JOINT COMMITTEE ON EUROPEAN SCRUTINY díospóireacht -
Thursday, 13 Jan 2011

Six-monthly Report on Developments in EU: Discussion with Department of Agriculture, Fisheries and Food

Chairman

The final item on the agenda today is a discussion with the Secretary General of the Department of Agriculture, Fisheries and Food on the Department's six-monthly report on developments in the EU, from January to June 2010. On behalf of the committee, I welcome Mr. Tom Moran, Mr. Aidan O'Driscoll, Mr. Cecil Beamish and Ms Corina Roe.

Before we begin, members are reminded of the long-standing practice to the effect that Members should not comment on, criticise nor make charges against a person outside the House or an official, either by name or in such a way as to make him, her identifiable.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses 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, persons or entity by name or in such a way as to make him, her or it identifiable.

We will now take a short presentation from Mr. Moran. This will be followed by a question and answer session with members. I am sure members will wish to pose questions on various aspects of the presentation.

Mr. Tom Moran

I welcome the opportunity to address the committee on the six-monthly report of the Department of Agriculture, Fisheries and Food on developments in the EU for the period January to June 2010 under the Spanish Presidency. As members are aware, the Department is very active in the EU arena as both agriculture and fisheries are governed by common EU policies - agriculture through the Common Agricultural Policy (CAP), and fisheries through the Common Fisheries Policy (CFP). The EU also plays a key role in other areas, including food and feed safety, animal health and welfare, international trade, forestry and plant health.

The Department submitted 77 information notes to the Oireachtas in 2009 for its consideration. This number was down considerably in the first half of 2010, the period covered by the report, when only 20 information notes were submitted. This was due to the Commission commencing its new term during the period covered by the report and, as it alone has the right of initiative, only a small number of proposals were presented. The European Parliament also commenced its term of office in early 2010 and there was not much time to progress proposals.

Notwithstanding the reduced number of Commission proposals, the theme of the Spanish Presidency was "Agriculture and Food, a Strategic Sector for Europe" and the Presidency pursued its theme to good effect. It held debates on the international competitiveness of the EU agrifood model and on the Commission communication on the better functioning of the food supply chain in Europe. Following these discussions, the Commission established a high level forum for the better functioning of the food supply chain to be assisted by a "sherpa" group. The Minister for Agriculture, Fisheries and Food, Deputy Smith, is a member of the forum, which will examine the challenges facing the agrifood sector such as the volatility of prices and hikes in production costs. The forum commenced work at its first meeting in November.

In tandem with this, a Commission-led high level group on milk examined the medium and long-term challenges the industry will face in the aftermath of the abolition of milk quotas which will take place in 2015. In June of last year the group produced a report which was accompanied by seven recommendations. Some of these recommendations, which are concerned with contractual relations, transparency along the food supply chain and producer and inter-professional organisations, were subsequently addressed in a proposal from the Commission in December. However, this proposal will have very little impact in Ireland where the processing structure is based on co-operatives.

The Spanish Presidency was the first to operate fully under the Treaty of Lisbon which entered into force on 1 December 2009. The Presidency therefore focused considerable effort on the implementation of the treaty. The treaty introduces significant changes in legislative procedures in the area of agriculture and fisheries. The European Parliament now has full co-decision powers with the Council on most legislative matters in these areas. This has an impact on how the Department conducts its business. In response, the Department has enhanced its engagement with Irish and other MEPs.

We have held a number of well-attended and well-received briefing sessions with the MEPs in Brussels and I have bestowed upon an officer from our representation in Brussels particular responsibility for liaising with MEPs on agriculture legislation. I am aware that the committee and both Houses have also received additional powers under the treaty following the introduction of the subsidiarity check provisions. I note this House has been active in this area and has already submitted papers to the Commission on pertinent issues and most recently has produced a report on the future of the CAP. This is a welcome development.

