JOINT COMMITTEE ON COMMUNICATIONS, NATURAL RESOURCES AND AGRICULTURE díospóireacht -
Tuesday, 1 May 2012

Reform of Common Agricultural Policy: Discussion

Chairman

I welcome Mr. Aidan O'Driscoll, assistant secretary, Ms Brid Cannon, principal officer, Mr. Andy McGarrigle, principal officer, Mr. Paul Savage, assistant principal in the Department of Agriculture, Food and the Marine. I thank them for coming today. I also welcome Ms Marian Harkin, MEP, Ms Mairead McGuinness, MEP, and Ms Phil Prendergast, MEP, who will be addressing us afterwards.

Most people are aware that the committee is today commencing a series of meetings with the main stakeholders in this area, which will provide the committee with an excellent opportunity to tease out the current positions and concerns of all those involved, specifically with regard to the five draft legislative proposals that are currently under scrutiny - COM (2011) 625 to COM (2011) 629, inclusive - as well as any other wider CAP reform-related issues. Following the completion of this series of meetings, the committee will forward a short political contribution to the European Parliament. We hope to do this towards the end of May. This will ensure that the views of the joint committee on each of the draft legislative proposals can be considered by the relevant rapporteurs and shadow rapporteurs in advance of their own deadline to produce draft reports by mid-June. I know there are also a few meetings planned in Copenhagen and Brussels on CAP reform.

I ask anyone who has a mobile telephone to turn it off. I got untold abuse from members of the media last week who wanted to cover our meeting with An Post but said it was very difficult due to interference. There is a telephone or iPad rattling at the moment. I ask members and witnesses to turn off these devices.

Before we begin, I draw the attention of witnesses to the fact that they are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they 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 members should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I now call on Mr. O'Driscoll to make his opening statement.

Mr. Aidan O’Driscoll

I thank the committee for its invitation to address it today on the subject of CAP reform. I know the Minister for Agriculture, Food and the Marine, Deputy Coveney, would welcome an opportunity to discuss this issue with the committee in the near future. In this short statement I hope to bring the committee up to date with the current state of play in the negotiations, and I will be happy to attempt to answer any questions that members may have and, more importantly, to listen to members' comments and advice on the negotiations.

In very broad terms, the challenge for the current round of CAP reform is to deliver in good time a CAP that is fit for purpose, that is coherent with the Europe 2020 strategy for recovery and growth and that supports the twin goals of competitiveness and sustainability. These requirements in turn create further challenges in the form of crucial questions about how much money will be made available for the CAP in the period up to 2020, how these funds will be allocated among and within member states, and how the policy content will help to shape and serve the development of European agriculture. I would like to focus my comments on each of these key issues.

Since their publication last October, the Commission's proposals have undergone two rounds of detailed technical examination at Council working group level. The Danish Presidency has begun to produce revised texts in some areas - those in which member states are broadly in agreement on some issues - but these do not yet necessarily equate to final compromise texts. In the meantime, key policy issues within the reform, such as direct payments, greening and simplification, have also been discussed by the Council of Ministers and by the Special Committee on Agriculture. Negotiations will continue at technical and political level over the next year or more, and it is likely that the current texts will change considerably before final agreement is reached. These issues are also being discussed in the European Parliament and will be the subject of reports from rapporteurs on each of the four draft CAP regulations. It is important to remember that CAP reform is subject to co-decision, and therefore the Parliament will be a full partner in any final agreement that is reached.

In a parallel process, negotiations on the new multi-annual financial framework, MFF, for the EU budget for the period 2014 to 2020 have begun to gather pace. Early drafts of the MFF negotiating box - that is, the draft text of an agreement on the MFF - have been circulated by the Presidency. Heading 2 of the MFF covers the CAP, and a draft text under this heading was discussed at the General Affairs Council on 24 April. It is important to note that key CAP issues will now continue to be discussed in these two parallel tracks, that is, in the CAP reform negotiations at the Agriculture and Fisheries Council and at official level at the Special Committee on Agriculture and four separate working groups; and in the MFF negotiations in the General Affairs Council and ultimately in the European Council, with discussion at official level happening at COREPER and what is known as a Friends of the Presidency group. In addition, the key role of the European Parliament in this process and in making the final decision must be recognised.

As a member state taking over the reins of the EU Presidency in January 2013, Ireland is committed to playing an active and constructive role in securing agreement on CAP reform. However, to do this, three things need to be happen: there must be progress and ultimately agreement on the MFF; there must be substantial progress during the Danish and Cypriot Presidencies, at least on technical issues; and all three institutions - the European Parliament, the Council and the Commission - need to engage actively in the negotiating process, with a commitment to seeking a workable compromise. The Minister assured Commissioner Ciolos during his visit to Dublin in January that Ireland is willing to play a full role, both before and during our Presidency, in seeking agreement on this vital issue for both the EU and Ireland.

In terms of content, the key challenge is to deliver a policy that is fit for purpose and consistent with other EU policies. The outcome of this reform will essentially set the context and policy framework for the future of EU agriculture, so it is important that we get it right. The Europe 2020 strategy for economic recovery is grounded on the principles of smart, sustainable and inclusive growth. The agrifood sector is very important in the context of this strategy and contributes to all three of its priorities. It follows, therefore, that the reformed CAP must also be based on these three principles and must be coherent with the overall strategy for Europe's economic recovery. The objectives cited by the European Commission in its reform proposals reflect this. These three objectives - viable food production in the EU, sustainable management of natural resources and climate action, and balanced rural development - are a good fit with the agenda of increased competitiveness and sustainability in the Europe 2020 strategy. In terms of overall objectives, therefore, it can be said that the current CAP reform proposals are going in the right direction and are broadly in line with Ireland's national priorities for smart, green growth under our Food Harvest 2020 strategy.

It is Ireland's view that a strong CAP will make an important contribution to European economic recovery in the years ahead. In order to guarantee a strong CAP, commensurate resources need to be devoted to it. Ireland believes that the funding proposals in the MFF, which maintain CAP spending at current levels in nominal terms post-2013, represent a good starting point. However, it is also our view that the amount proposed by the Commission is the minimum required. In the MFF negotiations there are intense pressures for reductions in the proposed overall EU budget, and some member states are seeking to cut the proposed CAP allocations. In this regard, Ireland has been emphasising the fact that the CAP is the budget heading that shows the most restraint when compared to existing budgetary provisions; in fact, this will entail a small reduction in direct farm payments across the EU.

The issue of how to distribute CAP funds among member states is obviously a very sensitive one and has occupied much of the discussion to date. We have called for the principles of equity and pragmatism to be applied. The priority from an Irish perspective is to ensure that we retain our levels of funding for both direct payments and rural development, that is, pillars 1 and 2 of the CAP. The Commission has proposed using what is known as a pragmatic method to reallocate pillar 1 funds, which mainly cover direct farm payments, using as a base the average payment per eligible hectare in each member state. This is an approach that was originally proposed by Ireland and that largely protects our funding.

With regard to rural development funds, the Commission has not yet revealed its proposals for national allocations, but has said it intends to base them on a combination of objective criteria and past performance. We have real concerns about this, as some of the criteria being considered could lead to a significant reduction in Ireland's allocation. We have made it clear that such an outcome would not be fair or acceptable, and have expressed our preference for the use of the same pragmatic method the Commission has adopted for pillar 1, preferably considering both pillars of the CAP together. We have called on the Commission to bring its proposal on this issue to the table as soon as possible, and made the point that it is not realistic to expect member states to agree pillar 1 allocations in the absence of proposals on pillar 2.

With regard to the distribution of payments to farmers within member states, the Commission proposes to gradually move away from payments based on historical production references towards a system of uniform per hectare payments or flat rates by 2019 in each member state or region of a member state. Many member states already have such flat rates or are evolving towards them. In response, the Minister has said that we recognise that we cannot continue to base our payments on outdated historic production references. Nevertheless we have major difficulties with the pace and extent of convergence in the Commission's proposal.

Under a national flat rate around 76,000 Irish farmers would gain an average of 86% on their current payments, while around 57,000 would lose an average of 33%. These are average percentages and some of the gains and losses would be far larger. It is clear that the losses would be incurred by more productive farmers. This would have undesirable consequences at a time when Ireland is trying to encourage sustainable intensification in the agrifood sector as we strive to achieve the objectives in the Food Harvest 2020 strategy. Accordingly, we have been pressing for the maximum possible flexibility to be given to member states to design payment models that suit their own farming conditions and to adopt a more gradual, back-loaded transition process rather than the very rapid, front-loaded approach proposed by the Commission. We would like to have the option of putting a limit on the amount a farmer could lose in any redistribution. The measure would be consistent with the Commission's desire to achieve a more level playing field but would avoid a disruptive level or pace of change. We believe that the approximation approach by which all payments could gradually move towards but not fully reach the average is one alternative that should be considered. The Commission's pragmatic proposal for redistribution between member states is an approximation approach and provides a useful precedent. The Minister and his Department have been actively seeking allies for this position and have made significant progress, particularly with a group of member states with similar concerns. It should also be understood that a majority of member states have no difficulty with the idea of flat rate payments although they have concerns about other aspects of the proposals.

One of the key policy issues in the CAP reform is the focus on the greening of direct payments. It takes the form of the Commission's proposal to assign 30% of the national payment envelope to a new per hectare payment to farmers. The Commission has set out three environmental criteria that must be met to qualify for the payment that relates to maintaining grassland, diversifying crops and establishing ecological focus areas on farms. The Irish Government supports the idea of encouraging sustainable forms of agriculture which is at the heart of the Food Harvest 2020 strategy and can support the Commission in its desire to further enhance the green credentials of direct payments. It is preferable to do so in a way that avoids adding excessive bureaucracy. The Commission's proposals give rise to concerns since the existence of separate greening conditions will add significant complications to the direct payment system. There are also concerns that the proposed structure of the greening payment would hasten the movement towards uniform national or regional payment rates with the undesirable consequences I referred to earlier. There are also practical difficulties with the three greening criteria proposed that need to be resolved.

