Mr. Phil Hogan:

I thank the Chairman and members of the committee for their invitation. I am pleased to be here again. Since my appointment as Commissioner, this is the second occasion on which I have been in the Irish Parliament. I have visited 20 national parliaments on the instructions of the President of the European Commission. Commissioners have been told to engage with public representatives and national parliaments and I am very pleased to do so.

This visit takes place at a time when trust in the institutions of the European Union is falling and criticism, some of it unfair, is being heaped on the EU. We need a debate about how the EU can better communicate with the citizens in a way that emphasises the positive contribution that the European Union can make to their lives. The Common Agriculture Policy, CAP, is one of those policies that makes an immense contribution to the lives of millions of farmers and other beneficiaries in every country in the EU. Without it, what kind of food policy or agricultural production system would we have in Europe? What kind of rural environment would we have and what kind of vitality would our rural communities enjoy? How would we guarantee the food security of our 500 million citizens?

Agriculture and the broader agrifood sector continues to be a very important economic mainstay for this country, particularly in rural areas where employment prospects are not always plentiful. Recently, I made a visit to Greece where I met the Prime Minister to discuss how agriculture and rural development can make a telling contribution to the economic recovery of his country and how it can be managed and supported. As an Irishman, I was pleased to be able to use this country as an example of how this can be achieved.

In his recent state of the Union address, President Juncker spoke of a Europe that preserves our way of life. He identified a number of characteristics that epitomise this way of life, one of which is our agricultural sector. He specifically committed the Commission to standing by our farmers, particularly when they are going through difficult times. The European Commission's solidarity with farmers in every country in the EU is illustrated by the fact that we have mobilised €1.5 billion to support our farmers during the recent period of market difficulty. We did so without invoking the crisis reserve of €433 million per annum. Producers were hit with an unjustified trade ban imposed by Russia and many farmers, including in this country, were hit by falling milk prices resulting from many factors. Pigmeat producers have also been through a very difficult time but the European Union has provided almost €130 million in additional support for the sector. This, of course, is in addition to the existing CAP budget of €56 billion per annum that is spent every year to help farmers in every country of the EU.

I know that for some the level of support provided by the Commission will never be enough. However, when viewed against the backdrop of the enormous pressure on any budget, particularly the budget of the European Union, in terms of dealing with the migration crisis, I believe that any reasonable observer would have to acknowledge that the Commission has honoured President Juncker's pledge to stand in solidarity with our farmers. To put it in context, €10 billion is being provided to help to address the migrant crisis in 2015 and 2016 while an additional €3 billion has been provided to Turkey to provide shelter for 2.5 million migrants.

The CAP has been the mainstay of agricultural production in Europe for more than half a century and has ensured that the Continent has not had to experience the stress of food insecurity that it went through in the earlier part of the twentieth century. The CAP has evolved into a much more market oriented policy than was the case in its earlier years.

This evolution has been embraced by Irish farmers who are outward-looking and export-focused. The CAP is not perfect, however. A new CAP came into effect in 2015 and even before it began to be implemented I was facing calls to simplify it. Some of those calls came from the very same Ministers and Members of the European Parliament who had just negotiated it. To date I have implemented over 20 simplification measures which have been widely welcomed by European farmers. I can go into the detail on those simplifications with the committee later if members wish. More simplifications are on the way. Changes to market rules will substantially reduce 250 Commission regulations to around 40. These simplifications make life a bit easier for business operators and help them to deliver on jobs and growth for rural areas.

A further series of important actions and simplifications are being discussed at the moment in the context of the mid-term review of the multi-annual financial framework, the so-called omnibus regulation. These measures were welcomed by the European Parliament last week. They are aimed at further simplifying the policy and increasing its efficiency and ability to deliver results without compromising the policy orientation. In particular, changes are proposed to the Rural Development Programme, RDP, to provide a sector-specific income stabilisation tool. This will give member states the opportunity to design a tool that is tailored for a specific sector which, it is intended, will make it more attractive for farmers and member states. The proposal provides better means to support farmers in times of market crisis and reflects recent difficult experiences in a number of sectors. A further substantial change is being proposed to the rural development regulations to introduce simpler rules for accessing loans and financial instruments. These changes are intended to give a necessary boost, to make better use of financial instruments in the agricultural sector and to provide farmers with greater access to capital, particularly young farmers for whom access to credit is a very big problem. The proposals will require full co-decision of the Council of Ministers and the European Parliament. I have urged the legislators, in whose hands the proposal now rests, to ensure that these meaningful changes can be enforced by the start of 2018.

I am also in the course of proposing a package of measures relating to the simplification of greening and I welcome the support shown by member states for the majority of the measures. While I have offered a number of compromises which I believe address many of the concerns expressed, it is important to restate that the CAP is an economic, environmental and social policy. The CAP has a strong environmental dimension and that is as it should be. The simple facts are that the environmental dimension is here to stay and we will not lower our level of environmental ambition. I would also point out that the greening and environment measures are worth €14 billion a year to European farmers.