In EU terms, Ireland is are a small country and has only seven votes. However, the agriculture and fisheries industries are vital to our economy and we must, therefore, build alliances and use every avenue to put forward a coherent and robust Irish position. I am aware that officials from the Department have already briefed the committee on several occasions on EU matters. The Department is available at any time to provide whatever support is required in the future.

Despite the lack of new proposals, the Presidency concluded 15 proposals and progressed many others. I am aware that members have received copies of this report and, therefore, I do not propose to go into detail on all of the proposals. I will instead focus on the two major EU common policies - those relating to agriculture and fisheries - which come under the remit of the Department. Both of these common policies are undergoing review at present.

The debate on the CFP commenced in April 2009, when the Commission published its Green Paper, thereby launching a process of consultation with member states and stakeholders and a broad public debate on the future fisheries reform. The Department conducted its own consultation process with stakeholders, which was co-ordinated by Dr. Noel Cawley. The then Minister of State with responsibility for fisheries, Deputy Killeen, addressed a joint meeting of this committee and the Joint Committee on Agriculture, Fisheries and Food in November 2009. On the basis of all consultations, a comprehensive report was drafted and submitted to the Commission in early 2010. The review was discussed at various EU meetings during the first part of 2010 including at Council, where the Ministers debated the options for change. These included a "no policy change" scenario.

The European Commission held a major conference on fisheries reform last November and is expected to bring forward its proposals for amending CFP rules in June 2011, with a view to these entering into force in 2012. The Department intends to continue its close collaboration with the Federation of Irish Fishermen and the other stakeholders for the duration of the reform process in order to put Ireland's case forward and convince other member states and the Commission to strengthen the current policy in line with Ireland's submission on the reform of the CFP.

The CAP, the other EU common policy under the remit of the Department, is also undergoing review. The current system of direct payments and rural development funding will run until 2013 and will continue to be funded under the current financial framework. However, discussions have been ongoing for a number of Presidencies on what shape the CAP might take after 2013. The Spanish Presidency focused on market management measures and adopted conclusions which attracted the support of the majority of the Council in March. The conclusions noted the need to retain an effective safety net for producers, to examine other market measures and to explore the benefits of risk management measures, such as insurance schemes and mutual funds.

The discussions on the future of the CAP were also mirrored in Ireland. The Minister, Deputy Smith, established a consultative committee and this has been actively engaging with stakeholders. At the invitation of the Minister, Commissioner Ciolos visited Ireland in October and addressed a stakeholders' conference. He also addressed the Joint Committee on Agriculture, Fisheries and Food at that time and the unity of purpose among Deputies and Senators regarding our ambitions and objectives for the CAP was very notable. That unity of purpose will prove extremely useful as the negotiations on reform of the CAP progress.

Last November, the Commission presented its communication on the future of the CAP which is entitled "The CAP towards 2020". The communication will be discussed in Council and by the European Parliament in the early part of this year. The Hungarian Presidency is planning to reach Council conclusions on this communication in March. Legislative proposals will be presented in summer 2011 with a view to reaching agreement between the European Parliament and the Council in 2012, although there is a possibility that negotiations may run on into the Irish Presidency in the first half of 2013.

The Commission has launched a public consultation process regarding an impact assessment of proposals contained in "The CAP towards 2020" and the results of this process will feed into the final texts. We have urged Irish stakeholders to submit their comments by the deadline of 25 January next. This point was reiterated by a senior Commission official when he addressed the consultative committee in November. In the interim, the Department will be feeding into the debates at Council and in the European Parliament.

The Department has been focusing on how the agrifood sector can contribute to Ireland's economic recovery. In collaboration with the Irish agrifood sector, we published the Food Harvest 2020 report. The latter sets out an ambitious but realistic strategy for smart, green growth in the sector over the next ten years.