To resolve some of these difficulties the Minister for Agriculture, Food and the Marine, Deputy Coveney, proposed at a joint session of the Council with the European Parliament's Committee on Agriculture and Rural Development, COMAGRI, last November that we adopt a more flexible menu approach to the green criteria. Many other member states have also reached this view but there are a wide range of ideas about how to structure such flexibility and what specifically to include in a menu.

With regard to a payment structure, we have suggested that it would be worth considering adding the green criteria to the current cross-compliance and good agricultural and environmental conditions, GAEC, provisions. It would have the effect of a 100% greening of the direct payment at a much lower administrative cost while achieving an equivalent environmental benefit.

It is also clear that there are important points of detail in the criteria for the green payment that will have to be adjusted and will be the focus of detailed negotiations. We have made a range of specific suggestions on it but I will not go into here in order to save time.

I shall briefly touch on some other issues related to direct payments and rural development. The Commission's proposal to use 2014 as a reference year for the establishment of entitlements has been the subject of a good deal of comment in Ireland but not in other member states. There is concern here that the provision will lead to some disruption of the land leasing market. Therefore, we continue to seek more member state flexibility on this point. The provision has already been the subject of some change with the introduction of a 2011 qualification criterion that has been further amended in the Presidency's proposals. The issues are complex and may well change further before the final text is agreed. People should bear that in mind when they contemplate taking action on existing leases.

With regard to the proposals to establish a small farmers' scheme and a top-up for the young farmers' scheme, the main issues that have been raised relate to whether the measures should be mandatory or optional for member states. We favour an optional approach to the small farmer measure but have no difficulty with the mandatory nature of the proposal for the young farmers' scheme.

We are broadly satisfied with the thrust of the specific menu of measures provided for in rural development proposals. We have some specific concerns about forestry and investment measures and are glad to see they are being addressed in the Presidency's revised proposals. Our main concerns on rural development relate to the very elaborate and, in our view, overly bureaucratic provisions for rural development planning. They will impact more on the administration than on the farmer. The long running question of how to define disadvantaged areas, now known as areas of natural constraint, has also been brought into the CAP reform package and is clearly an issue of major interest to Ireland.

In the time available I will not dwell on the proposals on market measures or commodity market organisation, other than to note that we are supporting the Commission's proposal to abolish sugar quotas in 2015. There is a strong current among some member states to extend this deadline to 2018 or 2020. We also support the proposals to provide for a €500 million per annum crisis fund for agriculture.

In summary, the priorities for Ireland in these CAP reform negotiations remain as follows: a strong and well-resourced CAP; the retention of our levels of funding for both direct payments and for rural development; a maximum possible flexibility for member states to implement the payment systems and transitional arrangements that best suit their farming conditions; and as much simplification as possible for the farmer and the administration, subject to proper financial and operational controls.

The negotiation process on CAP is a complex and difficult one but all of our efforts are focused on achieving the best possible outcome for Ireland. These efforts continued last week when the Minister used his attendance at the Council of Agriculture Ministers meeting in Luxembourg to further press the Irish position with his colleagues and to work on building strategic alliances. They will be repeated over the coming months as the process evolves and will further intensify during our Presidency during which Ireland will work with other member states, and with the European Parliament and the Commission, to secure an agreement that will provide an appropriate policy structure for the agrifood sector over the coming years.

Chairman

I thank Mr. O'Driscoll for his comprehensive report.

Deputy Michael Moynihan

I welcome the officials from the Department who are here to discuss what is the one of the most important negotiations for agriculture and the fundamental issues of CAP. The policy's reform is coming into focus more in the agricultural sector, farming and at the farm kitchen table as we proceed with discussions.

Mr. O'Driscoll mentioned in his presentation that when the Commission committed to maintaining the current budget last year the agricultural community was relieved. He also mentioned that there is pressure from other sources and the same was reported in the farming media over the past number of months. Perhaps he will clarify the matter because it is important that agriculture is based on a sound CAP.

Mr. O'Driscoll also mentioned greening. At most of our meetings on farming and discussions with the farming community, greening and the proposals announced in October have featured. Some would say that we are getting down to the nitty gritty of agriculture and the micro-management of agriculture rather than having an overall CAP. It is important that we examine greening and ensure it is cleared. Perhaps Mr. O'Driscoll will outline the greening proposal more for us. Every member of the farming community that has talked to us highlighted the greening issue. The issue of 2014 versus 2011 has distorted the land rental market. I have seen it in my community. Everybody who is in touch with the farming community is aware that people are making decisions on the leasing of land, on land that becomes available for leasing, or farmers who had rented their land on long-term leases have taken the land back to make decisions on how best to position themselves for the future. Reports have come forward that the concession given in 2011, namely, that one had to be an active farmer in 2011, does not seem to have allayed people's fears. Many issues regarding succession need to be teased out. If there are new entrants to farming between 2011 and 2014, even on family landholdings and so forth, issues in that respect need to be teased out. A clear indication needs to be given that these bureaucratic issues will be addressed during the next six to eight months.

Some people would say that since 1992 a great deal of bureaucracy has built up around the funding of farming or the funding of the CAP. Many farming organisations and farm families would have followed the CAP negotiations to note if there would be a lessening of the bureaucracy but there is a concern that CAP reform might involve more rather than bureaucracy.

Mr. O'Driscoll outlined that some countries were not in favour of the abolition of the sugar quotas in 2015 and proposed that quotas would continue until 2018 or 2020. He might give us more information on that. Those are the issues on which I would like to get more information. I would like to speak again at the end of the discussion if that is possible. I thank the officials.

Deputy Michael Colreavy

I thank the Department officials for attending. I extend a big welcome to the MEPs, one of whom I know very well. It is great to see them here.

I thank Mr. O'Driscoll for his presentation. Even though it is a brief document there is a good deal in it. We would be generally supportive of the summary presented in the conclusion. I would point to one reservation I have, which I have mentioned during several discussions, namely, that while the Department is seeking maximum possible flexibility from member states to implement the payment system and the transitional arrangements, smaller farmers in the more disadvantaged areas have very real concerns that their interests will not be protected and promoted in terms of this flexibility. That is something we must monitor.

In terms of the wider document, will the multi-annual financial framework provide certainty in regard to funding, policies and regulations for member states for the period 2014 to 2020? At what level is the multi-annual financial framework and is it only an financial framework or does it incorporate policy and regulation as well? What degree of certainty will it provide for member states to enable them to plan ahead to 2020?

Reference was made to a committee, the "Friends of the Presidency" group, which is new one to me. I would like to know who or what the "Friends of the Presidency" group is and what is its brief.

In terms of timescale, it is clear that a great deal still needs to be done. There are dependencies between one step following on from the last one. Is there a possibility of a delay in decision making which would impact on the overall CAP agreement and putting the reaching of agreement on it beyond the term of Ireland's Presidency of the EU? Do we have a plan B for that eventuality? A good deal is happening in Europe at present and it would seem prudent to have a plan B in terms of the timescale for decision making.

On the Commission proposals for national allocations and its intention to base them on a combination of objective criteria and past performance, I understand the Irish Government's concerns about that. What arguments are being put forward by those who propose that rural development fund allocations be based on a combination of objective criteria and past performance? If we do not understand the rationale of those putting forward their proposals, it will be difficult for us to propose acceptable alternatives.

I sound a word of caution regarding redistribution. Small farmers in the more disadvantaged areas are concerned that they are being left outside this loop and that decisions will be made to benefit those who are in a stronger position by damaging the smaller farmers in the more disadvantaged areas. We cannot allow that to happen.

On the menu approach, do we have information on what is on the menu? Those are my questions for the moment.

Deputy Martin Heydon

I thank the officials for their contribution to date. I extend a warm welcome to our MEPs.

I welcome the fact that the priority is to retain levels of funding for both direct payments and rural development, which is important. Putting a limit on the amount a farmer could lose in redistribution is an angle and it is something towards which we should be working hard when one notes the percentages involved. Overall, our agricultural sector will be a major loser if we have large numbers of farmers losing huge amounts. The loss of such amounts is not a sustainable for us to manage a sector that we are trying to grow with such big targets set in Food Harvest 2020.

On the reference in the presentation to 2014, have we asked Teagasc, or has any work been done in the Department, to quantify what the impact will be? There has been a great deal of debate on this throughout the country. Are there any hard facts on that, has work been done on it and, if not, could work be done to ascertain what will be the impact of 2014, it being the reference year if that goes ahead? Much of the talk up to now has been anecdotal. If we had some hard facts on that, it would make us realise how much of a priority we need to make it because people have got very worked up over that.

A word that was only mentioned in the presentation once or twice, which is a major issue for us, is that of simplification. In some of Mr. O'Driscoll's references to rural development, the proposals could be elaborate and overly bureaucratic. The greening aspect of what the Commission currently proposes has the possibility to be very bureaucratic. Our aim is to have a more simplified CAP post-2014. At present, in some forms, it could be seen to be nearly more bureaucratic than it is at present, which would be a major concern. How does Mr. O'Driscoll consider progress has been made on the simplification aspect?

On sugar quotas, Mr. O'Driscoll said that some countries are pushing for them to be extended to 2018, or 2020 as a possibility. Being mindful of when the Commissioner was here, the Minister addressed the committee on that day a number of months ago and he made the point, which was not referred to in the presentation, on which I would like clarification. If sugar quotas continue beyond 2015, would we as a country be making a very active pitch that Ireland would have access to any quota that would exist beyond 2015? Any agreement to which we signed up in the past was only up as far as 2015 as far as I am aware. It would be our preference, and I believe it is the Minister's preference, that we would actively fight and support the Commission in its proposal that quotas would be gone by 2015. If it survives beyond that period, does Ireland expect to have access to quota? I may come back in later if that is possible.

Deputy John O'Mahony took the Chair.

Deputy Noel Harrington

I apologise to the Chairman and the representatives for my late arrival and for missing the earlier part of the contribution. Key issues in the CAP negotiations are the budget under the multi-annual financial framework and flexibility in regard to how Ireland will be allowed to adapt the Common Agricultural Policy to suit our needs where they are different from those of other member states. It is difficult to see how a one-track-fits-all proposal would be allowed. I hope progress is being made in getting flexibility in decision making for an Irish agricultural context.

