Andrew Doyle (Wicklow, Fine Gael)
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The purpose of this morning's meeting is a briefing from the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, on the negotiations on the Common Agricultural Policy and the Common Fisheries Policy, which were concluded towards the end of the Irish Presidency of the Council of the European Union. I congratulate the Minister, his officials and the permanent staff in Brussels and Ireland on the way in which they conducted the business. Had it been taking place in any other country, we might have had a difficulty finishing it by the end of June.

I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person in the House or an official either by name or in such a way as to make him or her identifiable. I apologise for the late change of venue to Room 2 in Leinster House. There was a little bit of uncontrollable water in our normal committee room, despite the dry weather. I understand this is quite a historic table, as it is a table that was previously used by the Cabinet.

Simon Coveney (Cork South Central, Fine Gael)
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My understanding is that the meeting was to run only until 10.30 because of Leaders' Questions and the Order of Business. However, let us get as much done as we can. I am in the Chairman's hands.

I can speak for an hour on the Common Agricultural Policy, or I can give a five to seven-minute outline of what has been achieved, after which we can have questions and answers. Most committee members have a reasonable idea of what was agreed. Deputy Ó Cuív and others have tabled detailed parliamentary questions to which they have received replies.

If one were stopped on the street and asked what are the big ideas in this CAP reform, one could probably sum it up under three broad themes: environmental protection, generational change and an open market for food production and agriculture. The reform guarantees a minimum level of environmental protection, which for the first time is enshrined in direct payments under Pillar 1. A total of 30% of a farmer's payment is directly linked to qualifying for a greening payment. We have discussed the greening criteria previously; these include protecting permanent pasture, guaranteeing crop diversity and having an ecological focus area on farms, particularly arable farms. This contains a series of flexibilities which will mean the vast majority of farms in Ireland will automatically qualify for the greening payment. It has been designed predominantly for other countries which have very large arable areas with no hedgerows. There will be an impact for Irish farmers, particularly arable farmers - not in an overly onerous way, but farmers will have to adapt somewhat to qualify for a greening payment. It is good to have an environmental benchmark above which everybody must be. The greening of the CAP and guaranteeing a basic level of environmental standards are enshrined for the first time under Pillar 1.

Generational change in farming is a very Irish issue. We are now openly and on a mandatory basis requiring countries to positively discriminate in favour of young farmers. They will receive a top-up to Pillar 1 payments of 25% on the first 32 hectares, which is the average farm size, which is similar to an installation aid scheme through Pillar 1. This will be available for five years to a farmer under the age of 40. Only 6% of farmers in the European Union are under the age of 35 and, with regard to young farmers owning and managing their own farms, this is no basis for an innovative, growing sector. Getting young people into agriculture and farming has never been as much of a priority as it is now under Pillar 1, and as an option under Pillar 2.

The reform will also move food production and agriculture to a more open-market approach. The world and Europe need more food and we need to find a way of producing it sustainably and competitively, while at the same time having market interventions when necessary if there is a collapse in price. Such interventions are now more focused on providing a safety net for farmers in response to a crisis rather than managing markets and prices on a monthly or annual basis. This is good from an Irish perspective because we are quite competitive in producing beef, milk and sheepmeat. This theme is reflected in the removal of dairy quotas in April 2015 and the removal of sugar quotas in 2017.

Moving towards a competitive and more market-oriented approach to food production is also reflected in how we propose to redistribute single farm payments to allow farmers with the capacity to produce the most food to retain higher payments than farmers who do not have this capacity because of their land or where they farm, while at the same time recognising that the gap between these needs to close. It is not sustainable to have one farmer earning €80 per hectare and another farmer next door, or in the same country, earning €800 per hectare. This is why we have agreed to have flexibility in the redistribution of single farm payments, which was the big issue in the debate in Ireland. Every farmer asked what he or she would get under the new CAP versus what he or she received previously. Approximately 50,000 farmers in Ireland will lose some of their payment in the redistribution and just over 60,000 farmers in Ireland will gain. The average losses will be between 11% and 12% while the average gain will be approximately 35%, but this will happen gradually over a seven-year period. There will be no dramatic shocks to the system in terms of farmers losing a lot of money in a short period of time, which would have set Ireland back significantly in meeting the targets under the Food Harvest 2020 plan, to which the Government and the previous Government were and are committed.

My objective was to ensure that we moved from the Commission's position, which would have resulted in a dramatic shock to the system in Ireland which would have been felt immediately because 40% of the move towards flat-rate area-based payments would have happened in the first year. In fact, it would have been much more than this when one added the greening payment, as it was proposed, and the other proposals. It would have meant that approximately 60% of the change would have happened in the first year. The proposals changed dramatically over the past 12 months, and we now have flexibility which will bring about a more gradual redistribution, while the amounts being redistributed are less but still quite significant.

At present farmers are on €50 to €70 per hectare, but after this change nobody will be on less than the minimum payment of 60% of the average, which we anticipate will be between €145 and €150 per hectare or slightly less. We have the option, if we wish, to set a maximum payment per hectare. With regard to the idea of somebody being on €50 per hectare while somebody else is on €1,200 per hectare, after this reform no farmer will be on less than €145 to €150 per hectare and, if we choose, there may be no farmers on more than €600 to €700 per hectare either. We have this choice and flexibility. By any standards this is a dramatic change to what existed previously in terms of the huge differential between low earners and high earners in direct payments.

I could spend a long time speaking about this flexibility. I understand we have provided quite a lot of information to committee members, which they have been able to read through. In essence, the key issues for Ireland, and the key decisions we need to make, are that we need to finalise how we use the toolbox for which we fought hard. Everything we sought, we got. We obtained a reasonable minimum payment at a reasonable level and flexibility on a voluntary basis in a series of other issues under Pillar 1. If we wish we can reintroduce coupled payments if we have vulnerable sectors we wish to support, such as protein crops, suckler beef or sheep. I would like the views of committee members on this, not necessarily today but during the consultation period. We can set a maximum payment if we wish. We must set a minimum payment.

We can transfer up to 15% of the money between Pillars 1 and 2 or take a series of other actions, but we must prioritise young farmers and set aside money in a national reserve to prioritise new entrants and to top up those who have done badly out of the system through no fault of their own. We must provide up to 1% for a crisis reserve that farmers will get back if it is not spent. The model that I was seeking is now available to us, in that there will be a fair redistribution of the single farm payment.

We have broad options under Pillar 2. Much consultation is necessary on the priorities that we are being asked to support, such as innovation, climate change, the environment and young farmers. I hope it will allow us to maintain some of the existing schemes that we view as being valuable while replacing others with new schemes that are more effective in responding to the challenges of modern agriculture.

The budget under Pillar 1 will be similar, albeit with a 3.3% reduction, whereas the reduction under Pillar 2 will be more significant. We will go from approximately €350 million per year in European supports to approximately €313 million. On average, this is approximately 53% co-funding. As such, we will have less money to spend on rural development. We must be more targeted. I would be open to people's opinions in this regard. We have already started a public consultation process on the matter. We want to hear from farming organisations in writing and verbally. If the committee chooses to do so, it can contribute as well. If individuals wish to express their opinions to me in person, we can discuss them publicly or privately.

My only objective in putting together a new Common Agricultural Policy, CAP, for Ireland for the next seven years is to do what is best for Irish agriculture as a whole. Some farmers will not like this system, but the objective is to make decisions that, on balance, are the right ones for Irish agriculture and have two aims: first, to fulfil the promise of Food Harvest 2020 in terms of expansion and the potential of Irish agriculture and land to produce more food sustainably; and, second, to protect vulnerable areas and farmers who do not have the capacity for expansion through the provision of the supports needed to keep family farms intact. These twin objectives have been the Government's goals since taking office. They will be the guiding objectives as we put CAP together for Ireland, now that we have a broad range of flexibilities from which to choose.

