The most crucial thing with which we are involved is the budget. If one does not have money, one will not get out of the traps to change a car, build a shed or anything else. As was said in June and July last year, it looked like the Commission threw out an indicative figure for the budget. The problem is it only has an advisory role. The Parliament has a say and the Heads of State are those who have a real say. That is why I said in the presentation the Taoiseach has a critical role to play. The relationships he builds with the prime ministers of Germany, France, the UK and other countries are important.
Some countries like the UK and others will always try to cut the budget but we have to make sure the Taoiseach is very clear. As Deputy Colreavy said, the Taoiseach needs to emphasise that the CAP is vital for employment across Europe. At a time when the rate of unemployment is 25% in Spain and jobs are threatened, it is essential that the CAP is protected. It is important that Heads of State come out openly and say that for reasons of food security, employment and the public good, the protection of the CAP budget is important I expect the negotiations will take place in late November or December. The French election will be over and I will not presume the result. The new President of France and Prime Minister of Germany will be in office. Decisions have to be made early next year or the opportunity will be missed.
We are concerned about greening. Like every other bureaucrat I have ever met, the Commissioner started by saying things would be simplified. Hundreds of pages of extra bureaucracy were produced which referred to turning one scheme into two and new cross-compliance rules. The Commission's calculations estimate the ecological set-aside will result in a drop in food production in Europe when we are told we need more food to feed the world. The thrust of the greening proposals run counter to the proposals to feed Europe and the world.
There is increased pressure on water in South America, Australia, North America, and in France and Spain at the moment. There will be pressure to feed the world's population and Europe has a duty to feed its population. The CAP has served the European taxpayer very well over the past 50 years, something which is often missed. European taxpayers pay less than most others in the world for food as a percentage of family income. The weekly household spend on food is between 11% and 13% in Europe but in other parts of the world it is between 25% and 50%.
There are benefits for the public and employment. We propose greening should take account of the fact that one can fly into Dublin, Shannon or Knock and drive hundreds of miles in any direction. It is a perfect example of greening. We have permanent pasture, hedgerows, biodiversity streams and stone walls. Compared with most of the rest of Europe, we have delivered on greening which needs to be acknowledged.
We need the flexibility that will acknowledge what has been done and not set new theoretical targets. That is why we refer to a menu of options which would mean a country like Ireland with higher environmental standards than the rest of Europe, never mind the rest of the world, would be acknowledged. We should not reduce production and impose extra costs.
A few Deputies referred to change. Any change needs a very long timeframe. The Commission proposed a huge jump in 2014, namely 30% of greening and 60-40 flattening. For farmers with substantial borrowings and investments it would result in a 50% or 60% cut in payments in year one. That would have an effect on their investment. Some of them with substantial borrowing would be pushed out of business. The banks are already reflecting a concern. Senator O'Neill referred to the cattle sector. Many of those farmers, if they had not a good single farm payment, could not go to the mart to buy because the bank would not allow them do so. We have to bear in mind the effect of the timeframe on production.
Some speakers suggested reducing percentages substantially and looking at the option, as Senator Comiskey said, of taking a little off the top and adding it on to the bottom at a slow gradual pace and minimising the disruption. Commissioner Ciolos's proposal will undermine our productive base. He is coming from a country that did not have the benefit of the Common Agricultural Policy, CAP. Romania and Bulgaria entered the system too late and farming there shows all the signs of not having a properly funded CAP. We benefited substantially from single farm payment and rural development funding which gave us our level of economic activity and investment, whether in farms or in stock levels. Many farmers in Romania and Bulgaria still use horses and carts because they did not have the benefit of those additional payments over the years. There seems to be a move to pull us all down to the lowest common denominator. We have a competitive advantage because of the investment we have made. By leaving that where it is, we will grow our dairy, beef, sheep and grain production but if we undermine that base we will damage production. There is a move to level everyone down, which I do not believe in.
When we make this point to the Commissioner he says, "Go regionalisation". We know the damage that would do in different parts of the country, such as Deputy O'Mahony's or Senator Comiskey's own areas. Regionalisation would wipe some lads out. That is why we are trying not to go down that route. We are trying to get the flexibility that will adapt us to what is going on. Rural development measures can be used to bring up some farmers' incomes. Deputies O'Mahony and Colreavy and Senator Comiskey said there are farmers on some land types who do not have the capacity to increase production. We must use the rural development measures to bring up their income and leave them at a sustainable level.
