Oireachtas Joint and Select Committees
Tuesday, 7 May 2013
Joint Oireachtas Committee on Agriculture, Food and the Marine
Update on CAP and CFP: Discussion with Minister for Agriculture, Food and the Marine
The Minister for Agriculture, Food and the Marine has agreed to give us an update on the Common Agricultural Policy and Common Fisheries Policy. As this is Europe week in the Oireachtas, the committee felt that our meeting would give the Minister an opportunity to bring us up to date on the key issues arising in both policies. The Minister is available until 3.15 p.m. Before I invite him to speak I remind members of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against either a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
I understand the original format for the meeting was to spend 30 minutes on each policy and that I would make a long contribution on the state of play for both policies without taking questions. However, as I am happy to take questions I will make a briefer contribution to give members to raise questions or points of clarification. I am in the Chairman's hands.
I have a slightly longer statement on the CAP and it might be no harm to read it into the record so that everybody understands the current position. Which would the Chairman prefer me to deal with first, agriculture or fisheries?
Some members may wish to leave after that. I thank the committee for inviting me to address it on the issue of CAP reform. My comments will focus on where the negotiations currently stand and on how progress is likely to be made as we try to reach agreement on a reform package before the end of the Irish Presidency in June. I will be happy to answer members' questions at the conclusion of my statement.
Recent months have seen a number of positive developments in the negotiations on CAP reform. The agreement by the European Council on the multi-annual financial framework on 8 February provided the necessary clarity to enable negotiations to move forward. This was followed by the by the European Parliament's adoption of an overall position on the reform proposals in its plenary session of 12 March and agreement by the Council of Agriculture Ministers on 19 March on its so-called general approach to the reform package, that is, all four regulations, following the tabling of compromise proposals by the Irish Presidency. The latter achievement in particular represented a major step forward given the complexity involved in reaching a compromise among 27 member states on such a wide range of issues. It proved possible to complete this task thanks to the determined commitment of my colleagues to reach agreement and their readiness to compromise on extremely sensitive issues. More important, the negotiation process is now able to move to the final so-called trialogue stage, whereby the Irish Presidency represents the Council of Ministers in discussions with the European Parliament and Commission on finding an overall compromise.
We have, therefore, moved from a narrower focus on finalising a Council position to the point where the Council's position is one of three different perspectives being brought to the table. Given that the European Parliament and the Commission have their own views on the wide range of issues arising under the CAP reform package and we do not yet know the likely shape of the final compromise package, it is too early to draw firm conclusions about the precise implications for farmers and we will have to await the end of the process, which I hope will be in June. In the meantime, however, I wish to update the committee on some of the details of the Council agreement and to highlight key issues that will have to be addressed with the Parliament and the Commission as we push for an inter-institutional political agreement by the end of June.
Direct payments are the area that has received most coverage in Ireland. Perhaps the most contentious issue from a political perspective is the question of how direct payments should be distributed within member states. The Commission's proposal to move to a system of flat rate national or regional payments by 2019 would result in a significant payment transfer between farmers in a number of member states, including Ireland. As an alternative, the Council added the partial convergence model originally proposed by Ireland, which would instead give member states the option to move only part of the way towards a full convergence payment system. Based on the Commission's methodology for distribution of payments between member states, we believe this can work. This option acknowledges the fact that it is no longer tenable to base payments on historical references while at the same time allows member states to move towards convergence in a more measured way than would be possible under the Commission's proposal. Optional minimum and maximum payments per hectare are also provided for.
In addition, the Council has proposed, as an add-on to either the flat-rate or partial convergence models, that member states may use up to 30% of their national ceilings for top-up payments to farmers on their first hectares up to the national average farm size or up to 30 ha.
The European Parliament has its own views on internal convergence. In some ways these are broadly similar to those of the Council, in that the Parliament's position provides for flat-rate payments and for the Irish partial convergence alternative. However, the Parliament representatives, at trilogues and along with the Commission, has supported a mandatory minimum payment per hectare as an addition to the Irish model. The Parliament also provides for the so-called "first hectares" payment, although it feels that this should be made on the first 50 ha, rather than up to the national average farm size. In a departure from the other institutions, the Parliament has also tabled the so-called "tunnel" option whereby payments would converge to within 20% of the national average payment per hectare by 2019, with a maximum loss of 30% that could be incurred by any individual farmer.
On the domestic front, we are facing two sets of demands on this issue. On one hand, there are farmers on low payments per hectare who are arguing for a larger share of the available funding on the grounds of equity and fairness while, on the other, there are those on high payments per hectare who have invested single payment funds in improving the productive capacity of their farms and who do not want these efforts to be undermined. Both sets of demands are understandable and reasonable but are difficult to reconcile for obvious reasons. We need a solution that is fair to everyone and which represents a real move away from historic payments but which avoids unreasonably large cuts to those on higher payment rates. As in all negotiations, the key will be to reach a fair compromise that will help to level the playing field without putting productive farmers out of business. The reality is that the final outcome will be somewhere between the Commission proposal and the Irish one. The important point from our perspective is that the Irish model is at the centre of the negotiations and I will be working to ensure that the final outcome is as close as possible to this model because I believe it provides fairness and a balanced solution.