Those members who know me and have spoken to me about this issue have a fair idea of the kinds of area we will pursue. We are in a good place versus where we were 12 months ago. We need to move on, listen to people about what they want for agriculture and why they want it and make informed decisions early in the autumn so that this process is not allowed to drag on forever. We need to have all our decisions made by the end of the year so that we can allow the system to prepare for implementation in January 2015. My Department will need to put software, inspection and payment systems in place to ensure we can implement Pillar 1 and Pillar 2 of a new CAP from that time onwards. A full 12 months will be necessary for these preparations and to allow us to inform farmers of what they must do to ensure that the overall system works seamlessly.

My timescale on Pillar 1 is to make decisions in early autumn. Since the consultation on Pillar 2 will take longer, we will try to finalise decisions by the end of the year. I suspect that we will have a number of committee meetings on the details before then. I do not propose to supply exact answers today as to what options we will adopt. Instead, I will provide details on the process by which we will make the decisions.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I thank the Minister for outlining where we stand. In terms of how the available money is distributed, it is important that the committee is not presented with a fait accompli but is engaged throughout the process. The Minister stated that he did not want any dramatic shock. The first day this issue was discussed, I stated that the changes should be introduced over time. There have been dramatic shocks for farmers in the past five years while we and the Minister were in government. For many farmers, rural environment protection scheme, REPS, payments exceeded the single farm payment and the disadvantaged area payment combined. When it came to an abrupt end and was replaced by the agri-environment options scheme, AEOS, many people could not access any scheme, resulting in a significant loss to farmers in every county who had been receiving substantial REPS payments. The idea that there have been no shocks is not borne out by reality.

Simon Coveney (Cork South Central, Fine Gael)
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I never said that.

Éamon Ó Cuív (Galway West, Fianna Fail)
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The Minister did. He stated that he did not want dramatic shocks in the system. I wrote it down.

Simon Coveney (Cork South Central, Fine Gael)
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Under the new CAP.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Yes. There have already been dramatic shocks that we need to address. It is good that a minimum payment was included, but my understanding is that €103 million must be realised as a result. The Minister has been working on figures, so I will work on the 2010 numbers on the basis of which the €103 million figure is calculated. They do not include deductions for young farmers, the national reserve, etc. We are discussing redistribution.

The next question is how to remove the money from farmers above the national average. We are not discussing something that will happen in 2015, but the endgame in 2019. There must be objective reasons for taking money from one group versus another. The system must be as objectively fair as possible by 2019.

The Minister has made available figures on stocking density per hectare - this is a fair reflection of productivity and is the best we will get - for everyone but tillage farmers. Using this as a measure, we should try to bring farmers in a similar output category - as we do not know individual outputs, we cannot work on that basis - to the same level of payment by 2019. There is no reason to pay someone more in 2019 just because he or she received many grants in 2000. It would be more logical to connect payment to average output per hectare of the relevant cohort. This would lead to a fairer single payment system, as the current system is riddled with inconsistencies and there is no relationship between productivity and euro per hectare. This is important, as many farmers in the 350-450 ha bracket are productive. I do not know why they should be penalised because of history as opposed to a rational reason.

Will the Minister confirm whether regionalisation is off the agenda?

Will he also confirm whether he is considering the single farm payment coefficient as regards different types of land? An acre would not be counted as an acre and a hectare would not be counted as a hectare.

My understanding is that the greening payment is for carrying out greening activities. Will the Minister relate that payment to something that farmers used to get or will it be made relative to the amount of greening activity they must undertake? If all farmers must go to the same amount of greening effort, will they get the same payment per hectare? Alternatively, will someone who used to get a large payment get more under this scheme even though he or she might be less green than someone in receipt of a lower payment? This is an important issue.

There is so much to discuss, but I will not delay the meeting for long, as this is our first cut at it. Optional provisions include the prevention of land abandonment and compensation for specific advantages. Is it intended to consider these for payment under the national reserve? For example, land abandonment could become a major issue in certain areas.

The battle in the next six years will be about the prices that farmers get. Unless we pay farmers adequately for the food they produce and unless they make a profit from production as opposed to the single payment, it will be impossible to reach the Food Harvest 2020 targets. In many sectors, farmers' prices are being squeezed and there are no margins in their activities. If this persists, the consequences for agriculture could be disastrous. This issue must be put at the top of the European and Irish agendas.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank the Minister for his presentation. While I am encouraged, I am also at a loss to understand the proposed consultation process. From my understanding of the Minister's comments, he hopes to undertake it this autumn. That seems to be a short timeframe for maximum consultation. Will he outline how he hopes to do it? He stated that he would accept written submissions as well as open public debate.

What we are about to undertake before 2019 and 2020 will determine the viability of small and medium-sized farmers in particular. How the budget is shared out will determine their survival. The negotiations have allowed the Minister certain flexibilities.

I welcome the young farmer and generational change aspects. The top-up for young farmers is to be encouraged. It is a step forward and will be of considerable help from the point of view of generational change.

The Minister mentioned moving to an open-market approach.

Simon Coveney (Cork South Central, Fine Gael)
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It is a more open market, but there are still many protections.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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The Minister stated that a major element would be market intervention. Did he mean European intervention?

Simon Coveney (Cork South Central, Fine Gael)
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Yes - intervention in prices.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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National intervention alone would be difficult. Many people will welcome the abolition of the milk quota system and the move into the open market. However, I am concerned that only the strong will survive and the weak will perish. I hope I am wrong.

I welcome the opportunity presented by the abolition of the sugar quota for Irish farmers to resume production of sugar beet. This is dependent on the provision of a facility by the private market. The Minister stated that, if it were to happen, a processing centre would have to come from the private sector. Will consideration be given to State support in this regard? It was always a great industry. For many, it was a good cash payment at Christmas. They depended on it. I welcome the opportunities that will be offered.

I look forward to the consultation process, which should be open to everyone. Deputy Ó Cuív will concur that many meetings in the west heard of dissatisfaction with the way in which the previous CAP regime was operated. The move towards convergence will depend on the flexibility shown by the Government.

I look forward to working with everyone for the common good - that is, for all farmers. The Minister stated that 60,000 farmers would gain up to 30% from convergence.

Simon Coveney (Cork South Central, Fine Gael)
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Thirty-five percent on average.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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Twenty-five percent?

Simon Coveney (Cork South Central, Fine Gael)
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No, 35%.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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My apologies.

Simon Coveney (Cork South Central, Fine Gael)
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As many as 67% will gain from this.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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From a low base, but this is to be welcomed. The Minister also mentioned flexibility in coupling. Will he elaborate? No one wants people to get money for nothing. There was a gap, in that it was not just the small, weak farmer who availed of it. Reasonable coupling should be considered.

Andrew Doyle (Wicklow, Fine Gael)
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We seem to be having some problems with the microphones.

Susan O'Keeffe (Labour)
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Like Deputy Martin Ferris, I would appreciate clarification on the consultation process. People will approach us. I appreciate that the Minister wants to consult in phases, but the early autumn deadline for Pillar 1 is short. If he has a date in mind, it would be easier for us not to misguide people on when the moment will pass.

The Minister stated that the sugar issue would be a purely commercial decision. Is that set in stone? It is strong language. Only private enterprise will be involved.

Simon Coveney (Cork South Central, Fine Gael)
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Should I answer now?

Andrew Doyle (Wicklow, Fine Gael)
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Deputy Deering and Senator O'Neill have offered. We will conclude with their questions.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I compliment the Minister on having achieved a good deal at the end of last month.

Obviously, there was much pressure to achieve that deal. If we had not achieved that deal, we would have been in serious difficulties going forward. It is important now to try to make the best of it and achieve as much as possible.

The Minister might refer to the reference year, which was a key issue for Ireland in the negotiations. The issue was raised at this committee on numerous occasions. I would like to think that in some way it fell into the final decision. When is the final decision on the reference year likely to be made?

Another big issue, which arises on a regular basis and which has become topical again in recent days, is the inspection regime in the whole system. I very much appreciate that when one is in receipt of large amounts of taxpayers' money there is justification for it, but there is a perception, whether right or wrong, that we are over-inspected in some areas. Could that be looked at or could a protocol be put in place so that people know exactly what is happening in advance of inspections?

