son was a dairy farmer, he would get a grant for milking powder or bulk tank but they themselves are getting nothing. I raised this with the Minister. I am not suggesting that the Commissioner can fix this straightaway but this issue needs to be realised. While our tillage industry is small, it offers a balance to the ships coming in. We produce 2.5 million tonnes of grain here and import over 2 million tonnes but as long as we produce it here, we will never be exploited in respect of the price of our feed.

The Commissioner says that feed prices on the supply side are projected at lower levels than those observed in 2010 and are a benefit to milk. I suggest that a high grain price would suit people in Ireland because we produce off grass. Therefore, it would be better for us if there was a slightly higher price for grain. If anything can be done on the support side for grain farmers, it should be done because it has reached a critical level. The Commissioner understands where I am coming from.

In respect of inspections, the Minister made a very good point at a meeting in Cork last night. They were talking about the new genomics scheme. He said that we will break the penalties down in proportions. If a farmer has broken a rule on a certain point, they will be fined on that point of the scheme. If a person in tillage does not have a proper defined boundary, they lose all their property if it is over a certain percentage. They have only broken one rule. That can be critical when one is trying to survive. Penalties are there to punish, not to remove a farmer from production. We could look at how they are divvied out.

Could the Commission look at the simplification of CAP? When a delegation from the committee visited Hungary, they were quite supportive regarding looking at greening on a country level. It makes no sense to have a three-crop rule in Ireland when we are 95% green. If we could get some modification there, it would help on a practical level.

I could not agree with the Commissioner more regarding labelling. We are struggling to get proper labelling on origin but if GM is going to become an issue, labelling needs to be pronounced and clear.

Protein production is a hobby horse of mine. I am very grateful for the payment on protein crops. It is forgotten at this stage that only two to three years ago, Europe was running short of protein. It was not that we could not pay for it. We could not get it. Soya bean production had decreased in the US and around the world. We are only a small market. The large ships do not necessarily face in for Cork or Foynes. I spoke about this with the Secretary General a few years ago. We need to stimulate production of protein, for example, producing soya bean in places like Romania or Hungary and beans here. We need to look at it in a strategic fashion to ensure we are never held hostage because if we cannot produce enough protein, our milk industry will not function. That is vital and I feel we are leaving a broadside open on that.

I started off with area aid many years ago. Roughly speaking, farmers got €150 per acre, produced their crop and got their payment. Production was then decoupled from payment. Where a farmer once had a single farm payment entitlement, this has now gone to the landowner. If a landowner leases for a long period of time to give surety to the active farmer, they get tax allowances. However, what is happening now is that the landowner is keeping possession of the entitlement. If I am renting land for ten years, I pay back the single farm payment to the inactive farmer and pay another €200 to €300 per acre for the pleasure of working the land. They are market forces and we cannot change them but we need to look at this strategically to make sure that payment goes to the active farmer because it is crippling active farmers with debt. We cannot look for cheap funding from banks and at the same time not use the single farm payment properly. In effect, it is becoming a social welfare payment. It is the way the system has evolved but I would like the Commissioner to be aware of it.

In respect of farm credit, the Commissioner is aware that we still have weak banks in this country but they are getting better. However, there is a tendency to mop up equity. Unfortunately, people who are changing their structure in farming from sole traders to limited companies are finding that their interest rates are increasing substantially. Greater equity is being sought. It is giving them less ability to use their assets productively. It is something we need to keep an eye on. We do not have enough competition to fix that yet. The SEBI funding is being discussed in terms of it coming through to Ireland at around 5%. That is too high. One of our pillar banks is suggesting 5%.

The pearl water mussel is causing concern in the Blackwater valley in north Cork. I know it is not totally a matter for the Commissioner but it is important it is recognised. Another issue is the famous hen harrier. Where do I start with it?

Mr. Phil Hogan

The Deputy can talk to someone else about because it is not my responsibility.

We expect the Commissioner's substantial influence can deal with this chap with feathers.

Mr. Phil Hogan

I am a substantial man but I do not have influence with regard to the hen harrier.

Every development, be it a milking parlour or yard, is being evaluated on its potential effect on the pearl water mussel. This leads to increased planning costs, slows down planning and needs to be looked at.

The Commissioner should not forget our ongoing efforts to bring back the sugar industry.

There are still issues with State aid rules and perhaps the Commissioner could keep a watching brief on that to see if there is potential to re-establish a sugar industry, after Fianna Fáil removed it singlehandedly.

