Mr. Aidan O'Driscoll:

I thank the Chairman for his good wishes on my appointment. I will convey his comments to Dr. Kevin Smyth and his colleagues.

I thank the joint committee for the opportunity to address it on EU developments in the agriculture sector in the latter half of 2014.

CAP simplification was an issue that arose towards the end of that period and I will cover this also in my opening statement.

The committee has in front of it the six monthly report on EU developments for the period July to December 2014, which shows the number of dossiers progressed during the Italian Presidency. Given the significant EU institutional changes in 2014, the European Parliament elections and the appointment of the new Commission, policy developments in the period in question were fewer than in other years.

Before I begin, I want to correct a typographical error on page 2 of the report, relating to the schools’ schemes. The Commission is recorded in the report as seeking to ensure that aid rates for these schemes would be set exclusively by the Council. In fact, it is the Council that is seeking this. The Commission’s proposal provided for co-decision.

One of the most significant developments in the past six months of 2014 was the set of conclusions adopted by the European Council on climate change. The Council acknowledged the low mitigation potential in the agriculture and land use sector. It asked the Commission to consider how best to encourage the sustainable intensification of food production, while optimising the sector’s contribution to greenhouse gas mitigation and sequestration, including through afforestation. The detailed policy on how to include land use and forestry in the 2030 framework will be agreed before 2020. The inclusion of this text, largely drafted by Ireland, was highly significant for future policy on agriculture, forestry and climate change in the EU, particularly with regard to the 2030 emission reduction targets. It was the first time that EU leaders acknowledged the specific challenges involved in ensuring coherence between the EU’s food security and climate change objectives. This text also broadly reflects the views expressed when agriculture Ministers previously discussed this matter, again at the prompting of Ireland.

The impact of the Russian ban on EU agriculture products was discussed at several Council meetings during the course of the Italian Presidency. The dairy and fruit and vegetable sectors across the EU were most affected by the ban and the Commission introduced a number of market support measures to assist producers in these sectors, including an aid to private storage scheme that was extensively used by Irish operators. A special compensation package was introduced for dairy producers in the Baltic states and Finland who were severely impacted by the ban.

The funding of these measures was an issue, with the Commission proposing the use of the agriculture crisis reserve fund. The Commission subsequently withdrew its proposal following strong objections from a number of member states, including Ireland. We took the view that EU farmers were disproportionately affected by a decision that was taken from a political and security policy perspective, and that, in these circumstances, expenditure should not be confined to EU agriculture budget lines only.

The EU Commission has continued to provide updates on the market situation consequential to the ban and information on the measures that it has taken to address the situation. From an Irish perspective, our dairy and seafood sectors were most affected but with significant impacts also on our pigmeat sector. Until the imposition of the ban, Russia had been seen as a priority market for growth of exports, with our agrifood exports having increased exponentially, by some 460%, in the years leading up to the ban.

The next main topic dominating discussions during the Italian Presidency was the future of the dairy sector, in preparation for the abolition of milk quotas in 2015. Ireland strongly supported the abolition of the milk quota regime and along with other member states continued to call on the Commission to introduce support measures to ensure a “soft landing”, to mitigate the impact of superlevy fines, in the run up to the expiry of milk quotas on 31 March 2015. Unfortunately, agreement between member states could not be reached and Irish dairy producers are now faced with a superlevy bill of approximately €69 million euro. The Commission has introduced a facility which will enable farmers to pay the superlevy bill in instalments. Department officials are currently finalising the implementation details and the Minister will make a further announcement on this in due course.

As to legislative dossiers, the organics dossier was comprehensively examined in 2014 during both the Greek and Italian Presidencies. This is a proposal to revise the EU rules on organic production with a view to generating further growth in the EU organic sector and to reinforcing consumer confidence in the area. This dossier has continued into 2015 under the Latvian Presidency. It has re-examined the proposal at both political and technical level and has produced a substantially revised text covering areas such as the scope of the proposal, rules governing the conversion period, the presence of unauthorised substances in organic products, the co-existence of organic and conventional farming on the same holding, the import regime and controls. The Latvian Presidency hoped to achieve a general approach at Council yesterday, that is, an agreement on the Council's position, and, while good progress was made, further meetings of the Council will be required to secure agreement, which they hope to achieve in June.

The Italian Presidency discussed a number of other legislative proposals during its tenure, including the four part animal and plant health package and the school fruit and milk scheme. On the animal and health package, there was good progress on the animal health dossier, which updates and consolidates European Union law on animal health. The Italian Presidency secured a general approach from Council on this dossier and we expect the successful conclusion of an agreement with the European Parliament by the end of May.