We are heading into a new regime with regard to the payments system. As the Minister said, a new IT system has been put in place. There is the issue of bureaucracy and more paperwork. Are we starting from a green-field site, so to speak, in regard to the new application process? When the single farm payment began approximately 20 years ago, very complicated and detailed work had to be done. In recent years, it has become easier, and it can now be done online in a few minutes if there are no real changes from year to year. Will this new process create difficulties? As everybody knows, all most farmers want to do is farm, but obviously there is paperwork to be done. If it gets very complicated and messy, people get turned off. Will there be an easy system in order to qualify?

We have the single farm payment and a greening payment. Will two separate applications be required, for example? Will it be a matter of ticking boxes? We are probably at too early a stage to decide, but will it just be a matter of ticking boxes in order to qualify for the greening payment or whatever the case may be?

A key element, which must be welcomed, is the mandatory top-ups for young farmers. The Minister said that 6% of farmers in the EU were under 35 years of age. That is a major issue which must be addressed and I hope this will address it. It may not be just a matter for CAP, but there must be an incentive for farmers at the other end of the scale to move on or to pass the farm to younger farmers.

One of the key elements, which must be remembered, is that as a result of what we have got, productive farmers have been protected as much as possible. We need to achieve the Food Harvest 2020 targets. If we had achieved only part of what we achieved and what the Commissioner proposed in October and November 2011 - the flat rate system - our chances of achieving the Food Harvest 2020 targets would have been minimal. While the nuts and bolts need to be sorted out, the fact the productive farmer has been protected is important, as is the fact that there is flexibility to ensure farmers can get extra payments for whatever they may lose.

The consultation process in which the Minister went around the country selling his idea of the approximation model was a very worthwhile exercise. His timescale might be tighter on this occasion but he might consider a similar process.

Pat O'Neill (Fine Gael)
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Many of the issues I wanted to ask about have been dealt with. Our own group had a meeting with the Minister when he came back from Brussels with the deal and I said I would hold a public meeting in my area, which I did. I was asked specific questions which I e-mailed to the Minister's officials. The biggest issue arising is land. The land system in Ireland is very complicated, whether the land is leased, rented or owned, as is the transfer of land and the transfer of entitlements. I do not know whether the Minister or his officials are expert enough to deal with specific issues. I would welcome a meeting with somebody who is an expert in that area because we all have specific issues in regard to land which has no entitlements. Does that receive the minimum payment now? Who owns the entitlements to land that is leased? Is it the owner or the farmer who has been farming it for the past seven or five years? I do not want to go into specifics but I would welcome it if the Minister would make an official available to the committee to go through aspects such as that. We would all be better informed, because those are the questions we are being asked.

I welcome the measures in regard to young farmers. If we are to achieve the Food Harvest 2020 targets, we must make a big issue of getting more young people involved in farming. I agree with Deputy Deering that we will have to provide an incentive at the other end to try to get people to move out of, or to retire from, farming and let younger people take over. I do not know whether it could be done through Pillar 2, but we should look at a scheme.

I will welcome the consultation process and I hope this committee will play a very active role in it. I was very alarmed last week to see a headline in the Irish Farmers' Journal stating that penalties are up by 500% in the past three or four years. That is frightening people. It is easy to forget, given the weather we have had over the past three weeks, that farming has had its toughest 18 months, and to see a headline like that and money being taken from people is frightening. I know there is the issue of cross-compliance and so on, but a headline like that does not do any good. With a new scheme coming in, we must ensure it is farmer-friendly in terms of how one applies for it and how one stays within the guidelines. If it is too complicated, it will frustrate people and their livelihoods could be affected if they face penalties. When the new scheme is devised, it should be farmer-friendly in regard to how farmers must comply with everything. We should not get tied up in bureaucracy and red tape.

Simon Coveney (Cork South Central, Fine Gael)
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I agree with the last thing Deputy Ó Cuív said, which was that we need to work to ensure farmers get the best price they can for their animals. We have been doing that. We now have the highest price ever being paid for milk. Over the past five or six months, we have had pretty high beef prices also. The way in which we do that is to support farmers, to ensure we have the maximum demand for Irish products, to protect our reputation as we did during the horse meat crisis, and to open up live export markets when we can to provide competition, which we have been doing, with boats going to Libya. Discussions are taking place as to whether we might be able to export live cattle to the UK, because UK prices for beef are the highest in Europe.

We are doing what we can to work the market to ensure Irish produce is sold into premium markets and that Irish farmers get the highest value they can. However, farmers need to respond to that too, with more farmers entering into the beef quality assurance scheme and the lamb quality assurance scheme. Approximately 80% of the beef produced in Ireland is under the quality assurance mark while approximately 50% of sheep and lamb meat is. There is no reason a farmer should not be operating out of that quality assurance scheme. That helps us all to market Irish meat as the best in Europe from the point of view of quality, safety, animal husbandry, environmental controls and all the other things the quality assurance scheme guarantees.

The whole point of having a national reserve is to support new entrants into farming, farmers who have been farming without any payment on what is called naked land who should be eligible for payments in the future, and farmers who may have been ill during the reference year, or were out of action for some other reason, and got a raw deal in terms of their entitlement.

They can make their case and look for a top-up on their existing entitlement. That is the kind of thing the national reserve can do.

I fought really hard to get what is called a flexible greening payment. Ireland was the only country that even thought of this concept initially, but we got strong support once we started selling this approach. If we were to do as the Commission proposed, which is what the Deputy is also proposing - that is, to give the same greening payment to every farmer per hectare - it would not reflect the effort for certain farmers and the incentive that is there for certain farmers to abide by the greening rules. If somebody is operating a low-intensity form of farming on a hillside somewhere, he will essentially have to do nothing to get the greening payment, whereas an intensive dairy, beef or arable farm will require a whole series of things to qualify for a greening payment. It is much more sensible to say to farmers that they will have 30% of their payment held back until they can show that they meet the greening criteria, and then they will get that 30%. This is distinct from having a payment of 70% and then 30% of the average payment across the country assigned as a greening payment to each farmer. Thirty percent of an average payment is between €70 and €80, so for somebody who is on €600 per hectare it is nowhere near 30% of their payment. Therefore, the incentive is not the same for higher earners as it is for lower earners. If somebody had an €80 payment per hectare at the time we were negotiating, the greening payment would be the same as the other base payment because it would be 30% of €270, which is the average payment. I thought it was much more sensible and much simpler for farmers to understand to tell them that 30% of their payment relates to their greening responsibilities and they only get it if they meet those responsibilities. If everybody has the same flat rate payment, then the greening payment is 30% of that average, but if there is a differentiation between higher earners and lower earners based on past productivity and so on, which is what we are proposing for Ireland, then it makes much more sense to have a flexible greening payment because the incentive for farmers to be green is the same regardless of income. If the Deputy has a different view, that is fine. We can talk about it again, but my view is that a flat rate payment would have had a very significant redistributive effect for many farmers, which was something we wanted to avoid. Having a flexible greening payment allows that payment to change over the seven years with the rest of the payment. It is a much more gradual change and farmers will be able to adapt to it more easily.

I could ask the Deputy the question of whether regionalisation and the single farm payment coefficient are off the table. It is an option that is on the list. All options are on the table at the moment. I think it is unlikely that we will go down the regionalisation or the coefficient route, but let us not write things off before we start the consultation process. Some people might feel that we should use those tools. I think it would be very divisive to use either of those tools. One of the reasons we argued so strongly for a gradual redistribution of funds and to limit that redistribution was that we would not have to break the country up into different regions. I do not want people in the west of Ireland, the north west, the south west or south east to be put into categories on the basis of their geography. Instead, I would rather a gradual redistribution at a national level. That has been my preference, but let us hear what people have to say in the public consultation process. Some people may feel we should use a coefficient in mountainous areas, but personally I would need persuasion on that. The less we divide the country into different areas and payments, the less divisive this debate will be. Now that we have got our approximation redistribution model, I think it is less likely we will have to do that. If we chose the Commission's approach, which some people have advocated-----

Éamon Ó Cuív (Galway West, Fianna Fail)
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Who advocated that?

