Dáil Éireann Debate, Thursday - 14 June 2012
1Deputy Michael Moynihan asked the Minister for Agriculture; Food and the Marine the progress he has made in relation to reform of the Common Agricultural Policy; the estimated maximum reduction in the single farm payment here; and if he will make a statement on the matter. [28711/12]
Amharc ar fhreagraSince their publication, the proposals by the European Commission for reform of the Common Agricultural Policy have undergone detailed examination at Council working groups, the Special Committee on Agriculture and the Council of Agriculture Ministers. At next Monday's Agriculture Council, the Danish Presidency will present a progress report outlining the current status of the negotiations. Negotiations on the new multi-annual financial framework, MFF, for the EU budget for the period 2014 to 2020 are being progressed in parallel, primarily through the General Affairs Council, although the final decision will be taken by the European Council. Many of the CAP issues, including the key issue of distribution of funds between member states, are being discussed in the MFF negotiations and will ultimately be agreed as part of these negotiations. These proposals are also being discussed in the European Parliament and next week will see the release of draft reports from EP rapporteurs on each of the Commission's proposals.
My key concerns about the reform proposals arise in four areas. These are the overall CAP funding, the method for distributing CAP funds between member states, the method for distributing direct payment funds within member states and the overarching need for simplification in the reformed CAP.
On the budget, the funding proposals in the MFF maintains CAP spending at current levels in nominal terms post-2013. The agriculture heading is the one showing the greatest restraint, and in my view the amount proposed by the Commission is the minimum required. However, there are continuing and intense pressures for reductions in the proposed overall EU budget, with obvious implications for proposed CAP allocations. The Government will continue to resist any pressure for reductions in the CAP budget.
As to the allocation of CAP funds between member states, the current Commission proposals for direct payments in Pillar 1 take a pragmatic approach to redistribution and are broadly satisfactory albeit with some loss to Ireland, estimated at approximately 1.4%. The Commission has yet to table a specific proposal for allocation of Pillar 2 funds for rural development. I have concerns that the basis on which they propose to do so could reduce our allocation. However, I am vigorously defending our Pillar 2 funds, and will continue to do.
As to the distribution of direct payments within member states, the Commission proposal is to gradually move towards a system of uniform per hectare payments, or flat rates, by 2019, in each member state or region of a member state. As the Deputy knows, we have a difficulty with this because we would see a significant transfer of money from the more historically productive farming sector, which is likely to continue to be productive, to the less productive sector. We recognise there needs to be a redistribution of single farm payment but we need to put limits on it to ensure we can continue to maintain, grow and expand Ireland's agrifood sector while at the same time moving away from the historical basis for payment based on 2002 and 2003 productivity levels. The Deputy will see more information in the rest of this reply.
Additional information not given on the floor of the House.
Many member states already have such flat rates or are evolving towards them. I recognise that we cannot continue to base our payments on outdated historic production references. Nevertheless, I have major difficulties with the pace and extent of convergence in the Commission's proposal.
Under a national flat rate, although the overall allocation to Ireland would not change, 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 than this. For example, in the extreme case of those on very high payments of over €1,000 per hectare, the loss would be well over 70%. In general 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.
I have accordingly been pressing for the maximum possible flexibility to be given to member states to design payment models that suit their own farming conditions. I also want a more gradual, back-loaded transition process. The approximation approach, by which all payments could gradually move towards, but not fully to, the average is one alternative that I believe should be considered in this regard. The Commission's pragmatic proposal for redistribution between member states is, in effect, an approximation approach and provides a useful precedent. Modelling in my Department suggests that the application of this system to the distribution of funds between farmers in Ireland would lead to much smaller gains and losses to individual farmers than a flat rate system. However, the precise level of transfers depends on the details of the methodology used.
I have been very active in seeking allies for this position, and I have been making significant progress, particularly with a group of member states with somewhat similar concerns. However, 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.
The negotiation process on CAP is complex and difficult, but all of my efforts are focused on achieving the best possible outcome for Ireland. These efforts will be continued over the coming months as the process evolves, and will further intensify during our Presidency in 2013.
There is no question or doubt but the negotiations going on at present in Brussels and the structures the Minister mentioned are vital for the future of Irish agriculture. Last July, to the great relief of the Irish agricultural sector, the European Commission committed itself to maintaining CAP funding at 2013 levels. From the meeting of the Oireachtas Joint Committee on Agriculture, Food and Marine attended by the Members of the European Parliament and in talks and discussions we have had with various people in Europe and at home, there seems to be huge pressure on the CAP budget. Before we go into its distribution and its various sections, we need to ensure the strongest possible case is made to maintain the budget as was promised in July last year. The negotiations seem to be slowing down. It was always envisaged, and the Minister stated it on numerous occasions, the CAP negotiations would be finalised during the Irish Presidency and his chairmanship of the European Council of Agriculture Ministers. What is the likelihood of this happening? If it does not happen are contingency plans in place to roll over the present Common Agricultural Policy to 2014?
As I see it, we cannot finalise the Common Agricultural Policy reform and spending money on new schemes until the multi-annual financial framework negotiations are finalised. This is the multi-year budget which Europe must agree. The Commission hopes the MFF will be finalised in December. I would like to see this happen but I think it is unlikely politically. I think it will also be an issue for the Irish Presidency. Under our Presidency we will need to try to get agreement and finality on the MFF and in doing so protect the CAP budget. Let us be clear: More than 80% of all EU funds coming to Ireland comes through the CAP. It is by far the most important element of EU funding for us and we need to protect it. It is hard to give a date but I hope that in the first quarter of next year we will see the MFF finalised and agreed. This will mean there will be huge pressure on the Irish Presidency to get the deal on CAP done before our Presidency ends. If the detail of CAP is not agreed next year it will be impossible to see a new CAP taking effect from the beginning of 2014. There will be only six months to put the new regulations and rules in place and get the information out to farmers. There will be huge pressure on our Presidency to get this done, and this pressure will come from the Commission and other member states. I hope that in February or March of next year we will be able to finalise the MFF and in May or early June we will see CAP coming to a final conclusion. Many of the final agreed CAP proposals will have been predicted at this stage by the Commission and it will be ready to go with the new rules and regulations that need to be rolled out in the following six months for a new CAP to begin at the start of 2014. The timetable is tight but I believe it is doable.
The Minister spoke about the multi-annual budget being agreed in February or March and the CAP to be agreed in May. Surely there is not time for the system to be ready to go in Ireland by 1 January 2013-----
2014.
Sorry, 2014. The timescale seems almost impossible at this stage.
I do not think the timetable is impossible but it is very tight. If it is not possible to deliver it on time we will have to look at a contingency plan, on which the Commission will have to put proposals together, which will involve extending the implementation of a new CAP by a year and some type of continuation measure for 2014. However, this may not be possible because if it is decided in the MFF that the budget allocation for CAP for 2014 will not be what it is now we will have problems with regard to how to allocate the money. This is not straightforward which is why I believe there will be considerable pressure to get the job done within the timeframe set out. If it is not possible to do that, we will need to get on with doing the job and putting in place a contingency plan for 2014 so that a new CAP could begin in 2015. I emphasise the ambition of the Government and that of the Council, the Commission and the European Parliament as far as I know is to get the MFF and CAP finalised in a timeframe that would allow us to enter a new CAP from the start of 2014.
