Mr. Tom Moran:

I thank the Chairman and ask him not to worry about the delay, as we are delighted to be present. The joint committee has asked us to discuss three extensive topics. With its agreement, with one team of officials, I shall first make a statement on the Common Agricultural Policy and Food Harvest 2020. Later, with another team of officials, I shall make a statement on the Common Fisheries Policy.

I thank the committee for giving us the opportunity to bring it up-to-date on the first two topics. I shall deal, first, with CAP reform. Members will be aware from previous presentations that negotiations on the package are taking place in parallel with negotiations on the budget or multi-annual financial framework, MFF, which will have a crucial bearing on the timing and content of CAP reform, as it deals with issues of direct relevance to the Common Agricultural Policy. Heading 2 of the MFF deals with the CAP and the negotiations on the size of the budget, the mechanisms for the distribution of funds between member states and non-financial issues such as the greening of pillar 1 or direct payments.

These are the key MFF issues from an Irish perspective.

As regards the size of the CAP budget, the Commission proposal is to maintain agriculture funding at 2013 levels in nominal terms. This represents a decline in real terms over the lifetime of the financial framework. Nevertheless, Ireland's view is that the Commission's proposal represents a reasonable starting point for the negotiations. However, we have pointed out that agriculture is the expenditure heading showing the most restraint, and that the amount proposed is the minimum required.

On the allocation of funds among member states, the key priority for Ireland is to retain our levels of funding for both direct payments, which is pillar 1, and rural development, which is pillar 2. Commission proposals for redistributing direct payments among member states are broadly satisfactory from an Irish point of view. However, it has yet to table a specific proposal in respect of rural development funding and we have concerns that the envisaged use of a combination of past performance and objective criteria for pillar 2 could reduce our allocation. We believe an objective criteria approach cannot provide a solution that will address the concerns of all member states and should be abandoned. The allocation of pillar 2 funds should instead be based on past performance only, as measured over the entire 2007-2013 rural development programme period. Any adjustment beyond that should use the same methodology the Commission has proposed for pillar 1.

Ireland is also pressing for pillar 1 and pillar 2 funds to be considered together, which would be consistent with the complementary nature of the two pillars within one common policy. In addition, no member state with below-average pillar 2 payments per hectare should lose in any redistribution and no member state should lose under both pillars. Ireland receives lower than average payments per hectare for direct payment and rural development funds combined, and we therefore see no justification for any reduction. In any event, it is imperative that we see proposals soon from the Commission on pillar 2 distribution. It is unrealistic to expect member states to sign up to proposals for the allocation of pillar 1 funds without knowing the Commission's intentions on the second pillar. This is a point we have made time and again.

The final key issue from an Irish perspective is greening in the context of pillar 1 payments. In the MFF context, the main focus is on the proportion of direct payments to be used for greening measures. The Commission has proposed that 30% of the annual national ceiling should be used. Ireland considers that this rate would represent an unacceptable hastening of the move to flat rates of payment unless it is applied on an individual farmer basis - that is, each farmer would be paid the same percentage of his or her overall payment, rather than a flat-rate 30%, in return for the greening measures the individual farmer carried out.

Against a background of increased pressure on the EU budget, particularly from net contributor member states that are seeking an overall reduction of €100 billion in funding, the Cypriot Presidency last week published the latest version of the so-called negotiating box, which is the framework within which the negotiations will be finalised. We are still examining the proposals in detail, although members will have seen the Minister's initial comment; he made the position very clear in the Dáil earlier today. The key points include a proposed overall budget cut of €50 billion, or about 5%, and a cut of 2% in CAP funding. We are also seeking clarity on the treatment of the new crisis reserve for agriculture and the manner in which proposed cuts to pillar 1 expenditure will be divided between direct payments and market supports.

The MFF proposal will be examined at a number of COREPER meetings over the next few weeks before being discussed at the General Affairs Council on 20 November and the Heads of Government European Council on 22 and 23 November. Officials from my Department are working closely with the Department of Finance and the Taoiseach's Department on this and we are fully focused on securing a deal to provide a well-resourced CAP that will allow us to achieve our objectives for the Irish agrifood sector as set out in Food Harvest 2020.