Simon Coveney (Cork South Central, Fine Gael)
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The Deputy advocated that we redistribute more than what the Commission was proposing. Regardless of that, if we chose the payment per hectare flat rate model, then we would have had to break the country up into different regions to reflect different productivity levels. That would have been almost impossible to do and I did not want to do it, which is why we chose the approximation model. I think we got a good win on that and now we have to design it with the flexibility that we have.

The question about making a direct connection between stocking rate and payment is a fair one, but it is not the only issue on the table. Even if we wanted to do so, we are not allowed under world trade rules to directly link payments to productivity, which is why the only option we had available to maintain any link with productivity and stocking rate was to maintain a link with the historical payments. We are moving away from those historical payments and converging towards an average. That was the only way we could maintain some link, and we have done a reasonable job at that for the next seven years.

The redistribution figure is about €103 million. There are dangers in taking the table that I sent to members and using it as the accurate table.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I am aware of that.

Simon Coveney (Cork South Central, Fine Gael)
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I know the Deputy is aware of it, but I am saying this for everybody's benefit. These are 2010 figures. We are talking about a payment that farmers would have got in 2010 and the payment they will get after the redistribution effect of what we are proposing. Figures have changed slightly since 2010 for some farmers. The average payment will also be less because redistribution will happen after the 3.3% budget cut is applied, after the 2% for young farmers is applied, after the 3% national reserve figure is applied, and after the 1% crisis reserve is applied. The figure that everybody gets before redistribution kicks in will be less. We may not use a full 2% for young farmers. In my view we are unlikely to use the full 3% for the national reserve, but these are maximum figures that could be cut. The reality is that some money will be taken from farmers' payments before the redistribution kicks in. Money will be given back to farmers on the basis of young farmers and the national reserve, and money will be given back from the crisis fund if it is not spent. I have heard farm organisations stating that farmers are going to lose 9% before they even start. In my view, that is the maximum possible that could be lost before we start, but it is very unlikely to be 9% because most of these funds will not reach their full amount, and in most years the 1% crisis fund will be reimbursed to farmers the following year as we do not have a crisis every year. People need to understand that.

Some of the figures we read about are accurate, but some of them also factor in maximum losses without factoring in gains. When farmers say that they will lose 2% to give to young farmers, their sons might be gaining from that, or they might be gaining from it if they are under 40. Some of them might be losing 2% and gaining 25%. Let us not just focus on losses, because that is what makes the dramatic headlines. Let us try to look at what is lost and what is gained, because all of those initial losses are for very strategic reasons that all of the farming organisations support.

Farming organisations tell me they are in favour of supporting young farmers, yet they are concerned about the fact that everybody is losing 2% to facilitate that support. They say they support a national reserve, yet they are uncomfortable about the fact that farmers have to lose 3% to facilitate it. They cannot have it every which way. That is why I hope this consultation process can be non-partisan. Let us try to put together a package of measures that work. We will disagree on some things but it is important that we all operate on the basis of accurate figures.

I accept that the REPS payments have resulted in a fairly dramatic loss of income for many. When REPS payments were at their height we had a lot of extra national money that was being added to European money, beyond matching funding to put more money into agriculture, and rightly so, because the country could afford it at the time. We are now just about matching European money to make sure that we have full draw-down, but adding nothing on top because we cannot afford it. One of the casualties of that has been the switch from a very generous and popular REPS to the less generous and less popular but much more focused AEOS. It is still popular. It is oversubscribed. There were 9,000 applicants for the last AEOS that we launched last year but we can take only 6,000. Anyone who says it is a Mickey Mouse scheme should look at the applications. I accept that there is less money to spend on rural development and that is why we need to be more accurate about how we spend it. My comments on avoiding shocks to the system are about the redistribution effect in the new CAP for people’s single farm payments. I said that very clearly.

In response to Deputy Ferris's comments on coupling, this requires a real discussion and I would appreciate an input from this committee. There are pros and cons to coupling. We will send out a very good paper on this, if we have not done so already. People need to realise that we have the capacity to couple up to 10% of Pillar 1 money - that is, 8% plus an option of 2% for protein crops if we want. Ten percent of €1.2 billion is €120 million, which is a lot of money that we could choose to couple if we wanted to max that out. That means that every farmer loses 10% of his or her payment to facilitate that fund. The arable or dairy sector may be paying for re-coupling in the suckler beef sector. If we want to do that let us go into it with our eyes open. Sometimes farmers call for coupled payments as if it were new money coming from Brussels that does not affect single farm payments for everybody else. That is not the situation. This is a €1.2 billion pool of money. That is it. If we decide to take some of it to re-couple payments we need to consider that option carefully and we may well pursue it to support vulnerable sectors. Let us be clear, however, if we do that we are taking the money from other sectors that must sponsor it.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Does that come out of the Department’s financial reserves for young farmers and other funds?

Simon Coveney (Cork South Central, Fine Gael)
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Yes, exactly. Coupled payment is a double-edged sword. It benefits the sector that we want to support, but it has to come out of the other sectors. If we were to support suckler beef, for example - there are approximately 80,000 beef farmers - we would be giving the money back again. For someone who is not benefiting from a coupled payment it could result in their getting a more significant payment. It is not fair to say that they could have a 19% loss because we are not going to couple 10%. If we do couple it will be a much lower figure. We would try to put a scheme in place. The obvious sector would be suckler beef farming, but it is interesting to consider how we would do that. For example, rather than introducing a coupled scheme we could transfer money from Pillar 1 to Pillar 2 and then design a scheme that would not simply give farmers money for producing beef. We could introduce something like a suckler cow welfare scheme that would give farmers money for producing beef but would also ask them to do some other things that would add value.

It is possible to transfer money from Pillar 1 to Pillar 2 without any co-decision funding requirement. In other words, we could do something more strategic with that money, but it would be the same as coupling. There are options available to us to do strategic things with the money that we have. Every time we spend money in one sector it costs another sector and that is what we need to understand. If we couple beef, that is at a cost to the sheep, dairy and arable sectors. If we couple sheep it is at a cost to other sectors. We have the flexibility to do that if we want, but that coupling debate is a very divisive one. Farming organisations take different approaches to it. The Irish Creamery Milk Suppliers' Association will, I suspect, take a very hard line to oppose coupling. I do not want to cite other organisations but I know the ICMSA's position. Others will have an internal debate on this issue and will try to find a balance on the coupling option. I look forward to receiving those submissions.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Will the Minister get us the paper on the coupling? If we take off the 8% does it tell us what happens if we benefit only the suckler cow sector, or suckler cows and sheep, suckler cows and dairy herds on bad land and so on? Does it give the actual amounts of money? It is very easy to figure out how much one is taking from everybody: taking €10,000 results in a loss of €800. The more data we can get, the more people will be informed as to what their real options are. The people who are not in the coupled area will be against it and all those within it will do a quick calculation on the basis that if they get €10,000 they will lose €800, and wonder what they will get back. My calculation is that if it was €1,200, that would be a gain of €300 or €400. If it is anything less than that they will say it is not worth the hassle of two schemes, even for a few hundred euro.

Simon Coveney (Cork South Central, Fine Gael)
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We need to be careful not to fall into the trap of trying to produce schemes here that are popular for certain sectors. We need to step back and ask what are the vulnerable sectors in agriculture that need support, as opposed to what is going to win the support of 50% plus one. We need to look at our Food Harvest 2020 plans and at sectors that are vulnerable, that are not performing or that need some support in order to perform to their full potential. That is the context we need to consider for coupling. I will give the Deputy as much information as I have. I do not have all those figures. I have a briefing note on coupling, how it is calculated, where it comes from and some of the impacts it may have on other sectors. We do not have it broken down into the kind of detail the Deputy seeks. That can be done but the Deputy can easily do it himself.

Andrew Doyle (Wicklow, Fine Gael)
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It may be a good idea for us to get together to come up with proposals. There is an opportunity in this part of our considerations to make sure that if there is to be a coupling it rewards activity and that if anyone is at a loss it should be the people who are less active. We are still talking about it. We still have not figured out the definition of "active". Going back to coefficients and different categories of land - and, as Deputy Ó Cuív said, people in the same cohort of production - there are ways to tailor a scheme with some decoupling to make sure that the people who get the extra money are those who are more active. That draws a line in single farm payments between the more and the less active. It could cover many things.