I was pleased with the Council's agreement to the compromise proposals on greening I brought forward in March. These proposals bring the necessary flexibility to the Commission's original proposals so that farmers can be involved in sustainable agriculture without overly bureaucratic impediments. If we consider the three greening criteria, we can see that the Council and European Parliament positions are quite similar in relation to crop diversification and permanent grassland. On ecological focus areas, the internal debates within the Council and the Parliament were more complex and difficult. However, the broad elements of the Council's general approach largely concur with the framework ultimately adopted by the Parliament, although there are differences on details such as thresholds and phasing. Similar positions have also been adopted on the structure of the greening payment, which addresses Ireland's requirement that this payment be applied as a percentage of each farmer's individual payment rather than as a flat rate.
The positions of the Council and Parliament are further apart when it comes to the concept of equivalence and, more specifically, the related issues of the Pillar 2 baseline and double funding. The Council has taken the view that greening should not be included in the baseline for rural development activities. It has also extended the provision on organic production in Article 29 of the horizontal regulation to agri-environment measures supported under Pillar 2. The European Parliament, on the other hand, has taken the view that all greening measures should be included in the baseline for Pillar 2 schemes and has ruled out the possibility of double funding in all circumstances. Its position is that support under the rural development programme should only apply to measures that go beyond the mandatory standards and greening obligations under Pillar 1.
On the question of penalties, the Council has decided that, in addition to forfeiting the greening payment, a farmer could be liable for an additional administrative penalty of up to 25% of the greening payment. In contrast, the European Parliament approach is to penalise defaults on greening obligations with loss of the greening payment only. The reason the Council has adopted its position is because, in the aftermath of the agreement reached by the Heads of State on the MFF which states that greening must be mandatory, it was necessary to go beyond people simply losing greening payments if they do not implement the greening criteria. That is from where the additional fine of 25% comes.
Other issues in the negotiations include the capping of direct payments and the proposed young farmers and small farmers schemes. On capping, the Commission and Parliament are generally agreed on the mandatory capping of payments at €300,000, with phased reductions applied to payments between €150,000 and €300,000. The Council prefers that payments above €150,000 be capped or reduced by member states on a voluntary basis. Colleagues are aware of my views on that matter.
The Commission and Parliament are again broadly similar in their approaches to young farmers, particularly in their favouring of a mandatory scheme. They have, however, different emphases as regards the maximum area attracting payments and the question of whether selection criteria should be used. The Council favours the use of selection criteria and lump-sum payments, although the main difference in its approach is that the scheme should be optional for member states. Similarly, there are differences in the approaches of the three institutions in respect of small farmers. The Commission favours a mandatory scheme at member state level but participation would be optional for farmers. The Parliament, on the other hand, favours an optional scheme at member state level which would then be mandatory at farmer level. In between, the Council - which I represent - prefers an optional scheme at member state level for farmers with total payments of less than €1,000.
Of course, the big question is whether the three institutions can come to an agreement on these and other issues by the end of June. My strong belief is that they can do so. The vehicle for this will be the so-called "trilogue" process. Typically, this represents the final phase of negotiations in areas where the European Parliament has a co-decision role with the Council. Indeed, this is the first occasion on which that the Parliament has had such a role in respect of CAP reform. As President of the Council, Ireland is representing member states in these negotiations with the Parliament and the Commission. The trilogue phase commenced on 11 April, with discussions on the direct payments and single CMO dossiers. These were followed by the first trilogues on the rural development and financing and monitoring dossiers on 17 April. As of this morning, a total of nine trilogues have taken place across all four dossiers and a tenth is in progress as we speak. Although the process is normally protracted, our intention is to complete a total of 34 trilogues across the four dossiers by 20 June.
I am happy to report that progress has been very good so far. The trilogues have been held in a very positive, constructive atmosphere. All of the institutions have responded to the Presidency's call for a collaborative endeavour and for a spirit of compromise to inform the process. I do not intend to go into excessive detail at this point but it is clear that early progress has been achieved on a number of technical issues. This has been facilitated by technical discussions which are running in parallel to the trilogue meetings. Our team, which represents both the Department and Ireland, has done nothing short of a phenomenal job in light of the level of resources available. Many of the staff involved are working 12 or 14-hour days in order to try to get this over the line.
The more politically sensitive points that have been encountered to date have been discussed in a preliminary or exploratory way in the trilogues but have essentially been parked for further consideration by Ministers and MEPs at a later date. This process is very helpful in allowing the three institutions to engage with each other on these more difficult points so that they can more fully understand each other's positions and will be invaluable when it comes to finalising the agreement. In this regard, I have also agreed with the Chairman of the European Parliament's Agriculture Committee, Mr. Paolo de Castro, on a further parallel process aimed at making progress on the big political issues that are likely to form the basis of the final agreement. In other words, we are engaging in informal political dialogue on an ongoing basis in order to try to find compromises with which everyone can live.