We are, collectively, trying to wear the green jersey. This is about jobs and exports. At a time when the Irish economy is under such pressure, we have a collective responsibility not to damage the productive base and not to damage jobs and exports. The economy is on shaky ground and the last thing we want is some event, whether internal or external, that will do serious damage and result in a drop.
The Government has an important role to play. I agree that the Taoiseach should be suggesting that the CAP cannot be touched. We must fight strongly to maintain the rural development policy. We have a strong history in this regard. I remind the Minister and the Government that even in the 1980s, when money was scarce, we paid disadvantaged area payments. This is not a time for the Government to cut the Leader programme. It is a time to support rural development and to send a signal to Europe that we want to have a properly funded rural development programme. That is very important.
The Commissioner likes the flat payment model, but no two farmers are the same. One farmer will borrow money to build sheds and to put cows in calf while another man, whether because of age or other reasons, will decide not to do so. One cannot give the same level of support to a lad who decides his business is not producing food as to the man who is creating employment and exports and is making a huge contribution to the economy. The farmer who builds the shed, puts the heifer in calf, puts the ram with the sheep or milks cows creates substantial employment and added value to the economy. We have to protect that.
We are trying to get a compromise with the Commissioner and we are working with other farming organisations, as Deputies have suggested. We sat down with the French and the Austrians. On Monday next we will bring some of our county chairmen, who represent our 29 executives, to meet the president of the German organisation. We have met the Austrian farming organisation. We work with the other farming organisations to find like minded countries. There are 27 members in the EU. Of them, 12 are new member states which are already on a flat model. Of the 15 other member states, about ten, like us, are on the historical model or variations of it and five are not. Of those ten, Ireland, Austria, France, Belgium, Holland, Denmark, Italy and Spain have serious problems with the Commission proposals. There is an alliance for change and for productive agriculture to create employment.
I understand what was said about active farmers. My view of an active farmer is a lad who is willing to work. I do not care what off-farm job he has. That has nothing to do with it. Whether he has sheep on lowland or a hill, or cattle is not important so long as he is a working farmer and is not someone who looks out the window. It is important that farmers be involved and creative. Every member of the committee referred to the budget. We want to justify the budget. It can be justified on the basis of food security, and feeding half a billion people with top quality food. An active farmer is the man who is working to create employment, which is very important. We must support the man who is willing to invest in his business.
Deputy McNamara referred to greening. It is too bureaucratic at present and will restrict production. Some of the Commission's more ludicrous proposals are even welcomed on the basis that by reducing production they will increase prices. That makes no sense at a time when there is pressure to feed the world's population. Greening must acknowledge what we have done in Ireland. I have spoken to Mr Georg Håusler, chef de cabinet to Commissioner Ciolos, a few times along the lines of Deputy McNamara's proposal. I told him that in Ireland we have the highest level of permanent pasture in Europe. Most countries have less than 30%. We have three times the European average. We have more biodiversity and more than ecological set-aside, if one includes all our regions. He would not consider that. I proposed that we could tick the required box because the country is well above the level of permanent pasture. He would not agree and said every individual farmer must comply.
This brings us back to the question of farmers below the EU greening average. Commissioner Ciolos is totally committed to greening. He is determined that this is how he will make his mark. He says every farmer, whether he has half a hectare in Romania or 2,000 hectares in the Czech Republic, must take on some level of greening. Some of it makes no sense but that is where it is going.
Pooling farms in some kind of partnership is not a bad idea. We need to do something on that. We have made several proposals on taxation and other areas. There was an inequality, even in last year's budget. A dairy farmer who had a partnership got a tax exemption while a beef farmer did not. That inequality needs to be dealt with immediately. If we want to see partnership, whether of tillage farmers or sheep farmers, we must encourage it and not simply make a rule that covers only a small number of farmers and excludes most. That needs to be dealt with.
It cannot be repeated too often that the budget is what this game is about. We talk about redistribution from the 15 old member states to the east, but there is already redistribution. Cutting the budget will create a level of discontent in eastern Europe, where there is a huge bloc of countries, led by Poland, that will have a big influence on the budget. They are gaining a certain amount under the Commission's proposals of June and July 2011. If the overall budget is cut, every gain they expected to get will be gone before they start and they will be starting on a lower base. There will be some row if everyone is substantially cut before we start. The budget is imperative and we need to focus on that first.