We have spent an hour on the CAP and the Minister has yet to answer some questions, particularly on the consultation process, the inspection regime and the reference year. Those are the questions that remain unanswered. When we get those answers we will move on to fisheries and we will work on this at an early stage in our work programme.

Simon Coveney (Cork South Central, Fine Gael)
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I am under a bit of time pressure too, but that is my own fault. In response to questions about sugar, I have always said that I would love to see the sugar industry rebuilt in Ireland, but I have also said I am not going to consider supporting that financially and committing public money to it only to see it collapse at some stage in the future.

Any rebuilding of the industry must be based on sound commercial principles. It has to make sense to grow, process and produce sugar in Ireland. In my view, we have a good chance of making that commercial case. However, the Government will not provide subsidies to an industry if it will collapse in the future without those subsidies. The business case must be made. The promoters of the sugar industry are not asking for State subsidy; they asked for an end to EU quotas. That is what we have achieved and it is over to them now. They and the growers will be required to put together a business case to show how they would build, finance and pay for a processing plant that could also produce bio-fuels. They are quite confident that they can do it.

Ireland is very competitive at producing certain foods. Our climate is very suitable for growing grass and I believe we can be competitive at growing sugar beet, even though when it was produced in the past we were not as competitive as other parts of Europe. I think competitiveness can be improved by the use of new varieties, as demonstrated in the UK. The issue is that we want food to be produced in Ireland at a competitive price. I hope we can do that in the case of sugar, but that commercial case and the backing finance have to be put together. I presume Enterprise Ireland or the other arms of the State can help in that process to a certain extent. However, we have no intention of creating an artificial market for sugar that then collapses at some stage in the future after people have committed significant funding and effort in order to rebuild it. The policy is in place to allow the rebuilding to happen because quotas will be gone. It will take until 2017 to be ready in any case. It is now over to the promoters and developers of this project to make it happen. I will be as supportive as I can but given the money available to me we need to be very careful about how we spend it.

The Commission is holding a conference on the issue of milk prices in September which will deal with post-quota market supports for milk. Some countries are very concerned. These are countries which do not produce milk as competitively as Ireland and may have an average herd size of three or four cows. Some central and eastern European countries are in that position. They are concerned that they cannot compete on milk prices against Ireland or Denmark. Some of those questions will be teased out at the conference. However, this was a red line issue for me. The Irish Presidency was in receipt of proposals for some kinds of supply control measures post-milk-quota. I said that if that was in the CAP reform I could not and would not support it. Ireland has spent an absolute fortune in time and money preparing for the move away from a quota system. The growth potential under the Food Harvest 2020 targets is a 50% increase in the volume of milk produced over five years. Co-ops, companies and farmers are spending significant money to facilitate that growth. We need to ensure it happens and we will fight hard for it in the autumn. Some safety-net proposals will be made and I need to ensure that those safety nets do not prevent us from achieving the growth we want to deliver.

The scheme for young farmers was an Irish proposal which was welcomed by everyone. Members asked about the consultation process. We have not yet agreed an exact timetable. I would like to have a focused consultation process that does not go on forever. We could debate and discuss this for months because it is so complex. However, we need to make judgment calls and decisions. We have the information on which to base those decisions so that implementation can be planned in a way that does not take farmers by surprise and so that everyone is informed about what is happening and how to prepare for it. I would like to see a full year lead-in period. I propose that we focus intently on this issue. The month of August will be a holiday time but I would like to make decisions on Pillar 1 towards the end of the September to October period because that pillar represents €1.2 billion. It will take us a little longer to put rural development schemes in place but I hope that decisions on Pillar 2 can be made before the end of the year.

We have the option to choose either 2013 or 2015 as the reference year. I suspect the strong preference will be for 2013 because the die is cast with regard to land and entitlements and the applications have been made. I hope this will end land speculation by people trying to work the system.

Inspections are a separate but linked issue. There are no additional inspections in Ireland above the number required. I thought the headline referred to was unhelpful, but the article made a more reasonable point. We are required to inspect a certain percentage of farms every year and we are audited on that basis. If we do not fulfil the requirements on inspections, auditing and penalties, we are fined through disallowances, whereby the Commission will not release moneys owed to Ireland. I take the point that the more complex the system, the more likely it will be that farmers will break the rules by accident in many cases. We need to keep the system as simple as possible to ensure that farmers are not being caught out by the complexity of a new system and that penalties are not applied to farmers who have made honest mistakes. That has happened with regard to mapping and digitisation issues. The appeals system is designed to allow for fair treatment of farmers.

Pat O'Neill (Fine Gael)
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I asked about the ownership of entitlements on leased land and whether it is the owner of the land or the farmer who is farming it. The eleven-month system is in place in Ireland and there is land with no entitlements. I would welcome a meeting with a departmental official to clarify the issues.

Simon Coveney (Cork South Central, Fine Gael)
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We can facilitate a meeting for any member who wishes it; we do this all the time. If the Senator wants a detailed meeting to tease out some complex land arrangements which may be in place in County Kilkenny, that can be arranged.

Brian Ó Domhnaill (Fianna Fail)
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I have a quick question on Pillar 2, which the Minister has answered in part. What is the Department's view on the timescale involved and the new arrangements under Pillar 2, such as for mountain areas, and the allowance to increase the hectare payment to €450 for farmland above 62°N? A large chunk of Leader funding is administered by the Department of the Environment, Community and Local Government. This funding has not been drawn down and it looks like it will not be drawn down even though eligible projects are waiting for funding. This is a no-brainer, in my view. Why should we return money to Europe that could be used under Pillar 2 for agriculture if it cannot be used for Leader funding? Will this jeopardise the negotiations on the new Pillar 2?

Simon Coveney (Cork South Central, Fine Gael)
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The Minister for the Environment, Community and Local Government and I are working to ensure that we draw down all available money. We also have funding to draw down under the targeted agricultural modernisation scheme, TAMS.

As a result, we will be working to ensure that there will be full draw-down between now and the end of 2015. The Minister for the Environment, Community and Local Government, Deputy Hogan, is taking the same approach in the context of putting Leader companies under a great deal of pressure. Many Leader companies have spent only 38% or 40% of their allocations. The Minister's Department is working hard to ensure that these companies spend what they indicate they are going to spend and that there will be full draw-down. There is a great deal of work taking place in that area because, like the Senator, we want to ensure that all of the matching funding available from Brussels for us under CAP will be drawn down by the end of the period in December 2015.

In the context of the additional payments for what is referred to as high-altitude farming, I do not believe there are any mountains high enough in this country to allow anyone to qualify for such payments. Essentially, they relate to those who farm in the Alps and the Pyrenees. In fact, it is mainly the Alps and in Austria where there are land management systems in mountainous areas that are designed to retain animals on the land in order to keep vegetation down. Those involved receive very significant payments which, in some cases, greatly exceed the highest payments received by farmers in Ireland. It is unlikely that such payments would be made in respect of those who farm on the hills of Donegal.

Brian Ó Domhnaill (Fianna Fail)
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Unless the Minister takes on board the Chairman's proposal relating to the Wicklow Mountains.

Simon Coveney (Cork South Central, Fine Gael)
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That is a different issue.

Brian Ó Domhnaill (Fianna Fail)
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Yes; it relates to commonage.

Simon Coveney (Cork South Central, Fine Gael)
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The proposal in question relates to a Pillar 2 scheme which is designed to match environmental management of sensitive geographical or mountainous areas with farming. This very interesting proposal was put forward by the Wicklow Uplands Council and, to some degree, it mirrors what was done in the context of a small environmental farming scheme that was put in place in the Burren. We only have so much money to spend on Pillar 2 schemes. There have been calls for a retirement scheme and we could put one in place but we would then be prevented from doing other things. We have considerably less money to spend on Pillar 2 schemes. The more new schemes we introduce, the more we will be obliged to abolish existing ones in order to provide funding. There is no magic tree from which we can continually pluck money.