An issue that arises is when the CAP will be finally agreed. It has been stated that it may be agreed during the Irish Presidency. I presume that is based on our confidence in the Danish and Cypriot Presidencies to carry out their business. How is it progressing and is it likely to be finalised during the Irish Presidency?

I agree with the comment on greening and that it should be part of an overall single payment. What we hear about most, at the meetings we attend, is the amount of bureaucracy that has to be gone through for audit purposes. It is hard to get away from it but if there was a way of avoiding it we would. I strongly support any effort to allow for greening to be part of a single payment rather than decouple. It should still be an important part of the payment and it would be a mistake to brush it aside in terms of the overall direct payments system. We listened to Commissioner Ciolos during his visit to Dublin in January and it is clear the pressure on the CAP budget from other sectors within the Commission is intense. This is a part that needs to be dealt with here. Some parts of the greening proposals are unworkable and in other parts of the country they are acceptable. It all comes down to flexibility and how we can interpret and deal with the issues that the CAP will introduce.

I note from the opening statement that a significant part of the CAP budget, which sometimes does not receive the same attention, is local development access funding which is important not only in an Irish context but in a rural context but it should be hugely important in peripheral countries where there is pressure from the larger countries with greater political clout. That significant funding can be provided for local and rural development tends to get lost in the argument on direct payments and the more indirect AEOS and disadvantaged area schemes within different annexes. It is important not to lose sight of that part of CAP as a significant feature of it.

Vice Chairman

I thank the Deputy. Perhaps we can get a response to these questions. Does Deputy Ferris wish to put his questions before the response?

Deputy Martin Ferris

I have a few questions, some of which were partly covered. In regard to rural development funds the witness said, "We have real concerns about this as some of the criteria being considered could lead to a significant reduction in Ireland's allocation". What are the criteria concerned? He also said, "Under a national flat rate around 76,000 Irish farmers would gain an average of 86% on their current payments, while around 57,000 would lose an average of 33%". The amounts may be greater in some cases. What is the differential in respect of the national outlay? Is it a plus or minus on the current position? Is it fair to say that the 76,000 farmers who would gain are smaller farmers who have been struggling for a number of years? My next question concerns the proposal to abolish sugar quotas. I am confused here. I note that we are supporting the Commission's proposal to abolish sugar quotas in 2015. We do not have an issue with quotas; we have given that away. What is the reasoning behind the Minister's position on abolishing sugar quotas? Is there any evidence within the Department that Ireland may return to the sugar market?

Vice Chairman

We shall take those questions now and some follow-up questions later.

Mr. Aidan O’Driscoll

There is much ground to be covered. There were a number of questions on the overall budget and the multi-annual financial framework position. The way the EU works it that it has a seven year budgetary framework and an annual budget within that each year. Nevertheless, the seven year budgetary framework is extremely important in setting out the overall amounts available within the budget for each of the major areas of activity of the EU. To respond to a question from Deputy Colreavy, the Commission has made a proposal for a seven year budgetary framework for the EU. The outcome of that will be quite certain; in other words that will fix the amounts available for the whole seven years and within that for each year and will also define the amounts available in each of the main budgetary headings, including heading 2, which is described as sustainable growth, natural resources, but which is almost entirely made up of the CAP spending. Effectively, it sets the limit for CAP spending. What it puts forward is a budget of €382.9 billion for the CAP out of commitment appropriations of €1.25 billion. The CAP is a very large part, 36%, of the overall EU budget.

What has happened at MFF level - this is the responsibility of the Department of Finance - is that a significant number of member states, particularly the larger member states who are net contributors to the CAP budget, have indicated that they think that the overall EU budget proposed by the Commission is too large by an amount of about €100 billion. They want to reduce the overall budget by that amount. The question is where do they cut. If the CAP is 36% of the budget, obviously there is some threat to the CAP budget. That is the essential point I was making.

Deputy Moynihan made the point that many people, when the Commission proposal emerged, were happy that issue had been dealt with and that we had the budget. That is not the situation. We have a proposal with which we are fairly happy but we it is not a decision yet. I agree that is a hugely important point.

In terms of the MFF negotiations I was asked by many members what exactly is in those negotiations. Within the MFF the so-called negotiating box, which is just a peculiar term for a text of an agreement, it is not only dealing with the issue of the budget allocation but is also getting into a number of other issues including, for example, the division of pillar 1 and pillar 2 moneys between member states; in other words, not just the overall EU budget but the allocations among each member state.

Its members are also discussing whether 30% of the national ceiling should be for greening. They are discussing the question of whether some flexibility should be allowed for member states to transfer money from pillar 1 to pillar 2 and vice versa. They are also covering a number of other areas including, for example, the co-funding rates within pillar 2 of the CAP, that is, the amount the EU contributes to those measures compared with the amount member states contribute.

The point I am making is simple. Within the MFF negotiations a number of very important points of detailed CAP policy are being dealt with also. That is why I said that negotiations are proceeding on those twin tracks simultaneously, and there are overlaps between them. It is complicated, particularly when we recall that in addition to that the process in Parliament is going on.

The setting of 2014 was mentioned as an issue, and Deputy Moynihan made the point that the 2011 additional criteria has not allayed fears on that, which I understand. As I said in the statement, this is an issue that has arisen in Ireland. As far as we are aware it has not arisen in other member states. We have continued to press the point that member states should have the flexibility to set an earlier year if they so wish. That is the outcome we would prefer.

The Deputy is right in terms of what has happened to date. Before the proposals came out - these things leak and we were aware of what the Commission was about to propose - we put some pressure on the Commission and at the very last minute it put in this 2011 criterion to assist us, as it saw it. We made the point to it at the time that it did not deal with the issue very well. Since then, many member states have objected to the 2011 reference. They would prefer the 2014 straightforward reference without the 2011 reference. The Presidency has now proposed in its revised proposals that a member state should be allowed to set either 2010 or 2011 or have no pre-reference period but simply stick with the 2014. What it is an example of is that the text is dynamic. It is moving. It is changing. That is the reason I said in my opening statement that people should be very wary of making any decisions based on text as they see it.

Bureaucracy was raised by Deputy Heydon and others. We all call for simplification. Everybody does that but many member states have begun to put their money where their mouth is, as it were, and set out specific proposals on simplification, including Ireland. We have been part of a group of 13 or 14 countries for a number of years which has been very active on this issue actively making practical proposals for simplification. However, there is no doubt that what the Commission has proposed, particularly on greening, is not simple by anybody's definition and will lead to significant additional bureaucratic work.

In response to Deputy Ferris's point on sugar, to be clear, the reason we are supporting the abolition of sugar quotas is that Ireland could not now get back into sugar production even if we wanted to do so. Even if there was a commercial possibility of doing so we could not do so. If quotas are abolished, however, we will be able to do so if it is commercially viable. In other words, there will be no EU policy restriction on us. That is the reason we favour the abolition of quotas. It creates the legal possibility, whatever about the commercial possibility, of us getting back into sugar production.

Deputy Ferris also raised the question of objective criteria and asked what was involved in that regard. That question was raised also by one or two other Deputies. The Commission has said, regarding the rural development funds, that it would like to distribute on the basis of "objective criteria and past performance". What it means by objective criteria are things like GDP per head, population in rural areas as a proportion of the overall population, agricultural labour as a percentage of overall agricultural labour and agricultural output as a percentage of whatever.

There are many different sets of criteria that could be used, and on the face of it the idea of objective criteria sounds fair. If it is objective, it is objective. The problem is that everybody has their own favourite objective criteria. Every member state could put forward reasonable sounding criteria which would happen to favour them, and like everybody else we are in that position.

We have seen some of the Commission's internal calculations and some of those criteria, such as GDP per head, would be very unfavourable for Ireland and very unfair because they are out of date in terms of the position in this country. Regarding others, it is a question of detail definition, for example, "population in rural area" sounds as if it should be good for Ireland, and it would be, but the particular definition the Commission is using turns it into an unfavourable criteria. There are many detailed issues in that regard and many pitfalls in trying to develop objective criteria. We will get involved in an incredibly complicated negotiation on objective criteria in which it would be very difficult to reach agreement. We have said that the pragmatic approach used for pillar 1, which is based on the average payment per hectare in the member state, equally could be used for pillar 2. That would provide a favourable basis for Ireland.

It is unclear in the negotiations what will happen in this area because the Commission has steadfastly refused to come forward with a proposal, despite enormous pressure from virtually all member states and from many Members of the European Parliament. When we see its proposal we will be in a better position to negotiate the detail of it but right now we are satisfied with the position as I have indicated, and that we will hold to that position.

I was asked about the friends of the Presidency group. I promise it is nothing sinister. It is a term that is sometimes used for ad hoc groups that are established. It is a group of officials who are working on the multi-annual financial framework, and Ireland is well represented on that committee by an official from the Department of Finance.

The date of any agreement and the role of the Irish Presidency was raised by Deputy Harrington and a number of other members. I indicated in my opening statement three conditions I thought would have to be met if we are to get agreement during the Irish Presidency. It is clear that the CAP negotiations will not be agreed before the Irish Presidency, therefore, the Irish Presidency will have an important role to play in the CAP negotiations. There is no question about that. It is too early to say whether we will have agreement during the Irish Presidency but we are preparing ourselves to do that deal. We have made that clear to others. It is a compliment to previous Irish Presidencies that a number of member states have indicated to us that they will be very positively disposed to that and that they respect the fact that the Irish Presidency would be a good Presidency in which to do a deal.

If a deal is not done during the Irish Presidency there are serious questions about what would happen. I was asked about a plan B. The process could kick on for quite a distance. A number of elections would then be looming and so on and therefore it would be quite difficult. Already, there is some speculation, and it was mentioned by some members, about a delay in implementation. That would grow if the deal was not done during the Irish Presidency but we cannot say for certain that it will be done. It is a complex negotiation and all of the planets have to align for it to happen.

I was asked about the menu approach. There are a number of proposals being made by a large number of countries on what might be included in a menu approach. Ireland was one of the first to mention this possibility but a number of other member states have now adopted that kind of position. A goodly number of member states would like to include the possibility that any farmer who takes part in an agri-environmental scheme, such as REPS or AEOS, could qualify automatically for payment within a menu.