There is not much new left for me to say as all the questions on my list have been asked. It was good to have the Commissioner and his officials here. It is a great honour for Ireland, with a population of just over 4 million, that the Commissioner has such an important and prestigious role. Leaving the Commissioner aside as an individual, it is crucial for Ireland that it has the agriculture portfolio and the budget under its control. I wish the Commissioner well in his term and have no doubt he will do us proud.

The Commissioner mentioned that he wrote to the competition Commissioner in regard to fertilisers. Will he let us know whether he got any direct feedback and whether there is a sense some progress can be made? I understand some movement can be seen in prices based on gas prices, but what feedback did Commissioner Hogan get from the competition Commissioner?

Deputy Barry mentioned that we should never have lost the sugar beet industry. We would like to see it back and I acknowledge the efforts made by the Minister for Agriculture and Food, Deputy Coveney, during our EU Presidency and during the renegotiation of the CAP to see the abolition of the quotas. Is there any further assistance the Commission can provide to those of us who are interested in re-establishing the sugar beet industry?

Our report today, which the Commissioner received before this meeting, made significant mention of simplification of the CAP. While what we have now is something the Commissioner has largely inherited, it is very important to consider what happens in the future. The Leader programme is important. During the Commissioner's time as Minister here, I dealt with him in regard to some local cases in places such as Suncroft, Rathangan and Castledermot. These cases nearly broke our hearts due to red tape and bureaucracy.

Mr. Phil Hogan

I hope they support the Deputy for what we did.

I hope so, because there are three lovely community centres in place now.

I am sure the Minister knows from his time on this side of the House that there are ways to simplify the Leader and rural development programmes and also the greening community programme and the CAP. Our report outlines measures that could be taken to simplify some of the complex rules in the greening element.

Farm safety is a topical issue here currently. How does Ireland compare with its EU colleagues and are there any EU-led initiatives to help member states in the work they are doing to try to make our farms safer workplaces for our primary producers?

I welcome the Commissioner. Many of the issues have been covered here already and earlier in the Seanad. The issue of inspections is an important concern for farmers. Nobody knows better than I of this because I underwent an EU audit ten years or more ago. When a person sees 13 or 14 officials arriving from Brussels in suits it is no wonder he would be fearful he would lose his shirt. Thankfully that did not happen.

Significant and much needed progress has been made on land eligibility over the past months. We in Leitrim or in the north west did not grow much sugar beet, but we were able to use the beet tops and the left over beet for feed. This was a cheap source of feed and I believe it would be useful if we could re-establish the beet industry. The Leader element of the rural development programme is important. As the Commissioner knows from having visited the north west, people and communities are now benefitting from many of the projects that were funded through those programmes and the moneys spent on them.

Another issue of concern is the issue of young farmers. The Chairmen referred to them as being in limbo and we have approximately 3,800 of these farmers. When we look at their situation on a case, by case basis, some of them have entitlements and will be okay, but quite a number of them have no entitlements. It is vital these farmers can continue farming. However, I understand this is probably an issue we must deal with ourselves.

I welcome Commissioner Hogan to the meeting. Most of the issues have been discussed but I will try to raise one or two thorny issues.

I know the Commissioner will say the issue of the hen harrier is not one that concerns him but the problem is that people here say it is not their issue and I get the impression that it is the same story in Brussels, that it is not their issue. The problem arises because in areas where there is an SAC, NHA or SPA designation on a farmer's land, this has impact on the ability to farm that land. While it may not have been the Department or the Commission that imposed the designation, when someone or some other Department made the decision to impose it, this had the ability to affect farming practice. This is causing significant concern among farmers.

Senator Comiskey mentioned the issue of commonages. Land eligibility has caused significant concern due to ineligible land and clawbacks, which is one of the most contentious issues currently. The problem with the clawback arises when the clawback goes back four years because of the new mapping systems, although the farmer in question feels he did nothing wrong.

One other issue is the publication of single farm payments of every farmer in the country. This has caused some anger and I was asked to raise this matter with the Commissioner if I got the opportunity to meet him. I now have that opportunity.

Mr. Phil Hogan

The Deputy's representative on Europe for Mountbellew has already raised the matter with me. The Deputy knows what answer he will get from me on that.

Was this issue raised by other countries? The proposal was blocked by two countries a number of years ago.