Ireland's view is that the agriculture and food production sector is hugely important in the context of Europe's and Ireland's economic and industrial recovery. It contributes to all three priorities of the EU 2020 strategy, namely, smart, green and inclusive growth. Its importance has been acknowledged in the conclusions reached by the Heads of State and Government at the spring European Council last year and in the recently released EU budget review document produced by the Commission. For Ireland, the future CAP will determine the policy framework for the successful delivery of our Food Harvest 2020 strategy. It will be of vital importance to ensure that it underpins the strategy. In the circumstances, the Department's priority is to ensure the proposed reform of the CAP results in a strong and properly resourced policy in the years ahead. There is good support for this position among other Agriculture Ministers in the EU Council. The Minister has made clear that it is in Ireland's interest to have the current two pillar structure continued with a primary focus of pillar 1 on the support of farm income and the main focus of pillar 2 on the development of agriculture in rural areas. There has been a high level of activity and debate regarding the future CAP among member states over the past two years. The Minister and the Department have participated actively in these discussions with a view to building up alliances at both ministerial and official level and pressing the Irish viewpoint at formal and informal meetings of EU Agriculture Ministers and at bilateral meetings with the Commissioner and with Ministers and officials from a number of other member states. These contacts, which are essential in a negotiating process are proving productive in deepening our understanding of each other's positions and in establishing support for the Irish position in the negotiations.

The debate on the future of the CAP is heavily influenced by the parallel discussions on the next EU multi-annual financial framework 2014 to 2020, which have just commenced with the publication of the Commission's communication on the EU budget review. Negotiations in this area are headed by the Department of Finance and we are liaising closely with them in this regard. The Department has recently submitted an information note to the Joint Committee on Agriculture on the agriculture aspects of the EU budget review. Legislative proposals are expected in the middle of the year.

This represents a snapshot of the main EU related developments in the first six months of last year, together with a look forward at some of the main policy issues for the Department in future months and years. I will be happy to answer additional questions from committee members.

Senator Eugene Regan

I thank Mr. Moran for the presentation. We are dealing with the first half of 2010. Why is the committee not dealing with legislative proposals for the second half of the year?

Chairman

We have not received those reports yet.

Senator Eugene Regan

The six-monthly report is dated 30 July 2010.

Chairman

We have not received the report for June to September yet.

Senator Eugene Regan

I have two questions about the report. The first relates to the section dealing with the international competitiveness of the agrifood model. One issue is the position of the farming organisations vis-à-vis other elements of the food chain. I do not know whether that refers to the strength of supermarkets and the discussions last year about examining the issue of fair competition between supermarkets and the primary sector. Will Mr. Moran comment on that?

My second question relates to climate change legislation and guidelines on the farming sector. There is nothing in the report about the impact of international or EU decisions on the farming sector and how they could restrict it. Mr. Moran mentioned that the Department has outlined the agrifood sector's contribution to Ireland's economic recovery in the Harvest 2020 report. My question relates to changes at European level regarding climate change. The Climate Change Response Bill 2010 is being considered today. If it were passed in its present form, how would it affect the Department's assessment of how the food sector can contribute to economic recovery? The report by Teagasc on reductions in carbon output suggest a serious impact on the cattle population, in particular. How will Mr. Moran's assessment of the importance of the agriculture and food sectors to economic recovery be impacted by these proposed changes, which go beyond the guidelines agreed at European and international level?

Deputy Michael P. Kitt

I welcome Mr. Moran and his officials. I refer to two issues - the budget review and the CAP post-2013. There are indications that there may be changes. The EU Agriculture Commissioner reportedly favours smaller producers. Is that still the case? If so, there will be changes. With regard to our presence in Brussels, Mr. Moran referred to officials assigned there but there is great competition among representatives there. Some business organisations and private bodies have good representation in the EU. Are we addressing that?

The Climate Change Response Bill 2010 is very different from the Bill drafted by the Joint Committee on Climate Change and Energy Security. It seems to be a case of, "This is it but we can change it". Business and agricultural interests have concerns about the Bill but it is a little different from the committee's Bill.

What engagement is taking place regarding the shape of the CAP?

