Thursday, 13 October 2011
Dáil Éireann Debate
Minister for Agriculture, Fisheries and Food (Deputy Simon Coveney): Yesterday, the European Commission published its reform proposals for the Common Agricultural Policy. These proposals are complex and detailed requiring time to digest them in full. There are also points of detail on which clarification will be required. Accordingly, my speech today is my initial reaction. At this stage, these are proposals only, not final texts. Negotiations will take place at political and technical level over the next year or more. It is highly likely the current texts will be significantly altered before final agreement is reached.
I already gave the House an outline of the Government’s priorities in the CAP reform process in September. Today, I will present the Government’s initial comments on the formal legal proposals and will elaborate on any points raised in this debate during the question-and-answer session.
The Commission’s texts to hand do not contain too many surprises and there are good points, as well as difficulties in them. The parallel proposal on the multi-annual financial framework for the next EU budget, presented by the Commission last June, retains the current level of CAP funding at least. This is a good starting point in the negotiations as it compares favourably with the pressure for severe cuts to the CAP from certain elements of the Commission, as well as a good number of member states, earlier this year.
As to the distribution of funds between member states, I am pleased the Commission has adopted the pragmatic approach in respect of direct income supports, one advocated by Ireland for some time. We strongly advocated this issue should be examined on the basis of each member state’s average payment per hectare of eligible area. I am pleased the Commission has adopted this approach, which Ireland was initially alone in proposing. The net result, on current figures, is a relatively small reduction in our national ceiling for direct payments from €1.255 billion to €1.236 billion in 2017 and subsequently. The results would have been very negative for Ireland if another measurement, utilised agricultural area, had been used as the basis of the calculation, as was the Commission’s original intention. We will be subjecting the calculations to detailed scrutiny in the negotiations and will continue to seek to maximise our position.
I would have preferred if the Commission had also adopted this approach for the distribution of pillar 1 and pillar 2 funds. However, the Commission’s proposals indicate it will make a separate proposal on rural development — pillar 2 — funding on objective criteria and past performance. It is clear from the impact analysis that such a proposal could threaten our rural development funding depending on the precise criteria used. I note, however, the Commission has said there will be a small change in the distribution of rural development national envelopes.
I am determined to retain our rural development funding. This will, to some extent, be facilitated by the fact the Commission has chosen to analyse the distribution of pillar 2 funds on the basis of funding per hectare of pillar 1 eligible area. Again, this was advocated by Ireland as it demonstrates that our allocation per hectare is below the EU average. This provides a useful argument to deploy in defence of our rural development funds, as does our good past performance in using these funds.
The Commission is proposing the current single payment scheme will be replaced by a new payment model made up of several different elements and moving eventually to a uniform national or regional rate of payment. The proposals envisage the individual historic reference will be replaced by a model based on regional or national averages. A target date of 2019 has been set for achieving a uniform value of all basic payment entitlements in a member state or region of a member state.
I acknowledge there is little support among other member states for the retention of the historic model as used by Ireland. In those circumstances, my priority will be to seek as much flexibility as possible for member states to determine the payment models best suited to their conditions and to the development of their farming systems.
I will also be seeking appropriate transitional arrangements, as I am not happy with the front-loaded transition process in the Commission’s proposals. When I discussed this issue recently with my French ministerial colleague, Bruno Le Marie, we agreed on the need for such flexibility for member states in both payment models and transition arrangements. I believe we can get good support at the Council and European Parliament for a reasonable level of flexibility for member states, including a longer and slower transition than envisaged by the Commission. This will be a major focus of the negotiations over the next two years.
My Department has already engaged with stakeholders on this issue and will now intensify consultations on appropriate payment models for Ireland. We need to examine all possibilities with an open mind to determine what is best to support family farm structures and our ambitions for the sector as set out in Food Harvest 2020.
There has been much speculation in the media recently about the use of 2014 as a reference year for the establishment of entitlements. Under the proposal, new payment entitlements will be allocated in 2014 to active farmers who used at least one payment entitlement in 2011. The inclusion of this proposal is as a result of lobbying by Ireland and other member states. Entitlements will be established for the farmer who declares the land in 2014 and will be based on the eligible area declared by the farmer for that year.
There is concern the proposals could lead to land market distortions and would not be in the best interests of productive farmers. I have conveyed these views to the Commission and will continue to press this point. The proposals already contain some changes from what was in earlier drafts because of Irish pressure.
The provisions surrounding establishment of entitlements are complex, requiring a great deal of clarification. Moreover, it is likely they will be altered significantly during the course of the negotiations. Against that background, I would strongly urge farmers not to prejudge the situation or rush into decisions which they may later regret.
As expected, the Commission has proposed 30% of the national ceiling be set aside for greening, a new payment per hectare payable to farmers for following agricultural practices beneficial to the climate and the environment. The Government supports the idea of encouraging sustainable forms of agriculture which is at the heart of the Food Harvest 2020 strategy. However, I have considerable difficulty with the proposals as they stand. The existence of a separate greening measure will complicate our existing single payment scheme and hasten the movement towards uniform national or regional payment rates. I am aware that the CAP already delivers considerable greening. To avoid excessive bureaucracy, we should consider alternative approaches which achieve the same ends but with less red tape. I would also take issue with some aspects of the three greening criteria proposed but these can be discussed in more detail later.
As a result of Irish lobbying, there has been a positive development in terms of prioritising young farmers. I welcome the proposal, which mandates member states to use up to 2% of the national ceiling to make top-up payments to young farmers for a five-year period while they are under 40 years of age. This is a proposal that Ireland was particularly active in pressing with the Commission. We are all aware that there is a need to improve the age structure of our agricultural work force and to support well educated young farmers who will be the platform for further innovation and growth in the sector. It is sensible to provide support for young farmers in pillars 1 and 2 of the CAP.
Deputy Michael Moynihan: These proposals will form the bedrock of agriculture in the coming years. In every Dáil debate, Question Time and discussion outside the House, everyone has remarked that agriculture will be one of the main driving forces of economic recovery and will lead to export-led growth. The industry will play a pivotal role in Ireland’s future. In this context, it is important that we examine yesterday’s proposals from Brussels. Deputy Kirk and I were outside when they were announced. Judging from the reaction in the European Parliament and many farming organisations, there is a great deal of anxiety about the future.
As the Minister rightly stated, the 2014 versus 2011 issue could lead to significant distortions in the land rental market. It is important the matter be clarified as soon as possible, as it has been highlighted in today’s media commentary. That the language used in the document launched yesterday was far from clear means farmers who are making decisions do not have certainty. This is an important issue.
At a time when there is food scarcity and food security is required, the 7% set-aside will need to be highlighted. Taking a cross-section of the farmers with whom I spoke yesterday and today, these proposals will affect some people badly due to stacked entitlements. I refer in particular to cattle farmers. They built up good entitlements in the 2000-02 reference period before consolidating their holdings and making prudent decisions on the management of their farms. We are trying to support the high-end beef industry in every way, shape and form, but the farmers in question have significant concerns about the proposals.
There has been much discussion about the proposals’ contents and there is a great deal of text involved. It is almost as if the EU is attempting to micro-manage agriculture down to the minutest detail in each member state. The Department, the Minister, his officials and the Oireachtas must be proactive in getting the best deal for Irish agriculture. Farmers feel threatened by the proposals.
Various documents on the 30% to be set aside for greening were leaked in August and subsequently, but the actual proposals are different. Irish agriculture must take this issue seriously. We could set back much of the good work that has been achieved in recent years. We must ensure the vulnerable ends of the sector that we have been trying to protect through various schemes are not kicked back further by this document. It will challenge the people who built up substantial entitlements during the previous reference period and consolidated their landholdings.
We do not have time to digest every aspect of the proposals. Having listened to Members of the European Parliament and a broad spectrum of people yesterday, there are concerns. While it is only a negotiating document, it must be changed radically to ensure it dovetails with what the Irish want from their agriculture industry, given how pivotal the industry’s role will be.
Deputy Seamus Kirk: I thank Deputy Moynihan for affording me a few minutes to discuss this matter. It will be one of the more important debates that will be held in the Chamber during the next 18 months.
The proposals were circulated by the Commissioner yesterday and the European Parliament has spent some time on them. The debate will unfold during the next 12 to 18 months. It is difficult to anticipate whether there will be many changes because agricultural needs within the Community vary considerably from Latvia to Ireland. The original CAP was framed to identify the needs of the developing industry across the Community, particularly in Ireland.