As I have said from the start of the Irish EU Council Presidency, the final target for that political agreement is the end of June. It is clear that the European Parliament and the Commission are committed to achieving this objective along with the Council. Member states have demonstrated their commitment and as the President of the Council of Ministers I intend to do all I can to ensure these deadlines are met. I am clear, however, that the timeline for political agreement by the end of June is remarkably tight and ambitious. In fact, at the start of our Presidency many people said it could not be done. It can only be achieved with significant compromise coming from all sides and an exceptional effort from all three institutions. Therefore, following next week's Council discussion on the current state of play, I intend to use the informal Council meeting in Dublin on 27-28 May to hold informal discussions with the European Parliament on how we can ensure that the end of June objective can be met. We are likely to focus our attention on a limited number of key political issues. I will then take stock of where we stand before taking the necessary steps with a view to reaching final political agreement at the council meeting in Luxembourg towards the end of June. That is currently planned for two days but if it takes three or four days then so be it. We will push hard to try to get political understanding and agreement on all four CAP reforms and regulations. If we do that - I believe we will - then the Irish Presidency will have played a significant role in setting a course of certainty and modernisation for farming for the coming seven years. If the committee has any questions, queries or points of clarification I will gladly to try to answer them.
I forgot to welcome Ms Bríd Cannon from the Department in my introduction. We have not been circulated with copies of the Minister's statement. Perhaps he could arrange to have them circulated. We need to discuss the Common Fisheries Policy as well. Therefore, I would appreciate it if members could limit their contributions to three minutes each in order that we can give the CFP an airing. The Minister is due to leave by 3.15 p.m. which leaves us 33 minutes. I call Deputy Ó Cuív first.
I apologise to the Chairman and the Minister for my late arrival. I had mechanical trouble with the car on the way up. I did not get the full import of what the Minister said and I regret that. That said, I call on the Minister to answer some questions here or else to get me the information. As the trilogue decides things is it possible to make known publicly what has been decided, or is it the policy that nothing is decided until everything is decided and that any agreement remains a secret until everything is decided? As the thing progresses people are keen to know where exactly we are going.
The Minister referred to political agreement by the end of June. Is that an agreement whereby the Council, the Commission and the Parliament have come to the end of their negotiations and have a package that the negotiators have agreed on? Do the Council of Ministers and the Parliament have to go back for ratification? In the case of the Council of Ministers I imagine that would be easy enough but perhaps the Minister will let us know when that is likely to happen. Are we likely to see the Parliament sign off on this agreement this side of the summer or is it likely to go into the autumn? Will the Minister outline when that will be decided and when the three parties will have agreed it in their plenary sessions? I gather there will then be something of a delay in drawing up the final regulation and that it must then be endorsed by the three sides as being a fair reflection on what was agreed. How long is it likely to take before we have the final signed and sealed version and before each country will know the choices and can begin to make choices from the menu?
My understanding is that there has been a strong case made for as wide a menu as possible. Can the Minister confirm that no matter what happens it is a given that, for example, a flat rate payment is a possibility because countries have it already and the Commission wants it? In that case there may be several menus including redistributive payments or a minimum payment like the internal convergence. The flat rate payment will be in the mix anyway. Then each country would have to decide whether it wanted to level off the playing pitch.
The Minister might be able to give us some clarity on another issue that seems to be of considerable concern to the Irish Farmers Association. If I had any doubts about it, the matter would be a considerable concern to me too. I am referring to the issue of co-funding for rural development. Can I take it that it would be most unlikely that any Government of this country would leave European money after it because it could not come up with co-funding? Can I take it that the likelihood is that the Government will match all the co-funding under the rural development programme as required? I cannot conceive of any Government that would leave behind what is effectively free money but the Minister needs to put the matter to bed because I keep getting pleas from the IFA to the effect that there is considerable uncertainty about it. I suppose there may be technical uncertainty but I do not imagine that the Minister would go there and I doubt he will. It would be useful if the Minister could clarify the matter subject to the usual caveats that any Minister must set down.
Given what was agreed in the Multiannual Financial Framework, MFF, is it possible to give the committee ballpark figures on the Pillar 2 side and what they would mean in terms of disadvantaged area payments, REPS payments or agri-environment options scheme payments and so on? With the single payment it is easy to do a direct comparison between this time and last time. However, there was heavy co-funding or over-funding in the beginning and now there is a clawback. As a result it is far harder to get a calculation of what the 11% cut in Pillar 2 is likely to mean. For example, is it possible that there could be a REPS 4 payment for 60,000 farmers? I am assuming that the Government does nothing more than co-fund. Is it possible that such provision is in the ballpark? Do we know at this stage the position of what we got in the MFF? I do not presume the Government will over-fund any more than I presume it will not co-fund; I believe the Government will co-fund and no more. What order of magnitude in terms of money will be there for the agri-environment options scheme, installation aid, the farm retirement scheme, the disadvantaged area payments scheme, Leader payments and so on compared to the last time? These details would be useful for an informed debate on the issue.
I have probably used my three minutes but I have two quick, final points. The first relates to small farmers. What is the definition of a small farmer? Is it 5 ft. 3 inches, 5 ft. 4 inches or is it that he gets under a certain amount in Government payments or European payments? What is the level of payment under discussion? The Minister remarked that there was some divergence in this regard. The Minister stated that we know his views on payments greater than €150,000. Will he clarify what they are because I am unsure? I wish to know exactly what the Minister is proposing to do in this regard because, as he stated, it will be at least optional.
I thank the Minister for his presentation. I have had reservations about CAP since it has been implemented. I was hoping to have a more equitable and fairer distribution of payments in particular, to ensure that the weaker and the smaller farmer survives. The Minister is aware of my position regarding the cap on funding. I have held the position since the day I came to the House that it was grotesque for anyone to get over €100,000 in payments and that this was unjustifiable. I cannot for the life of me understand it. I can understand that the British and other larger beneficiaries would try to hang onto this but I believe it is wrong. A sum of €100,000 is more than enough for anyone involved in the enterprise.