There are other concepts of a more technical nature. Farmers who maintain what is called "green cover", namely, farmers who grow a winter crop on arable land, which is regarded as environmentally beneficial, should qualify. There are a number of ideas that go beyond the specific three criteria mentioned by the Commission.

With regard to our ideas, not having a separate green payment and instead applying the criteria to the direct payment as a whole is possible. I mentioned this and a number of Deputy's picked up on it. The idea should at least be considered. It would definitely be simpler and achieve just as much environmentally.

We have made detailed comments on each of the three criteria. The Commission has proposed, according to the crop diversification criterion, that there be three crops on land amounting to more than 3 ha. This threshold is far too low. It is completely impractical to suggest a farmer should have three different crops on 3 ha of land. This figure is not realistic. We have suggested a minimum threshold of 15 ha and this has some precedent in European law. We have suggested the same minimum threshold for the ecological focus area requirement, for example.

With regard to the very important grassland qualification, according to the Commission's proposal one is allowed a tolerance rate of only 5%. In other words, one can plough up to 5% of one's grassland. This, however, does not recognise that, in a country like Ireland, whose farmland is almost all grassland, the planting of small areas with cereals by a farmer is environmentally very positive from a biodiversity perspective. We have suggested that any farmer whose grassland amounts to 70% or more of his land should qualify automatically. This would make the measure more realistic in our case.

The key problem that has emerged is that the Commission has come up with three very fixed criteria that will apply everywhere, from Sicily to Lapland. Whether this is realistic is a very serious question and that is why people are opting for a more flexible menu-type approach.

It is only fair to point out that the Commission's calculations, which are probably correct, suggest Irish farmers would incur costs among the lowest in the Union in meeting even its green criteria. This is good because we are already very green but it is a much bigger issue for other countries. I would expect those countries to fight very hard on these issues.

The gains and losses for individual farmers balance out. In other words, there is a national ceiling that will be given to Ireland. If there were a flat rate, some farmers would lose significantly and others would gain significantly, and Ireland would come out quits. Our analysis of various flat rates considered a national flat rate, different regional flat rates, and defining regions in different ways. I will not go into all the details here but will happily share them with the members. All the evidence points to the fact that those who would lose are farmers who are more productive and have higher stocking rates than others. The farmers with very low stocking rates would gain. I hope I have covered everything.

Deputy Éamon Ó Cuív

I thank Mr. O'Driscoll for the presentation. We are really getting to the business part of the matter. I welcome the officials from the Department, some of whom I have met in a previous capacity. The first point is that if the money is not in the kitty, it does not matter how one divides it. There will not be enough if the allocation for agriculture is cut. Therefore, it is very important that we all stand together in Ireland and make a strong case for funding the CAP properly. Ultimately, food security is incredibly important. There are many things one can do without in life but one cannot do without food. We may be complacent about it.

It is easy to agree on the big policy issues. Who could argue against more production, greening and sustainable rural communities? We often spend a lot of time debating those issues but, ultimately, what actually determines what happens is the detail of the scheme and its availability to farmers. We must examine this matter very carefully.

Every time we engage in European negotiations, I hear about cutting down on bureaucracy. When I was involved in the negotiations on the last rural development programme, bureaucracy was to be reduced. The reality is that it gets worse all the time. It becomes more complicated and pernickety. The European Union must focus its mind on the bureaucracy issue and act in a way that leaves more competence to the national governments in this regard. Implementing small rules from the centre is just not workable.

When I was in the Department of Community, Rural and Gaeltacht Affairs and the Department of Agriculture, Food and Rural Development, it often seemed to me that everybody is terrified of the auditors from Brussels, who seem to spend their lives nitpicking over small issues and trying to turn them into major scandals. I can remember, but will not repeat, the very good example outlined by Andy McGarrigle about the sheep farmer and the auditor.

As somebody who represents a marginal area, I believe it would be great if the single payment operated according to an area-based system. However, as we found out in the past week, when one wipes away measures at the stroke of a pen, thus removing suddenly payments on which people depended for 20 years, one creates considerable uncertainties in people's lives. We saw this with the AEOS in that people leaving REPS 3 this year suddenly fell off a cliff. I know from looking at people's accounts that this is a disaster.

I accept one cannot change from the historical system to an area-based system overnight as it would affect farming seriously, but I believe that, over time, we must change it. There ought to be a smooth transition. If one changes the system too rapidly and without warning, one causes huge problems with the bank manger among farmers with significant borrowings, for example. One must ask whether it is sensible to have a system that is liable to change fully every six years. Ten-year and 15-year loans are not uncommon. If one takes out a loan half way through the period to which a scheme applies, one cannot be told what will happen after three years. We need more certainty, including certainty over a longer term. It seems it takes two years to set up the CAP and that it operates for two years, and that two years are spent discussing the next one. I am not sure this uncertainty is good. It would be much better if we could put some of the basic schemes into a much more long-term framework, perhaps allowing for a certain amount of tweaking.

However, allowing for the ability to change the whole system is creating uncertainty and certainly does not aid investment. The first thing a lender will ask one, assuming it will give money at all, is what will it be like in the future. The witnesses might clarify whether the disadvantaged area payment will remain in place and whether it will be differentiated on land type. Will it covered the same areas of the country as at present? If the greening measure is to be a stand-alone measure, will it be additional to, and over and above a REPS-type measure, or is the greening payment to be the payment in future? While I have suggested one should festina lente and have a planned programme and a single payment, this only would be tenable were a REP scheme in place for those who depended on REPS in the marginal land areas, because they have suddenly fallen off a cliff and have been very badly treated in that regard. One must consider what the total package does for all the different groups of farmers and if one seeks change, one should bring it about incrementally and not go over a cliff on either side. At present, we are in danger of falling off both ends of the cliff. Consequently, as I stated, I am anxious to ascertain whether the rural development policy will include a new REP scheme.

As for the small farmers' measure, I understand it involves sums of €500 or €1,000. In the Irish context, from the documentation I have received I am unsure whether this includes disadvantaged area scheme payments as well as single farm payments, but that would apply to a very small farmer. I would favour a de minimis approach to all farmers receiving less than €5,000 just to make life simple because while I deal with many very small farmers, most of them receive more than €1,000 in grants. I apologise for being late but I was out on Inishbofin last night. While I may have missed it, I see no mention in the documentation provided on a measure for areas with natural constraints. Is this still on the menu and what is the attitude of the Irish Government and the Department towards such a measure? Obviously, as I live in an area with huge natural constraints, I wonder whether such a measure still is on the agenda and what is happening in this regard. Moreover, in addition to such natural constraints, European constraints are being imposed on us from all sides with stocking levels being reduced and so on.

The view is sometimes expressed that a farmer is not viable if he or she is only earning €5,000 euro per annum from the farm. However, that is a highly simplistic view of life's complications because in the case of a person with a job who has a second part-time job that earns him or her €4,000 or €5,000, the second job is not considered to be unviable but to be a good supplementary income. Is it correct that 60% of Irish farmers are now part-timers and that this percentage is rising?

Mr. Aidan O’Driscoll

Yes, give or take.

Deputy Éamon Ó Cuív

Perhaps this trend is no longer rising so rapidly because of the downturn in the economy but only 40% of Irish farmers can earn a full living exclusively from farming. Moreover, even in the case of those farmers, I believe that in some instances, their partners might be working. From a pure production point of view and were production one's only objective, it might be much more efficient to eliminate three quarters of the farmers of Ireland and to set up a few factory farms. However, this policy is about balancing many things, namely, the vibrancy of communities because it is about people, communities and society and is not simply about how one can produce more milk. While it is important to produce more milk, it should not be at the expense of everything else, just as one does not do all these things at the expense of, for example, the ecology. The pillars are there to sustain rural communities and consequently, to use an old saying of a party to which I belong, establishing as many farm families as is practicable on the land is still not a bad idea.

Moreover, accepting that part-time farming is a valid type of farming and can be highly productive also is not a bad idea. When I first went to the farmers' co-operative at Cornamona in the 1970s, I figured out rapidly that the land only had a certain productive capacity. I came to the conclusion that instead of taking people off the land and putting them into factory jobs, the only way to achieve good family incomes was to leave them on the land and to put them into factory jobs as well. People with two incomes then had a fail-safe device and it was sustainable. Moreover, this practice has sustained many families in very good lifestyles since then. Therefore, the policies should recognise this reality and should recognise the part-time farmer has an extremely significant contribution. A part-time farm might yield an income of €20,000 or €5,000 and that is valid, for as long as the farmer is using the land reasonably productively. I grant that this makes matters more complicated. I refer to something else I found out about part-time farmers, In the area in which I live, where farming on its own is not very sustainable, in many cases, the part-time farmers actually invested more on the farm because they had a job on which to fall back. Consequently, farmers who made a profit on the farm often put it back into the farm and took the long view because they were not trying to survive off it or to use it literally to keep bread on the table.

Deputy Andrew Doyle resumed the chair.

Another point that worries me concerns the references to active farming. As I have read them in detail, they do not pose a problem but there appears to be a growing view in the Department about active farming that I hope is not shared by Europe. When the Department changed the disadvantaged areas scheme payments, it could have hit the bigger farmers a little more. For example, there was an option to hit very large dairy farmers who get disadvantaged area scheme payments for very advantaged land. Instead, however, it hit farmers with low stocking densities. One could argue the threshold is only 0.3 livestock units per hectare and if one is not farming to densities above that, one is not farming at all. However, like everything else in life, the devil is in the detail. The Department will make savings of €25 million in this way and if one takes an average payment, 12,500 farmers will be hit. I believe the biggest number of those who will be affected by this measure will be hill farmers who own commonage. I cite the example of a hill farmer who is engaged in cattle raising only and who has a one-tenth or a one-hundreth share of 2,000 acres of a mountain on which he or she does not put out the cattle but which, in technical terms, constitutes two thirds of that person's farm. In such a case, the stocking level must be three times the threshold of 0.3 livestock units per hectare on the remainder of the land to be entitled to the disadvantaged area scheme payment. Twice as many farmers do not have cattle only than have cattle and sheep or sheep only. I am a little worried, when one gets into the details of this measure, that were someone to do an exercise on paper that presumed all farms are simply straight patches of green land, he or she would perform the calculation and conclude that without such a stocking rate, one would not be farming at all. As I noted this would fail to understand that a large number of those who own rights to hills do not farm those hills for very good reasons. This would pertain in particular to older farmers.