Two points strike me. In the early days, two common phrases in the terminology that was part and parcel of this area in Brussels were “food security” and “Community preference”. Neither is used in these proposals. There has been phenomenal growth in the world’s population. Food production in Europe will need to increase to certain levels to meet these needs. If developing countries have the capacity to import food produced in Ireland, the UK, France, Germany or elsewhere in the EU, we must have an industry that is geared towards meeting the needs of developing markets in Asia, India and so on.
The Minister referred to a key point, that of the age profile in Irish agriculture. The number of people under 35 years of age who are actively involved in farming is low. If we are to get the dynamism, innovation and changes that we need, we must attract young people to the industry. I welcome the proposals in the document to try to address this issue.
What about the interim? The Minister and the Minister for Social Protection are members of the Government that took the decision to raid pension funds to create employment. This objective is commendable in its own way, but some of that money could have been spent on the economy’s primary production sectors wherein national wealth is created. The agriculture industry generates beef, dairy and other exports. Should we not take the opportunity to create jobs in the industry? At a time when nearly 500,000 people are unemployed, agriculture is seen in a different light today than it was two or three years ago. Young people are being drawn towards it. The demand for places in agricultural colleges around the country bears this fact out. There are not enough places. Some colleges are overcrowded with students. There are too many students in them and given the need for mentoring and tuition, having too many in a class creates its own problems. It may well be an area the Minister needs to examine. The Warrenstowns of the world are closed and no longer available.
Next March, many farmers in the country will face a problem with a superlevy. We have had exchanges in the Chamber about this and it will cause huge problems. Young farmers and farmers who are not so young are way over their quota production allowance now and to get to next March will be a job for them. There is a need for clarity on this. Various suggestions are being tossed around and debated and on the previous occasion the Minister indicated the possibility of the butterfat adjustment holding out some prospect. Yesterday, I spoke to a number of people in Brussels and the indications were that prospects exist in this regard but major voices in Europe may not be in favour of it. The need for a diplomatic offensive on this is obvious.
I described the rumoured proposals which emanated on CAP reform as “steady as she goes” rather than ambitious or challenging and this has been confirmed. After months of speculation and leaked documents, I welcome the fact the Commission has produced a set of formal legislative proposals for the reform of the CAP. It will provide a firm basis for debate and negotiation. Very extensive documentation exists and we will need time to study, analyse and debate it and for the Government to negotiate it. It is already clear that a few key areas require greater analysis and discussion. These are the size of the CAP budget, the distribution among the member states, the distribution within member states, the future basis for payments to farmers, the greening of pillar 1 and regional flexibility and simplification.
As I make my comments I am conscious I have two responsibilities. I will seek to protect and promote the livelihoods and interests of mainly small farmers in designated disadvantaged areas in the west, the north west and the Border counties. I also recognise the national agri-food plan, Food Harvest 2020, will be significantly impacted for better or worse by how well or badly the draft proposals are finally agreed and implemented.
I would like to have seen a larger CAP budget. The EU speaks about the absolute need for food security but does not translate this into tangible outputs. Recently, I stated at a meeting I would like to see an EU equivalent of Food Harvest 2020 whereby the EU sets out a food security strategy for the next decade. However, we do not appear to have this. The Minister and the Department must fight very hard to prevent any reductions in the CAP budget and to ensure a significant increase in the rural development budget allocation because we should have good grounds for improvement on this.
With regard to the distribution of payments to farmers, there appears to be a growing realisation that there will be a move away from historically-based payments towards a flat rate regime at regional level. However, we must ensure changes made do not damage either farmers or the targets we have set out in Food Harvest 2020. At a minimum, we should seek a smooth and gradual transition over a period of years, because these proposals have the potential to introduce a significant step change in the first years of the new regime.
The base year of the proposal is 2014 but this is counterbalanced by the requirement to have a payment in 2011. This leaves the door open for grant aid by size of cheque-book and we simply cannot accept this. We must also consider carefully the definition of “working farmers” and we must ensure it deals with small farmers in the west, north-west and Border counties whose holdings are not large enough to employ somebody. While the employment initiative in the proposals is welcome it would be wrong to penalise farmers whose holdings are too small to permit them to employ somebody. I hope we do not see one good measure being paid for by introducing bad measures for farmers who cannot economically afford to employ workers.
I am extremely disappointed the quota for dairy milk has not been lifted and that farmers in Ireland still face a superlevy. We have the ridiculous situation whereby creameries in the Twenty-six Counties cannot buy milk from farmers in the Twenty-six Counties who have milk available, but have to purchase in the Six Counties while people in the Six Counties cannot purchase from the Twenty-six Counties. It is a ludicrous situation. There is no need for the quota. It is accepted that it is obsolete and should have been lifted. We must return to negotiating this.
I have serious concerns about the proposals for greening pillar 1 because they may have a negative impact on the competitiveness of our agricultural industry. They also have the potential, despite what is stated about simplifying and streamlining, to increase bureaucracy and the administrative burden on farmers. I am also concerned about how tangible the benefits of these measures will be. We need much discussion and debate on these areas.
The Commission has brought forward proposals to confine support to active farmers and I welcome this. For some time I have called for this and most people will have sympathy with this objective. The reason for the existence of the CAP should be to support farmers. We need an effective and workable definition of what is an “active farmer” in the context of a decoupled support regime. I have doubts that the proposed test, which is based on CAP receipts and other income, will be effective and workable. We do not want to fall into an administrative quagmire or to distort or disrupt the conacre market and the availability of land to farm businesses.
I am reasonably heartened by the proposals on regional flexibility because member states should have the flexibility to tailor their environment and industries to their requirements. However, it must be strongly negotiated and we should end up with something workable which ensures the maximum possible degree of national flexibility.
With regard to rural development, I very much welcome the Commission’s increased focus on improving competitiveness in the food chain and on promoting investment in research and development. We should be in pole position on this but there is probably much preparatory work to be done. Given the size of the industry, the people employed in it and our previous experience in research and development we should put together a very tight package of proposals on this.
What can one say about simplification? The proposal is for the regulations to be simplified and for less bureaucracy. However, the detail of the content seems to indicate otherwise and this will require further examination to ensure farmers will not have to deal with another layer of bureaucracy.
The proposals are just that and they have to be agreed. There needs to be widespread public discussion with the key stakeholders and we all need to be informed before the specific case for Ireland is argued with the Commission.
Deputy Tom Fleming: I commend the Minister, Deputy Coveney, for his efforts in endeavouring to secure for Ireland the best possible deal in the ongoing CAP negotiations and in particular for the manner in which he challenged the EU bid to use 2014 as a reference year for future payments. I believe this has now been rectified and I ask the Minister to clarify whether 2011 will be the reference year for future single farm payments. This will enable active farmers to rent the land and to develop their production rates. It is heartening to see that the majority of the money will go directly to the farmer thus ensuring that 128,000 land holdings in the country will remain viable. Approximately 300,000 people are employed directly and indirectly in agriculture and this number will be maintained and expanded over the next number of years.
I am pleased a system of equality of payments is being introduced so farmers in the poorer land which is prevalent on the western seaboard will be on a par with their counterparts in the eastern part of the country. Additional moneys and incentives will be provided for farmers in areas with high rainfall. I ask the Minister to clarify the criteria for these incentives. Those of us who live in County Kerry are very aware of the adverse effects. I refer to an interview on Radio Kerry a few years ago when the presenter asked a farmer what type of farming he did. The farmer replied he was milking ten cows on 50 acres; ten acres for milking the cows and 40 acres of water. The presenter was confused and he asked him to elaborate and the farmer said he had ten acres arable and 40 acres horrible. This is the case for several people engaged in farming in the west and south west. I am pleased to note the Minister will maintain his stance on equalisation in order to put these people on a solid footing. They have been custodians of the land and of the farms all down the years and in very tough times. It is crucial that we keep them on the family farm.
It is appropriate that young farmers are being incentivised to take up farming as only 7% of farmers are in the younger age bracket, under 35 years, of the 128,000 engaged in farming, meaning a total of 14,000. I am pleased to note that the agricultural colleges are full and there is a demand for places. This demonstrates that young farmers foresee a future for themselves on the land. I am confident they will maximise our full potential and growth levels so we will be a prime producer of agricultural products and world leaders in the field.