The presentation refers to the positions of the Commission, Council and Parliament. It also refers to the flat rate, the tunnel option for the Parliament and partial convergence, and that things will fall down somewhere between partial convergence and the Commission. Can the Minister elaborate on that? It was mentioned that there are minimum and maximum options. Do they refer to a flat rate of payment?
The Minister also said he hoped to have things tied down by the end of June. That would be very dependent on where parliamentarians from other countries stand. What is the Minister's sense of the situation? Can he give us an indication of Germany's position? That could be fairly influential.
The Minister mentioned small farms. Do they comprise fewer than 1,000 acres?
Okay. My position has always been that it is essential that small family farms survive. They need whatever supports are possible to get them through difficulties in order that they can survive. It is essential, not just in monetary terms but for the social fabric of rural Ireland.
I thank the Minister for taking time out of his busy schedule to appear before the committee, take questions and brief us. I have a couple of points on single farm payments. The Minister mentioned the gap between the overall figure for internal convergence and the Commission's flat rate proposal. Does he have any sense of how far away from the figure we had for internal convergence we might end up at? It is probably a guesstimate at this point. What are the positions of the Parliament and Commission on the definition of "active farmer"? What does the Minister think the definition will be after the trialogues?
The Minister outlined the different position of young farmers. Some are voluntary, mandatory or a combination of both depending on the different sides. I am mindful of the fact Ireland has been a key exponent of protecting young farmers and making sure we have more access to the market for young farmers. Have there been any discussions on encouraging farmers to retire or putting a scheme in place? Young farmers will not go into farming unless older farmers give way to them.
The Minister did not mention sugar. Has it come up under the trialogues? Concern has been expressed by local community groups which have dealt with applications for local Leader funds. I know this area is the responsibility of the Minister, Deputy Hogan, but I am mindful of the fact that the next seven years of the Leader projects are very dependent on Pillar 2 and rural development funding. I ask the Minister to expand on the current situation.
On the trialogue process, which was touched on earlier, and the role of Parliament, do representatives have the power to make final decisions or does everything need to go back to Parliament to be signed off on? If we meet the target of 20 June, what is the likely timescale for the next six months of the year? What will happen when the trialogues are completed? When they are completed what will the next six months entail for the Minister and his Department when we consider the menu of options before us?
I thank the Minister and, in particular, his officials for the enormous effort to which he referred. I am sure they have been working extremely hard. Is one part of the trialogues batting more than the others for smaller farmers? It is a difficult question. The idea of supporting young farmers coming through the system almost becomes irrelevant if small farming is in danger, because farms will become more like business operations with businesspeople who will look to become involved with farming as farms get bigger. The idea of the small farmer and young farmers taking over farms will be diluted.
The Minister's time frame looks good but ambitious. What would happen if there is a hiccup and the process goes beyond the end of June?
I have a couple of specific questions. Is there an agreement on the reference to 2012? Will it apply across the European Union or will it be up to each member state to agree a date? If that is the case, can the date be retrospective?
What is the situation regarding ecological focus areas? There was a suggestion that farmers could pool greening measures in localities, for example a fairly intensive farm could buy greening measures from a nearby farm which was less intensive or more environmentally sensitive.
On reference years, some people retired prior to the initial scheme and are no longer farming. One group is active on this issue. If there is a retrospective reference, does it effectively preclude their re-entry to farming as they will not have drawn down entitlements in a previous year? Deputy Heydon asked for a definition of "active farmers".
I thank the Minister for his presentation. It must be a unique situation, whereby the rich get more money than the poor and those on good land seem to receive more in subsidies than those on poor land. The Minister said we know his opinion on the cap on payments. I am curious as to what it is. It should be limited to €35,000. Information has been supplied to me by smaller farming groups, which have told me changes would lead to a redistribution of in the region of €90 million. One thing that is confusing me about the debate is that when one is discussing an issue as important as this, it is important that everyone puts his or her cards on the table. If people are arguing that there should be no cap on the amount people receive, it is important to know whether those making such decisions receive large payments. Those speaking should make clear their personal interests.
I have heard people in large farming groups, who receive far more than €35,000, argue there should be no €35,000 cap on payments. At an IFA meeting in Drumshanbo a number of months ago, I discovered the IFA will give the Minister an easy time. I asked if it would campaign to put a maximum limit on the amount a farmer could receive through CAP and was told it would not campaign to cut anyone's payment. I thought it would campaign for all of its members. I have met umpteen members and attended meetings where small farmers - I do know what the definition is but we have a fair idea - are up in arms at the way things are going. What would be the problem in supporting those who are not on the best land?
It is important to differentiate between productive and intensive farming.
It is important to differentiate between “productive” and “intensive”. A farmer can be productive without necessarily being intensive, because his or her land is not suitable for that type of activity. Would the Minister describe the farmers of north Roscommon as productive and, if so, will they be rewarded accordingly?
I welcome the Minister. It is important that two agricultural schemes which were abandoned some time ago are restored. These are the installation aid scheme for young farmers and the retirement packages for farmers seeking to retire. The capacity for farmers to manage the changeover of family farms is of vital importance to the future of farming in this country. Young people must be facilitated where they wish to assume the responsibility of running the family farm. The unfortunate reality is that farming is now largely a part-time concern because it is so hard to make a living. In the majority of cases, family farms do not provide sufficient income and farmers are obliged to supplement their resources through other means.