Work is continuing under the Latvian Presidency on the plant health and official controls dossiers. Again, the objective of these proposals is to modernise and consolidate the existing legislation in these areas. The fourth part of the package, the plant reproductive material proposal, was withdrawn by the Commission for redrafting, following the European Parliament’s rejection of it last year, and no further progress has been made on this proposal to date.

There was disagreement too within the Council on the proposal to merge the rules covering the school fruit and school milk schemes. Further discussion on this dossier has been suspended pending the outcome of the Commission’s evaluation of the state of play as part of the Common Agricultural Policy, CAP, simplification exercise.

The Council also discussed ways of strengthening EU policies for young farmers and the position regarding error rates in agriculture expenditure. The Council adopted a series of conclusions concerning the latter, while Presidency conclusions were adopted regarding the former.

There were a number of developments in trade negotiations in the period covered by the report. Some of these negotiations, including those with Japan, the United States and the MERCOSUR group of South American countries, are very important for EU and Irish agriculture and I would be happy to provide the committee with further information on the current state of play. At present there is much attention on the Transatlantic Trade and Investment Partnership, TTIP, negotiations between the EU and US. The ninth round of these negotiations took place last month and a tenth round is scheduled for July. There are high-level commitments from both sides to conclude substantive negotiations by the end of 2015 but opinion is divided on whether this deadline will be met.

Turning to CAP simplification, the background is that, following his appointment last November, EU Commission President Juncker set simplification of the CAP as a priority for the incoming Agriculture Commissioner, with an instruction that, in the first year, he should concentrate on direct payments and greening, in particular, rural development, quality policy and the fruit and vegetables regime. Thus, in January last Commissioner Hogan launched a screening exercise within the Commission of agricultural legislation to identify elements that could either be simplified or left to member states. The Commission initiative is ongoing and was guided by three principles - first, maintaining the basic political decisions taken under CAP reform; second, no weakening of sound financial management or increase in error rates; and, third, prioritisation of areas of greatest concern to farmers and other beneficiaries.

The Commission then wrote to all member states inviting their suggestions for CAP simplification. Over 500 pages of suggestions were submitted by member states and these are currently being examined by the Commission.

The Latvian Presidency has pursued this initiative actively and has scheduled a number of debates at the EU Council of Agriculture Ministers. Yesterday, the Council adopted a series of conclusions, the main thrust of which are to identify the areas of the CAP most in need of simplification and to maintain pressure on the Commission to come up with simplification initiatives later this year to address these issues.

Turning to the content of the simplification, Ireland has contributed actively to the simplification initiative. We have made a written submission to the Presidency and have participated actively in the debates at Council. The main focus of Ireland’s submission is to ensure stability, certainty and subsidiarity in the application of the rules in place. This means ensuring that the Commission does not issue revised interpretations with retroactive effect or create new conditions and requirements by means of interpretative notes and implementing regulations, where no specific provisions already exist. We have provided a number of examples of specific instances where improvements could be made. These relate to interpretations taken by the Commission on equivalent greening measures, the definition of catch crops and the adjacency of landscape features and buffer strips to land parcels. We have also identified a number of elements in the Commission delegated and implementing acts that should be simplified. These relate largely to greening requirements and controls. In particular, we have drawn attention to the disproportionate impact on smaller farmers of the formula for deductions and sanctions for over-declarations and to the complicated formula for reductions and penalties for breaches of greening requirements.

I would be happy to provide further detail to the committee, if the members wish. I understand they have already have received a copy of our submission.

Our essential point is that the adoption of Commission acts, as well as delegated and implementing acts, was rushed, and the outcome is a very complicated set of rules which is a prime candidate for simplification.

We have also drawn attention to the need to streamline and simplify the approval process for rural development programmes. This is an extremely cumbersome and complicated process which is very resource-intensive and can ultimately give rise to delays in the implementation of rural development programmes. This is a key issue for us, which will, of course, also affect future amendments to programmes.

We will continue to interact with the Commission and with other member states to ensure that our proposals are followed up. The Commission has engaged positively in the process to date, and yesterday put forward a number of initial suggestions, which we are examining. A number of member states have called for a mid-term review by 2017 of the basic legislation on the CAP. We are wary of such a review so soon into the implementation process, as we believe it would not be confined to simplification but would result in an unpicking of the CAP reform agreement reached in 2013, less than two years into its implementation. Nevertheless, there will be continued pressure to sort out anomalies in this basic legislation, and this could lead eventually to more wide-ranging CAP reform.

It should be remembered that the Commission had already made a commitment to the European Parliament in April of last year that it would have another look at the greening provisions after the first year of implementation. Of course, the 2013 CAP reform agreement already provides for an evaluation of the ecological focus areas provisions by the end of March 2017. Moreover, the current multi-annual financial framework, MFF, for the EU budget will expire in 2020, and the debate on the MFF for the next period will inevitably generate a discussion on the future of the CAP after 2020, either in late 2017 or in 2018.