Senator Paddy Burke

Senator Regan referred to the Department placing great emphasis on agriculture playing a big part in our economic recovery. What support can the Department give to co-operatives and the dairy sector? Where will growth emerge? The Harvest 2020 report contains recommendations but the Department is not taking a great lead in this regard. It should be upfront and it should challenge co-operatives, manufacturers and processors to develop new products and new markets. Will the Department play a leading role in this? How committed is it to research and development in conjunction with co-operatives and processors?

Chairman

How has Ireland's submission on the Common Fisheries Policy been received?

Mr. Tom Moran

That was a fine range of questions and I will deal with them as best I can. This is a six-monthly report for the first half of 2010, which followed a particularly difficult period for the dairy sector. I recall the Commissioner talking about prices rocketing for consumers but coming down like a feather. The producers were not getting - this applies throughout Europe-----

Chairman

I apologise for interrupting Mr. Moran but Deputy Kitt and I have to go. Perhaps Senator Burke will take the Chair.

Senator Paddy Burke took the Chair.

Mr. Tom Moran

There was a general view when things got difficult in that period, during which time the dairy sector was the cockpit, that the chain was not functioning as well as it might for producers. The pain was not being shared down the chain. Equally, in the good times gain did not travel up the chain. It is in that context the Commission set up this group. We were pleased the Minister was asked to participate. Members will recall that at that stage milk prices in Ireland were hovering around 20 cents, which caused great difficulty for our producers. There was more than just a feeling at that time that passing on the pain to consumers might have provided a bounce in consumption levels. The general view - this was discussed on numerous occasions at EU Council level - was that something needed to be done to parallel the work already being done by another group on competitiveness in the agri-food chain. That work is now under way and the group had its first meeting in November last year, which is important. The matter had a parallel outing in the high level group set up by the Commission specifically to deal with the milk sector. One area which it examined, which has now translated into legislative proposals, is the ability of producer groups to band together to gain the requisite strength to operate within the market and how this would gel with competition law and so on. The relevance of some of that in the Irish context, in particular in the milk sector, is limited because our milk is produced on a co-operative basis. It is relevant in some member states which have large private buyers of milk.

The issue of climate change, which was touched on by all those who spoke, is clearly extremely relevant and central to everything. Climate change was addressed in the Food Harvest 2020 report. If one stands back from the bigger issue of climate change, leaving aside the science of it, what needs to be considered is how we reconcile the accepted increase in population, the demand for food worldwide and our ability to produce it and the accepted challenge that climate change, both mitigation and adaptation, brings to us. They are the two main prongs of this challenge. Food Harvest 2020 recognises the challenge and suggests, as one of its recommendations, that an impact assessment be carried out in regard to how this is to be reconciled.

We are carbon efficient in the food sector, which is important. We can and should increase our food production and output because we do it in a carbon efficient manner. We are concerned, for example, about carbon leakage, namely, that if we in some way constrain our output it will be produced elsewhere to meet population and demand worldwide. Food will be produced elsewhere by countries that are less carbon efficient. These issues need to be taken into account. Account must also be taken of the fact that research will be crucial in this regard. We have joined an international alliance on research, led by New Zealand, to ensure our food production is adapted to minimise the carbon effect. Research already in place shows that a reduction of 4% in carbon can be achieved by changing practices.

The Climate Change Response Bill 2010 is being discussed elsewhere in the Oireachtas today. While the Bill sets broad targets, it does not get into the details of how these targets will be reflected in the non-traded sectors. This issue has yet to be addressed. To address it, the Bill provides for sectoral studies and impact assessments, which presumably, will be carried out. The importance of the agriculture sector to the economy and the wider issues to which I have referred in terms of increased demand and our ability to produce low carbon food for export, the importance of food and agriculture to the economic recovery, will have to be taken into account. There is provision in the legislation for this to be taken into account. Addressing climate change is a challenge. It is a challenge when it is placed side by side with the potential we have to produce and export food on a low carbon basis. The legislation currently being discussed provides for that to be taken into account in the future. At that point, there will be considerable further dialogue on how these issues can be reconciled.