I have two other issues. First, if one bases one's rural development policies on those who live in rural Ireland, I am very curious to learn how Europe has devised a system that has managed to prove that very few people live in rural Ireland or that only a very small percentage of the population does so. The census indicates something which I imagine to be unique to Ireland, namely, that nearly 40% of the people live in the countryside or in villages of less than 1,500 people. I imagine that were one to use that definition of the countryside, one would have very few people living in the countryside in countries such as France, in which people, even the farmers, tend to be much more villagised than are we and much more town-based. Consequently, I am very curious as to how that criterion is working and the witnesses might explain it.

My final point concerns rural development. I went over to Europe a number of times about de minimis payments but failed to change minds there in this regard. The minimum grant under rural development programmes is where they consider a grant of less than €200,000 is not likely to upset the free market. I brought in a rule that where it was a non-commercial activity one could give a grant of up to €500,000. The European Court of Auditors has apparently taken issue with this. How will the development of a rural community centre affect trade on the free market in Europe? It is time we got real.

We live in the real world. I was involved in setting up industries to trade internationally and it takes millions of euro to do so. I calculate that there has been more invested in industry in my area than would be spent in the whole Leader programme for the entire Gaeltacht, comprising some 90,000 people, over seven years. How can anybody in their right senses in Europe believe that a grant of €200,000, €400,000 or €500,000 to a small industry would really disturb trade across the European Union? It is nonsense, and doubly so for an island off an island off the European mainland.

Having established industries, I can confirm that a grant of €200,000 is a drop in the ocean. Any members of the committee who have been involved in such activities will know that I am correct. Therefore I would hope that Ireland will put the boot in with other like-minded countries, and particularly peripheral countries, in saying that the minimum should be revised to at least €1 million, if not €2 million. There seems to be a terrible control-freak syndrome operating from Brussels. If they seek an example of how they will not affect the single market, they should go to the United States whose economy is all based on competition. The United States have no constraints on state aid, which is an important issue. That minimum level - and the tiny amount of money involved in the Leader programme - has had a huge limiting effect on rural development. It has always been a sop in áit na scuaibe.

Deputy John O’Mahony

I will be brief because all the questions have been covered, particularly the ones concerning small farmers and restricted ones. I would like Mr. O'Driscoll to elaborate on the seven-year budget and the 36% figure of the overall budget. He explained that very well but he then talked about larger countries wanting to reduce the overall budget by €100 billion. Given the complex CAP discussions that are going on, it is hard to reach definitive conclusions in that overall context. Perhaps this is a question for our MEPs afterwards, although I will ask it in advance and I would like Mr. O'Driscoll's observations on it also. What are the logistics of this overall budget? Is it €100 billion per annum or for the seven years? Is the overall budget determined for that seven-year period in a similar fashion, or when is that to be decided? The overall budget has been introduced, to everybody's relief, after the Commission's proposal that the agricultural budget should be maintained. Mr. O'Driscoll might outline that.

Chairman

I thank Deputy O'Mahony for having assumed the Chair for a few minutes earlier. I have one brief question. In the context of the overall negotiations, the Minister and the Department have tried to build up alliances with like-minded European nations. How does Mr. O'Driscoll perceive that changes in political regimes, particularly in key countries, will impact on the negotiations? I know the question is somewhat hypothetical at the moment, although it may not be that hypothetical.

Mr. Aidan O’Driscoll

I thank the Chairman and other members of the joint committee for their questions. The last point is a key issue, although I do not want to wander into the political space. A key element in all EU negotiations is that one is lost if one finds oneself on one's own. One must have allies otherwise one is going nowhere. The issue of allies is extremely important and the Chairman is right in that respect. We have been working hard on that issue. An example is the whole area of what is known as internal convergence - in other words, having flat rates within member states.

There are about nine countries in total that have problems that are in some way similar to our own. We are obviously working closely with those. They do not have exactly the same problems as we do, but they have problems of a similar nature. The bottom line is that they do not want to go to flat rates. We are therefore working with those countries, but we are also talking to countries who have completely different problems. They may not have any problems with flat rates but they have problems of their own. We are saying to them that we are sympathetic to their problems but we need them to understand ours.

There are two sets of allies therefore and we work hard on both. One set is the people whom one hopes are close and have similar views to ours. There is another group - maybe it is a larger group on this occasion - comprising people who do not have our problem but have other problems of their own. They may be willing to join together in an approach which involves greater member state flexibility.

Deputy Ó Cuív was making this point at the beginning of his intervention - that this issue of greater subsidiarity, as it is called, or great member state flexibility and less control from the centre, offers a way forward for many member states.

If members of the committee do not mind, I do not want to go into the question of changes in political regimes.

As regards overall budget issues, I should stress that this is a matter for the Department of Finance and I do not want to get into this area too much. I am sure that another Oireachtas committee is looking at it closely.

The big issue is that in the scale of reductions that some member states are seeking in the overall budget, there are only two or three budgetary areas that have any real size. One of them is agriculture, while another is cohesion funding, which mainly benefits new member states. Another perhaps is the whole research area, which is also very important for Ireland and other member states.

There are quite limited areas of the EU budget where one could make major reductions. This is where the concern is arising. I do not want to raise any unnecessary concerns about it. The bottom line is that the Commission has made a proposal that is modest but is a good start to the negotiations from our point of view. I merely want to underline that there should be no assumption that this has been achieved. That is the key point. We are not there yet and we are quite a long way from it.

The multi-annual financial framework, or MFF, and the decisions within it, might be made by the end of the year, in which case we will then have greater certainty. We will certainly need MFF decisions before we can finalise the CAP. That is pretty clear and I know it is the strong view of some people in the European Parliament also.

I will deal briefly with a few other points that were raised. The issue of disadvantaged areas is bedevilled by the fact that everybody calls it different things. It is an issue I have been raising in the Department for years. We call it "disadvantaged areas", the EU calls it "less favoured areas", and now they are calling it "areas of natural constraint". It is essentially the same thing, although different terminology is used. It will stay but the Court of Auditors has raised an issue and the Commission is anxious to make progress on it. The Commission feels there should be objective physical criteria to define an area of natural constraint, as it will be known. It has proposed eight criteria in that regard. We were not satisfied with the initial criteria because they did not encompass the kind of issues we have with our wet climate. We have succeeded in persuading the Commission that it should adopt an additional criterion related to soil-moisture balance. Work is under way on exactly mapping what areas would qualify under all of these criteria. It is quite complicated because the stoniness and slope of the soil, as well as a whole set of other detailed criteria, must be taken into account. This was an issue under debate before the Common Agricultural Policy, CAP, reform process started. It has been sucked into the reform debate and it remains to be seen whether it will be decided in the reforms.

Green payments are separate from the rural environment protection scheme, REPS. However, the green payment would set the baseline for REPS or the agri-environment options scheme, AEOS. In an agri-environment scheme under pillar 2, such as REPS or AEOS, one is required to take action above the baseline and what is regarded as normal. The green criteria would now be part of what is regarded as normal. We would change the baseline but the REPS payment and the green payment would still be separate. The rural development programme will continue to include an agri-environment measure so it could be a REPS, AEOS or another similar scheme.

We believe the small farm scheme should be voluntary. One of the issues about the €1,000 limit that needs to be recognised is that in some member states, mainly southern European and Mediterranean countries, this will include a large number of their farmers, up to 50% in some countries, because they have extremely small holdings. The small farm scheme is really targeted at that kind of country. For that reason, we believe it should be mandatory at member state level. We are not implying that we would not run it but we would prefer to have it optional for each member state.

The Commission made some proposals on the definition of an active farmer that would have been very bureaucratic and involved us collecting incredible amounts of information on every farmer and their incomes. It was very impractical in the view of many member states. I am glad the Presidency, in its revised proposals, has moved away from this and the Commission has indicated a willingness to engage on that issue. It is more likely that what is called a negative list will be drawn up which consists of a list of bodies that would not be eligible for payment. For example, it would include airports and golf clubs for which the payments were not originally intended. Believe it or not, Schiphol Airport qualified for payments very controversially which the Dutch managed to sort out.

The definition of "rural area" is interesting. Essentially, the EU has classified land areas into three categories, predominantly rural, intermediate and predominantly urban. In the data released by the Commission, it has defined the rural population as those living in predominantly rural and intermediate areas. We believe this is wrong. Even within the terms of its own research this does not make sense. It should just be the population of predominately rural areas. However, some major countries would lose out from this classification which underlines the fact that when one comes up with objective criteria and then gets into the details, it gets incredibly difficult to agree on them.

Chairman

I thank Mr. O'Driscoll for his frank responses. I wish the Department well in its negotiations. As part of the co-decision procedure, the role of the Department is critical in all of this. It would be essential the multifinancial framework, which I accept is outside the Department's hands, is agreed before the Irish term of the EU Presidency if we are to get the CAP reform through the first half of 2013. Changes in regimes may have an impact on that.

I thank Mr. O'Driscoll, Ms Cannon, Mr. McGarrigle and Mr. Savage for attending today's meeting. We look forward to engaging with them during this process and we hope to make a political contribution at the end.

Sitting suspended at 3.55 p.m. and resumed at 4 p.m.

Chairman

We now have three eminent ladies, Members of the European Parliament, before the committee, Ms Mairead McGuinness, Ms Phil Prendergast and Ms Marian Harkin. As the MEPs were here for the earlier presentation, we can take it as read they understand the privilege rules.

Ms Phil Prendergast, MEP

We were going to sing for the committee actually. We are known as The Farmerettes.

Chairman

I welcome the MEPs and know they have busy schedules but this is an important process for them in which to be engaged. It is also important for the committee to hear their perspective on the CAP reforms.

Ms Mairead McGuinness, MEP

I thank the Chairman for inviting us to participate in the committee's work on CAP reform. It is important to acknowledge the work of the departmental officials in this regard. They have been consistent and excellent in their engagement not just with the Council of farm Ministers but also with the European Parliament. I also acknowledge their active engagement with all Members of the European Parliament. There has been real recognition by officials and the Minister for Agriculture, Food and the Marine, Deputy Coveney, of the role of the Parliament in co-decision.