Éamon Ó Cuív (Galway West, Fianna Fail)
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In order to engage in a debate on this matter, we must have access to figures. The Minister indicated that he will move on Pillar 1 first and then proceed to Pillar 2.

Simon Coveney (Cork South Central, Fine Gael)
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No, I did not. I stated that Pillar 2 would take longer. We are already in the middle of a consultation process in respect of it.

Éamon Ó Cuív (Galway West, Fianna Fail)
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They are inextricably connected. At the end of each year, farmers receive printouts. They then add everything together and the result represents the figure for their payments. I am trying to obtain a fix on this matter. Would it be possible, as a preliminary exercise, to indicate what were the various measures on the previous occasion? There has been a reduction of 11%. As the Minister indicated, in the early years we overpaid in the context of co-funding and it was then necessary to engage in a clawback exercise. I understand that under the new CAP, payments relating to any new agri-environment scheme will be approximately halfway between those which currently obtain in respect of REPS and AEOS. The amounts which previously applied in respect of the latter were €12,000 and €4,000, respectively, so farmers will be lucky if they obtain in the region of €6,000 in the future. The orders of magnitude which will apply must be made known to members because otherwise we will not be able to discuss the matter with farmers in any meaningful way. Would it not be possible for the Minister to indicate what was spent under the previous CAP and the pro-rata position which will apply under the new CAP - in this regard we must ensure that no more and no less co-funding than is required will be provided - and the amounts that will be available under the relevant schemes? It would be very useful to have the figures in that regard.

Andrew Doyle (Wicklow, Fine Gael)
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There is an exercise which must be carried out if the Minister is to do as the Deputy suggests. I refer to the fact that a balance must be struck between the people who will be in the cohort that will receive an increase in Pillar 1 funding and those who previously received area-based payments under the disadvantaged areas scheme or REPS and who tended to be the greatest beneficiaries of Pillar 2 funding. We must ensure that the position does not become distorted.

I suggest that we move on to discuss the Common Fisheries Policy. We have spent 80 minutes discussing the CAP. We will be able to continue the debate on the latter on another occasion. Will the Minister make his opening remarks on the CFP agreement?

Simon Coveney (Cork South Central, Fine Gael)
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I thank Ms Josephine Kelly, one of my officials, for her patience. As members are aware, the Common Fisheries Policy has not received the attention it merits. The agreement relating to it was negotiated at the same time as that pertaining to the CAP. In many ways the reform of the Common Fisheries Policy is much more radical. This was necessary because the existing policy was not as effective as it should have been in terms of ensuring that we protect and maintain fish stocks and support fishing communities. When, 20, 30 or 50 years from now, people look back at European policy from the point of view of fisheries, I hope this will be seen as a very radical point of change in terms of how European waters are fished. The CAP is also a point of change but it is nothing like as radical from a policy perspective. The CAP is more about money and how it is distributed.

There are a number of key features in respect of the Common Fisheries Policy agreement. In the first instance, we are committed to fishing to what is termed the maximum sustainable yield. This will not happen overnight but we have stated that we will fish stocks, where possible, to maximum sustainable yield by 2015. All fish stocks to which quotas attach will be fished to maximum sustainable yield by 2020. In other words, the scientific research carried out by the Irish Marine Institute and other bodies will inform us as to the size, state and health of stocks and we will then apply the maximum sustainable yield formula in respect of them. This formula allows the maximum commercial catch to be taken from such stocks while ensuring that they are maintained. This is a really positive step forward for those in the fishing industry and for fish stocks. It will mean that there will still be fish in ten years' time and that we will not fish in an unsustainable way.

The second radical change proposed under the agreement is a move away from discarding fish. We are going to introduce - on a phased, species-by-species basis - an obligation to land fish. This means that those in the industry will be obliged to change, quite radically, the way they fish. They will not be able to simply dump over the side of their vessels fish for which they do not have a quota. It is perfectly legal to discard fish at present but, more than anyone else, fishermen really resent the fact that current policy requires them to dump, in some cases, 50% to 60% of the fish they catch. Many of the latter are healthy adult fish that are marketable and valuable and they are dumped over the side for seagulls and other species to eat or else to rot at the bottom of the sea. Apart from anything else, this is immoral and we are going to change the position.

A great deal of discussion and negotiation was required with the fishing industry and with politicians in the European Parliament, the Commission and the Council of Ministers in respect of this matter. My main objective was always to ensure the policy shift to which I refer would be made but in a way to which the fishing industry could adapt and with which it could live. I am of the opinion that we have achieved that. There are flexibilities in the system which will allow fishermen to manage this change. For example, they will have inter-species flexibility in the context of using their quotas. They will also have inter-annual flexibility in this regard. If a fisherman is operating in the cod, haddock and whiting fishery in the Celtic Sea, for example, and he has a quota in respect of cod and whiting but not for haddock and he brings on board a large catch of haddock, he can use up to 9% of the quota of his target species to compensate for this. There will be a cost involved but at least the fisherman in question will be allowed to land the fish and sell it. If, at the end of the season, a fisherman has caught more fish than he has a quota to land, he can take up to 10% of next year's quota to compensate. So the figures are 9% for inter-species flexibility and 10% for inter-annual flexibility.

Those flexibilities are useful. Then one has what is called a de minimisfigure, starting at 7% and over a five-year period working down to 5%. Our fishing fleet will be able to discard up to 5% of what it catches, but only when it proves it cannot avoid catching those fish. In other words, fishermen have to be able to show they are targeting fish and using modern gear to do that, whether it is Swedish grid to release cod in the Irish Sea when one is catching prawns, escape hatches in the Celtic Sea or mesh size. If one cannot avoid catching fish and cannot deal with it through inter-species and inter-annual flexibilities, one can have this outlet of a de minimisfigure spread across the fleet.

We have sensible, practical implementation measures, but the net effect will be dramatic. At the moment approximately half a million tonnes of fish are discarded in Irish waters each year. If one thinks about that and the value of it, the fish are being wasted and it is damaging stocks and undermining breeding. That will end and it is a really good thing for the fishing industry that it will end. We will have grant aid to help fishermen adapt, to buy the new gear they will need and to become more targeted in terms of how they fish. We will have to go around the country to explain to fishermen how that will work to make sure they are comfortable with it. They are obviously uncomfortable with it at the moment because they know it is a difficult, radical change. Generally, change costs money and it is money they do not have. Much reassurance is needed and we will work hard to provide that. Points to note are fishing based on scientific advice, ending discards, and making decisions on a regional basis involving the fishing industry, which is something it has been seeking for years. We have now an agreed model for regional decision making that will allow us make decisions for the Irish Sea, the Celtic Sea or the western waters with other countries that are fishing in those areas, rather than having to go back to Brussels and go through a long process to make decisions.

In terms of Irish-specific issues, we have maintained and strengthened the language in regard to the Hague preferences. We would like to have gone further in terms of enshrining the new Hague preferences in the new CFP as an automatic right to this country every year but that was not possible. Anybody who says it was is not being realistic. If we had created a debate around the Hague preferences we could have lost them altogether. There was the capacity to lose them altogether. We are the only country in the European Union that would vote in favour of the Hague preferences. It is possible that Britain would but it is divided on the issue. Nobody else wants to give Ireland preferential treatment in terms of the allocation of stocks and that is the effect of the Hague preferences. We have strengthened the wording on the Hague preferences but we have not enshrined them as a right. As Minister, I still have to make a case in December to ensure we get the benefit from them, but in my view it is still a good result.

In terms of protecting the Irish Box, again, we have enshrined in the regulation the objective of protecting biologically sensitive areas. The only biologically sensitive area in the European Union is the Irish Box, apart from a small one off one of the Canary Islands somewhere in the Atlantic. In general, we are encouraging countries to set aside biologically sensitive areas and to implement fishing restrictions there. Again, that was very much our intention in terms of the protection of the Irish Box.

We had a huge risk at the start of the discussion on the Common Fisheries Policy due to the Commission’s wish to introduce what was essentially the privatisation and trading of quotas. The system was based on single transferable concessions, TFCs. That part of the proposal has gone and we can maintain public ownership of quota, which we will allocate on the basis of who needs it most. That is an important win for us.