Given the market orientation of the Irish agriculture and food sector and the importance of agrifood exports to this country, I would like to provide this committee with a short outline on the state of play in the markets at home and abroad. When I addressed this committee in June last year, the focus was still very much on the sectors in crisis, namely, dairy, pigmeat and fruit and vegetables. Today I am pleased to say that we are seeing something of a recovery in those hardest hit markets though we have yet to see this fragile recovery translating itself into money in farmers' pockets.

The milk market has been the primary focus over the last year and a half. The most recent information available suggests there is a now a general consensus on the improvement of market conditions once the adjustment in supply started to materialise. That adjustment has begun and its effect in Ireland is beginning to show through a welcome price recovery in the last few months. The milk reduction scheme, which is voluntary and which came into effect a few weeks ago, will help this trend. I note the participation of one in four Irish farmers. The scheme has proven to be very attractive and the high level of participation is a clear indication of the appetite for such a scheme. It is particularly noteworthy and important for the success of the scheme that all of the main milk-producing countries are significant participants, including the 4,400 applicants in Ireland. Indeed, in percentage terms, Ireland is the member state with the highest participation rate among milk producers, at 24%. This new and innovative scheme has seen participation by dairy farmers across the EU, with the exception of Greece.

The beef sector is of significant strategic importance to Ireland. The sector is facing difficulties, some arising from developments in the dairy sector which have resulted in the culling of a lot of cows and slaughtering of heifers. EU production also increased by over 3% this year. This is affecting the supply-demand balance. Exports remain dynamic, with an increase of 16.8% between January and July of this year. New emerging markets, such as the Philippines and Israel, are contributing to keeping our trade balance very positive. In addition, reasonable prices for raw materials and positive forecasts are keeping production costs within certain boundaries. I am convinced that one way to ensure development and an improvement in price is to help livestock farmers to find new markets.

I will be travelling to Turkey in early December in an effort to increase access to the market there for live as well as fresh-meat exports. I have already been to Mexico, Colombia, China and Japan to try to open new market opportunities for European farmers, while I will visit Vietnam, Hong Kong and Indonesia in two weeks. As regards third-country markets, I will be proposing that we look at promotion. In addition to dairy and pigmeat, I wish to have beef included as part of our external promotion programme in 2017. We also must raise awareness of the high quality and sustainability of European agriculture, including the unique extensive livestock sector in Europe. For that reason, I intend to include a targeted promotion programme for beef, with a budget of €15 million in 2017, aimed at increasing awareness among members of the general public in the EU of the value of sustainable agriculture and the role of agriculture in respect of climate action, from which livestock will also stand to benefit.

I will offer a few comments on Brexit, on which I will elaborate further during my appearance at the Joint Committee on European Affairs after this meeting. I am fully aware of the huge strategic importance this issue has for the agrifood sector in Ireland. Trade flows of food produce between the UK and Ireland are larger than the bilateral flows that either jurisdiction has with any other country in the world and account for almost £4 billion annually. In the agrifood trade, half of all Irish beef goes to the UK consumer market. Ireland is the UK's largest market and its second biggest supplier. A total of 52% of Northern Ireland's food exports travel south to the Republic of Ireland. I made these points in great detail to the European Commission's Brexit negotiator, Mr. Michel Barnier, a Frenchman. I met him two weeks ago and I am aware that he has been in Dublin since then to discuss these issues with the Government. Mr. Barnier is a former Commissioner and former French Minister for Agriculture, so he comes to the job with some experience and understanding of the issues, not least in the agriculture sector. I am also satisfied that as a result of his role as Commissioner with responsibility for Structural Funds in the past, he understands the North-South dimension as well.

I have no new insight into what will happen arising from the consequences of Brexit. The UK has yet to make up its mind on its negotiating position. Cross-border relationships and the UK's future relationship with the EU will be very difficult issues with which to deal. The truth is that nobody knows what the future holds, be it the conditions under which the UK will leave or the post-Brexit environment in which the UK and Ireland and the UK and the EU will be able to co-exist. There will have to be a relationship of some type. The most immediate impact of Brexit is on the exchange rate, with sterling weakening against the euro and the dollar since the UK's decision to leave the European Union. The impact of a weaker sterling currency is already being felt by Irish farmers and specific sectors.

I will conclude on a more positive note by recalling the words of the Commission President, Jean-Claude Juncker, when he described our agriculture sector as a strong part of our European way of life that he wishes to preserve. In his letter of intent for last week's work programme, he committed the Commission to the modernisation and simplification of the CAP to maximise its contribution not only to the Commission's political priorities but also to the sustainable development goals. We should not ignore these political signals from the President of the Commission. Aligning the CAP closely to the Juncker priorities in the context of the post-2020 discussions will provide policy options to ensure that we maintain a viable farming community and strong, sustainable rural communities in the years to come. This process is already under way. Last month I had the pleasure of holding a European Commission conference in Cork, which was attended by over 335 people representing all of the stakeholders. It was a very successful meeting and a document entitled A Better Life in Rural Areas was agreed at it. The latter contains a ten-point plan which advocates for investing in the potential of rural areas, not only in terms of jobs and growth but also for better integration into other policies. I look forward to doing my part to build a stronger and simpler CAP and one that is able to respond to market difficulties in the future.