Mr. Phil Hogan:

I thank the Co-Chairmen and the Members of the Oireachtas present. It is good to be back. I thank the committees for facilitating this meeting. As the Co-Chairman has said, earlier this week I participated in an interparliamentary committee meeting with the European Parliament's Committee on Agriculture and Rural Development. Some of the members present were able to be there. We covered a number of issues but we can always go back over them again.

Last week, I spoke in a debate in the European Parliament in which I acknowledged that "national Parliaments play an essential role in bringing the Union closer to its citizens". We have to rely on members to scrutinise the activities of their own Government but they should also be able to scrutinise the programmes which we have at European level. As public representatives, this is the way it should be.

I recognise the immense hardship caused by the prolonged winter and the rainfall levels in recent months, which have particularly affected livestock and tillage farmers throughout the country. We are all very conscious of the stress that this has caused for farmers, both financial and emotional. The weather seems to have improved and the images of animals going back out into the fields were certainly welcome, though obviously we would have liked to have seen them in better condition. As members are aware, last October the European Commission was requested to allow additional advance payments to be made under the basic payment scheme and advance payments were increased from 50% to 70%. I was requested to allow that increase by the Minister for Agriculture, Food and the Marine. In recent weeks the Minister also requested me to allow Irish tillage farmers to derogate from the crop diversification requirement, which is known as the "three-crop rule". This is being implemented since 11 April. I made a political decision with the Commissioner for the Environment to do so. Of course the paperwork has to be completed but nevertheless farmers have been able to sow their corn and their crops from 11 April without having to comply with the three-crop rule.

This meeting comes at an opportune time. Next week, the European Commission will adopt its budget proposal for the period from 2020 to 2027. Like the Estimates process with which the members are all familiar, there is always a little bit of toing and froing between the relevant Commissioners and the Commissioners responsible for the budget. It is no secret that this is also going on in Brussels at the moment. The difficulty this time arises because we have €12 billion less as a result of Brexit and because of the expectation of member states that more money will be spent on other policy areas at European level, particularly security, defence and migration. That would cost another €12 billion if it were to be implemented immediately. There are only two places from which we can get money, that is, from the member states or from "own resources" as it called. This refers to various sources of money such as the emissions trading scheme. This money is required to fill the deficit in the EU budget. The Irish Government and other governments - 21 governments out of 27 in fact - have indicated that they are prepared to look at putting more money into the pot. However, this decision must be made by unanimity so we have to work hard over the next year to convince the five or six countries which are holding back if we want to get agreement on a well-funded and fully-funded European budget, such as we have at the moment.

I have made this point strongly when I visited a number of countries and met not only ministers for agriculture, but prime ministers. I have also been offering a robust defence of the Common Agricultural Policy, CAP, and the value for money it delivers. I genuinely believe that the CAP has stood the test of time and has been a remarkable success, but a successful policy is often taken for granted. Nobody here should be under any illusion about the extent of the challenge facing the budget. My job is to try to build strong alliances in order to resist the worst of these cuts and achieve the best possible outcome for our family farm model. That is what I am doing at the moment.

We are proposing some significant changes in the context of the CAP communication. As members will know, on 29 November I indicated that we have to have a new way of delivering the CAP in order to bring about greater simplification of this policy. We have European rules and we have member state rules. In my view we do not need both. We want to move from a rules-based and compliance-based approach to an approach based on performance and results. We have to do more for the environment and for public goods. This is the only way we can adapt our CAP policy in order to be able to show our European taxpayers and all members of society that food security is important but that public goods are equally important. Our farmers certainly have a role to play and I want to see farmers as part of the solution, not part of the problem.

Guaranteeing a fair level of direct payments for farmers to support their work is, in my view, not alone essential and not alone for the benefit of farmers, but for the benefit of the wider society. Farmers are both the producers and providers of our food and the custodians of the countryside and the front line in the protection of the rural environment. They are effectively our boots on the ground in delivering on environment and climate change. I also want to see our small and medium-sized farmers protected from the worst excesses of what may be a difficult budget. I have been making the case throughout Europe that this is about equity and fairness for our farmers, who provide our people with so many public goods.

Some pure economists, in this country and outside it, advocate the abolition of direct payments and say that there should only be payments for public goods. I do not agree with this. We need income support for our farmers in order that they can survive. We cannot have a sustainable society without sustainable farmers. This is particularly the case for our small and medium-sized farmers. If we expect our farmers to make a bigger contribution to climate challenge and other societal goals, that has to be taken into account in terms of the budgetary allocations made. Members will hear more about this over the next few days, next Wednesday to be precise.