Mr. Phil Hogan

Those are countries that read the legislation. As it was included in the legislation in 2013, it is understood it cannot be changed. However, not everyone around here understands the same thing.

We will begin now with replies to the issues raised by Deputy Barry's concerns, but not his complaints about the rain.

Mr. Phil Hogan

Many of the issues the Depty has mentioned are options for the Minister for Agriculture and Food, Deputy Coveney. We produce 2 million tonnes of grain in this country, depending on the year, but that is not something I would include on a list of priorities because it is such a small amount. The only way we can assist grain producers and do something about the margin of profitability is to try to reduce their input costs. Those input costs have reduced, particularly fuel input. We also made it a priority to include malt and barley growers in the GLAS scheme and we gave considerable assistance in that regard to ensure the malt and barley contracts were protected. Those growers were able to get the benefits of the scheme because they were able to get decisions made early. Those growers are a significant part of the grain industry.

I mentioned that I am looking at the issue of inspections in the context of CAP simplification. I fully agree with the Deputy on this issue. We go over the top through the disproportionate way we deal with small farmers. We will have an ecological focus area, EFA, review in 2016 and this will give us the opportunity to look at all greening measures, not just the EFAs, with a view to putting whatever changes we want to make in place for 2017. The three-crop rule and similar issues can be examined in that context. We are not too bad in regard to the three-crop rule here, because of the equivalence we can give on protein. There is a 33 million tonne requirement for soya in Ireland.

I agree with the Deputy that our attitude in Ireland is a little bit of "on the one hand, and on the other" in regard to GMOs. We do not mind importing GMO and biotechnology crops, but we do not want to grow them ourselves. Therefore, there is a bit of a political dilemma. However, as long as the process is science based, I will stand over it. We cannot stand over something that is not science based. In the last Commission, all of the licence requests from the United States were blocked and political decisions were not made. That blockage has gone and 19 licence requests went through in the past month. This will help with the importation of soya bean into this country and will help the competitiveness of our beef industry. Otherwise, we would have been at a 20% disadvantage.

Single farm payments will go to active farmers. This issue arose also in Scotland last week.

It is an issue that legislators will have to examine in the context of a mid-term review. In regard to the strategic bank, the interest rates are high but today we launched a programme of European Investment Bank loans which will offer money at approximately 3% over a term of ten to 20 years, depending on the project and the risk. This programme could be rolled out by 1 January 2016, or sooner if possible.

The hen harrier is not my responsibility. Whoever is responsible for the matter should sort it out. When an area is designated and the issue of single farm payment liability comes into play, the Department of Agriculture, Food and the Marine makes the decision about paying single farm income on designated lands in respect of which income is foregone because of the hen harrier. The Department of Arts, Heritage and the Gaeltacht is responsible for the designation of the land but Deputy Heyden raised the issue of farmers who did not receive the single farm payment because of the designation. It will cost approximately €12 million to resolve the issue. Members know who they should approach to discuss priorities in this area. It is a significant political issue. If we were in private session, I might say more about how we should resolve it. It is included in tier 1 of the GLAS scheme but that is not enough in terms of what people were seeking. It is a matter for member states, however, and even if I was Commissioner for the environment I could not dictate to member states on their priorities and choices.

Publication is part of the law as agreed by the Council of Agriculture Ministers, representatives of member states and the European Parliament. Generally speaking, there was not much hoo-ha about it after a day or two. The IFA was the only organisation generating activity but if it had said nothing there would not have been as much discussion. We should not get intoxicated about something that is not a major issue. It is an annoyance more than an issue but it is in the legislation.

When the business plan for beet was being prepared, the price of sugar was €700 per tonne. The price has since decreased to €400. What can we do to ensure a viable sugar beet industry in terms of giving €40 per tonne to the farmer while also making a profit? It cannot be done with current prices. The financial conditions are not conducive to developing a viable beet industry. The European Union is not going to set up a beet industry in Ireland after providing €6 billion for a restructuring package several years ago. Ireland received €150 million from that package. Farmers and Greencore participated in the decline of the sugar beet industry, and they got paid for it. I do not see a great deal of money flooding into the fund but the sugar industry is not viable at current prices. If the State wants to build a new entity with its own money or on the basis of tax breaks, which probably would fail the Commission's state aid rules, it has limited options. That is the hard reality of the business case. I am sure the hard-nosed people who are trying to put a package together are well aware of the difficulties.