I hope the Minister will do all he can to restore both of those schemes, which deal with the two ends of the scale, namely, young farmers starting out and those who wish to retire and pass the farm on to a younger family member. The future of Irish farming depends on young people retaining an interest and being supported to exercise that interest. The State must assist them to get going and offer enticement to parents to retire.
To avoid any allegations of impropriety, I wish to confirm that I am a farmer in receipt of the single farm payment. I have made this declaration in the past both in this committee and on the floor of the Dáil. I appreciate, however, that Deputy Flanagan may not have been in attendance on those occasions.
We do not have time to discuss that. The agenda today includes a discussion of the Common Fisheries Policy, and the Minister and witnesses are awaiting that. We also have some private business to deal with. I invite the Minister to respond at this point.
It will be difficult to respond to all of the issues raised and also deal with the CFP in 15 minutes. I expect Deputy Thomas Pringle is in attendance specifically to discuss fishing.
I have no problem coming back on another day to debate these issues. It is simply a question of finding the time to do so. I will proceed, however, with addressing the points raised as best I can.
In regard to the trialogue, what happens there is that as we go through the process, the political issues are essentially parked. In other words, all the major issues, including capping, internal convergence, greening and young farmers, are assigned to the political process to deal with. Many of the technical measures are being agreed and the trialogue is wading through all the different issues. At the end of the process a four-column document is presented. In fact, it begins as a three-column document setting out the Commission view, the Council view and the Parliament view on each issue, such as active farmers, financial discipline, capping, payment entitlements, Article 21 and so on. As part of the trialogue process, we have to fill in a fourth column which sets out an agreed compromise between the three. That is the mechanics of the process.
The Deputy is correct that many countries will refuse to sign off on anything controversial until they see the full picture. In that sense, there is indeed an element of nothing is agreed until everything is agreed. The other issue is that I cannot sanction a compromise position without going back to the Council.
As the Deputy knows, a Council position was agreed in March. In Ireland’s role as chairman of the Council of Ministers, we are negotiating with the other institutions to achieve an agreed compromise. There are essentially two major political discussions remaining. One will be an informal meeting in Dublin and the other is the Council of Ministers meeting at the end of June in Luxembourg. Members of the European Parliament and Commissioners will be present at the June meeting, so the three institutions will be represented. We hope, over two or three days, to hammer out a compromise, in which case there will be political agreement on all of the key issues.
If we are successful in that, the second half of the year will be about the Commission turning those political decisions into regulations and law which will be voted on by both the Council of Ministers and the European Parliament in the autumn. The intention is that the process will be finalised by the end of the year. In the meantime, member states will decide on how they will implement the different flexibilities and menu options that are available. Some issues will be mandatory and others not. We will have to design a system that works for Ireland, given all the flexibilities and options available to us. It is about finding the best approach to CAP reform for the next seven years in terms of internal convergence, greening, young farmers, capping and all the other issues. There will be choices to be made and it is our intention to make them in the second half of the year. There will of course be discussions on all the issues.
After a compromise position is agreed, the intention is to leave a full 12 months for member states to prepare for the implementation of the new CAP. New payment models, mapping capacities and software models will be required. Whether the revised distribution system includes new rural development schemes or a revised direct payments model, we must put systems in place that will ensure it can happen efficiently, including putting an inspections regime and so on in place to enforce it. That takes time. Most countries outsource the process to the private sector which requires designing an entire implementation system and takes at least a year.
To summarise, the objective is to have a political decision by the end of June which the Commission will then formulate into regulations and law that will be approved in the autumn by both Parliament and Council, with a view to giving a full 12 months thereafter to member states to prepare for implementation from 1 January 2015. The complication in this is that the budget starts in 2014, which will require some type of carryover measure to extend existing policy, or close to it, through 2014 on the basis of a new and smaller budget. We would then have a full implementation of the new policy direction commencing in 2015. I hope I have set out the position reasonably clearly.
In terms of the menu of options, I expect that flat rates will be a possibility. However, we will have to wait and see what is finalised. Given that some countries already have flat-rate payments, they are certainly likely to hold onto them. They are an option for Ireland if we choose to take it. I do not consider that the best way to go from an Irish perspective, but everybody has their own view on it.
In terms of co-funding of rural development schemes, the latest multi-annual financial framework figures indicate that some €313 million per year will be coming to Ireland under Pillar 2. The Deputy is correct in pointing out that this is a reduction on the current amount and that a large portion of it requires a co-funding element if it is to be drawn down. It is of course our intention to ensure that all funds from Europe are drawn down. I have made that very clear to farming organisations and I do not understand where the confusion arises.
Paper never refused ink. As a former Minister himself, the Deputy knows that I cannot make budgetary commitments three or four years in advance. All I can do is outline my intention and determination to ensure we draw down all available moneys from CAP funds.
Regarding the definition of small farmers, the Council position is that a small farmer is one who is in receipt of a payment of less than €1,000. This definition was designed for other parts of Europe and not so much for Ireland. Deputy Ó Cuív is shaking his head, which suggests to me that he does not know the reasoning behind it, which I am happy to explain. In many countries - Poland, for example - there are hundreds of thousands of farmers with very small holdings, with perhaps only two or three cows and who are in receipt of very small payments.