I ask the Minister to clarify what will be the situation regarding land that is not farmed and has not been entered into the area aid scheme for this year or before 2011. What will happen this land and will the entry of this land dilute the national allocations or any late applications for this year?
Deputy Luke ‘Ming’ Flanagan: I thank the Acting Chairman for her comments when she spoke on these proposals. As many other Deputies said, there is a lot in them and it will take time to digest them. On a first reading it seems a farmer’s life is becoming fairly complicated in comparison to what it used to be. There is some confusion among farmers as to what has happened since we joined the EEC as it was then. If the Minister will excuse me using this analogy, it seems to be a case of “Simon Says”. In the 1970s, farmers were told to take out ditches and use as much land as possible and now they will be fined for doing the same thing but the proposal is for them to go back in that direction. It is a little baffling at times as to what is EU policy and whether there will be a new policy in ten years time to take the ditches out again.
I refer to the IFA and the ICMSA responses to the proposals which show they have serious concerns that farm incomes could be hit by up to 50%. So far as I can understand it the aim of the EU is to guarantee food security but if this is its aim then it would want to consider increasing the funding. I refer to the cuts in the suckler premium scheme and the AOS scheme over the past few years which show there are many challenges for farmers. Even if the Minister does the best job possible, the challenges will remain.
On the positive side, we live in a very fertile country and some of these proposals could be beneficial. I refer in particular to capping. Many people would not agree with this proposal and some farm organisations do not seem to agree but in my view it is ludicrous that some big farmers and people who are not even farmers are availing of hundreds of thousands of euro in subsidies per year. If there is a limited global figure it would make far more sense to direct more of this money towards small farmers. I note that under this mechanism the funds may be saved to remain in the member state concerned and may be transferred into a rural development envelope for use in innovation and investment by farmers. This makes a lot of sense and where possible it is preferable to exporting the raw ingredient. For instance, France does not export its grapes and subsequently buy the champagne or fine wine produced from them in another country. France achieves maximum value from what is an excellent product. We have excellent raw material here and much more could be done to make added-value products.
I refer to the potential for rural development projects. The proposal includes start-up grants of up to €70,000 and business start-up aid of €15,000 per small farm. This has to be a good thing. It is hoped it can be used in such a way to mean that local produce will be on sale in the streets of every small town in the country. Farmers have only one route to market and the multiples make massive profits with very little margin for the farmer. An investment in young farmers and small farmers could mean they could process their produce on site which would add significant value and profit. A farmer could develop processing on site, adding value, sell locally and keep much of the profit other companies would get. This would not alone boost local farm income, but also increase the attractiveness of areas for tourists and would return some of the originality that has been stripped from Irish towns to them.
When we joined the EEC, my mother used to ask me what had happened to farmers, because she saw them buying potatoes, cabbages and all the things they could grow themselves. There are downsides to these proposals and when I look at them in more detail, I will be able to explain my thoughts on them. What sticks out as a positive is that there is increased potential for young people to get involved in farming and for small farmers to be part of a thriving industry. There is no reason that should not be the case in my town. The majority of our fruit and vegetables are brought in from outside the area and while we produce a significant amount of meat, much of our meat is brought in from outside areas. There is more to be said on these proposals and when I have looked further into them, I will give my opinion.
Deputy Andrew Doyle: The stated objective of the run-in to the CAP was to provide for a mechanism to ensure we could produce as much food as possible within the European Community, do it sustainably and support viable rural communities. To that end, it succeeded within the Commission debate in keeping the fund, by and large, as it is. From Ireland’s point of view, thanks to being able to persuade people to use eligible areas as opposed to used agricultural land areas, we have more or less secured what will amount to a very small drop in our envelope.
We must remember that the Commission’s motivation is to see the three objectives being attained and it is quite clear that one of the key aims is to see a convergence — probably much quicker than we would like — of the single farm payment. The greening measure, particularly at the proposed percentage, effectively puts 30% of the fund into the flattening of the rate straight away. What we must ensure, if we are to have some convergence, is that we do this as slowly as possible. If we are to ensure that we can produce as much food as possible within the European Union, the last thing we should do is create volatility. For some people, the panacea is that everybody gets the same rate. This is seen as the primary tool for upping the wealth of people who receive less currently and it is also thought it will increase production. Both are a fallacy.
There are ten stated objectives in this, one of which is competitiveness. If we agree tomorrow to give the member states on far smaller single farm payments than us the same payment as us, what will happen is they will lose competitiveness. Their disposable income and standard of living would not increase, because those with money and cheque-books would come in and buy up the land and rights. The result would be consolidation, with small farms being bought up and people exiting farming at a rapid rate.
Our job now is to unite behind our negotiators and our Ministers and persuade people of this reality. Many issues will be raised here, such as reference years, and whether 2011 is an adequate trigger mechanism to ensure we do not have speculation, particularly in the conacre sector, where we could have people who will farm “on paper” and hope they make a killing and hold the young active farmers we are trying to promote to ransom come 2014 and 2015. The greening measures are tailor made for us, particularly when, as Mr. Kiely said yesterday, we have a food security issue on the one hand and climate change issues on the other. Part of our selling of ourselves to ensure we are allowed to up our production game and not be part of a regime that will stymie that is that we can deal with both. We can produce food and do it in a way that is most beneficial to climate change mitigation.
We have a lot of work to do. I cannot disagree with some of the stated objectives, such as that research and innovation will be improved. All farmers, young and old, will welcome that. This is a positive aspect and is a result of the arguments put forward by Irish representatives and our previous and current Government. Nobody could argue with simplification or with the provision to look after people in fragile, designated or less-favoured areas. These provisions are all a recognition of the stated objective of creating viable rural communities. However, let us not fool ourselves. There is a long way to go. We need to build up alliances with other nations and to persuade people that the simple flattening of the rate, here and across member states, will not improve the lot of people who think it will.
Deputy Dara Murphy: I welcome the release of the reform proposals yesterday. It is good to see the legal proposals finally on the table. There has been much speculation and anticipation over the past 12 months and people are glad to see the shadow-boxing over and know the real negotiations will now take place. I wish the Minister, Deputy Coveney, well. We have great faith in our fellow Cork colleague and as a former farmer, he is due great credit for how he has handled his Ministry to date.
We have 16 months or so of long, tough negotiation ahead. One issue we should touch on is that our changed position within Europe should confer on us a greater negotiation position. I would not like to have seen any Minister go to conduct these negotiations 12 months ago. I am going to Brussels on Monday to speak to a group of parliamentarians from the 27 member states on how Ireland as a country has been the shining example of how to manage its way out of the EU-IMF programme. This demonstrates that, once again, Irish Ministers are going to Europe with the respect of our European colleagues. We must emphasise the grave importance for our nation that agriculture and food production remain key parts of our economy. That message should have a favourable ear.
It is vital that we protect our budget allocation and I welcome the fact that the current proposals will only see a 1.5% reduction in that. This is good news, but this must be maintained through the negotiations. I support Deputy Doyle on the importance of the flexibility we will have in the future. However, I have some concerns. I am concerned by the idea of a flat-based payment. Ireland should oppose this because the most productive farmers would lose out to those who are less efficient, which would be unwelcome. I have spoken of another concern previously. When I was studying economics in UCC in the 1990s, one of the units on my course was agricultural economics. A concept that has stuck with me since then is the issue of food security within Europe and I remember my lecturer suggesting that this would be a major issue for Europeans within the lifetime of the students in that class. Here we are, with the EU not coming to terms with the issue for all European citizens. As a Continent and as a people, we must address this issue.
Ireland is perhaps one of the best placed nations to look towards allowing a Continent that has focused on energy security and military security to consider its most fundamental and basic need, the ability to feed its own people. I urge the Minister to allow for the potential to rebuild relationships with countries such as France. Our relationship with France has been terse in recent times but I believe France shares many of our ambitions in this regard.
We all welcome the positive measures for young farmers. Young people across all walks of life are the future and the age profile of farmers is something we must correct. Farming is a wonderful career with an optimistic future if we can secure a good deal over the next few years. The proposals to support young farmers have been driven by the Minister for Agriculture, Fisheries and Food, Deputy Coveney, and are welcome.