Senator Eugene Regan

Before Mr. Moran moves off the subject of climate change, I will ask a brief supplementary question. The six monthly report states that new standards should not be introduced without adequate impact assessment. Mr. Moran appears to suggest that if this Bill were adopted the impact on individual sectors would be assessed. Surely, the principle is that an impact assessment of the measure would be carried out before it is proposed or adopted. Has the Department done an impact assessment of the proposed legislation on the agricultural sector and the Department's plans and objectives in relation to ensuring the agricultural sector is not handicapped unduly by adopting standards which are above international or, at this point in time, European standards?

Mr. Tom Moran

Teagasc has worked on the possible effects of restrictions if applied directly to agriculture specially in relation to live stock production. That work has been published and is well known. The point I make is that the Bill coincides with the Food Harvest 2020 report in that both provide for impact and sectoral analysis in regard to whether and how they would be absorbed into the sector. There is provision in doing so to take account of the economic affects of applying sub-targets to the sector. In that context, provision is made that the Government may request the appropriate Minister to draw up sectoral plans. This coincides with the 2020 report. As such, safeguarding the economic development and the need to take advantage of the opportunities we now need, will have to be taken into account. That is how we propose to proceed in the event of the Bill being enacted.

Senator Eugene Regan

Does Mr. Moran see any conflict between the new parameters set out in the Bill and the Department's objectives for the agricultural sector?

Mr. Tom Moran

I see a definite challenge, but not necessarily conflict. I see a challenge in reconciling at broad international level the increased demand for food and Ireland's ability and potential to produce food for export. I do not see any conflict in that because there is nothing in the Bill which translates the broad targets into the sectoral areas. In other words, this is yet to be addressed and in doing that, provision will be made to take account of the economic effect of whatever measures will cascade downwards. In that context and at that stage, the full effect of any measures being considered will be taken into account. Part of the Bill provides for an expert group that will look at the way in which the targets are translated to sectoral level. Also, the agricultural sector has an ex officio member in that group, namely the director of Teagasc. Therefore, we are confident that the full implications of any translation downwards of overall targets will be taken into account.

Senator Eugene Regan

Should that assessment not have been done before the climate change legislation was considered? Would the Department not have preferred that an assessment of the full impact or implications on the different sectors would be done before any measures are adopted? The Department must work with whatever is adopted and it can work out and study the implications, but it seems foolhardy to bring forward legislation where an assessment has not been carried out and where the full import of such strictures will apply on each sector. This will create a major problem for the agriculture sector.

Mr. Tom Moran

Impact assessments have been done by the Department of the Environment, Heritage and Local Government and we have been fully involved and engaged in that process. We have also been engaged with its 2020 process of setting out the targets and recognise fully that there are climate change related constraints, particularly when account is taken that some of the expansion is in the livestock sector. Against that, part of the 2020 strategy that we have elaborated, which has had a huge buy-in, involves marketing a sustainable approach to the production and processing of food. We are convinced, as are Bord Bia, processors and marketeers, that this will be crucial in the smart element of the development of the food sector down the road and for the sophisticated markets into which we sell our food. In recent years, we have moved back from having half of our significant beef output being sold on third country markets to being sold in the European Union. Half of these exports are to the UK and the rest are to the high value areas of Europe. I do not mean to denigrate our non-EU markets, but that kind of sophisticated market is a demanding, sophisticated consumer market and sustainability in that area will be a key feature of how product is sold and marketed. It will no longer be possible, if it ever was, to simply call oneself green and stick a shamrock on something and sell it. Our product must be backed up with measurable carbon footprint information throughout the chain, from the farm on.