On the proposals for CAP reform, which will be published in late May or early June, we are moving away from the one-size-fits-all solution designed to be applicable from the Inishowen Peninsula to the Greek islands, or from Slea Head to Lapland. Not every farmer in these places does things in the same way and we have to reflect that in the spirit of subsidiarity and flexibility at member state level. We are addressing this in the context of our proposals on the CAP. The European Union will continue to have decision-making responsibility in respect of policy and key objectives, while there will be more flexibility for member states to draw up CAP strategic plans in order to meet those objectives. Member states will have discretion to decide on the appropriate measures to meet these objectives, having regard to their own specific circumstances, whether that is in terms of farming practices, climate or other conditions. In Ireland's case, these measures will have to be included in Ireland's CAP strategic plans, which will be subject to approval by the Commission. The achievement of these measures will be assessed by reference to set indicators and targets.

Some members will be aware that the existing approval system for the rural development programme can be lengthy, cumbersome and, sometimes, frustrating. We are determined, as part of our commitment to greater simplification, to make the new approval process more straightforward and efficient.

At the outset, I referred to the dreadful weather under which farmers have been trying to operate. These conditions have added to the costs of farming and it will not be easy for many of those farmers to recover these costs in the short term. Farmers deserve a fair price for their produce. This is where we are tackling the issue of unfair trading practices. These proposals are targeted not just at farmers and small and medium enterprises, but also at tackling the broader food waste crisis across Europe. Buyers will have to become smarter and more responsive to consumer demands when they can no longer load the risk and cost of food waste on producers. We will have a more ordered and more governed food supply chain. It is an initial proposal, which can be built upon by the member state governments and the European Parliament. We are doing this in the form of a directive which recognises that many member states are already doing things about unfair trade practices. These proposals can supplement and improve those actions. The Minister, Deputy Creed, said at the April Council of Ministers' meeting that the purpose of the legislation is to complement, not replace, that which functions well already, where that is the case.

With regard to trade, Ireland is a major exporting country in agrifood exports. For the year as a whole, it is estimated that the value of food and drink exports increased by 13%, representing growth of almost 60% since 2010. Exports to the UK rose by an estimated 7% to some €4.4 billion despite the weakness of sterling. However, Bord Bia figures suggest the share of exports to the UK has continued to fall despite the top-line growth figure, and the market share for exports to the UK is now estimated at 35%, down two points on last year. Therefore, we have to diversify. We have been travelling around the world with various business delegations in order to see what we can do to diversify, and we have succeeded in many places, for example, Japan, Vietnam, Singapore, Canada and, recently, in Mexico. I know there are concerns about trade negotiations with Mercosur, and these are certainly recognised as sensitive by the EU and as part of the mandate of member state Governments in the European Parliament.

A diversification strategy is essential if the agricultural sector as a whole, and particularly the beef sector, is to be protected from the worst effects of Brexit, given we have no idea yet what kind of future relationship we will have or what will exist between the UK and the EU. I am continuing my economic offensive to identify and access new and emerging markets. I remind the committee that the most recent EU figures showed monthly exports at a record level of €11.5 billion, adding up to a 12-month total of more than €130 billion in 2017, which is the highest ever. I am not saying that is happening because I am the Commissioner but, nevertheless, if there was anything going wrong, I am sure I would have heard about it. I look forward to many people mentioning this figure in the months ahead.

I am going to China with a business delegation arising from the very important opening of that market to beef in recent times, and four meat companies from Ireland will be accompanying us as part of a 71-strong delegation. The opening of the Chinese market is fortuitous and we hope Bord Bia and the Department will be able to deliver exports there, sooner rather than later. I pay tribute to the relationship the Irish Government and Irish public representatives have had with the Chinese embassy and the Chinese authorities in bringing this about. This has been a long time in gestation and it has come about because of painstaking political dialogue over a long period, and I am happy to see it has now come to fruition.

To conclude, I want to deal with the issue of relations between the United States and the EU in the context of trade. These are sensitive times and there is always the potential for a trade war in agriculture and food products between the US and the rest of the world in which European agricultural food products could become collateral damage, for example, in a trade war between the US and China. It is very difficult to understand how the US would target EU companies because we are supposed to be on the same side of the argument when it comes to the surplus of aluminium and steel vis-à-visChina. Nevertheless, the strategy and tactics of the US are certainly something that change from day to day, so there will be sensitivities around some Irish products that might be on the list. However, we have to reflect that all regions of the EU are affected and all regions take the responsibility if this is the way the US wishes to proceed.

Commissioner Malmström has been very active. She has gone to the US and the economy Ministers of many states have also been to the US, particularly those from Germany and France, to try to highlight the difficulties that would be created for the trading relationship of European companies vis-à-visthe US if this was to come to pass. We hope that common sense will prevail and that the good relationship we have on the trading side, given the 11% increase in trade between the EU and the US last year, will not be affected and will continue. We want to assure co-operatives and medium-size businesses in the food and drinks area, which are worried about this situation, that we are doing everything to convince the US President by 12 May so he will not in any way pull the levers of some irresponsible action that will have unintended consequences for our agrifood trade.