There is a requirement to wrap the green flag around ourselves in respect of these negotiations. The Opposition Members who spoke were productive in their comments. The Fine Gael committee met for seven hours over the past number of days and has done great work under the chairmanship of Deputy Martin Heydon. The interest of the party and that of our colleagues in Government, the Labour Party, is to secure the best possible deal. It is important that representative bodies continue to be as productive as they have been and that we work together to secure a deal in the best interests of our country and our farming and food production sector.
Over the past 24 hours, since the announcement of the package, the Wexford farmers have been on the telephones outlining their opposition to the document before us. They believe it will knock the heart out of productive farming and create uncertainty in farmers over the next two years. This is at a time when farming is getting up off its knees after a number of difficult years and making a valuable contribution to the economy.
The wheels of Europe move slowly and I ask the Minister to explain why it will take until 2014 to finalise the proposals. Productive farmers want to produce and develop and they see great opportunities in the Food Harvest 2020 document that the Minister has embraced. They see it as a way forward for farming. The document before us will hinder productive farming in this country and this is a major concern to farmers.
The creation of a new flat rate payment system is one of the major concerns. This is one of the first major changes since the MacSharry reforms of 1992. The year 2014 will be used as a reference year and the impact of this is still not clear. The Minister must have further dialogue and negotiation over the coming months. The fact that 800,000 ha of land, 20% of the total, is rented directly will have an impact on over 40,000 farmers and this leaves Ireland particularly vulnerable. Their interests must be protected in redefining the reference year through future negotiations.
What will happen to farmers who are not active this year but become active by 2014? All sides of the House referred to young farmers and, given the employment levels across the country and the lack of employment opportunities, it is important to encourage as many farmers as possible to go back to farming and see opportunities there. Perhaps the Minister can explain what happens if a person goes back to active farming before 2014.
In my county and in IFA circles, the major concern is that the flat rate payment will hinder active farmers. I have always been in favour of support for small farmers but we must also have productive farmers who create products for the processors in the interests of job creation. This area is of major concern. We must have a payment scheme that benefits active farmers, thus ensuring good security and the achievement of the Food Harvest 2020 targets set for production in this country. It is important that this is one of the areas the Minister deals with.
We already know that Irish farmers are producing with a green ethos. Farmers have full environmental obligations, which some would say are overly stringent, but they are producing their product in an environmentally friendly way. Reference to approximately 30% greening is of major concern to farmers. In light of the Food Harvest 2020 strategy, which places Ireland on an environmentally sustainable agricultural path, there is no need for additional mandatory greening actions.
The Minister will have a fight on his hands and the farmers want him to take off his gloves to fight the battle. It will be a collective decision from all sides of the House to support the Minister. It is important that the role of the productive farmer is enhanced, incentivised and protected in any negotiations between now and 2013. Farmers who want to produce between now and 2013 tell me there is great uncertainty in this document. Can we allay their fears in some shape or form sooner than that so that they can continue to produce and continue to be at the heart of productive farming in this country? It is important for the Minister to take off the gloves and fight the cause on behalf of Irish farming.
Deputy Michael P. Kitt: I welcome the opportunity to debate the CAP reform proposals. I welcome what the Minister said in his address. I agree it is necessary to develop a more competitive and sustainable agriculture sector.
I was interested in the Minister’s point about progressive capping. He said it may not have much impact in Ireland but it is the right direction to go. For over 30 years, I have attended public meetings and I often hear that so much of the budget goes to so few farmers. The idea of capping is interesting and the Minister will follow up on this.
At the other end of the scale are the small farmers. Many of the requests I receive concern minimum payments. I do not refer to €500 or €1,000 small-scale payments but something more realistic. This is something the Minister should examine when he considers capping and helping smaller farmers.
There is an emphasis on a fair return for farmers. Farmers want to produce and the idea of setting aside 7% of land for ecological purposes is neither feasible, practical or welcome. The idea that payments were tied to production is always more positive. We have had these schemes already, such as REPS, the agri-environment options scheme, AEOS, and the disadvantaged area payments. These were of great benefit to smaller producers and I appeal to the Minister to get the grants paid as quickly as possible. If the Department of Social Protection can pay out so much money to its clients every week, we should be able to get these payments out. We saw that frustration boiled over in Wexford because of the delays.
I would like to see a particular emphasis on the sheep industry. My own county of Galway is famous for its sheep but there is a problem with support for the sheep industry and the wool industry, which is becoming more important. Deputy Brendan Smith, when he was Minister for Agriculture, Fisheries and Food, did find €8 million in grants for sheep fencing and mobile equipment, which was an important incentive for the sheep industry.
With regard to the proposals on greening, someone said in the past few days that we have green tape as well as red tape. I am disappointed we have not received more information on this. With the REP and AEO schemes there is already great regard for the environment among farmers. If I might make one criticism, I do not agree that there should be a specific type of fencing, which would take up much of the grant money on that scheme.
I welcome the help and assistance for young farmers, including the top-up payments that were mentioned. This should ensure the future of agricultural colleges throughout the country, which is positive news. I have said to the Minister before that my local agricultural college in Mountbellew has so many applications it cannot take in all of the students on its courses. That is a positive thing in one way, but it shows there is a need for more teachers and more places in the agricultural colleges.
The Minister has talked about the case he is making with regard to the reference year for entitlements. I welcome his statement that farmers who had one payment entitlement in 2011 would be encompassed in this proposal. However, it is still of major concern. We hear reports about the dangers of land-grabbing and all of the various behind the scenes efforts that might be made to distort the situation, which is worrying. I wish the Minister well. He has a big battle ahead but he will have our support. We must be careful to ensure the continued livelihood of farmers, particularly smaller farmers, in this country.
Deputy John Paul Phelan: I welcome the opportunity to have a say in this discussion. Before I discuss yesterday’s announcement, I would like to echo the point with which Deputy Kirk finished up his comments earlier about the superlevy. It is not particularly related to the general discussion we are having, but I appeal to the Minister to act in that regard as soon as possible. There are a number of dairy farmers who will face acute difficulties in the next few months if action is not taken in the immediate term.
I would like to make a couple of points about the proposed reform of the Common Agricultural Policy as announced yesterday by the Commission, without repeating everything that has been said by previous speakers. It is good that the first phase of the shadow-boxing, at least, is over and that the Minister and his officials will be engaging in detailed negotiation, over the next year or more, about what form the review will take. There are a couple of things I would like to point out which are of particular interest to me and to people who are involved in agriculture in my constituency. I commend the Minister on his argument for reserving 2% of the funding for young farmers, which was something in which he took a personal interest. Since the removal of installation aid and the changes made with regard to the pension scheme for early retirement for farmers, any significant step to encourage the transfer of land to younger farmers and encourage their activity in agriculture is to be welcomed, and I commend the Minister in that regard.
Like most of the previous speakers, I am not a fan of the proposal for flat-rate payments. I agree with Deputy John Browne that we must focus on those who are productive in agriculture. Part of the basis of the new system of CAP, with decoupled payments, was the aim of moving funding towards not just those who were productive, but those who were producing a product that was wanted by the market. There is a danger, with the move to a flat-rate payment system, that this may not necessarily be the case in the future.
On the issue of caps, I agree with the previous speaker, Deputy Kitt, with regard to the maximum cap. In fact, the proposed maximum cap might be a bit generous, to be honest. This is something that, along with everything else, will be up for negotiation. I support the idea of a minimum payment, but it will need to be based on the productivity of individual farmers. It will not be easy to come up with a solution that is equitable.
Like previous speakers, I feel the proposal to link 30% of payments to environmental measures is a bit excessive. The proposals as announced yesterday, including a 5% limit on conversion from permanent pasture to arable crops, are a bit too rigid and will present a particular difficulty in this country, as will the 7% that is to be set aside for ecological purposes. I know the Minister has particular views in this regard and I ask him to expound on them at the end of the discussion. I wish him and his officials well in their continued negotiations at European level.
Deputy Tom Barry: I am glad to speak on these proposals, which are close to my heart. It was good to see the legal proposals on CAP that were published yesterday. Significantly, Ireland will retain its EU allocation almost completely. The EU is committed to maintaining CAP spending at 2013 levels into the future. One small thing that is worth noting is the doubling of funding for research and innovation in food security, the bioeconomy and sustainable agriculture. The proposed level of spending here is €5 billion, which is important, because research and development are key in achieving more productivity from the land we have.
