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.