In regard to the cost of fertiliser, Commissioner Vestager requested evidence of companies colluding to keep prices high. It is not easy to gather evidence but there is a track record dating back to 2004, when the fertiliser industry was fined and investigated by the then competition Commissioner for an alleged cartel. The industry does not want to go down that road again and it will not be happy with the letters I have been sending to the competition Commissioner, which are beginning to yield results. The recent IFA fertiliser conference highlighted the problems arising. It is interesting that older stock has going out of stores in recent weeks, and new stock is being sold at a lower price. We have to make sure the lower prices are passed on to farmers. We will continue to make the industry uncomfortable until such time as it sells fertiliser at an appropriate price in the marketplace.

Leader funding can still benefit from EIB loans as part of the rural development programme. The procurement issues need to be rationalised but that is a matter for member states. If they engage with us on procurement issues we can help them to do something about it. Ireland does not have a strong record on farm safety compared to our partners in the European Union. The Minister for Agriculture, Food and the Marine is making an effort to highlight this issue with the assistance of the IFA and other farm organisations. If improvements are not made in the next year we will have to consider the option of linking farm safety to payments. I ask farmers and farm organisations to take this issue seriously. Many of the tragedies that have occurred were avoidable.

The greening issue will be reviewed in the context of the ecological focus areas I mentioned earlier. Senator Comiskey asked about inspections, beet, Leader and land eligibility issues. The issue of land eligibility is being addressed in the context of the latest submissions made by the Department.

I do not know if anybody mentioned producer organisations. The Minister referred to old young farmers. We are facing a dilemma in that regard. I received a letter from the Minister stating that he had consulted the Commission on the matter. I am not sure who is responsible.

Mr. Phil Hogan

I will respond to the Chairman when I have seen the letter.

The new CAP included provisions for member states to establish producer organisations without breaching competition law. These organisations would have powers to negotiate prices for buying and selling products. How is that developing from the Commission's perspective?

Mr. Phil Hogan

The competition Commissioner and I attended a hearing of the European Parliament's committee on agriculture two weeks ago. We expect the regulations will be in place before the end of the year.

That would be welcome.

I welcome the Commissioner and congratulate him on his appointment. We are often our own worst enemies when it comes to simplification. That includes the farm organisations. One of the reasons for the single farm payment was to get rid of the previous plethora of schemes, such as the suckler cow welfare scheme and the beef cow scheme. No sooner had that been done, however, then the farming organisations looked for additional specific schemes, which made life very complicated for smaller farmers in particular. If a small beef farmer wants to get money from the CAP, he or she has to join the basic payment scheme, the greening scheme, the GLAS scheme, the discussion group scheme and the animal health and welfare scheme. That is a considerable number of schemes to join in return for a payment of €8,000 to €10,000. The lucky boy who has the big single farm payment might get €100,000 or, in some cases, a lot more in return for simply keeping his land in good agricultural order. If we want to simplify schemes we need to reverse the inverted pyramid that we seem to have created.

It is simple for the big farmer who collects the big payment. A person who receives a payment of €100,000 can ignore all the small schemes, whereas the smaller farmer must join many schemes, each of which has conditions and paperwork. As we know, the overheads of complying with a scheme do not change because a farmer has less stock. The overhead and hassle is the same whether one has 10 or 100 cows. In fact a larger farmer is more likely to computerise.

Countries such as Poland have a large number of very small farmers and a small number of very big farmers. Although the average farm size in Poland is tiny, there are also many very large farms. Throughout Europe, including Italy, there is a very large number of small farms. I often wonder whether it would be simpler if all those small farmers had the option of one scheme through which they could claim their money leaving all the complications for the large farmers who have the resources to comply with the complications. That is not what this simplification is about. Simplification begins with a very simple idea, and then it gets into all these structures. For the majority of the people Deputy Connaughton, Senator Comiskey and I are dealing with, whatever about Deputy Deering, nothing changes or makes life simpler.

I heard the end of what the Minister said about farm safety. While it is very important we focus on it, to a certain extent it is counterintuitive, and this is understandable. Dairy farmers account for the majority of very serious accidents. A disproportionate number of fatal accidents occur among dairy farmers, and 18% of farmers account for 50% of fatal accidents. One would have thought that dairy farmers would be the most organised and disciplined for doing things right, given that they have to get the quality of milk right. Dairy farmers normally have a good cash flow and rather than introducing a massive amount of red tape and penalties among the low-risk people, we should focus on the high-risk farmers. It is understandable to a point, given that dairy farmers have much more equipment, tend to be full-time farmers and contract out less work. We do not need a sledgehammer to crack this nut. We know where the high risk is. If we could remove the high risk, we could reduce accidents, and I ask the Commissioner to consider this in any changes he might make. There is major resistance among many smaller, relatively low-risk farmers to this becoming a mandatory condition of grant payments. We need to examine this and target our efforts.