The idea that they would have to go through an inspections and cross-compliance regime, as a farmer with 200 or 300 hectares would have to, seems like a nonsense from a bureaucratic point of view. So we have said that small farmers who have small payments - the Parliament says €1,500 - would receive them as normal but would not have to go through all the inspections and paperwork that bigger farmers have to go through. The idea is to make it easier to draw down funds without giving them the other added form-filling that larger farmers who draw down larger sums of money are doing.
Once one goes above that, there is an obligation on land owners and farmers to ensure they meet all the requirements because that is what they are being paid for. This is not free money for farmers that is just handed out because we want to keep farm families on the land. Of course that is a reason, but the main function of direct payments is to support the sustainable, safe production of food across the EU, which is why, traditionally and historically, the farmers who produce the most food get the highest payments. That is how payments evolved.
Pillar 2 is about a very different thing. We do strategic things regarding supporting disadvantaged areas and environmental schemes, and we do more targeted things in terms of the money we spend. Pillar 1, or direct payments, is primarily about supporting safe, sustainable food production that looks after everything from cross-compliance to animal husbandry, disease control and all the other things that European consumers rightly demand.
I agree with Deputy Ferris on capping, and I have said that ever since he raised it in the Dáil, but I am not the only decision maker here and I have to represent the Councils' position, which is that after €150,000 you can end payments or phase them out. The Parliament and the Commission have different views. The Commission's proposal was for much higher than that. Some very influential countries in Europe - the UK and Germany in particular - are adamant that under no circumstances will they accept mandatory capping. So we are where we are and we have to try to find a compromise that works. I agree with the Deputy that people who are receiving more than €150,000 of a single farm payment deserve to have a large proportion of that income redistributed and that is what will happen under the Irish model of internal convergence but also under the proposed options that exist for countries to apply a cap.
The idea that this will change all of a sudden, and we will be able to apply a cap of €35,000 on farmers, will not happen under the rules proposed. That would create an unlevel playing pitch across the EU in terms of how food is produced, and that is why countries would not sign up to it. I understand the thinking that people may have who want to distribute this money much more widely by putting a cap of €35,000 on it. That may suit certain regions or counties, and not others, but it would not suit Irish farming as it is structured. It would encourage the fragmentation of land, make it more difficult for farm partnerships to work and there would be a series of other consequences. A much higher cap is easier to defend, but the political reality is that nobody at the table proposes a cap in the region of €35,000 to €50,000. We need to get real on that.
Deputy Ferris asked about convergence and what the final compromise will look like. I am not sure yet. It will be somewhere between what the Commission proposed, and still stands over, which is flat rate payments for everybody, and what Ireland proposed, which has strong support in the Council. The former would redistribute approximately €300 million and the latter would have redistributed approximately €80 million. It will obviously be somewhere higher than €80 million and a lot lower than €300 million. If we are to avoid breaking our country up into different regions, which would be a disaster and very difficult politically to do, we need some redistribution model that does not push everybody to an average payment and in some way manages that distribution. That is the thinking behind the Irish model, which has a lot of support.
We will have to compromise further. I have said that very clearly. We will not hold the position the Council currently has. That will not be the final position. We will have to compromise further because many countries feel that redistribution model does not go far enough and is unfair. We will have to find that compromise and I am very clear on the different thinking on this. Different people are trying to put me under as much pressure as they can, some to hold that model and some to radically change it and I am trying to make a decision that is not about vested interests but about ensuring Irish agriculture can continue to grow and expand and produce more food.
The Minister is very sensitive and he is right. If I were him I would be very sensitive about it because I never saw anybody preserve privilege as he is doing. All he is doing is preserving the rich and making them richer.
There is an irony in, on the one hand, Deputy Ó Cuív regularly referring to the fact that his previous Government put in place the Food Harvest 2020 strategy and what he is now proposing, which would totally dismantle that. He does not know what he is talking about.
If people ask me questions I would like to answer them. There are different definitions of "active farmers" and this is one of the most difficult things to get right. To have a common legal definition of an active farmer across 27 - soon to be 28 - countries is very difficult. The Commission has said it would categorise active farmers as those having more than 5% of their income coming from farming. That is not a very sensible proposal. In the Council we have set a minimum level of activity for areas that are being farmed to qualify that land for payments, to ensure it is being actively farmed and the Parliament has a variant of that. We are trying to get that right because we obviously want to ensure payments are targeted at active farming, despite what Deputy Ó Cuív says.
We have not come to sugar in the trialogues yet but I want to hold strongly to my position in the Council, for which support was hard-won, that we should phase out sugar quotas by 2017 at the latest. Countries such as Ireland, Slovenia and Portugal which may consider getting back into sugar processing should be entitled to do that. The Commission's proposal is 2015, the Parliament's proposal is 2020, so the Council position, which is somewhere in the middle, is something I hope we can get agreement on. A portion of rural development funds will be set aside for future Leader programmes, although the structure of Leader companies may change fundamentally before then.
Many people are speaking up for small farmers and young farmers because most countries, especially newer member states, have a lot of small farmers, so that is a very strong part of the equation. Even in terms of aspects such as contributing towards crisis funds in case of problems such as a collapse in price, we are supporting strong arguments that farmers who earn below a certain amount of money from the CAP system would not have to contribute to that crisis fund.