I am glad the issue of the budget has been raised as a serious matter that is still not resolved. I was concerned when I spoke to some Deputies recently that they thought this issue had been resolved and the deal was done. It is not. I am concerned about what will happen around the overall budget for the European Union. It will be influenced by the political climate of Europe which is not exactly warm. We need to be conscious of the importance to Ireland of ensuring the budget is adequate. Europe's politicians should see a European budget as an instrument for growth and jobs but there is a tendency among member states to regard cutting their contributions to Europe as a badge of honour. That creates a serious danger for Ireland and the Common Agricultural Policy. If the budget is reduced overall there will be cuts to all policy areas. Agriculture will not escape and the rural development budget may also be hit. The impact on direct payments may not be as large but rural development is vulnerable. It is important, therefore, that we participate fully in the budget discussions and work to improve the political climate of Europe. The European Parliament has demanded a good budget for agriculture and other policy areas but the European Union does not raise taxes. We rely on Heads of State and Government to fund the budgets for EU policy areas. The focus of CAP reform is on direct payments and their redistribution. However, we should not forget rural development, the organisation of the marketplace and market supports.

In regard to direct payments, I do not see greening as a major problem for Ireland. The officials have provided clarity on the details of the proposals, some of which are problematic. We have not yet discussed the redirection of policy towards a public goods payment, the principle of which is that farmers not only produce food but also perform environmental tasks for which the market does not pay them. Deputy Harrington pointed out that the direct payments proposal includes an allocation of 30% for greening linked to the overall budget. Those who argue this is too much should be cautious in seeking a reduction to 20% or 10% in case they endanger the overall budget for direct payments. There are consequences to our actions. There is no doubt that the greening proposal will increase bureaucracy. The Commission has estimated that member states will face a cost increase of 15% in implementing the new system. That issue needs to be addressed.

We have not yet discussed the Commission's plans to abandon the current entitlement system in order to reinvent an entirely new payment entitlement. The field of horses comprises 27 member states but their starting points differ. Some have already introduced flat rate payments and others operate simplified systems or, like Ireland, base their payments on the historic model. The Commission wants all the horses to reach the finish line by 2019 despite their different starting points. That will be practically impossible to achieve but it is difficult to see how flexibility can be translated into a text that member states will be able to implement. I accept it will be difficult for Ireland to move to a flat rate but certain member states which have already made the change do not understand our position. The discussion around 2011 and 2014 is academic because we will not change minds that have already been made up. The Department and I have warned repeatedly this is a proposal rather than a decision.

The European Parliament has great expectations for the Irish Presidency. We may have to resolve the overall budget issue, the fisheries issue and the agriculture issue during the Irish Presidency in the first six months of next year. It is a lot to ask but officials have indicated a willingness to deliver. If the political climate is better, we can deliver because we will be able to put the budget in place and discuss the details. The Council of Ministers is discussing the details but the Parliament is also involved in that process. As a member of the EPP's negotiating team, I find it extremely difficult to achieve consensus within political groups because of the complexity of the document. The more one reads the greater the difficulty in getting a handle on the detail. Certain proposals, such as active farmer, have already been changed, however, and we can reach agreement quickly in other areas.

The most difficult issue is redistribution, whether between or within member states. Some of the member states which are on low payments, such as the Baltic countries and Portugal, are actively campaigning to get better payments but they are willing to sacrifice agriculture in favour of cohesion if they do not achieve a better redistribution.

We are also holding parallel discussions at Commission level on the issue of fairness in the food supply chain. A report will issue in June from the stakeholder working groups and another major report will be prepared by the end of this year. The outcome of these almost non-political deliberations are as important to the future of Irish agriculture and farm incomes as the issues we are discussing today. The Chairman might bear that in mind because farmers and consumers will be interested in knowing what is happening in that regard.

Ms Marian Harkin, MEP

I endorse what Ms McGuinness has said about the Department's officials and our permanent representation in Brussels. I have found them very helpful and knowledgeable. It is a big help to us as MEPs that they have their finger on the pulse because, as Mr. O'Driscoll has pointed out, the details of these proposals are intimidating. We often hear generalisations about different aspects of them but our role as parliamentarians is to amend the minutiae of the documents that come before us. Members of all political parties and none can play a role in these debates thanks to co-decision. They can work with MEPs of all parties to understand the details or at least offer their views. That is a role this Parliament can play for the first time because it now has co-decision with the Council.

Deputy O'Mahony asked about the size of the budget. The best estimate anyone can give is that it is approximately 1% of Europe's wealth. The budget proposed for 2013 is €138 billion, which represents an increase on 7% on previous budgets. While the Commission and the Parliament will support this increase one can be sure the Council will seek to cut it. It is difficult to estimate over a seven year period. All I can say is that it will be less than €1 trillion and that Germany and some of the other large countries want to shave significant amounts from it. If we have a smaller cake, the portion for agriculture will also be smaller. We will be supporting a large budget but we do not have the same influence because we do not raise the taxes. The Parliament has always been strong in supporting an adequate budget for agriculture and I have no reason to believe this will change.

The other issues of concern to people will be the flat rate payments and redistribution. Countries such as Romania, Poland and Bulgaria want us to be even more ambitious than we are while Germany and Belgium prefer that we have a proper adjustment period. The view of the agriculture committee of the parliament is that we should have a long enough adjustment period to allow member states to get that point.

I do not need to add to the greening issue. However, there is a great deal of concern in Ireland about it but I do not know that it will create as many problems as we think. The Parliament has strong views on this with the provision for 7% of land to be set aside. Significant amendments to these proposals will be made by the committee and the Parliament. It is something Ireland can probably live with, whereas the issue of the redistribution of payments is of greater concern.

Ms McGuinness, MEP, mentioned the active farmers issue. We can forget about that because the Commission has had to admit defeat on it. We will have to consider something else, which is a positive move as well. In the past week or two, the European Court of Auditors produced a report on the CAP and there was a presentation last week. I read that representatives of the court will appear before the committee at the end of the month.

Ms Mairead McGuinness, MEP

They appeared before us last week.

Ms Marian Harkin, MEP

Obviously, what I read was out of date. They say that, for example, the level of bureaucracy within the rural development programme, even to them, is mind boggling. There are six layers of rules, which confirms what Deputy Ó Cuív said and that is no way to go about our business. They also had a problem with the definition of "active farmers" and the issue of capping.

The committee is interested in what the Parliament thinks. Recently, we voted on a non-legislative report on greening in Strasbourg. That was a good indication of what the Parliament is thinking. We voted that mandatory greening practices should be adapted to suit the specificities of different member states and they should be workable and not entail too much bureaucracy. That gives an outline of where the Parliament is coming from on those issues.

The Court of Auditors report stated the CAP is too input and expenditure oriented rather than looking at performance and outcomes. This is what the Commission tells us it wants to do but the Court of Auditors report says the way it is designed will not allow for that. They also referred to the additional administrative burden on farmers and member states. They reckon the current administrative budget could increase by 15% to implement the Commission's proposals. All these issues will be taken into consideration by the Parliament when we deal with the reports and the minutiae.

Ms McGuinness, MEP, mentioned the foodchain but the debate is ongoing in the Commission and it is very important for farmers. The agri-environment options scheme was mentioned. I acknowledge the significant impact the scheme has had not only on farmers along the west coast from Donegal to Kerry, but across the country. For the first time in 18 years, there will not be an agri-environmental scheme and I wonder whether that will have an impact on Ireland's allocation from the rural development fund. There may be no connection but I would be interested in the committee's comments on that.

Deputy Ó Cuív mentioned de minimus aid earlier. Negotiations are ongoing but I am more than hopeful that the directorate general for competition will not see the €200,000 threshold as a problem. On the basis of communications I have had with officials, they do not say this. I acknowledge the Deputy referred to an increase but we will deal with what is there now. I agree with him that we can look to the next Leader programme. That issue will be sorted and it will take time but I acknowledge it has taken too long.

I refer to the European Globalisation Adjustment Fund. The Commission has made a proposal that farmers may be included under this for the first time. It has a budget of approximately €3 billion and up to €2.5 billion could be available for farmers but that money will only be available if trade deals prove disadvantageous to agriculture, in particular the Mercosur trade agreement. What are the committee's view on that? There are differing views in the Parliament as to whether this is a suitable and sufficient instrument if a trade deal significantly damages agriculture.

Ms Phil Prendergast, MEP

Like my colleagues, I am grateful for the opportunity to address the committee. During my year in the Parliament, I have met the representatives of many farming organisation and families to discuss issues affecting farmers and I have used my position on the agriculture committee to convey their concerns and priorities during the ongoing negotiations. Ireland has participated in the CAP since 1973 and, over the past 40 years, has received more than €45 billion in funding. That has paled into insignificance recently as we talk about billions of euro as if they are just hundreds of euro. However, the CAP has provided farmers with great income security and has allowed Europe to become largely self-sufficient and less reliant on food imports. Ireland receives the highest amount per capita of member states and that is a reflection of both the success of previous Governments in negotiating the policy and the strength of the agriculture sector here. Ireland receives just under €2 billion in support from the Union every year and the importance of this funding cannot be overstated. In a political discourse dominated by euroscepticism, it is worthwhile to point to the CAP as an example of Europe contributing to improving our communities, increasing rural standards of living and providing employment through Ireland.

I will break my submission down into two parts. I will address issues related to direct payments to farmers under the reforms proposed to pilar 1 and the importance of maintaining a strong focus on rural development post-2013 through pillar 2 supports. There have been many difficulties with the proposals for pillar 1 reform, most notably as they relate to reform of the single farm payment and the so-called the greening of the CAP, which has been covered by the colleagues. However, these changes must take account of the various national contexts in member states. A one-size-fits-all approach would be the ruination of the CAP and it would dilute its potential to bring about genuine improvements in the European agricultural sector. A practical example is the proposals announced to update the small farmer scheme. Many of them, such as the drastically reduced administrative burden through a single defined payment of between €500 and €1,000 to farms of less than 3 hectares, have been discussed by the previous contributors. The number of small farmers varies greatly and, therefore, the Commission cannot be overtly prescriptive when it comes to the percentage of the national envelope that must go to the scheme. There are also problems in Ireland and throughout Europe with how to define an "active farmer". We are all in agreement that golf courses and airports are non-agricultural and industries should not receive pillar 1 supports. However, precisely defining the term "active farmer" is cumbersome.

