Mr. John Comer:

I thank the committee, and my organisation welcomes the opportunity to engage with elected politicians and make them aware of our views on issues that are important to farmers. We are thankful for the privilege. There is much ongoing debate relating to the CAP.

Much will be decided in the coming six-12 months. We have made our views on policies well known and have met a number of the political representatives present today on an individual basis. However, it would be worthwhile to go over the important aspects.

Everyone is in agreement that we need the best result in the budget. Our organisation wants the multi-annual financial framework to be put in place as soon as possible. If financial crises occur in other member states, it will not be to farmers’ advantage to have the budget continuously in doubt. It is in everyone’s interest to agree the framework. This relates to pillars 1 and 2. We must keep an eye on objective criteria and the way in which pillar 2 is funded. It is essential that Ireland’s portion of the pillar 2 budget be agreed simultaneously under the multi-annual framework. Perhaps we will have a wider debate on this issue.

We have picked out the main points of the October 2011 proposals on the Common Agricultural Policy, CAP, that will affect us as farmers – flattening or convergence, as it is known, the base year and greening. In the Irish context, convergence or flattening would have a negative impact on active farmers. We wish to flag this issue clearly today. If every hectare of land in Ireland has the same payment attached to it, there will be no incentive for a farmer to remain active and all of the financial power will be placed in the hands of the armchair farmer instead of the active farmer. We support the Minister for Agriculture, Food and the Marine’s position. With his departmental officials, he has a fair grasp of the impact of shifting funds from one set of farmers to another.

We would support proportional approximation, but it should be graduated. A critical wording should be incorporated in the regulation, namely, “a gradual move towards”. This would not require one to arrive at an outcome within a specific timeframe. Even the proponents of different approaches to disseminating the funds agree that a gradual move is essential, particularly given the system’s use of reference years.

We must accept that the historical situation is gone. The Commissioner does not like the word “historical” and wants to move onwards. However, the people with historical entitlements or their sons or daughters remain active on their farms. There are anomalies, but as much as 85% of them are still active. Some 9% or 10% are in receipt of large payments but are doing little, but one should not throw the baby out with the bath water. One should be cognisant of supporting the active farmer.

A useful definition of “active farmer” at member state level is essential. An active farmer should have a meaningful stocking density. In the interests of fairness, we would not be opposed to the inclusion of an off-farm income element, although the Government might claim that it would be difficult to regulate.

Turning to the graduated approximation, up to the first €30,000 the maximum linear cut could be 5%. At over €30,000, the cut could be 10. This would have a large effect on lower single farm payments. A small payment would increase by up to 30%.

Although I am from the west, I represent all farmers. The best way to represent west of Ireland farmers or those who believe that they have less productive land would be to incorporate into pillar 2 a meaningful rural environment protection scheme, REPs, no further cuts and an enhancement of the disadvantaged areas scheme payments. This is the way to channel funds to land that does not have the same productive capacity. Investments have taken place but in the average or typical sized farm operated by a full-time farmer. Cognisance must be taken of that fact. A full-time farmer, operating a labour unit, receives a reasonable single farm payment so what, in the name of God, is the justification for making him insolvent? It is the production basis for this country. Why would funds be shifted away from him, even modest payments of up to €30,000? What is the point of doing that?

Many politicians have told the organisation that the potential impact and speculation about using the base year has gone. I strongly disagree. People continue to speculate, particularly on the dairy farmer element. The land surrounding a milking platform is critical and if anything interferes with it then a farmer cannot milk cows or replace it with land located five miles away. People say that the damage has been done with regard to the reference year. The problem is that I do not believe that the reference year will be 2014. I think that it will go beyond that.

If everything works as best that it can and the multi-annual financial framework is agreed at the end of the month, before Christmas or at the end of December, we get the EU Presidency in January and the Minister gets agreement on everything, then we need regulation and to build legislation around it. Even if all of the civil servants in Europe work flat out I do not think they will get the work done in time for 2014. That means that the base year will role on again. If, like the indications made in the past few days, they run into difficulty then it could be 2015. Therefore, speculation will continue and it is a disaster for the dairy farmer because there are issues with the land around milking platforms.

The IFA has an issue with the third element of the CAP which is greening. There are 18 statutory management requirements for cross-compliance and that bar is sufficiently high enough to justify a single farm payment. We must bear in mind that the Commissioner has emphasised that it is his best card for securing the overall budget and it is the best way to sell it to the taxpayers of Europe who fund the CAP and EU budgets. Keeping in mind that greening is coming, the IFA would like to know more of the details. It is proposed that 30% of lands will be under the headline of "greening". If that is the case then the IFA want it to incorporated into proportional approximation. Otherwise, in year one, 30% of land would be flattened which would be too fast and too soon and would distort many businesses. We would like to know the details of the greening plan. There is a proposal to have five hectares for crop rotation which would be a disaster for dairy farmers as a lot of dairy farmers grow maize. The limit is too restrictive. I know it has been proposed to increase the amount but it is not a Commission proposal. Many issues must be watched. We want to ensure that the greening element does not disallow the need for a proper rural environment protection scheme in pillar 2.