The legal proposal also recognises a number of challenges, and high on the list is food security. This is something that has been spoken about a lot, but I do not think people realise what it really means. Food security is something one only misses when one does not have it. We have had cheap oil, cheap money and cheap food, but oil is no longer cheap and neither is money, and food will not always be cheap. However, if we have a progressive attitude and make sure our lands are as productive as possible, we will keep it affordable.
I also welcome the news that sugar quotas are to go in 2015. This is something for which I have fought for a long time, as has the Minister, who has been there from the start. The EU recognises that changes need to be made. Sugar has become scarce and expensive and obviously it is prepared to consider the issue again. I have spoken to the Minister, who has presented a clear plan and is very supportive. I welcome the allocation of 2% of the direct payment envelope to young farmer schemes. Such payments helped me when I went into farming. There must always be new generations of young people entering farming.
As a commercial tillage farmer, I recognise the possibility of a reduced single farm payment cheque. We are fortunate that the Minister understands this and will seek flexibility, so that whatever the level of reduction, it will not be too harsh or too quick. Ireland is expected to retain its share of pillar 2 funding. While the proposals are out there, there is much talking to be done before we achieve a final settlement. An inclusive approach is needed to bring everybody together. I compliment the IFA on its engagement with the process and I look forward to future developments.
Deputy Colm Keaveney: I join Deputy Tom Barry in thanking the Minister for his inclusive approach to this matter and his positive and strong statements to the House regarding our strategic approach in the coming weeks and months, and in the medium to long term, in respect of the Common Agricultural Policy. I also welcome the Minister’s comments to me at Tuesday’s meeting of the Oireachtas Committee on Communications, Natural Resources and Agriculture regarding his strong identification and attachment to small rural farmers and the disadvantaged payment issue. The Minister has indicated his commitment to examine how we can secure maximum effect and benefit for rural economies. Given the scarcity of available resources, we must ensure a fair and equitable distribution of the resources we have to rural areas.
I also welcome the Minister’s stated priorities with regard to Ireland’s strategy for approaching CAP reform. He will have the full support of the Labour Party in seeking to maximise resources for the CAP as far as possible, so that this country has a sustainable food production strategy in the interest of the broader economy. We will support him as he seeks to secure flexibility from other member states in regard to the type of payment model he outlined at Tuesday’s meeting. We are all agreed on the need to ensure that single farm payment funds are protected and that any future adjustments are fair and equitable.
I noted the Minister’s clarification earlier this week on an issue I raised with him, namely, the necessity to ensure that whatever emerges from the reforms, we must have a simple and effective way of minimising unnecessary bureaucracy. Farmers are currently faced with a minefield of compliance paperwork. I support the Minister’s position in regard to the incident in Wexford this week where direct action took place against the Minister and his officials. We were led to believe this was the consequence of a failure to communicate certain issues. It has been brought to my attention that compliance in regard to paperwork is a major issue for the Department. This is an area urgently in need of reform in order to ensure the Department reaches its targets under the Minister for Public Expenditure and Reform’s interdepartmental spending review. One can only assume the Department is allocating significant resources for the purpose of correcting documentation, reviewing digitised maps and so on. We must tackle this inefficiency within the Department in order to ensure prompt, efficient and secure payment for rural communities.
Deputy Martin Ferris: The proposals contained in the CAP document published yesterday in Brussels, if accepted and implemented in full, will be hugely damaging to the agricultural sector in Ireland. They will damage the viability of family farms and undermine the potential within the agricultural and farming community. As such, I welcome the Minister’s commitment that he will seek to ensure that no changes to the CAP budget or structures will impair the implementation of the Food Harvest 2020 report. I assure the Minister, on behalf of Sinn Féin, that we will fully support him in his efforts to ensure CAP benefits to Irish farmers are retained.
The Minister must also ensure that any changes do not introduce further delays and red tape which would impede farmers in drawing down their entitlements. That type of bureaucracy has been one of the most common causes for complaint from farmers in recent years, although it would seem the delays are often due to hold-ups within the Department rather than in Brussels. I am interested in the Minister’s reference to his proposal that individual members states should be allowed to shape their own payment models. Will he clarify whether this implies a different method of payment in regard to the regularity of cheques or a more radical change in the administration of the single farm payment?
My party has made several proposals regarding the overall structure of the single farm payment scheme in terms of modulation, which effectively amounts to a gradual decrease in payments, and in regard to a limit on the amount of money that can be received by any one recipient. In many cases the largest payments go to agribusinesses rather than actual farmers. The maintenance of active farming as a means of production is of great importance to our food security as well as to the broader economy.
There is a great disparity in how the single farm payment is distributed. In a report I produced some years ago for the former Oireachtas Committee on Agriculture and Food, I pointed out that 68% of farmers were receiving less than €10,000 under the scheme, which accounted for 28% of the total payments made. On average, the bottom 68% received a payment of €4,057 compared with an average of €22,170 for the top 32% of recipients. The disparity in payments was even starker when one took into account that 55,312 farmers, representing more than 44% of all recipients, received less than €5,000, accounting for just 10.5% of the total. By contrast, the 2,092,or 1.7%, of farmers who received more than €50,000 accounted for €154 million, an average payment of €73,500 and 12.6% of the total fund. The largest single payment was of more than €500,000.
While it can be argued that this disparity merely reflects the differences in farm scale and production, it also indicates that many farmers are at risk of being forced out of farming. That undermines the whole basis of the CAP, which is to protect the European model of farming based on family farms. The proposals being put forward will wipe out a huge section of the rural population, impacting in particular on small family farmers who are struggling to survive in current circumstances. As I said, the Minister will have the full support of my party in seeking to protect these farmers. I come from a small family farm background myself and am conscious of the contribution the family farm has made to our communities, society and economy. Its survival into the future in a viable way is of great importance from a social, economic and community perspective. I am a strong supporter of positive discrimination towards smaller, weaker farmers in order to ensure their survival and continued viability. We must all put our shoulder to the wheel in an effort to secure the future prosperity of the sector.
Deputy Seamus Healy: The proposals published yesterday are of serious concern for farmers. Therefore, I welcome the Minister’s assurances today in regard to his objectives. I hope his key priority will be to ensure the Food Harvest 2020 targets are achieved. Farming is a major enterprise in this country and a huge driver of the economy. Some 60% of Irish manufactured exports were derived from agriculture with a value of approximately €8 billion in 2010. The objective in Food Harvest 2020 is to increase that figure to approximately €12 billion by 2020. That is a huge driver of our economy and in terms of retention of jobs and job creation. The sector supports approximately 300,000 jobs and we want to see an increase in that number to ensure that this sector, which is key to the economy’s recovery, prospers further.
It is important to remember that even though the sector has increased considerably in recent years, farm incomes remain particularly low. The 2010 figure is in the region of €18,000 which is half the average industrial wage. This year there was an 11% increase in farm assist payments to farmers. While farming has improved in the past two years, farm families continue to experience serious difficulties in terms of income derived from farming.
Another area I hope the Minister will give priority to is the age profile of the farming community. Approximately 25% of farmers are over 65 years of age and only about 7% are under 35. That is the current position and it appears to be endemic in farming. We must seriously consider how that can be changed because if farming is to prosper and contribute to the economy, and to the local economy, we have to have young people seriously involved in farming. The current position has pertained for a number of years but it is an area we must focus on and if tax changes need to be made to ensure that farms are transferred at an earlier age to younger people that should be examined.
Farming has contributed a great deal to job creation with 300,000 people currently depending on farming. With the expansion of the world population there is a huge opportunity to create further jobs both directly in farming and in downstream employment. I hope the Minister will prioritise that area.
Acting Chairman (Deputy Joanna Tuffy): We now move to questions to the Minister which must conclude by 3.37 p.m. to allow the Minister reply for five minutes. With the Minister’s agreement I will take the questions in groups of three and Members might ask related questions.
Deputy Michael McNamara: I commend the Minister for his commitment to the agricultural sector which is clear to all, particularly those of us who sit on the agriculture committee. I commend him also for having recently extended the deadline for spreading slurry until the end of the month to enable people take advantage of this bout of good weather.
With regard to areas with natural constraints, I understand that one of the proposals in the CAP reform proposals is a top-up scheme proposed for least favoured areas under pillar I that would initially run alongside the existing disadvantaged areas scheme. The Minister may correct me if I am wrong but I understand the proposal is that the disadvantaged areas scheme would cease at some point during the period of reform considered. As a representative of Clare, where a number of farmers farm under severe natural constraints in some cases, I am concerned that their top-up measures for disadvantaged areas be continued. I would like to know the Minister’s response to this reform proposal and if it is optional, which I understand is the case from media reports, if the Department or the Minister would be minded to introduce it in Ireland.