We produce that way currently. Our REPs and new AOS programme take a sophisticated environmental approach, but more needs to be done. If we are to build on the brand Ireland approach, particularly in meat produce, which will be to the forefront in that element of the 2020 programme, it is important to capitalise on our climate and carbon credentials and to translate them into measurable targets which are available for people to see. Some of the big retailers are going down that road rapidly and we want to be ahead of the game in this regard. This is the other side of the carbon issue and is a whole area on which we can capitalise. This is provided for in the 2020 approach and Bord Bia is already well down the road in building on its already successful quality programme and is building a sustainability element on top of that along with the UK carbon trust. It is not just a question of sitting back and letting this be an issue. It is a question of getting ahead of it, owning it and branding our food, not just at retail level, but getting back into processing and making it carbon friendly.

Acting Chairman (Senator Paddy Burke)

Is education not central to that? Therefore, how can the Department promote this and at the same time allow three national agricultural colleges to close? We need to be part of the smart economy, to build on our knowledge, be smart and forward thinking and put the sector on a sound footing. In light of what Mr. Moran has said, surely it makes no sense to close down three agricultural colleges - despite the fact they are full - with the full imprimatur of the Department and Teagasc. That makes no sense to me.

Mr. Tom Moran

I agree that knowledge and its dissemination are part and parcel of our direction in the area of agriculture and food. The Senator is also correct that there is a huge surge in the demand for agriculture education in the various colleges. At the same time, the operation of the colleges operated by or on behalf of Teagasc is a matter for Teagasc. It is not for the Department to second guess the way in which Teagasc resources are allocated or how they are put to best use. However, I can tell the Senator how we have promoted education. The Department has funded discussion groups. These are not just talking shops and have been hugely successful. The discussion group programme is innovative and is funded from moneys the Department extracted from unspent EU funds under the Single Payment. We fund participation by dairy farmers in discussion groups where efficient and innovative practices are transferred from farmers to each other, facilitated and animated by trained Teagasc people. This programme has proved hugely successful as there are huge gains to be made in terms of efficiencies at farm level. It is not just through college that these skills can be transferred, but through many different ways.

Senator Paschal Mooney

I am grateful to Senator Regan who explored an area I would have raised and I thank him and Mr. Moran for clarifying the issue. The Secretary General will be aware that the IFA and ICMSA have focused on the livestock area. They suggest that the targets laid down, which I concede are not legally binding in the proposed legislation but only a framework, mean there will need to be a significant reduction in the national herd. This will mean that the improving market penetration of Irish meat products abroad will be diminished and this gap will be filled by other countries. Therefore, the reduction in the herd will defeat the improvement in market penetration. I do not want to be too complex or technical about this as I appreciate it is slightly outside of what Mr. Moran came here to discuss. However, it is relevant. Does Mr. Moran have any opinion on this or is he of the view that the legislation will provide for an advisory committee and that there will be an impact analysis for the various sectors which will result in, presumably, a conclusive decision being taken as to the targets being achievable or otherwise? Is that Mr. Moran's view or what is his opinion of the concerns of the farming organisations?

Mr. Tom Moran

If targets were applied down the line to the agriculture sector, then specific areas would be the focus. Some would be positive and some negative. Livestock would be one of the areas under great consideration, if that were to be looked at. Once that happens - if it happens - one then needs to take account of the points I have mentioned, such as the economic effects. We are looking at a 50% increase in milk output. This does not mean increased cow numbers as much of the increase will be to do with increased yield and better use of the existing production capital. There will be a focus on livestock and on livestock numbers. The way in which livestock are produced and reared, the age at which animals are killed and the way they are bred, will all come into the equation. Equally, on the positive side, one must consider the sequestration possibilities, not just in forestry but in grass and the use of clover and so on. There is much to be considered when doing a sectoral analysis. It is reasonable to say that one would have to focus on the effect on livestock of targets were they to be translated down into sectors.

