Mr. Colm Hayes:

I will start with the budget which, naturally enough, seems to be the main issue. Our position on it is unequivocal. From the Taoiseach to the Minister for Finance and our Minister, we want to see the budget restored to the previous level, taking into account that there will no longer be the UK contribution. Deputy Martin Kenny mentioned how proactive we had been. When here on the last occasion, we outlined that our Minister had been to the fore in gathering together other member states. He joined five other Ministers, through the Madrid Declaration, in emphasising the importance of a strong budget. Approximately 12 to 15 member states have since come on board, which means that there are now 18 to 20 member states that share the same view. Of course, it is not the view of every member state and it is ultimately a matter for Finance Ministers, but on the matter of the budget we are on the same page as every member around the table and every stakeholder.

I was asked about the importance of this issue. It is quite clear in that 80% of the EU funds for Ireland come through the CAP. We are ultimately net beneficiaries. For every euro we put into EU funds we get back a higher amount through CAP. However, the Commission's proposals are based on a certain increase in member state contributions and not all member states are willing to make a contribution. As Deputy Penrose outlined, other member states have outlined other priorities which have their own costs attached. That has to be balanced with the CAP.

We were asked whether we could supplement the budget at national level. As I understand the proposals, we will be able to supplement Pillar 2, subject to available funds. Commissioner Hogan previously quantified the shortfall or gap for Ireland at about €47 million per year. There are so many variables at play affecting whether we will make up the contribution that it would be unwise to speculate at this stage.

Deputy Penrose raised the issue of regulations. They are quite clear. On the question of whether one can top up Pillar 1 payments, one cannot according to the current regulations. We are not always in favour of this because it would give a certain degree of leverage to member states with big pockets in what they might or might not do with their farmers, which might put us at a certain competitive disadvantage. There is flexibility to move 15% of each budget between the two pillars. We are a long way from decisions, but there is certainly that option.

On the issue of young farmers, I absolutely agree. As may be seen from a cursory glance at the measures under the current CAP, we are very supportive of young farmers. The policy on generational renewal in agriculture in Ireland is based on incentives for young farmers and bringing through the talent, skills and enthusiasm available. We are certainly doing what we can to help in that regard and will continue to do so under the next CAP. As Deputy Martin Kenny said, there is a proposal for 2% of the funding to be set aside. In fact, Commissioner Hogan has been quite clear that the Commission does not intend to approve individual member state CAP strategic plans, unless they very clearly set out what they intend to do for young farmers. I am confident that we will not be found wanting in that regard. In addition to the figure of 2%, there are specific supports possible within the new regulations for young farmers. These are the supports of which we avail. An example is a higher payment under TAMS. There is a figure of 60% for a young farmer as opposed to the standard 40%. All the time, we have national Exchequer measures to support young farmers through the taxation system. They go from budget to budget, but again it is part of the package of State supports for young farmers. We are absolutely in agreement on recognising the importance of supporting young farmers.

We agree on the question of climate change. We very much regard the next CAP as part of the solution to climate change and it is part of Ireland's response. We are extremely interested in what the Oireachtas Joint Committee on Climate Change will report in the next couple of weeks and look forward to having an input. We are engaged intensively with the Department of Communications, Climate Action and Environment and its Minister, Deputy Bruton, as they intensify their efforts to deal with climate change. As I made very clear in my opening remarks, there is no free pass for agriculture and we do not see it that way. Now that we have a specific 40% target in the next set of climate change regulations, we very much see it as part of the solution. It could involve measures such as technology transfer or what we are doing. We are doing a lot to tackle climate change under the current rural development programme, examples being low emissions slurry spreading and the beef data and genomics programme. There are many individual actions also.

An issue arises on the balance between Food Wise 2025 and the next CAP. Our Minister has been very clear on the importance of sustainable intensification.

We know Irish beef and dairy production is top of the class when it comes to environmental sustainability but it can do more and we are determined it will do more. We know the stakeholders are determined that it will do more. When it comes to climate change policy, it is a stated EU position that the balance between food production and environmental obligations must always be borne in mind. This goes to the sustainable intensification point of view. In general terms, I agree with speakers who have said that they view the CAP very much as part of the solution. The individual schemes within that, the conditionality that goes behind the Pillar 1 payments and the possible eco-scheme under Pillar 1 will all have a very strong climate focus as well. They will also bear in mind the other environmental obligations that rest on our Department. We are not forgetting things like water quality and biodiversity.