Deputy Seamus Kirk: The first observation, which I should have made earlier in my contribution, is that this is a classic case of the devil being in the detail. The teasing out of the detail of these proposals will be vitally important and before final judgment is passed on the document we will need to get some of that detail. There has been much speculation in the media recently about the use of 2014 as a reference year for the establishment of entitlements. Under the proposal, new payment entitlements will be allocated in 2014 to active farmers who used at least one payment entitlement in 2011.
In terms of the reference year, the 2014 versus 2011 argument is fundamental and while I know the original proposal was 2014, the year 2011 was referred to in that unless the claims or payments were made in that year applications will not be considered. It is clear this aspect requires clarity because the rental and leased land will be hugely problematic for farmers who depend on it to expand and keep their operations going.
On the definition of an active farmer, we had definitions in previous CAP packages but will there be any change in the definition having regard to the fact that we are into an area based payments system? On the greening measures, what is the position regarding a dairy farmer or a beef farmer who re-seeds his land on a fairly regular basis? It is clear there will be a period of time in which the land will not be available for grazing because of the re-seeding process.
On crop rotation, people in tillage who grow cereals rotate with potato growers and in many instances lease land to major potato growers, which I am sure happens in the Minister of State’s constituency on a regular basis. It suits individual farmers who have a tillage business to rotate with potato growers. How will that work out? Will it affect the area based payment arrangement?
Also on the greening measures, if individual farmers happen to have suitable sites for wind turbines does the Minister envisage any way that payment or grant aid can be given to those farmers where it is expedient and wise to provide a wind turbine to reduce the cost of electricity and help reduce the carbon footprint in the process? Also, regarding solar panelling on dairy farms and the milking parlour where it will be possible to install solar panels, does the Minister envisage any aid being available under those headings?
Deputy Seamus Kirk: I refer to the individual farmer where the farm visit has taken place but the report has come back stating that the farm has to be redigitised. Clearly, there will be a delay in payments in that regard. It is affecting cash flow of individual farmers at a time when it does not suit them.
In the context of the developing agricultural industry, I am aware there are forces at play in the agriculture world who believe there is potential to regenerate the sugar beet industry but there is a need for the Minister and the Department to give some direction to the agricultural industry as a whole because it is relevant in the context of crops and the plans people will have for the future.
The new area based payment and the question of where commonages fit in is relevant in my own constituency of Louth. In a previous incarnation I tried to address difficulties for individual shareholders and commonages. How will that fit into the framework for area based payments?
Regarding horse training farms, such as large farms used for the training of race horses that clearly are not in the mainstream activity of farm production, how will they be treated in the context of the area based payment? On the afforested areas, I ask the Minister to comment on the 7% eco-provision in the plans. Is this set-aside by a different name? Is it realistic to leave this aspect as part of what is termed the “end of the day product” and which will be part of the CAP policy going forward?
Deputy Simon Coveney: Our understanding is that the Commission is trying to give countries an option to use up to 5% of the single farm payment envelope to target payments at areas of natural constraint. It has suggested, as an example, less favoured areas, LFAs, but it is not necessarily confined to those areas alone. We potentially may have the capacity to make exceptional payments because of natural constraints, for example, because of designation, or the limitations that apply to areas of environmental or biodiversity significance of certain regions. That is in addition to LFAs remaining under Pillar 2 funding. There will be a requirement to have a definition of LFA lands to qualify. We have worked hard to get an understanding in the Commission as to how to maximise the land that would qualify under the LFA definition. We define less favoured areas by a measurement of the moisture in land; in other words, most LFAs and disadvantaged areas are disadvantaged because of the amount of water that is held in the earth. They are boggy areas and areas without good drainage. We have got acceptance in the Commission for a way of measuring LFAs on the basis of moisture retention in land, which is a major success from our point of view. Otherwise, we would have stood to lose massive tracts of land that are currently regarded as less favoured areas. We may still lose some, but we have a mechanism to make an argument for LFAs into the future. There are two mechanisms for funding LFAs, the first of which is the current system under Pillar 2, which will change in terms of its criteria, and the second is that we can, if we want, set aside some single farm payment moneys to make extra payments to certain designated lands that are disadvantaged or have certain conditions applying to them that justify an extra payment. There are more options open to us there.
I want to clarify the position in respect of the 2014 versus the 2011 reference year. Everyone has mentioned this issue. To be clear to Deputy Fleming who commented earlier, and I thank him for his comments, 2014 still remains the reference year. We are not that happy about that but it is the reference year in the document. What has changed from previously leaked documents or our understanding of what is likely to come up in documents is that the EC has now added a requirement to have eligibility for a payment of some sort under the single farm payment scheme in 2011. The European Commission is trying to prevent people who want to invest heavily between now and 2014 in order to build up single farm payment eligibility but who are not currently farmers, in other words, to prevent significant land speculation coming from outside the agricultural sector. There has been a good deal of concern about that in recent weeks. The Commission has solved a part of the problem but there are still concerns about 2014 as the basis for a reference year, even with the 2011 eligibility requirement. That is the reason I am saying to farmers not to rush out and start making decisions on the basis of the current proposals on the reference year issue because that element of these proposals is likely to change and be amended in the next year or so. It could be earlier than that, and I hope we get the clarity Deputies are requesting so that we do not impact unnecessarily on the leasing market.
In relation to the crop rotation and crop diversity requirements under greening, I honestly do not think what is being proposed at present makes any sense. The idea that one would be required to have a minimum of 5% of arable land, planted with three different crops is a bit of a nonsense. I think what the Commission would have liked to do is put in place a measure that required farmers to have crop rotation plans on arable farms, but it was proving very difficult to write a policy that would be easily enforceable. What we have is a measure that will be questioned, amended and changed under the greening measures.
Deputy Simon Coveney: Let me deal with the payments issue, because there is some confusion as to whether my Department is getting out the payments on time. Currently our payments to farmers are €45 million ahead of where we were at this time last year. There are no delays in sending out the single farm payments. Next week we will distribute €444 million of single farm payments to 85,000 farmers across the country. This is 50% of their single farm payment. By the end of next week we will be another €42 million ahead of where we were last year on top of where we currently are. There are no delays with the two big packages, the disadvantaged area and the single farm payments. There are some areas where farmers have not got their payments because of mapping problems and the need for clarification on certain points. Where there are genuine problems is with AEOS payments. The agri-environment options scheme is a complicated scheme that was introduced previously but it had a series of implications in terms of complexity of mapping, where maps had to be synchronised with maps that were submitted for single farm payment and in many cases they did not match up. The reason we are obsessed with digitising maps is that in future we will not have delays as a result of mapping. Having digitised maps allows one to make decisions much more quickly. There are teething problems with AEOS.
Deputy Simon Coveney: Digitisation is a requirement. If and when we are audited by the European Commission, the last thing I want is to be fined or to have the money reduced because we have not done our job properly. We are dealing with the complexities of AEOS payments and we will continue to send out cheques as quickly as we can.
Deputy Seamus Healy: I have two questions. Will the Minister comment on Deputy Kirk’s question on the sugar industry? We know what happened with the industry, but I am aware of numerous farmers who believe that the industry can be reinstated. What are his views on that?
Deputy Luke ‘Ming’ Flanagan: My question relates to the greening proposals, in particular to turf cutting, when the Common Agricultural Policy was being negotiated. Was it flagged that along the line farmers could potentially lose part of their single farm payment if they cut turf? The turf cutters cannot establish definitively whether their single farm payment would be affected next year if they went out and cut turf in certain bogs. From doing some paperwork we have established the potential for a cut of 10% to payments but we cannot ascertain the definitive position. What is the situation under the current CAP? More importantly, what will be done to avoid this problem in the future in order that farmers will know what they are signing up to?
How will the greening proposals impact on turf cutting? I am not saying it is the be-all and end-all for everyone but for a lot of farmers it is their main method of heating their houses and cooking food. What does the Minister think of these proposals? How will they affect people who use turf as fuel? Will it affect people outside SACs or have knock-on effects on other designated areas?