Acting Chairman (Senator Paddy Burke)

With regard to research and development, the co-operatives have done tremendous work over many years in developing products and finding markets. What is the Department's role in targeting the research and development of new products and markets? Who will co-ordinate this work or will it be left to the processors, the manufacturers and the co-operatives to take the initiative and find their own markets? Is Bord Bia associated with research and development?

Mr. Tom Moran

That question is central to the expansionary provisions in the 2020 harvest, particularly with regard to the dairy sector. If milk output is increased by 50% - which is a very significant expansion and very valuable for the country - then this has implications up and down the chain. It has implications at farm level and clear implications at processing level. For instance, what is to be done with the milk and how is it to be marketed? What products and markets will be targeted? This will involve the whole chain, not just the co-ops but also the Irish Dairy Board, marketing, and so on. How one arrives at that point depends on the way in which additional milk is produced, the seasonal flow of that milk and strong marketing by both co-ops and the dairy board.

The Department has played a very strong role in recent times in the area of research, through its FIRM and Stimulus funding mechanisms. I do not have the figure to hand but I think it is €15 million which I can check for the committee. The Department is funding research in the food area under the FIRM programme and at production level under Stimulus funding. Enterprise Ireland is contributing to research and development at individual processing plant level. Teagasc, under its Moorepark arrangement, is heavily involved in working closely with processors to develop new products.

I take the point that more needs to be done, not just in research and development - particularly on development - but on the application of new ideas because if one has more milk production, one will need to use the additional product. This is part of the challenge.

A key point in the 2020 arrangement was the establishment by the Minister of an implementation group which he chairs. This is a flexible group because the core group consists of the Minister and some senior officials from his Department, as well as the chief executives of the agencies, Bord Bia, Enterprise Ireland, Teagasc, the Environmental Protection Agency. That group is the driving force. However, most of the recommendations in the 2020 report relate to industry and various players outside the Department. The purpose of that implementation group is to drive and lead, to push and cajole and to ensure there are no blockages in the way. Research is one of the key areas the Department funds. Funding is an issue but it is not central to the 2020 process and this has been recognised by the industry and by the farm organisations. The reality of our position now and where we will be in the next couple of years means there will not be a significant level of funding available but this does not take away from the fact that a great deal is being done at the moment and this will continue to be done.

The implementation group on milk, for example, has already set up an activation process, chaired by Seán Brady. This has now finished its work and will report to the Minister's implementation group next week. This group has set out the steps that need to be taken from now for the next couple of years to reach the 50% increase in milk. It assigns the roles and responsibilities. Key to this will be the work of Teagasc and the research agencies in developing new products or adapted products for the kind of markets we will now target.

If the Acting Chairman wishes, I will continue as I have a list of issues. Deputy Kitt referred to the budget review which is running parallel to the CAP reform. Working closely with the lead Department of Finance, the Department's interest in the budget review was to ensure that the review says the right things about the CAP. We are pleased that it does so in that it recognises the importance of the CAP and the role it plays in Europe, in rural areas, in employment and in industrial output. We want to ensure that an adequately funded CAP emerges out of those discussions.

On the question about the small producer, the Commissioner in his communication and when he speaks, refers to the need to have special provision for small producers under the new CAP arrangements. It is not yet clear what is meant by small producers in those terms. A technical working group is meeting today and one of the questions being raised is to define what is meant by a small producer. A small producer in Ireland is quite different from a small producer in the United Kingdom or, in Romania.

The Department's focus in the CAP reform negotiations will be on the centrality of the economic, family-based farm. We are in constant communication with the industry here as to the direction we wish to take in this regard.

A question was asked about our presence in Brussels and about our official who is designated to liaise with the European Parliament. Senator Regan in a past life will have dealt very closely with those officials. We are happy that our presence in Brussels is adequately staffed and properly resourced to deal with the CAP. We have expert people there. We have strengthened the role. It is well known that since long before I became Secretary General our presence in Brussels has been very beneficial. I hate to use the cliché about punching above one's weight but we do that. We have recognised, as we should, that there has been a change in the way the institutional arrangements work with the Parliament and Council. We planned well in advance to be up and running ahead of that. The Parliament will play a crucial role in the CAP reform and we will work closely with our MEPs and with other MEPs. The Minister has had a number of contacts with the Chairman of the agriculture committee, Mr. Paolo de Castro, MEP. These people will play an important role.