The current proposals seem to kick the can down the road. They say that an inactive farmer is one whose direct payment equals less than 5% of income received from non-agricultural sources. However, the problem then is whether a non-agricultural source of income can be correctly defined. Can a definition be found which comfortably fits all 27 member states? The expert is Ms McGuinness and, therefore, all questions should be put to her. We agreed this in advance in the interest of brevity. However, we had a chat recently. She said that in the direct negotiations in a committee it comes down to nuances. The use of "a", "is", "them" or "on" could make a difference to the interpretation of what we are discussing. It is that defined and refined. It is also one of the difficulties when there are many languages and interpreters. How things are interpreted or misinterpreted can cause problems for us. There have been some questions regarding creating positive or negative lists outlining criteria for establishing who is an active farmer. While there could be a reasonable compromise we would need to see the specifics of that. The most sensible thing to do in this instance is to allow the individual member states establish their own definition of what an active farmer is, taking into account the peculiarities and nuances of the state in question.

Greening of the Common Agricultural Policy, CAP, has been one of the most difficult areas in the current negotiations. The priority for Ireland should be the introduction of a system which is flexible and adaptable and does not put undue burdens on individual farmers. This will mean ensuring the greening measures are realistic. I was particularly happy last week to hear my party colleague, Luis Capoulos Santos, MEP, who is one of the European Parliament's rapporteurs for this legislation, state that he is in favour of the Commission proposals to allow transfers from pillar 1 to pillar 2 up to a maximum of 10%. I believe it is a sensible move which gives power to member states and will improve the overall effectiveness of the reforms.

The final issue on pillar 1 relates to the top-up payment for young farmers. Greater clarity is needed on the specific definitions contained in chapter 1 of the proposals. There is considerable uncertainty about the precise requirements for access to the programme. I have received queries from constituents who are concerned that the requirement to have activation entitlement under the single farm payment might prevent new entrants. That is definitely a difficulty and needs to be examined more closely with a usable system put in place. Regarding pillar 2, one of the best things I did since becoming an MEP was to visit various Leader programmes and partnerships across Munster. Since January I have visited IRD in Duhallow, West Limerick Resources and on Thursday I will visit Avondhu Blackwater Partnership in east Cork. I have seen really fantastic work done by these programmes. It has been a pleasure to visit and see a programme in action with such positive benefit for the entire community.

I use this platform to highlight the dangers of diluting the impact for local action groups through alignment. While I favour greater co-operation between local authorities and the action groups, I vehemently oppose bringing these action groups under the control of local authorities, which would destroy the bottom-up approach envisaged in the rural development programme. If some of the measures currently under the control of the LAGs were taken away and given to the local authorities, it would not be in line with the Commission requirement that rural development be undertaken in an integrated fashion. We know of very great successes. If something is not broken we certainly do not need to fix it.

The proposals for reform of pillar 2 have stated that the Commission favours increased integration after 2013 with all aspects of rural development working in synergy. Having seen the work of these organisations and their transformative effect on local communities, I will continue to advocate this position at home and abroad in the European Parliament. I thank the committee for the opportunity to speak here today.

Deputy Michael Moynihan

I thank the Members of the European Parliament for sharing their insight with us. I acknowledge all the work departmental officials have done over the years in interfacing with Europe on behalf of Irish agriculture. The real question relates to the budget. On a scale from one to ten, with ten representing extremely concerned, where do we stand on the budget? I know it is probably a crystal ball scenario of how Europe is at a particular time when the budget is decided. Bearing in mind that last June the proposed budget was almost agreed and considering where we stand today, should we be concerned about the future monetary package that will be available for the Common Agricultural Policy?

Deputy Michael Colreavy

I thank the Members of the European Parliament. This is the first time I have attended a meeting where Members of the European Parliament have addressed us. The departmental officials also presented a very interesting perspective. We all recognise that agriculture and the rural way of life are substantially different in Ireland from most other European nations. We have a dispersed population and farmers with large tracts of mountainous land but low stocking because they are using the lowlands for that stocking. Are our fellow European Union member nations familiar with the differences we have in Irish agriculture and the particular difficulties faced by farmers in the more disadvantaged areas? How can we improve their understanding of the challenges faced by Irish farmers?

Is there scope for more joined-up work with the Six Counties Department of Agriculture and Rural Development? I know that co-operation has been ramped up between our Department of Agriculture, Food and the Marine and its counterpart in the Six Counties. Is there scope for more co-operation at European level whereby both the Six Counties and the Twenty-six Counties can benefit?

Senator Pat O’Neill

I thank the Members of the European Parliament for their presentations. Until the budget is agreed, everything is up in the air. I am disappointed because when the Commissioner Ciolos was here in January, he told us the budget was guaranteed and I was one of the people who congratulated him on that. I have since learned from some of our MEPs that this was not the case and there is now vagueness in that regard.

I take the point Ms Prendergast, MEP, made about Leader, which has done excellent work here. I recently read a report that indicated that for every €3 spent on Leader here, €1 goes on administration. Does it sound like value for money when 33% of the money goes on administration when it could be doing something better in the community?

The greening of the CAP needs to be teased out and we should not get too upset about it because we have been involved with the agri-environment option scheme, AEOS, and the rural environment protection scheme, REPS. Some specific types of farming may not be able to fulfil the greening aspects and will need a derogation. The farm organisations will need to make a major impact with regard to the CAP. They will need to deal with the parliamentarians, including the MEPs present and Members of the Oireachtas. There will be many public meetings and considerable disquiet with many people worried about what will happen. However, unless the farm organisations come out in support of some scheme, possibly a 50% flat rate payment, there will be major disagreement. The farm organisations have a major part to play in this.

Deputy Colreavy and others spoke about large tracts of mountains with low stocking rates. CAP reform is not all about large tracts of mountains. CAP reform is about the many very productive farmers in this country. We need to ensure they are protected and allowed to continue to produce high quality food. The success of agriculture is one of the reasons the country is getting out of its troubles. If we can continue with our beef, dairy and sheep industry, we may have a chance. It is not all about poor land. It is about protecting our major areas of production. When it comes to CAP reform they cannot be seen to be handing it all back.

Senator Michael Comiskey

I welcome the three MEPs. Unfortunately, I missed part of the earlier discussion with the departmental officials. I am very concerned to learn there is a question mark about the budget. We felt the budget was agreed and it is vital that we hold on to our budget. I am in favour of some swing towards higher payments, perhaps not a flat-rate payment, in more severely disadvantaged areas. Unfortunately I must disagree with my colleague, Senator Pat O'Neill. It is very important to look after those in mountainous regions and hilly areas who received very small payments in the past. It is important that in future they receive a little more of the cake. We must maintain people in rural Ireland. Part of my reason for going up to the Seanad was to raise the area of rural resettlement. We see major problems with rural schools losing numbers of children. We cannot allow this to happen. We had a great scheme whereby people moved to rural Ireland. It is another issue.

I am particularly interested in the small farmer scheme. With regard to the rural development project, Senator O'Neill mentioned that 33% or the €1 spend on administration for every €2 in grant payments. I understand there is a major delay, particularly with regard to projects of more than €200,000. They are held up and cannot be paid. The €1 has been spent but people cannot draw down the €2 of grant aid. This must be moved forward very quickly. I am aware of a number of such projects. Many projects of less than €200,000 have been agreed but the money has not been granted. The letter of offer is not being received because of a delay in the system. I do not know where this delay is taking place but I am working on it.

Deputy Michael McNamara

I apologise for being so late. I was detained in my constituency. I thank the MEPs for joining us. What is the status of the negotiations on ecological areas and pooling which would enable farmers to pool their farms with regard to the greening requirements? The socialist group in the European Parliament made a proposal that greening would not apply to farms under a certain threshold size which has not been determined. Is there support for this more broadly in the Parliament?

Chairman

We have heard all the questions and I will allow the witnesses decide who wants to answer what.

Deputy Martin Heydon

I have one more brief question. In light of the targets of Food Harvest 2020 and the very ambitious goals with regard to increases in our production, what concerns do the witnesses have about the impact of the redistribution of CAP funds between member states and in states themselves? How much cognisance do the MEPs take of Food Harvest 2020 which is our national policy? I presume it forms a key component of their views in the European Parliament.

Ms Phil Prendergast, MEP

I will speak first and refer many of the questions to Ms Mairead McGuinness because she is the expert. Senators O'Neill and Comiskey spoke about the administrative costs. I would argue whether theirs is the correct interpretation of the costs. The Leader programme and the positive effect on and interaction within communities throughout the country are successes to be lauded and not to be put into a cost analysis. I know everybody focuses very much on funding in these times but these programmes are working very well. I agree there are hold-ups in allocating funding and I suppose this has to do with processes and due process. One hears all types of excuses because everyone is in a process of some type or another in these times.

Deputy Colreavy asked about co-operation between us and Northern Ireland. All of the MEPs from here and Northern Ireland have met. I met the Northern Ireland Minister for Agriculture and Rural Development last year in an informal setting and we discussed our mutual needs. We have also had more formal meetings. This opportunity to meet exists and can be exploited and expanded and it is very positive. There is probably scope outside the nuances and intricacies of the CAP negotiations for us to build up good relations and all Irish MEPs do their very best with regard to what is important for our economy. We do well when explaining to our various groupings and during discussions the difference in terrain in the various regions of the country and the disadvantage experienced in mountainous areas. People know when we speak in Europe about a region it may not mean a region in Ireland as the entirety of Ireland could be a region when it comes to disadvantage if it is what fits the package for us. It is a matter of interpretation.

Ms Marian Harkin, MEP

Committee members might be interested to know I have just changed my flight to Brussels because I realised I would miss it. This is why I raced out during the discussion. I consider this committee so important I will wait until tomorrow morning.