The Commission made the proposal to stand still. The Parliament is much more supportive than it was a few years ago. I appreciate, Chairman, that MEPs attended the joint committee recently. We work closely with all MEPs. It is important that they are out front. It is repeated again and again in the Parliament that the CAP must be about food security and employment. In that context, we must defend and prioritise the CAP budget.
Two areas are being spoken of with regard to young farmers. The first is a top-up on the level of payments. The second is substantially higher rural development grants. Farmers under a certain age who are starting up and do not have the opportunities some of us had to invest in various modernisation schemes would get a higher level of grant, plus a top-up. Across Europe, there is not as much support for this as we would like. We have strong representation in Brussels and we have inquired about an early retirement scheme. The emphasis seems to be on bringing in young farmers but the same effect can be achieved if this payment is increased and they get a higher level of grant. National legislation is very important here. Agricultural tax relief for the passing over of farms must be retained.
I agree that there are complications regarding restricted areas. One concerns stocking density. We have had several meetings with the Minister for Arts, Heritage and the Gaeltacht, Deputy Deenihan, to try to have those restrictions reduced, at the very least. There must be compensation. I agree that there is a long accepted agreement in Ireland between Government and farmers that there should be no designation without compensation. REPS, the agri-environment options scheme, AEOS, and coupling all add to that. That is why it is imperative that an AEOS scheme be announced immediately for those areas. They are under restrictions that force costs on them. Under the new scheme, as was mentioned by Senator Comiskey, some of the higher payments will be reduced gradually, but under Pillar 2, there should be a much higher payment in the designated areas. Areas are designated as less favoured, more severely handicapped and hill areas, and the gap between them is not adequate. There should be a substantially wider gap to allow a higher payment for hill farms and designated areas. I know there is not a magic wand to make extra money, so adjustments must be made in other areas to achieve this. I agree about bureaucracy. We need what flexibility we can get.
Deputy Phelan does not live too far away from me and she knows the financial pressure many people are under. Most farmers invest in their business and have a commitment to banks relative to that investment. Any sudden change would have a huge impact on the money they spend in the local village, of Graiguenamanagh for example, and with builders or on the employment created through local marts, meat factories and so on. It is important to support that economy. This is all about jobs and exports.
In reviewing disadvantaged areas, it makes no difference whether a hill is in Graiguenamanagh or Mayo. Hills have the same problems wherever they are. We must retain all the areas currently designated. Huge work was done to have areas designated, and Senator Comiskey was heavily involved in much of that work. There are hilly areas in the Chairman's own area of south Roscommon where farmers would gladly swap two acres for one. It does not matter where the land is. A hill is a hill and it must retain its designation. That is very important.
To support new entrants we need a top-up for young farmers. Reference was made to the use of the national reserve for a farmer who has increased production in the meantime. The Department's figures show that the value of production of dairy, beef, sheep and grain by farmers who receive €35,000 in single farm payment, and who will take the biggest hit, is far greater than the amount of single farm payment. There is a huge percentage of production and economic activity in those farms and we do not want to undermine that. However, people who have moved from one side to the other and ceased production should take a reduction in payment. For those who have started or increased production, the national reserve should be able to deal with that.
Senator Pat O'Neill also lives close to me. I agree with him that Commissioner Ciolos's proposal would lead to a few very large factory farms and would undermine the family farm structure. Many family farms that are dependent on the €20,000 or €25,000 single farm payments would cease production and we would have the New Zealand model of every farmer milking 550 cows. The effect of that on jobs, employment and rural society would be devastating. We have a vital national interest in protecting our family farming model. A small number of farmers have no indebtments. If they have a level of production the national reserve should deal with them. We must do everything that can be done.
The programme for Government promised to reduce bureaucracy but neither the Government nor the Commission has done much about this. It needs to be tackled. We could take out bureaucracy and reduce costs and create employment. Everyone can see that costs are rising. External factors have led to a rise in the cost of fuel, fertiliser and feed, which are the three big agricultural inputs, and this is putting huge pressure on farmers' costs. The Government must be serious about reducing bureaucracy. Unnecessary bureaucracy and cost must be cut out. Value for money must be sought. We are all in favour of protecting the environment and of good animal welfare. We sell our food around the world based on the highest standards. However, unnecessary levels of bureaucracy that add cost should be removed. The greening proposals, as currently exist, create a huge level of bureaucracy.