Deputy Tom Sheahan resumed the Chair.

Chairman

I have been to Brussels with our agriculture committee a number of times. Having met them, our people and representatives in Brussels are excellent and doing great work. They must be commended for their work on our behalf.

Mr. Tom Moran

I welcome that comment and will ensure it is passed on to those who are slaving away in working groups in Brussels as we speak. I might have addressed the other points in my general comments on agriculture, the recovery and so on. We agree that agriculture will play an important role in the recovery. It is good that it has come centre stage again, given its significant potential. The 2020 target was nicely timed, in that it is up and running and there has been considerable buy in. Agriculture, food and fisheries will play key roles.

Deputy Kitt mentioned the shape of the Common Agricultural Policy. Its broad architecture is set out as an idea in the communication from the Commissioner, which I hope will be translated into legislative proposals. I hope the broad shape will comprise pillar 1 and pillar 2. The latter is the co-funded area that deals with rural development, on-farm investment and environmental schemes, whereas pillar 1 deals with direct payments, such as the single payment, and market supports. This architecture should remain, although a great deal of detail needs to be worked out. The question of how pillar 1 will operate is only now beginning to be discussed. There are some ideas, but no one is clear as to how they will translate into reality.

We mentioned milk. If one good point can be taken from the milk crash, it is that Ireland was up-front in the health check in arguing in favour of the maintenance of safety net supports, intervention and APS (aid for private storage) for when they are required. This idea did not receive a great amount of support at the time. People can quickly forget that situations can deteriorate. When the milk sector hit the ground the following year, market supports managed to stop it from sliding even further. At the beginning of 2010, there was a strengthened view among a number of member states to the effect that volatility in various sectors would be a continuing issue and that workable safety net measures were necessary. We were pleased with this. This matter will fall under pillar 1. Unless I am mistaken, I have covered all of the points.

Chairman

I asked a further question on how the Irish submission on the Common Fisheries Policy was received. Commissioner Ciolos appeared before the Joint Committee on Agriculture, Fisheries and Food. He was very much of the opinion that the current strength of pillar 2, including rural development, should be protected. In his former life, he was a rural development officer, ran a rural development company and so on. We were all involved in the submission on the CFP. It was detailed and the industry invested a great deal of time. How was it received in Brussels?

Mr. Tom Moran

I agree that the submission is a good document. There was a considerable amount of buy in, given the large amount of consultation and stakeholder involvement. This was a good way to do it. The submission distilled many views and brought our overall position to a logical point that could be sold. The response was sent to the Commission last February and the Commission is considering the proposals.

The reform process comprises general discussions, a communication that draws on some ideas, as is the case with CAP, and then legislative proposals. In this instance, the proposals will be published in or around the end of the Hungarian Presidency in June and will probably be discussed in the second half of the year. There is no way of knowing how our ideas have been received until we see the proposals in black and white. Our engagement with the European Commission at official and Commissioner level has been positive. That we are trying to win friends and influence people at various informal and formal gatherings is key. This has allowed us to clarify the issues and we have seen good buy in from other sectors.

As with CAP, our experience is that when one is in Brussels and going through a sector, being able to demonstrate a broad consensus at home is always useful. Consensus is not always the case in other member states. The Joint Committee on Agriculture, Fisheries and Food has a role in this regard, given the ideas it voiced to Commissioner Ciolos when he visited. We have invited the fisheries Commissioner, but she has not yet been able to name a date. When Commissioners see the general consensus that leads to a position paper, one's position is strengthened. We will build on that work.

Chairman

I thank Mr. Moran and his colleagues for attending and answering questions.