I discussed price with the Commissioner earlier today. Since I became spokesperson, I have believed that unless a farmer, after he or she strips away payments such as the single farm payment and disadvantaged areas payment, has a positive gross margin for every extra animal or unit of production, there is no encouragement to farm better, breed better and produce more. European agriculture cannot survive unless we get this fundamental piece of logic into our minds. I do not refer to fixed overheads. This is not the way it has been on a consistent basis with certain types of agriculture. This applies particularly to beef, 95% of which is sold within the EU, virtually all of which, excluding the catering trade, goes to supermarkets. Vegetables and fruits from this and many European countries are still sold within the EU as is 100% of liquid milk. I am examining this on an EU-wide basis and the issue is very important.

While I may not have always agreed with Commissioner Hogan when he was a Minister, I would laud some of the things he has spoken about since he became Commissioner, particularly the price issue. I hope a clear programme can be set out stipulating that unless farmers receive a fair return for their products, the Commissioner will try to persuade his colleagues - and I understand the challenges in doing that - that they will have two step up to the plate. Otherwise, family farming in Europe will die a slow death.

I welcome the clarity of what the Commissioner said about the beef genomics scheme. The Commissioner said any changes in the terms and conditions would apply only to those farmers who join the scheme after the programme modification has been notified to the Commission. According to the data, although only 22% of farmers with fewer than ten cows have applied for the beef genomics scheme, they account for 55% of herd owners. They are not some people over in the wilds of County Leitrim or Connemara. More than half of the herd owners of suckler cows have fewer than ten cows. Only 22% of them have applied, and I have a sneaking feeling that by Christmas half of them will have fallen at Becher's Brook and the figure could be 10%. I have asked for a county by county breakdown because I am curious about how many small herds are in places such as Kildare and Carlow. If the Minister went to the EU, could he negotiate a new genomics scheme for farmers with ten cows or fewer that would be simpler and less onerous regarding star ratings and, for example, would not require 60% of the animals to be tested? Could this scheme run parallel to the big scheme? Could the small number of farmers with fewer than ten cows who joined the beef genomics scheme jump to the small scheme? Such a scheme would suit the reality of the life of small farmers who are trying to stay in business.

Many people write off small farmers. In 1974, I went to Connemara and worked as a farmers co-op manager to start with. RTE produced a programme called "Landmark" at the time and many years later I saw myself on an episode of it filmed in 1976 or 1977. In that programme, I said there was no way we would get full-time farmers in the area to survive solely on farm income, but if we matched the farm incomes with modest off-farm incomes, we would maintain families. We successfully built up an economy around that, particularly with forestry. Small farmers are here to stay and can have a very good lifestyle if they use farming as a second income to combine with an off-farm income, which is easy to do with certain types of farming. I do not buy into the idea that small farmers are in a period of transition and are all going to disappear. I take it that it is too late to introduce a small coupled scheme for the small farmers and give them a grant for the number of animals and forget about all these conditions.

I refer back to the milk discussion we had a few minutes ago. In 1995, there were approximately 60,000 dairy farmers in Ireland receiving 27 cent per litre for milk. In 2015, there are only 18,000 farmers and they receive the same price while the input costs have increased by 50%. How long do the witnesses think it will be sustainable? We must maintain the numbers of dairy farmers and farmers in general. If the trend continues, we will have a very small number of dairy farmers in 20 years' time.

What can we do to ensure we maintain those numbers? Perhaps this issue is specific to Ireland, but maybe it is not. Input costs constitute the big issue given that we have had a 50% rise in input costs in dairy alone over 20 years.

Fertiliser was mentioned earlier and while it is a key issue, it is not the only one. There are other issues as well. To maintain those numbers in future, we have become efficient, which is important. We are getting to a stage now where we are probably as efficient as we are going to be. Is there real value for consumers at the end of the day, however, due to the efficiencies we are developing?

I will finally call the Commissioner one more time.