Deputy Michael Colreavy: Can the Minister tell us his negotiation position on caps on maximum payments and payments to agribusiness? How does he propose to handle the negotiations on redistribution between small and large farmers?
The document refers to regional flexibility. To what extent can we anticipate flexibility in terms of allowing each member state to design schemes to meet their particular interests? Does the Minister see any scope for a joint Twenty-six County and Six County approach to the Commission on the milk quota, even at this late stage, between now and 2015? Perhaps a joint approach to the Commission might yield some positive results.
Does the Minister consider that the State is in a position to maximise any EU funding which will become available under the research and innovation heading or do we need to do preparatory work to ensure we maximise potential? There has been a lot of discussion about red tape and the need for simplicity. Would the Minister consider setting up a small group of farmer representatives to examine forms, processes and advise the Minister? What might appear very simple and straightforward to a person in the Department might seem like an administrative nightmare to a farmer sitting at a kitchen table with a biro.
Deputy Simon Coveney: Deputy Healy referred to the sugar industry. I took a lot of sugar into the former factory in Mallow and I have a reasonably good practical and theoretical understanding of the industry. Nobody would like to see it re-emerge more than I would. However, I will not act on emotion. The industry needs to make sense commercially. The price of sugar internationally needs to remain at approximately €500 per tonne or more for it to be viable to produce and process sugar in Ireland. At the moment the price is well above €700 a tonne. The industry is more than viable at current sugar price levels.
There is a huge shortage of sugar because of a supply problem which is being exacerbated by a quota system in the EU. Over the summer two professional feasibility studies on reviving the sugar industry and building a sugar factory at a cost of between €350 million and €400 million were presented to me. A business plan was attached which outlined how those businesses could be successful, viable and commercial, based on growing sugar at a cost of approximately €40 per tonne. A lot of work is taking place. People have serious proposals and financial backing to try to make this happen.
My role is to try to ensure I provide the political leadership and policy route to allow people to re-enter the industry if they deem it viable to do so. We need to get rid of sugar quotas to allow Ireland to proceed on that basis because we currently have none. We were compensated to leave the current EU sugar regime which comes to an end in 2015. We will not get a quota before then. If the sugar quota regime is to be continued in Europe we need a slice of it at some stage after 2015 or failing that, an absence of a sugar quota to rebuild the industry if we choose to do so. The latter is the likely scenario.
The Commission’s proposals yesterday were news to us because we expected the date to be 2016 but it is now 2015. There will be strong lobbying from member states which have large EU sugar quotas and are happy that prices are strong to keep sugar quotas in place in Europe until 2016 or, possibly, 2018. It will be an ongoing political debate. It is clear where I stand on the issue. I will be trying to get rid of sugar quotas as soon as possible for this country, which will allow us to realistically consider the commercial options of rebuilding the industry, something which would excite a lot of farmers in the south and south east of the country.
On the age profile of farmers, that only 7% of farmers are aged under 35 is totally unacceptable. If we are serious about food science and production and continuing to build our reputation as the best country in the world to produce quality, safe and sustainable food and the sustainable intensification of food production, which is what we need to be doing, we need young, educated, bright and ambitious people to put their energies into this sector. I will propose policies in the budget to try to promote and encourage the hand-over of land from one generation to a younger one for the reasons the Deputy outlined. Unfortunately, from a financial point of view we are more limited than we may have been in the past. One reason I have pushed the Commission hard on mandating countries to set 2% of their single farm payment moneys aside for young farmers is that I know we are limited in terms of the funds we can provide for that objective. Therefore, we wanted to try to do it through European funds. Most people would support that as a progressive step.
In response to Deputy Flanagan, I understand there are no implications for single farm payments related to turf cutting. I heard him raise the point before. I will double-check the position. My Department is not responsible for turf cutting; it is the responsibility of the Minister, Deputy Deenihan. The current proposal is that 30% of a single farm payment will require a farmer to do certain things. These include retaining permanent pasture on farms, in which there must be a 5% tolerance; having a crop diversification policy, for example if one is an arable farmer between 5% and 70% of the land needs to have three or more crops, something which will probably change over time; and having an ecological focus area, which means that 7% of land would have to be set aside to promote biodiversity.
The current proposal is likely to change substantially by the time we get a final deal. They are the only three greening proposals attached to the greening payment. It is important that people know that. There are a series of other sustainability, environmental and biodiversity issues which may factor into rural development funds, that is pillar 2 moneys, such as climate change. I support many of those issues, many of which will provide farmers with more opportunities than threats. The major concern for farmers in terms of single farm payments is the 30% figure which applies to greening and is far too large. A lot of what is asked of Irish farmers suits them, such as the permanent pasture element, because 80% of our land is used for this. There will be a lot of change in the greening proposals over the next year or so as we discuss them. Deputy Colreavy asked how I felt about a cap on the maximum payments and to be honest I find it ridiculous that anyone would get more than €300,000 in a single farm payment; it is indefensible. I agree with the principle of caps and the Commission is now proposing that once a person goes above €150,000, reductions will apply to the payment, starting at 20% and moving to 100%, meaning there will be no more payments after €300,000. I would have no problem with that reducing slightly. I am being told that cap will only affect between six and 12 people or companies in Ireland.
While I agree with the remarks on caps, this is not a major political issue for Ireland because it affects so few people. In principle, I support the Commission’s stance but this is a potential bargaining chip for Ireland. We have huge political issues surrounding flexibility on the redistribution of single farm payment fund within the country so we should use all of our bargaining power to ensure we get the best deal possible on the most important element of these proposals, the flexibility issue. Rather than making a big stand on the cap issue, we will try to use it to secure the support of other countries on flexibility.
On a joint approach between the Six Counties and the Twenty-six Counties, I hope I will be able to speak in a way that many farmers will be comfortable with. We share many of the same concerns with our colleagues in the North. I have developed a good relationship with the Minister for Agriculture and Rural Development in the North, Michelle O’Neill, and we will continue to discuss in detail how we can support each other as CAP negotiations move forward, and how we can help on milk quotas and the soft landing. We have checked if it is possible to transfer quota between North and South and it is not a runner at present. We will continue to examine all possibilities.
One of the interesting things in CAP this time is that outside of the CAP funds, there is a considerable chunk of money for research and innovation available to the food sector that was not available before. We can target research and development funds and innovation funds that are being made available by the Commission under a different category outside CAP that can be applied to the food sector and we should take advantage of it.
Deputy Seamus Kirk: Is the Minister considering an independent economic assessment of the reactivation of the sugar beet industry? There have been two feasibility studies from a commercial angle but has any consideration been given to the Department carrying out an independent study?
Deputy Simon Coveney: At present, no. We have gone through both studies with a fine tooth comb in the Department. The figures stand up but the key issue is the impact on sugar prices when and if we get rid of quotas in the European Union, when Germany, France, Poland and Britain dramatically increase the volume of sugar they are producing. Personally I think it will not collapse, although there will be a reduction in prices. Whether prices will fall by 40%, which would be needed to make it viable here, remains to be seen.
It is important, however, to note that Ireland is not a competitive place, from a global or European perspective, to produce sugar. Sugar yields and sugar content in sugar beet are not high in Ireland because of the climate. Producing sugar from sugar beet as opposed to from South American sugar cane is not competitive. Having said that, because of the extraordinary supply problems with sugar, the likely increase in demand for sugar in future, the importance of sugar security for the food industry, and the value of sugar beet as a rotation crop, which is grown on about 10,000 hectares of land at present when there is no sugar industry but because farmers like to grow it and feed it to cattle, there are many reasons why farmers might like to pursue this course of action. The responsibility for me is to be up-front about the risks and opportunities and that is why I have said if we can predict a fall in sugar price below €500 per tonne of processed sugar, we are in dangerous territory but if we can make an educated guess that the price will remain about that, we are in an interesting position.
Deputy Michael Moynihan: The figure of 7% for eco-focus is quite high, particularly for intensive farming. The Minister should try to bring that to a realistic level. There is ongoing debate between the Department and the CSO on land declared on the single farm payment each year and how much the Department thinks is not claimed in any single farm payment application. We have heard concerns from family farms that have built up substantial single farm payments but will see that drastically reduced. Does he accept people will be drastically affected by the proposals as they are before the Commission at present? Commonage areas are not covered by the single farm payment at present but I trust they will qualify under the new regime.