I apologise to Senator Comiskey because I missed some of his questions when I left. He asked about the budget and how concerned we would be on a scale of one to ten. I would be very concerned about the overall size of the budget and on that scale I would be at approximately seven. Ms McGuinness was right when she stated some countries wear it as a badge of honour. Seeing how the European Council is examining and reacting to other issues gives an idea of its thinking and I will give an example. It is examining what it calls the "macroeconomic conditionality" of issues such as the social fund. This means if a country does not keep within its parameters, whatever they might be, it might lose out on social funds. When I see this type of thinking coming from the European Council I am at least at seven on the scale when it comes to my concern about the size of the budget. When I see countries not allowing the crisis derogation for the European globalisation fund because it would mean more of the money would be spent, and many of the same countries wanting to block the micro-finance initiative, it tells me how they are thinking. Perhaps seven is not high enough on the scale. This is my personal opinion.

Deputy Colreavy asked whether our fellow Europeans are familiar with our difficulties. It is a very difficult question to answer. They are in so far as we inform them, and let me assure committee members we do so. If one ever listens to the European Parliament debates on agriculture one sees per capita there are more Irish MEPs on the committee than any other bar none. It is way above the average. Certainly they hear about the issues. Finnish and Swedish MEPs will speak about the difficulties of the farmers in the north of their countries. Spanish MEPs will speak about the problems faced because of a lack of water. No matter what part of the EU one goes to MEPs will be able to tell one much about the difficulties their farmers face. However, MEPs are reasonably familiar with the problems in Ireland. Deputy Ó Cuív stated we need to put the boot in. I assure him the boot is well and truly in as far as agriculture is concerned. Even the numbers on the committee indicate the seriousness with which we take the issue.

Deputy Colreavy also asked a good question about the scope for joined-up thinking with Stormont. Two of Northern Ireland's three MEPs are full-time members of the agriculture committee and we work with them personally and at committee level. The Northern Irish Minister has met us all. As MEPs, we work together wherever we can, but the Deputy might be right about there being scope for greater co-operation. What is useful on one side of the Border is useful on the other.

Senator Comiskey raised the issue of the Leader programme. The 33% figure seems high, but I cannot comment because I do not know whether it is accurate. Having examined Leader programmes down the years, including the number of jobs they have created in rural areas where doing so is not easy, they are like everything else, in that there are excellent companies and not so excellent companies. In general, Leader companies have done good work. Some have done nothing short of excellent work. Thankfully, Ms Prendergast raised an issue that I forgot to mention. There is a proposal on alignment and the greater role of local authorities. I do not know how Members of the Oireachtas feel about it, but I have serious concerns about its impact on Leader groups.

Although I stand to be corrected, the delay with de minimis aid has arisen due to concerns raised within the Department of Agriculture, Food and the Marine. I am unsure as to where they started, but the Department communicated with its counterpart in Brussels. Our Department was happy to continue as it had been, but it is my understanding that its counterpart in Brussels created the problem. The matter is now before the competition directorate-general, which is openly stating that it does not know what the problem is, that this seems to be a storm in a tea cup and that it will respond if the Irish Government continues with the latter’s notification. It is a difficult situation for the Department. While I want to know why it is doing this and delaying projects, what would it do with the projects that have already received money if the competition directorate-general decided that there was a problem? All MEPs have been involved in this issue. The best that we can do is to tell the directorate-general to deal with the matter as quickly as possible. That it has arisen as an issue is unfortunate. Like all Members, I am dealing with quite a number of projects that have experienced this problem. There are a few in Senator Comiskey’s county. All we can do is try to accelerate the process. Many people are working to that end.

I missed the end of the last round of questions. Senator O'Neill raised the question of farming organisations' views. This is a difficult situation, but I agree with the Senator. Not only do Oireachtas Members need some direction, but MEPs do too. We are the people who will amend the legislation and press the green, red or white button on the proposals before us. No more than the Department, farming organisations tend to be helpful in providing information, but it is important to get a coherent message. We need to bite the bullet, although it will be difficult for everyone involved. When it happens, it is important that we not use it as a political football. I can say this because I am outside the political arena in Ireland. We should try to achieve the best outcomes for the country as a whole as well as for individual farmers. We should also consider the balance between pillar 1 and pillar 2. Farming organisations have a role to play in this regard, but not for one moment would I underestimate the extraordinary difficulty in reaching those decisions.

Ms Mairead McGuinness, MEP

I thank committee members for their questions and comments. Deputy Moynihan asked about the budget. I am concerned by the level of complacency. If we have achieved nothing else, I hope that we have ruptured the sense of complacency around the budget. As elected representatives, Oireachtas Members have a role to play as parliamentarians linking with other parliamentarians.

I will be a little blunt. When I listen to debates on Europe, I always get a sense of "Us" and "Them" as if things get done to us by other people. We are a part of the European Union. The phrase "Put the boot in" was used. Put the word in. Debate and engage for change. Sometimes, there is a danger of becoming the victims of a process in which we are equal partners. Members have a role in speaking with parliamentarians in the UK, the Netherlands, Germany and Sweden and in engaging with them on the question of why agriculture and cohesion policies deserve and need adequate budgets. In terms of the politics of Europe, we need to rebuild solidarity. It is not a good place at the moment. From an Irish perspective, the lack of solidarity is bad.

In terms of Deputy Colreavy's questions, I take issue with the suggestion that Ireland is always different and issues here are more difficult. There are smaller farmers and more difficult positions in other member states. Instead of portraying ourselves as different and apart, we need to find member states that share our problems. This is how one builds alliances. An official made this point. As much as we need others to understand our difficulties, we need to understand theirs so that they will take our issues on board. There is room for greater co-operation North and South. There is a great deal of it currently, but it is important to remember that the UK Government sets the budgetary tone. While we have great engagement with Northern Irish MEPs in terms of agriculture, I would like to break the barrier in the UK on the budget issue. That is key to this policy. We have reached a certain point, but more can be done.

Ms Harkin and Ms Prendergast have commented on the Leader programme and I will leave it at that.

Deputy McNamara raised the issue of ecological focus areas, a new idea from the Socialist Party. I hope that I am paraphrasing it correctly. If two member states have more than their required 7% and share a corridor of an ecological focus area, they need to have a smaller percentage. I have confused members because I have confused myself. This idea is a complexity too far. I have a different idea and I want to voice it at this meeting because some people might listen. If we want to value public goods, we need a market for them. Currently, we have no mechanism to ensure one. I suggested to the Commission that it should provide for a market in ecological focus areas should the other idea become the norm. This market will develop anyway. If 20% of my farm is wetland and Ms Harkin as no wetlands on her productive farm, what is to stop us trading ecological focus areas? It would establish a market for public goods. I am approximately 20 years in advance of current thinking, but it is no harm that people view my suggestion as a possibility. Perhaps Deputy McNamara's point is related.

We are aware of and support Food Harvest 2020, given its importance for Ireland. We need to ensure that market measures and so on are in line with what we are trying to do. However we manage to reformulate the entitlements system, there must be no sudden shocks to it. I would like to scotch the idea that this is a question of small versus large farmers. It is about farmers with high and low value entitlements. Some large farms have low value entitlements and some small farms have high value entitlements. Contrary to the efforts to simplify this issue as large versus small, it is anything but simple and calling it such would not be a fair assessment of the debate. There are great linkages between us as Members of Parliament, including between Labour Party and Independent colleagues, myself and Mr. Liam Aylward, MEP, my Fianna Fáil colleague. We understand the agriculture issue is important for Ireland, and we also know it is important for Europe. That is why Ireland needs to be part of it and not different from it. Sometimes the idea that we need special help and protection diminishes our arguments about a strong Common Agricultural Policy. I am confident the officials and our Minister have engaged fully with the Parliament, and my colleagues from many member states very much appreciate that. It is how we will do business. I thank the committee for inviting us before it.

Chairman

I thank the delegation for the interaction which has taken place this afternoon. This is the opening day of our session on this issue but we can see quite clearly that Department officials, MEPs, the Minister and those across parties in the committee are unified in seeking a maximum budget, in so far as that is possible. To clarify, Commissioner Ciolos stated he had agreement within the Commission on the budget and he flagged the point that the next stage was to get it through the Council. That is significant. The Department referred to the three principles and the Commissioner has sold the issue to the Commission on those principles.

There are some differences of opinion among us regarding redistribution; it is the one area that will divide not just political parties but farm organisations. It is a challenge but the last point made by Ms McGuinness is that this issue cannot just be divided into big and small. It is not quite as simple as east and west either. Coming from 700 feet above sea level in Wicklow one might appreciate that. There are quite a few diversions and we must get together and come forward with some workable solution. The approximation idea that may work from state to state can work within countries.

Our biggest challenge in fora is to convince Europeans that a strong CAP budget is, as Ms McGuinness mentioned, a budget for growth and jobs. Not only that, it is also important to ensure that as much food as possible is produced within the EU at an affordable level. That is as true now as it was when the Union was initiated, and it will spread the cost among those who pay the most tax. The American alternative is coupons given to poorer people. As the biggest net exporter of food, we must persuade our colleagues on that basic principle. A good CAP budget is needed for growth in jobs in rural communities so that food can be produced sustainably and affordably. I have concerns about the budget and it is a good day's work to ensure nobody is complacent about it. I also have concerns about what will happen politically within some of the bigger member states, as those processes could affect timelines.

I have one question. Beyond the end of next year, is it possible there could be a deferral to January 2015? The Common Fisheries Policy must commence on a certain date.

Ms Mairead McGuinness, MEP

It is possible there will be a deferral if the budget is not agreed. We would certainly roll over direct payments but the problem is rural development, where there would be a complete cessation of activity. I caution against this, as it would be bad politically and psychologically for Europe to fail to agree a budget. We may see the Parliament flex its muscles, and it would be good for this to happen in a positive way. A German colleague and member of the EPP group, Mr. Reimer Böge, leads on the budget, and he has indicated that the Parliament is willing to flex its muscles on this and not just give in. The end of the year will be worth watching.

Chairman

I was not implying that it would be an advantage but rather asking whether there was a possibility. I thank the members for their engagement and the MEPs for their forbearance in staying with us.

The joint committee adjourned at 4.55 p.m. until 9.30 a.m. on Thursday, 3 May 2012.