Mr. Phil Hogan

Thank you, Chairman. We discussed this today concerning some of the matters raised by Deputy Ó Cuív. CAP simplification is not going to be easy. Some of it is secondary legislation which is what I am dealing with immediately. More of it would be a matter for the Council of agriculture Ministers in the EU, based on whether we are going to change the basic acts in two years time.

We are going to look at the greening stuff, for want of a better word, and the ecological focus areas in 2016. It will be a rolling maul over two years to see what we can do to simplify matters in the interests of the beneficiary and in the interests of the member state.

Some 69% of all farm size in Europe is smaller than 5 ha. We have given discretion in the Common Agricultural Policy for a small farmers' scheme, but not every member state wants to take it up. Many options are being given in terms of flexibility to get over the problem we had in negotiating the CAP. One would need four CAPs, depending on what region of Europe one is from, to satisfy everyone. That is why the decision was made to give maximum flexibility, including options for coupled support. It is a matter for member states to make these particular choices. Some of the issues raised here should be raised on the floor of the Dáil.

Mr. Phil Hogan

No better man. The beef genomic scheme is about adding value, not about paying for the baseline. It is also an agri-environment measure and a climate measure. One will not see the type of results and the value of that in one year. It will be over a period. It will be assessed over six or seven years, as part of the rural development programme, to see if it has achieved its objective. In my view it will.

I can understand what the Deputy is saying, that those with under ten suckler cows might not want to get involved in it because they may be worried about the administrative burden and some of the scheme's conditions. It will be interesting to see what the figures reveal county by county.

As for making changes and modifications to include retrospectively the issues mentioned by the Deputy, I do not know the answer to that offhand. I will be glad to check it out, however, to see what can happen in the context of a modification. That is the only thing I can say about it to change from one scheme to another.

As the Deputy knows, the Environment Directorate General has a strong view if it is an agri-environment scheme. It was difficult to get its agreement on the scheme once it was presented by the member state as an agri-environment measure. It was not easy to get this through the system because there had to be a debate on whether it was a production aid or an agri-environment measure. It is a fine line. I appreciate the Deputy's remarks, however, and his concerns about the scheme. I would be glad to investigate that.

The risk-based approach on farm safety is a good idea. We should concentrate resources where the risk is highest and we should analyse the data on that basis. We are prepared to do so. I do not want to go down the road of linking payments to safety, but if member states or farmers do not take this seriously, that is the only tool at my discretion if I want to be serious about dealing with this unfortunate development involving an increasing number of deaths in recent times.

The schemes mentioned by the Deputy are all options under the rural development programme and a matter for the member states. That is part of the discretionary issues given to the member states to decide which options they want, including redistributed payments and animal welfare. People look at this in terms of what they will yield in financial assistance, not in terms of whether they value the scheme. I am sure that is the Deputy's point. As part of the simplification process we will examine these issues to see if there is a neater, less burdensome and less complicated way to provide a source of income for farmers who are just filling out forms on the basis of what they will get in the cheque rather than considering the value of the scheme.

As regards Deputy Deering's point, contraction and consolidation have been happening in every industry, including agriculture, for a long time. That is not going to stop. We are doing our best to tackle input costs, which is where the biggest dividend can be for farmers in terms of better margins. The costs include fertiliser, oil and gas. All these issues are now being discussed in the context of how Europe will be more energy self-sufficient, rather than depending on the Russian market.

We have had our European energy policy for the past few months. For the first time we are going to deal with these issues in a co-ordinated way, but they will not happen overnight.

Does the Commissioner have any concluding remarks other than responses?

Mr. Phil Hogan

I think I have said enough.

We are glad to hear from him anyway. On behalf of the committee members, I thank the Commissioner for accepting the invitation which we extended to him informally during our delegation's visit to him earlier this year, and subsequently formally. He can garner from the level of interest from members here that the role of the European Commissioner for Agriculture and Rural Development is a very important one for Ireland. They all take it very seriously. As we would have expected from Mr. Hogan, there has been a frank exchange of views. We take heart in the fact that he is tackling, and is fully briefed on, the issues that are most relevant to Ireland.

With that, I thank members of the committee for their constructive engagement with the Commissioner. We wish him well for the remainder of his term and he has a long way to go yet. We look forward to engaging with him further during his term as Commissioner. That concludes the meeting.

The joint committee adjourned at 6.55 p.m. until 1.30 p.m. on Tuesday, 30 June 2015.
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