Deputy Luke ‘Ming’ Flanagan: Going back to the Minister’s earlier answer, under the current single farm payment system, can the Minister find out if part of the payment can be taken off farmers, no matter what other penalties are imposed, if they cut turf next year in one of the 55 SAC bogs? The Minister will have to find that out because the Turf Cutters and Contractors Association is finding it very difficult to get a definitive answer on this. We wrote to the Department of Agriculture, Fisheries and Food asking for a yes or no answer and we got every word in the English language bar yes or no in reply. We must find this out for definite.
What is the Government’s policy on the capping of payments in negotiations? How low could the cap apply below €300,000? Could it go down to €200,000 or €100,000 maximum? The less money goes into the rich person’s hand, the more might potentially end up in the hands of younger farmers or those farming at a smaller level.
Deputy Simon Coveney: The 7% eco-focus areas include hedgerows. There are more hedgerows in Ireland per square kilometre than in any other country in Europe and we can count hedgerows as part of the 7%. In real terms, it is much easier for Irish farmers to set aside that level of land than for many farmers on mainland Europe.
From my perspective, however, the idea of setting aside any land that could be used to produce food when there are issues surrounding food security and when Ireland can produce quality, safe food for which there is a strong demand in Europe and globally makes no sense. If we need to protect areas for ecological reasons we should zone in on protecting those areas, as we do at present. To require every farm in the country to set land aside, regardless of the conditions, environmental value or biodiversity on the farm seems to me to be a very blunt tool. We should be more sophisticated than that.
With regard to Deputy Kirk’s question on farm land for which there has not been an eligibility trigger, I will come back to the Deputy with a more precise answer. It is my understanding that there are about 500,000 ha that is called naked land. It does not have the clothes of eligibility on it.
Cross-compliance is the terminology used when agricultural payments are lost because rules regarding respect for special areas of conservation, SACs, or biodiversity are broken. I will come back to the Deputy with a proper answer on this, but it is my understanding that if a farm within an SAC blatantly breaks the rules there is probably a cross-compliance implication. In other words, the farmer could, potentially, lose payments. I will come back to the Deputy in writing with a more exact answer than that.
The Deputy’s final point requires a response. The idea that we should take money from the rich to give it to the poor is a gross over-simplification of what the single farm payment is about. The single farm payment supports the production of sustainable food producing systems on Irish farms. We should recognise and reward the production of food, on a small scale on small farms and on a big scale on bigger farms. We should not penalise large farms because they happen to be efficient at producing food. The single farm payment recognises that producing food in Ireland and across Europe is more expensive than in other parts of the world, because of what our consumers demand of our farmers. They demand traceability, safety, inspections and limitations on hormone use in beef. They raise issues relating to climate change, sustainability, animal husbandry and all of the other things that are required of farmers in Ireland when they produce food. The single farm payment recognises the fact that those requirements make it more expensive to produce food. If we are to be competitive in terms of food pricing, consumers must pay something if they are going to demand those standards from food producers.
We have, and will have, a series of other mechanisms, under Pillar 2, to deal with issues related to the need to keep people on the land. We must recognise that in NATURA 2000 areas or SACs people have limitations put on them and that there needs to be some compensation for that. Deputy Kirk rightly raised those issues. From an environmental point of view, that is why we have disadvantaged areas and less favoured areas, LFAs. That is why we had REPS, which was a hugely successful scheme. We now have the agri-environment options scheme, AEOS, to follow on from that, because it is what we can afford at present.
We should not lump all these issues into the single argument that we need to take money from rich people and give it to poor people or take money from big farmers and give it to small farmers. That is not what we are at. The single farm payment supports an agricultural system and rewards people who are producing food responsibly and efficiently, as well as providing some support for people who are not able to do that because of the land they operate on. In the Common Agricultural Policy, as a package, there is a series of other tools to deal with the necessary social supports in rural Ireland, particularly in disadvantaged areas.
It is important that I make this point. The primary importance of the single farm payment, which is Pillar 1 money, is in supporting the growth and expansion of the agrifood industry in Ireland, predominantly by supporting farmers to produce food and to expand and grow. There will be some redistribution of money within Ireland from what has been referred to as the productive sector to what is referred to, I think unfairly, as the unproductive sector. It is an insult to say anyone’s farm is unproductive.
We need to tailor a solution that suits Ireland best and allows us to do what we aspire to do in growing the agrifood industry. What the Commission is currently proposing will not allow that. That is why there is a flexibility issue in the distribution of single farm payment money. We cannot simply maintain the exact status quo based on historical payments that have a base year going back to 2002. We need to put in place a new system that works. We will be working hard to do that and we have some ideas that are already semi-developed in that area. We will be working with farm organisations, stakeholders and farmers, in discussion groups when and where appropriate, to get the balance right and ensure that we treat people fairly and allow the industry to continue to grow.
Minister for Agriculture, Fisheries and Food (Deputy Simon Coveney): In many ways, this is the most important debate of my period as Minister. To discuss the Commission’s proposals is of significant importance. That is why I requested that we debate the proposals in the House rather than relying on press releases or PR spin. This is also why, this morning, I sent every Deputy a detailed analysis of the Commission document. I hope all Deputies received that and that it helped to inform their contributions. I will continue to do this. I do not want to manoeuvre party political advantage. As I receive information and as we develop ideas I will try to be as open and transparent as I can be and to take people’s ideas on board.
We are talking about the future of 128,000 farm families, many of whom rely heavily on income from schemes supported by the European Union, particularly the single farm payment. During the period of the next Common Agricultural Policy, payments of approximately €12 billion will come into Ireland. This is a significant contribution to the Irish economy. In reviewing the Common Agricultural Policy, we are trying to modernise farming and develop our thinking as to how farming should be done and how food should be produced in the European Union.
Deputy Luke Flanagan and others said they thought the European Union has been inconsistent and that policy has changed. This is true. Policy has changed and it will change again in the future because food production and the food debate changes. Seven or eight years ago, the European Union was trying to create an artificial market for food production, to keep supply down and demand up, to keep prices up and to import the excess food we needed cheaply from other parts of the world. There is now an entirely different debate. We are talking about food security and how we can ensure that Europe can feed itself and make a contribution to feeding people in other parts of the world who cannot feed themselves at present. Countries we currently import from will not be able to export in five or ten years time when their own populations grow and they struggle to feed themselves, never mind export cheaply to Europe. The food debate and food security debate change. The environmental debate changes. The climate change debate did not exist 15 years ago. It is now becoming a huge, and potentially limiting, factor for food production in the European Union and further afield.
As new challenges, obstacles and opportunities emerge policies must respond to them. The Common Agricultural Policy is about responding to the food needs of consumers in the European Union and further afield and trying to support a farming and agricultural base that can meet those needs over the next seven years or so. The European Commission has got it right in terms of its proposals to support young farmers, keeping in place the envelope rather than reducing it and in regard to capping and so on. However, in some areas it has got it wrong and we will have to change that. It is my job and that of Members to ensure we get a decision and conclusion to the CAP debate that makes sense for Ireland.
The job of the EU is to put on the table a policy proposal that is based on a common agricultural policy review for half a billion people in 27 member states. Members cannot expect that everything in that proposal will be tailor made for Ireland. It will not. However, it is a starting point. The EU puts in place a policy across the Union following which countries must then lobby, negotiate, use their skills and influence and build alliances and understanding in discussions and debate on specific areas of concern. Ireland has specific areas of concern. We are unique in the EU in terms of the percentage of food we produce that needs to be exported.
We are also unique in the EU in terms of our levels of ambition for the agri-food industry. As I understand it, Ireland is the only country that has a comprehensive growth template, namely, Food Harvest 2020 which the entire industry, including farmers, processors, food companies and Government buy into. We now need to tailor what is a broad based document, which seeks to provide a solution for CAP reform across the Union, for Irish farmers and Irish specific concerns. The big issue is how we redistribute single farm payment funds within Ireland. We need to have this debate in a way that does not cause huge division in rural Ireland.
Deputy Simon Coveney: It is hoped that people in this House will act responsibly during that debate. I can assure Members that I will listen to their arguments and will, when and where possible, try to facilitate them. I look forward to this House collectively ensuring that we do everything physically possible to ensure that by the time a deal is done, which is likely to be during the Irish presidency in the first half of 2013, there will be in place a sustainable plan for growth, through the Common Agricultural Policy, for the Irish food sector into the future.
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