There is a great deal of positive discrimination, therefore, in favour of small farmers. In Ireland, the debate often gets confused when people pit small farmers against big farmers. The way in which the calculation is made is as a payment per hectare under direct payments and for the highest and lowest paid farmers, the average farm size is similar right the way through the spectrum. They are all in and around 30 to 35 hectares.
That is incorrect. On the basis of the Department's figures, there is a 30% difference approximately. The higher the unitary payment goes, the higher the average farm size goes. It ranges between 32 and 44 hectares other than for farms-----
I appear before the committee on a regular basis and yet again we have Deputy Ó Cuív grandstanding and playing to the gallery to try to get a few headlines for himself.
I will provide the figures later in order that I can answer the questions that have been put. It is 3.20 p.m. and I was supposed to leave five minutes ago.
With regard to the reference year, we secured some flexibility in this regard following an Irish request in March during the negotiations because the reference year until then had been 2014, which was undisputed. There was a tie-back year, 2011, but essentially the reference year was 2014. That was having a significant and negative effect by making land much more expensive to lease. People were trying to build up their land holdings to maximise them in 2014 either to dilute high payments or to gain additional entitlements. That is still a problem and, therefore, it was important to have other options and flexibilities around the reference year, which is why we secured agreement that 2011, 2012 or 2013 could also be considered a reference year. We now have to negotiate with the Parliament and the Commission, neither of which likes that flexibility, and, therefore, we will have to see where we get to on this. I have consistently said to farmers that they should not make significant investment decisions on the basis of a 2014 reference year because the negotiations were not over and I still maintain that. However, I will not commit to another reference year either until we have a much clearer picture as to what we can do.
I refer to Deputy Healy Rae's request for installation aid and retirement packages. When we see the options available to us under the new rural development programme, we can then see what we can afford to do. Obviously, we will have to try to support vulnerable areas within farming where necessary and where possible and we will have to try to take strategic initiatives under the Pillar 2 headings, which provide for strategic investments we can make in the sector.
I am sorry. There are different views in the different institutions. We have said in the Council that protecting permanent pasture should happen on a national or regional basis. If the limit on ploughing permanent pasture at 5% was applied on an individual farm basis, it could be restrictive for somebody who is looking to increase productivity, expand a dairy herd or, for example, putting in more land for feed barley and maize. We have agreement on that but the Commission has been slow to accept that. I suspect we will have some flexibility in that area.
It is a little more difficult on the EFAs. There will be a requirement on an individual farm basis but there will also be an opportunity for collaboration between neighbours within areas to contribute to an EFA that they may border. It is not decided yet.
I will give a brief statement on where we are at. The CFP is coming down to four areas that need political agreement. The first is on discards and how we manage the cessation of discarding fish unnecessarily at sea. Currently, in Irish waters between 400,000 and 500,000 tonnes of fish are thrown over the side dead each year, which is a huge volume of fish. Some are juvenile fish but many are adult, marketable fish, which fishermen do not have quota to catch. That is a guesstimate but this does not only affect Irish boats. Ireland has been responsible on this. We have documented the discards issue for the Irish fleet and it is there for everybody to see but other boats, whether they be French, British, Spanish or Portuguese, are doing the same. We are determined, therefore, to introduce an obligation to land with certain flexibilities and exceptions and we are trying to get agreement on that with the parliament and the Commission and on a phasing in period to allow the industry to adapt and to give those involved the financial supports to help them to adapt.
The second issue is fishing to maximum sustainable yield, MSY. There is basic agreement on where we want to get to between the three institutions. We want to fish to a level that allows the stock to at least maintain its size and there are scientific measurement tools to do that. There are two ways of measuring MSY - biomass in the water and mortality rate among the fish killed and landed. We are trying to get the balance right between those two definitions. The Parliament wants one; the Council wants another. We are writing compromises at the moment.
The third issue is regionalisation. Countries want to be able to make decisions on a regional basis rather than having to go through a laborious, difficult process of codecision between the parliament and the Council. Both institutions want to facilitate that to allow groups of countries fishing in the same areas to make collective decisions that make sense within those areas without having to go through a long drawn out and difficult system and we are again making good progress on that.
The final issue, which is somewhat controversial, is fleet capacity management. Essentially, that is about ensuring the size of a fleet is matched with the available fish the boats are going out to catch. There are some exceptions because some fleets, for example, the pelagic fleet, is tied up for most of the year and then it has an intensive period of fishing. That intensive period more than allows the fishermen to be economically viable and, therefore, the issue is how to manage that because if they fished 12 months a year, they would catch more fish that they have quota to catch. We need flexibilities and management tools that can allow us ensure our fleets are sustainable, economically but also from a fisheries point of view. That is taking a great deal of negotiation.
There are many other issues but they are the four key issues. We hope to come to a conclusion on the CFP by the end of this month. We have a crucial meeting next week. I am going back to the Council to seek a mandate to change what we agreed last February, which was a Council position, and we are making changes to try to accommodate the concerns of the European Parliament and the Commission in an effort to secure a final agreement on the codecision trialogue process. We will have to wait and see where that goes but I cannot keep going back to the Council of Ministers seeking a new mandate over and over again. I have made it clear, therefore, that this is the final time.