As to the distribution of the CAP reform package, the key issue from an Irish perspective is the distribution of direct payments within member states. The Minister has already discussed with the committee the impact on Irish farmers of the Commission proposal, and this was well aired in the Dáil earlier today. The impact of the Commission proposal would be dramatic and unacceptable, as it would see payments to about 75,000 farmers increase by an average of 85% while the remaining 55,000 farmers would see their payments fall by an average of 33%.

It is important to point out that we recognise the need to move away from historical payment models, but the Commission's proposals go too far and too fast. We are therefore pressing for the maximum possible flexibility to be given to member states to design payment models that suit their own farming conditions. In our case we advocate what is known as an approximation approach, by which all payments could gradually move towards, but not fully to, the average, thereby limiting losses and gains for individual farmers. Our approach mirrors the Commission's pragmatic proposal for redistribution among member states, and we believe this is a fair solution that will prevent massive transfers from our more productive to our less productive farmers. The model we have put forward is formally supported by five other member states, namely, Spain, Portugal, Denmark, Italy and Luxembourg, and we continue to liaise with other member states and with the Commission in order to gain further support. We must acknowledge the fact that a large number of member states have no difficulty with a move to flat rates - some of them support it - but we are confident there is recognition of the difficulties this poses for some member states, such as ourselves, and that the principle of flexibility will ultimately be supported.

The Commission's proposals on the greening of pillar 1 also continue to be discussed in some detail between member states. While we fully support the idea of encouraging sustainable forms of agriculture, which is at the heart of our domestic Food Harvest 2020 strategy, we continue to have concerns that the proposed structure of the greening payment, which in effect will result in a flattening of 30% of the direct payment, will hasten the movement towards uniform national or regional payment rates. Our preference is to see the 30% calculated as a percentage of an individual farmer's payment, and this is a key element of our alternative internal convergence model.

In addition, there are practical difficulties with the three greening criteria, namely, permanent grassland, crop diversification and the ecological focus areas, EFAs, and we are pushing for adjustments to these criteria. We also see merit in expanding what is called the "green by definition" category to include measures that have environmental aspects that are equivalent to or better than what the Commission is proposing. These include participation in targeted agri-environmental programmes and in certified national sustainability schemes, such as the Bord Bia carbon footprint programme in the beef sector, which is now being extended to dairy producers.

In the rural development area, our concerns about the Commission's proposals relate mainly to process. I will not go into that in detail, but we have misgivings about the incorporation of development funds into what is called the common strategic framework with other funds and about the appropriateness of the application of macroeconomic conditionality. There are also administrative difficulties associated with the identification of ex-anteconditionalities and the operation of performance reserves.

We welcome the proposal to retain key market support measures together with the use of exceptional measures and a crisis reserve for emergency situations. We have seen in relatively recent times how important these can be in the dairy sector. We strongly support the Commission's proposal to abolish sugar quotas in 2015, but we will also closely monitor the negotiations to ensure that Ireland does not lose out if that quota system is extended. We are also carefully monitoring the situation in regard to producer organisations and inter-branch organisations. We want to ensure that the Commission's proposals in this area, which include the extension of rules and financial contributions to non-members, do not have the potential to interfere with the operation of the Single Market. That is a key element for us and always will be when we export as much as we do.

The negotiation process for the CAP is complex and difficult, but all our efforts are focused on achieving the best outcome for Ireland. As to timing, the proposals are being discussed both by agriculture Ministers in the Council and by MEPs in the European Parliament, and a number of elements will be the subject of substantial discussion, amendment and compromise in the coming months. The plan is to conclude negotiations during the Irish Presidency, but this is contingent on making substantial progress on the technical elements over the coming weeks and securing agreement on the budgetary framework at the end of the month. We will continue to build on our close working relationships with key members of the Commission, Council and Parliament ahead of a major effort to achieve agreement during our Presidency.