There appears to be strong support for capping, as there was last time in the discussion on the regulations for the €60,000 cap. This is currently €150,000 under proposals. Last time around, we immediately capped it at €150,000. The proposal this time around is for what is called mandatory degressivity to €60,000 so it will be a gradual reduction. The question will be a policy question for the Department and the Minister of the day as to how quickly we move towards that capping but the Minister has indicated that we should be open to that capping figure. The difficulty is that the regulations oblige us to take into account the salary of the recipient. I would certainly agree with others who point out the administrative complexity involved in trying to do that both for the farmer concerned and for us. Our priority every year, particularly when it comes to Pillar 1 payments, is to get them out at the earliest possible date. We always do the usual 16 October deadline. If we must start factoring in individual P60s, P45s and all sorts of other factors, it will bring about a complexity nobody wants to see. As I said in my opening remarks, that is an issue we want to tackle.

The question of consultation was raised and it is something we should talk about in terms of next steps. We had a formal consultation last July with the many stakeholders, which was attended by the Chairman, who was there to present the views of the committee. I can assure the committee that we have a lot of ongoing informal consultation with stakeholders all the time at ministerial and official level. We consult with individual farm organisations and local groups. Both Ministers met the environmental pillar just before Christmas to discuss its views. We have had public stakeholder consultations as well and have received a wide and varied range of views. I think I can confidently speak on behalf of the Minister on this point. The Minister is very open to consultation and if there are any views out there at any time, people know where we are and that we are contactable so the door is open to anybody with views on the next CAP and how our CAP strategic plan should be organised.

Deputy Penrose raised the front-loading of grant payments for forestry grants. This is something we have just done. We did it this year as part of the mid-term review so we have a slightly adjusted higher payment for the first ten hectares for the very reasons mentioned by the Deputy, namely, that it might incentivise those with smaller holdings to come in. I am very glad to say that this is in place. There is some pick up as well and possibly at some future point we might inform the committee about the exact level of pick up of that but I am glad to say it is in place.

Regarding the question of convergence, a point raised by Deputy Martin Kenny, the proposal in the regulation is to move to 75% convergence. The Minister has indicated that we are open to that. The CAP generally has been on a path of convergence anyway so I do not think anybody sees it diverging too wildly from that. The Minister has indicated that we are open to continuing down that path. The current CAP envisages convergence reaching 60% this year. The BPS application window opens quite shortly and when this happens, it will be evident regarding those who are affected one way or the other. In some respects, it means that having gone from what was effectively no convergence to 60%, the jump from 60% to 75% may not be that significant. At at minimum, it is 75%. It may not be that significant in the overall scheme of things. There is a lot of work and modelling as to how much funding that might generate but when we start to see the shape of the budget and payments, we could come back to the committee with a bit more detail about how much money that is generating. Regarding the general point about whether convergence will happen, it is certainly in the proposal and the Minister has certainly indicated a willingness to consider that.

Risk management is always a very topical issue. What risk management measures will we introduce? We have a slight divergence from the current proposals concerning whether the risk management measures should be mandatory for member states. Bearing in mind our own specific circumstances, our preference is for it to be open to us to consider them and we are open to considering them. The main risk management measure in the current CAP has been the crisis reserve fund to which farmers contribute. To be frank, I do not think anybody claims that it has been as effective as it should have been or worked as well as it should have. I am not sure that it has paid out too much. When income crises have occurred during the CAP, including the dairy crisis in 2015, the Commission has gone to other sources and the crisis reserve to fund it, which is something we have supported. Having a Europe-wide crisis reserve is not a great model because it is extremely difficult to get agreement and engagement about how it should be used but we do want to step up. We are aware that climate change is starting to manifest itself. We had some unpredictable weather this year. From a national point of view, the solutions to date have been ad hoc. We need to consider whether they can be built into the next CAP. Hopefully, I have answered the main points. If I have not, we are very happy to come back.