There are only two Council meetings left - one next week and the other at the end of next month. Next month's meeting will be taken up with the CAP. We are trying to get this across the line from a Council negotiating position in terms of a final mandate next week and then through the trialogue process before the end of this month to finalise the CFP political agreement, which will then to be voted on in the autumn in the same way as the CAP will need to be voted on when the Commission puts the necessary structures in place.
That is where we are at on the CFP. Deputy Pringle may wish to ask a couple of questions.
I have just one question. In recent days there have been reports about the European Parliament being unhappy with the situation. The Minister alluded to it briefly when he said he was going back to the Council seeking a mandate to alter the position in order to continue the negotiations. Will he explain the implications if the European Parliament withdraws and it cannot achieve that mandate?
This is the first time the European Parliament or the Council have ever done this. We have never agreed through co-decision or a trialogue process a Common Agricultural Policy or a Common Fisheries Policy. Therefore, it is new ground for everybody. There is an element of mistrust, although the personalities have a good relationship. Everybody is trying to get a final agreement as close to their institution's position as possible. We started the trialogue process in March for the CFP and have been working through it, but progress has been slow. Some weeks ago I went to Brussels and had a blunt discussion with the rapporteurs and the co-ordinators and said we wanted to speed up the process if this is to be done during the Irish Presidency. In my view the way to do it is to leave the technical experts to find technical solutions but to try to get political agreement on these four key issues. If we can solve those four issues, almost everything else will fall into place quite quickly. That is what we have been focusing on.
To be honest, I have tried to force the pace to a certain extent but at the same time I respect the mandate of the European Parliament, of which I was a member for three years. It has an equal say in the final outcome of reform of the Common Fisheries Policy but I cannot continue going back to the Council every time there is a minor change to get a new mandate to agree to that change. I have been in Brussels a number of times speaking to rapporteurs, the committee chair and other key personalities in the parliament. As I think I have a reasonable understanding at this stage of the compromises the parliament is seeking, I am going back to the Council to try to accommodate those concerns within reason. I will not get everything I want but I will have, at least, a final position on how far the Council is willing to go to compromise, I hope, by the middle of next week. I will then go back to Brussels to put that to the European Parliament and I am hopeful that it will accept it because, if not, the consequences are clear. If it does not accept it we have a stalemate because we do not have any more time during the Irish Presidency.
The Lithuanian Presidency, which follows Ireland, has made it clear it does not want this dossier. It already has much work to do in respect of the fisheries fund, the EMFF, and in preparing for tax and quotas negotiations in December. It has more than enough to do and it wants this done during the Irish Presidency. I want it done during the Irish Presidency. The Commission wants it done during the Irish Presidency because the consequences of not doing it during the Irish Presidency are that the Council may send our finalised document back to the European Parliament and ask it to undertake what is called a second reading of it. That means there would be a mandatory four-month period for consideration in the parliament and time required for translation into all the different languages. Even after the second reading it would have to come back to the Council for further consideration, which is probably a year away, which means that reform of the Common Fisheries Policy is not done during the mandate of this parliament and the Commission. That creates a huge uncertainty into the future. Given that I have been upfront and blunt about that some people think I am threatening them by saying they have to agree. I am not; I am simply outlining the reality of the timeframe available to us. There is a window of opportunity. There is a presidency that wants to do this deal and wants to find compromise. We are working night and day on the issue and are willing to take it across the line but we need partners in the other two institutions. I hope we have the trust that can allow that get over the line but, of course, I cannot speak for the Parliament.
The Minister mentioned regionalisation and co-operation between countries fishing in certain waters. Does that include a quota or has quota been mentioned? Deputy Thomas Pringle and Deputy Éamon Ó Cuív will be aware that the quota for the Irish fleet badly needs to be addressed. There does not appear to be anything in the negotiations on that issue.
There is a thing called relative stability which is what determines who gets quota and where. That is not being changed under the CFP reform because if we attempt to change it, the process would go nowhere because there is not a qualified majority and there are probably only two or three countries that would seek to change it. Obviously, Ireland would like to see an increase in its quota but recent decisions in respect of quota allocations show we have two thirds of the European Union boarfish quota, which is a new quota stock. When negotiating access to quota in recent years, we have done very well in that area. We can go through the argument as to why we are where we are when we look to the time Ireland became a member of the EU. I read in the fishing media each week that people are talking about the need to actually change quota and so on. I have to concentrate on what is possible in terms of what we are doing. I avail of every opportunity to try to increase quota for Irish fishermen if it is sustainable to do it. I will continue to do that and fight for the best possible deal. We will seek to maintain the Hague Preferences and the protection of the Irish Box off the south and south west coast of Ireland where there are many vulnerable species and a lot of spawning is taking place. At every opportunity I seek to protect the industry while at the same time trying to be a balanced and fair chairman of the current negotiations. For me to start promising this in the CFP reform we would want to be able to change relative stability; that would be blatantly misleading and will not happen any time soon. We need to concentrate on changing what we can rather than spending time and energy debating something we cannot change for the moment, unless something dramatic changes politically in European Union fishing.
I thank the Minister and his official for taking the time to appear before the committee. It is clear there is a deadline on both policies. If agreement is not reached on the Common Fisheries Policy in the next three or four weeks it will not happen until God knows when. In regard to the Common Agricultural Policy, even if we get agreement it is obvious that 2014 will be an interim year and Lithuania will have more than enough to do to take control of the signing of the regulations. I thank the Minister and look forward to an update at a future session.