With regard to pillar 1, price supports are important to our industry. The safety net for milk has been decreased to 20 cent per litre which is too low. Every milk producer across Europe would be gone out of business with such a rate. The scientific bodies in Teagasc have told us that the cost of production is 28c per litre this year.

Under the CAP proposals the IFA has not seen anything to identify or address the largest problem that will face our industry. The Minister has noble aspirations for us, such as an increase of 50% in production by 2020. We have not seen anything in any policy about volatility. It is incumbent on national and European politicians to address the elephant in the room which is volatility. That has the capacity to bring the dairy industry to where the pig industry is now. When I was growing up every household has its own pigs, perhaps as many as 20 sows, but now there are fewer than 300 pig farmers. They are struggling financially and scale has not solved their problems. Volatility is the single greatest risk factor for the dairy sector, particularly for investment.

We are working with our European milk board colleagues in promoting the idea of an independent monitoring agency. It needs to be independent of but supported by the Commission in order to get it up and running. It has been tried at national level in several member states and has not worked. It would have a two-fold effect - first, it would address volatility and second, it would take away the power from the multinationals. It is frightening to note that 23 multinationals control up to 90% of the retail food chain process. An independent monitoring agency would clearly identify the cost of production of milk and other products, what the processor takes out of it and what the retailer gets. It would identify where production is going before it actually happens, so an agency would have the capacity to predict production levels in eight to ten months time. We might be able to incorporate a system that would allow for expansion or contraction, if required.

It is of vital importance that we get funding from pillar 2. While we welcome the agri-environment options scheme, AEOS, it is the poor relation of REPS. It is not fit for purpose. A good vibrant, robust well-funded REPS scheme will identify and address many of the issues we raise. The disadvantaged area payments were cut from €220 million to €190 million. It must be reinstated and there must be certainty in the upcoming budget that no further cuts will be made to the REPS and the disadvantaged areas budgets. Under the Common Agricultural Policy proposals, we would like an orderly transfer of family farms. with provisions for installation and early retirement.

We have set out in detail our requirements in our pre-budget submission. I will list the headings. Land consolidation is absolutely critical. We acknowledge the improvement in the stamp duty provisions in the last budget with the reduction from 6% to 2%. We feel further adjustments could be made in the next budget that would make a significant impact. We would like to see the young trained farmers' stamp duty relief, which is due to run out at the end of this year, addressed.

We have major issues with capital gains tax on land consolidation. The capital gains tax is now at 30%. If one wants to sell a parcel of land five or six miles away and buy ten or 12 acres around the home farm, the costs are enormous. It is off-putting. I think for the good of the economy, given we are charged with taking the economy from the financial abyss, we would like the problem we have identified to be recognised in real terms in the budget and give roll-over relief for land consolidation. I think it would be of huge benefit to individual farmers and achieve significant benefit for the national good. We make a strong case that transfer of the family farm should be done on a tax free basis. My colleagues can answer detailed questions on the taxation elements of the pre-budget submission.

We do not want to see cuts in the funding of the schemes during 2013. The targeted agricultural modernisation agricultural scheme, TAMS, covers the dairy equipment scheme and is funded by four tranches of €4.25 million each year. We would like to see the payments front loaded. There is no logical reason that the money which will come on stream on a tranches basis is not paid to the farmers who want to do work. I know there is a requirement under EU legislation, but it does not specifically state that the tranches must be equal. It only states that there must be moneys available at the end of the scheme as well as at the beginning. I think the scheme could be front loaded to meet the demand that is there and leave a smaller portion of the fund for later on.

I think everyone is aware of the view of the capital assets implementation group. We say that land is merely the tools of the trade by which farmers earn an income. To incorporate the value of the land into the equation of income on which the capacity of a parent to send a child to third level education is adjudicated would be unfair, unjust and unworkable. I am prepared to answer any questions on our position.

An issue that is close to my heart, because I have looked for the logic to it on numerous occasions, and with the permission of the Chairman, I will refer to it at this meeting, relates to the conveyancing conflicts group. The Incorporated Law Society brought in a statutory instrument that will become the law of the land on 1 January 2013, whereby it is a legal requirement that a solicitor cannot act for both parties as happened heretofore. This will impact on all property transactions, but on farm transfer it will have a serious negative effect in terms of costs. What typically happens in a land transfer is that one person gets some of the land, another son might get a site and a daughter something else. A family with five children could end up with a bus load of solicitors to go ahead with the transaction. It was introduced under the guise of protecting the elderly and to prevent elderly abuse. We never got figures as to the number of people who were abused, or where it featured in the statistics and if this statutory instrument will resolve it. My view is that it will not. At another level, how did we gift the capacity to enact laws to the Incorporated Law Society when we have 166 elected representatives in Dáil Éireann and 60 Senators in the Upper House without it ever getting to the floor of the Houses of the Oireachtas? If it had been debated in the Oireachtas, the Law Society's position may be vindicated, but at least we would be more educated about it.

I thank the Chairman and members for their attention.