There is also strong support in the new CFP for the sustainable development of aquaculture. I ask colleagues around the table to help me develop the sector. There is much concern and misunderstanding about the aquaculture sector, in particular finfish farming. We must help people to understand that it will be a future growth area in terms of the extraordinary consumer demand for fish products that simply cannot be met by catching wild fish. We can do that in a sustainable, safe way and that is what we must do. We can create literally thousands of jobs by doing it and we can do it right. The CFP will support us in doing that in terms of some of the money that is available to us.

We are negotiating a fisheries fund for the next seven years to help us pay for the new CFP in terms of the transition that is necessary. We got a particularly bad deal the last time in terms of the fisheries fund. Even though the overall fisheries fund is being reduced by 7% in terms of a broad budget cut, this country’s allocation might well be increased slightly. We fought very hard for that and we will know the outcome in September. I have made a very strong case for an increase in our allocation of fisheries funds that I hope the Commission has taken on board. I will come back to the committee with a figure when I have it in September.

That is the general theme around fishing. The key Irish issues are the Hague preferences, regional decision making, maintaining the national ownership of quota and the protection of the Irish Box. We have won on all of them. The broader and bigger, radical policy changes that are needed around fishing to maximum sustainable yield, ending discards, being more targeted in terms of how we fish and supporting both freshwater and saltwater aquaculture are all progressive changes. For me this will be a difficult CFP to implement because it requires a lot of change but it is a really good policy change. When people look back in years to come at moments of change in big industries such as fishing, this CFP reform will stand out way above the others which were very conservative and did not change a whole lot. They maintained unsustainable fishing. In my view this is a really good moment of change in terms of how we conserve fish stocks and from a fishing industry point of view. If one is a fisherman who wants to bring a son or daughter into the business one can look ahead and anticipate that stocks will grow. We will have challenges in getting there but we will see less and less of our stocks being unsustainably fished. That must be good news for everybody and it means that quotas will increase over time rather than getting cut each year.

Andrew Doyle (Wicklow, Fine Gael)
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Three members remain who are interested in fishing. I urge them to be as quick as possible with questions.

Brian Ó Domhnaill (Fianna Fail)
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I thank the Minister for his update and presentation. I acknowledge that he and his officials have worked tirelessly on the reform of the CFP, particularly in the past six months during the Irish Presidency. However, I have met with fishermen around the coast who do not share the optimism that has been expressed by the Minister today. In fact, many smaller fishermen are somewhat disillusioned, rightly or wrongly, with the sector at the moment and the quota allocation that is available. While much attention and focus has been placed on discards, regionalisation and the protection of the Hague preferences, the real issue affecting fishermen currently is the lack of quota allocation. That is an historic problem which has not just developed on the Minister’s watch but is a massive issue even in his own part of the country where fishermen fish for cod, haddock and whitefish in Irish waters and are only able to obtain 11% to 12% of the quota while French and Spanish fishermen avail of the rest.

Simon Coveney (Cork South Central, Fine Gael)
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One must focus on what we can actually change rather than be unrealistic.

Brian Ó Domhnaill (Fianna Fail)
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I did say that it did not just happen on the Minister’s watch; it happened under the watch of Fianna Fáil Ministers as well.

I have no problem saying that, but that is the crux of the problem facing the sector. We should have a discussion about that in the future. It may not be directly linked to the Common Fisheries Policy, CFP, but it is the only issue of relevance to the fishermen.

I acknowledge the painstaking work done on the Hague preferences and also what was achieved, but if the proper quota allocation was available we would not need the Hague Preference at the end of each year or be required to seek additional transfers every December.

A vote has been called in the Seanad and I must leave shortly, but how will the ending of discards work in practice in light of the discard ban for pelagic stocks, which comes into effect in January 2015? What discussions have taken place with the industry, and will a period of flexibility be allowed or will the ban be introduced from 1 January 2015? The Minister referred to funding, but will new mesh size be part of the solution also?

This is not a political castigation, but I have met with fishermen and fishing organisations in various parts of the country and their unilateral view, particularly the organisations representing the smaller fishermen and women, is that there was a total lack of consultation and meetings in the lead-up to the CFP review. They feel somewhat isolated in that their views were not taken into consideration in the overall context. I know the Minister has been extremely busy with the review of the Common Agricultural Policy, the review of the CFP and hosting the Irish Presidency but, none the less, the fishermen believe there was a lack of consultation. In agriculture, which is the other part of the Minister's brief, solid consultation with farmers took place, and they would acknowledge that. However, there was a lack of consultation on the fishing side.

On the transfer of quota, I very much welcome that the scientific and technical committees, STCs, are gone. Going down that road was a no-brainer. What is the Minister's view on the transferring of quota between countries? For example, Spain may transfer to France or vice versaon a stock that may be less important to one country over another. What is the Minister's view on the prevalence of that and whether that quota should go back into a centralised pot on a Europe-wide scale, which could be redistributed to other member states? Did discussions take place on that or is it an issue that could be examined within the framework of the CFP?

Simon Coveney (Cork South Central, Fine Gael)
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I am sorry if I came across as being irritated at the start of the Senator's contribution, but we all have a responsibility to try to give leadership. There are certain things I cannot do, even if I want to. I would love to renegotiate relative stability but to do that I need to get a majority of member states to support me. There is not a single other member state that would support Ireland in terms of changing relative stability, with the possible exception of Spain, because it wants more from everybody. For me to start even claiming that I could change Ireland's percentage of quota versus that of other countries is unrealistic. To be fair, it was the same for previous Ministers. Ministers get stick on this issue. This was a deal done years ago. We can get into the reason that deal happened and the way it happened, or we can concentrate on changing what we can change in terms of getting big allocations of new species such as boarfish. We can concentrate on building up stocks also. Even though we have a relatively small percentage, that percentage is increasing year on year. My focus is on changing the things I can change rather than having this circular debate on trying to take more quota off the Spanish and the French because we gave them too much in the first place, knowing that I cannot do that. We all have a responsibility to try to explain that to fishermen in terms of what we can and cannot do as a member of the European Union, and be realistic about it.

On the Hague preferences, I would like to have done more. The Senator's colleague, Pat The Cope Gallagher MEP, did a very good job in the European Parliament. I would not pretend that he was not involved in this debate, because he was. Unfortunately, I read some coverage that was inaccurate in that it stated the Presidency was very unhelpful in regard to the Hague preferences. I was surprised to read that. It did not necessarily come from Pat The Cope Gallagher but from other sources. That was not the case. We wanted to do as much as we could for the Hague preferences while at the same time avoiding a broad discussion on it because I was nervous about where that discussion would go. I believe we got the best possible deal.

In terms of discards in the pelagic sector, that date was to be January 2014 but we pushed it back a year because everybody recognised that there is work to do to prepare for that. The pelagic sector should not have a huge difficulty in dealing with an obligation to land. It is already illegal for pelagic vessels to grade fish, for example. They should land everything they catch, more or less. This is a fairly clean fishery; therefore, it is about catching small fish, which can be dealt with through mesh size and so on. I accept it is not quite as simple as that, but already we are speaking to the Killybegs Fishermen's Organisation, KFO, and to others about the way that will work. I believe we will make it work. It is much more complex than the whitefish fishery, particularly when we have mixed fisheries where six or seven species might be caught in the one net, and it is difficult to avoid that.

On the lack of consultation, I would like to have travelled around the country more in advance of doing this deal, but to say there was not consultation in advance of the CFP would not be true. I am not a difficult person to contact. The heads of the six fishing organisations in Ireland have my mobile telephone number and can call me. Generally, I meet the fishing organisations before every Council they choose to attend, unless there is some exceptional reason I cannot do that. There has been consultation. Obviously, people would have liked more, but there was as much as we could possibly provide.

Brian Ó Domhnaill (Fianna Fail)
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I thank the Minister. I must leave to attend the vote in the Seanad.

Simon Coveney (Cork South Central, Fine Gael)
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I thank the Senator.

On transfers between countries, there is a system of swaps on which Josephine Kelly is probably the global expert, given that she uses it every year to try to get some of our sectors out of a hole in terms of getting some more quota. That system continues into the new CFP.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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Who will make the decisions on a regional basis? Will the Department make those in consultation with the sector?

Simon Coveney (Cork South Central, Fine Gael)
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Yes. That happens through what are called the RACs, which are regional committees with industry people sitting on them. The industry will be centrally involved in the regional decision-making process.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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The Minister said that as the species stocks improve there is the probability of extra quota and so forth. Will that be determined on proportionality?

Simon Coveney (Cork South Central, Fine Gael)
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Whether we like it or not, and I do not, we are stuck with relative stability, under which the stock is split among countries in certain percentages. That percentage does not change. As the stock increases, we get our percentage increase. That is the way it works.

I omitted to make a point earlier which I should make, and both Deputies present will understand it because they know the fishing industry quite well from a technical point of view. Currently, we have what are called total allowable catches, TACs, but that is based on what one can land as fish. In other words, when someone catches haddock and whiting their quota is what they are allowed to legally land on the quayside.

We are now changing that to a catch quota. Currently, if one has a quota for 5,000 tonnes but 6,000 tonnes are caught, it means that 1,000 tonnes are dumped over the side and 5,000 tonnes are landed. Under the new system, if one catches 6,000 tonnes one must land it all. Therefore the quota is now based on what is caught rather than on what is landed. That means that the quota will increase overnight when one changes that system.

Currently, the science of landing quotas factors in a 30%, 40% or 50% discard rate - that is, fish being killed - in certain fisheries. If one is going to land everything, the quota has to increase correspondingly, taking account of the extra fish one is going to catch but cannot discard. That is excluding the juvenile fish, which one should certainly be able to avoid catching. Switching from a landing quota to a catch-based quota should therefore result in an increase in the quota for fishermen. It is good news even though it is a bit more complex for them in that they cannot turf over the side what they do not want.

Thomas Pringle (Donegal South West, Independent)
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In simple terms, if I am a fisherman with an annual quota of ten tonnes of cod, does that mean I will have a quota in January 2014 of 14 tonnes?

Simon Coveney (Cork South Central, Fine Gael)
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Yes.

Thomas Pringle (Donegal South West, Independent)
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Do the 9% quota offset and the 10% offset from next year come into play at that point? That is one of the questions I had concerning the quota increase that was mooted in terms of the CFP.

Simon Coveney (Cork South Central, Fine Gael)
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To answer that point, let us say that one had ten tonnes of cod to catch in the current system, but the ISIS advice is on the basis of a discard rate of 30% for that species. It is quite a complex calculation, but the recommendation on a new quota will have to be based on what a fisherman can avoid, or not avoid, catching. If half the extra 3,000 tonnes of discarded fish is juvenile fish, it should not be factored into an increasing quota. However, if the other half is adult fish that one cannot avoid catching, it will be factored in. We are trying to maintain the mortality rate of stocks, but instead of throwing them into the sea, fishermen will be able to land them. The calculation is not the amount currently fished plus the current discard equals the new quota. Catching some of the discarded fish can be avoided. It depends on the fishery, but what is currently being discarded and cannot be avoided must be factored into the new quota. It is quite a complex calculation, depending on the stocks, because with some of the fisheries one can avoid catching fish, while with others one cannot. In some of the mixed fisheries it is also quite complex.

ISIS will have a much more complex job to do in recommending quotas. It will have to do two things. First, the quota must be consistent with maximum sustainable yield. Second, it must be consistent with a catch quota rather than a landing quota, taking into account what would otherwise have been discarded and what can be avoided through the use of technical measures. It is quite a complex system, but fishermen will know what we are saying because they throw cod over the side in buckets. They will know what is required for this calculation, even though it is undoubtedly a complex one.

The one certain thing is that fish that are currently being sustainably fished will not be subject to a reduction in quota on the basis of moving from landing to catch quota; rather, there will be an increase. If there is to be a reduction in quota because they are being unsustainably fished at the moment, it will be less of a reduction than it otherwise would have been because it is going to a catch quota rather than a landing quota.

Thomas Pringle (Donegal South West, Independent)
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That is fine. Does the 9% and 10% transferability come into play after whatever increases there are?

Simon Coveney (Cork South Central, Fine Gael)
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That is correct.

Thomas Pringle (Donegal South West, Independent)
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Is the Minister raising the issue of relative stability in the context of the overall discussions, or is he concentrating on what he believes we can change? That is just a general point and I am not seeking a debate on it.

As regards discards and their removal, one of the factors that will determine whether this is a success will be the attitude adopted by the SFPA and the rules we implement to make this happen in the transition period. It is also linked to the science involved, although the fishermen suspect the scientific evidence. Their evidence at sea is different from what the scientists claim. The complexity of the rules and regulations will be critical if fishermen are to buy into this scheme in its implementation stage. We do not want fishermen returning to illegal activities simply because everything is stacked against them and they feel they have no choice. That will be important when it comes to implementing the measures nationally.

As regards discarding, I am wondering about the Dutch fleets that are fishing mackerel to order off the west coast. Will there be any focus on that issue when discards are being policed? A significant amount of fish are being discarded even though this is already illegal.

The Minister said we were out of the individual transferable quota, ITQ, system, but that is implemented as part of the CFP, so is it optional?

Simon Coveney (Cork South Central, Fine Gael)
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Yes.

Thomas Pringle (Donegal South West, Independent)
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It is part of the CFP, but we have opted out of it. If at some stage during the CFP's lifetime a different Minister decided it would be a good thing for Ireland to opt into the ITQs, would that be possible? Have we opted out of it for the duration of the CFP, or could a decision be made in two years' time to opt into it?

Will provision be made in the fisheries and maritime fund for people who have been displaced from the fishing industry, so that they can be retrained for new opportunities in the coastal marine sector? We did not deal with that in the last CFP, so it should be part of the fund. There may be some pressures concerning the technical measures we want to support. It will be important, particularly in the processing sector, where we see ongoing modernisation that is displacing many jobs in Donegal.

Simon Coveney (Cork South Central, Fine Gael)
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All we can do in terms of science is to get better every year. Fishermen need to opt into this by taking observers on board and showing them the proof of why they do not believe the science. We also need to try to maintain and increase resources for the Marine Institute and others who are doing that research. An Irish person from the Marine Institute is the current head of ISIS.

The relationship between scientists and fishermen is better now than it has ever been. We got a pretty good deal last year and the year before in difficult circumstances for many stocks. That was on the back of having the Marine Institute with us to make the case to the European Commission on why the cuts should not be as drastic as they could have been and the increases should be greater. Fishermen now realise the value of having scientists on board, but we can improve the relationship all the time. There is no question about that.

I have heard the accusation from our industry that there are large Dutch pelagic vessels off the west coast, essentially grading a lot of fish and pumping them back into the water through underwater systems which are not visible. I will inquire into that, but obviously we must impose the rules. I do not want to target one nation as breaking the rules more than anybody else. Boat by boat, however, we need to ensure that people are not grading and mulching fish and pumping them back into the water as discards. That is not acceptable and it has to stop. If the Deputy has any evidence on that I will certainly follow it up.

On the question of ITQs, ITCs, TFCs or whatever one wants to call them, it will not happen while I am Minister and we will put in place a plan for the implementation of the next CFP that rules out that option as best we can. I cannot, however, make a decision for any future Minister. That option is there for them. The Commission would like us to use that option because it sees it as a way of reducing the fleet, but I do not like that because it means fewer and bigger boats, and fishing communities would collapse. We would end up with one or two big fishing ports in Ireland and nothing else. That will not happen on my watch, and the members of this committee would not let it happen.

Andrew Doyle (Wicklow, Fine Gael)
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No. I thank the Minister and his officials. What he said is correct. We have had too many political compromises on the CFP for years and against the background of the work the sub-committee is trying to do on smaller coastal communities and the people who represent the small inshore fishermen, it would be a travesty if we allowed IFCs, or whatever they are called, to become the norm.

As this is the last meeting, I wish all members an enjoyable break. Having regard in particular to the innovation we have had to incorporate into the meeting, I thank the broadcasting and editing staff, the ushers and the secretariat for all their help.