Mr. Tom Moran:

I am trying to follow the questions. In so far as I can, I will answer them in the order they were asked.

On co-funding, I mentioned that flexibility was one of the key tenets discussed in the negotiations. The option of providing different rates of co-funding achieves two objectives. First, it gives member states flexibility to apply and use the second-pillar arrangements, depending on their budgetary circumstances. Much of the pressure from member states throughout the negotiations was to maximise the EU contribution. It is not mandatory in that one can spend more than the contribution. The Commission provided for higher levels of co-funding in areas it wants to promote across the programmes. The environment is an example. Member states, but not only Ireland, are afforded the best option. No decision has yet been taken on the way we will apply the measure. I will return to this.

There have been some very useful comments and concerns expressed about international trade, particularly in beef. Reference was made to Canada, the United States and Mercosur. There are others also. We are concerned. Throughout the negotiations with the WTO, Canada and Mercosur and the negotiations on the EU-US trade agreement, the Department had concerns about beef. Our concern is that certain countries would be in a position to target high-value EU markets to which, as Deputy Ó Cuív rightly pointed out, the vast bulk of our beef now goes. Half our beef exports used to go to third countries, with the assistance of export refunds, etc. Half our exports amount to 90% of the total.

The vast bulk of our exports now go to the high-value shelves in the European Union. A policy that we have succeeded in, along with the industry, Bord Bia and the farmers, has been a shifting to an area where we are more secure. If that kind of market is targeted, particularly if third countries can send in high-value cuts, it is a source of concern. What does one do about it? The first step is to participate actively in the negotiations involving the Department of Foreign Affairs and Trade and the Government. We have been doing that and reflecting the views outlined. Our approach is to try to ensure that concessions given to other participating countries in a trade agreement cannot simply result in the cherry-picking of high-value cuts. Our negotiating position has been to separate high-value cuts and low-value cuts, for example.

That is to try to get the tonnage reflected in the fall of the animal; in other words, that strip-loins and fillets would not be the dominant tonnage, and that one might have to take forequarters and sides as well. We have been trying to do that in the various negotiations.

The Canadian figure, which turns out as a carcass equivalent of 50,000 tonnes, has to be hormone free. Standards will be paramount, so if that beef is coming in over time it will have to adhere to EU standards. Current indications are that in order to produce that much carcase equivalent beef, they would nearly have to produce 600,000 or 700,000 tonnes of beef in order to get that much to the EU with the kind of cuts they send. In addition, it would take them seven to eight years. There are risks in that but looking at the up-side, we have positioned our industry within Europe to hold a strong position in higher value markets. Our focus now is on developing the competitiveness of the sector, as well as knowledge, quality and profitability. That is what we are doing at the moment and our policy is quite consistent.

In the last budget we introduced a genomic scheme which is just one example of how we are focusing on the quality of what we produce, as well as the economics to ensure that we remain competitive. In the context of international trade agreements we can argue for account to be taken of the sensitivity of the beef area. I have given the committee some ideas of how we can do that. At the same time, we can focus on making our own beef sector as competitive and secure as possible, which is what we have been doing.

As negotiations with the United States progress, we will be conscious of the need for that country to take full account of our concerns. Only recently, the US has taken the first step towards reopening the market for Irish beef, which is a huge step for us. It will not be a major market in the short term, but it will be a niche market. Some of our exporters, and An Bord Bia, would concur with the view that there is plenty of space in the US for high quality, grass-fed Irish-style beef, although not in huge numbers. That is particularly so on the east coast of the United States. It is a big step and we are already engaged with the US on how to bring the first step forward to opening up the market. We pressed heavily for that before.

The reopening of the Japanese market, as announced yesterday, was a major boost to us. It is not just a boost in terms of volume, because at this stage export volumes are not large. It is a high status market, however, and a big payer. The kind of beef they used to take before we were banned was of the offal type. Japan is a big market for pork and beef throughout the world, and probably one of the biggest importing markets in the world.

This morning, a team of four or five from the Department left Dublin for Beijing to push for the next step of opening the Chinese market. In April 2012, the Minister, Deputy Coveney, signed a memorandum of understanding with them to start that market. One of the key elements in that was to get a working group of technical experts together, although it is not always easy to get that up and running with the Chinese. We have done that, however, and it is starting tomorrow in Beijing. We are hopeful that it will come to fruition.

We are conscious of the threats of international agreements. There are ways in which we try to address those but we also try to focus successfully on the competitive side, as well as the quality and safety of our own beef.

I will deal briefly with some of the other points. Young farmers were a key priority in the negotiations. We are now at the stage with Pillar 1, as we are with Pillar 2, of putting in the nuts and bolts on how we use it. Having taken it as a priority in the negotiations, we will be conscious of how young farmer prioritisation will apply throughout our policies. There are many ways in which it can be done. We did it a long time ago in the milk sector and we always prioritise young farmers in milk quotas. We can also do it through the tax regime, which is being done and budget 2014 provides for that. We can do it in Pillar 1 mandatorily under the single payment, which we negotiated at EU level. We can also do it under Pillar 2 when designing schemes so that we prioritise the advantage given to young farmers. We have done that in the past and it will probably be considered when we get down to the nuts and bolts of writing the schemes and putting them in place.

The key point is reflected in the committee's own document. The committee is correct in stating that one will not have a forward-looking profitable sector unless one is rejuvenating it by whatever mechanism is used.

I have dealt with the percentage of co-funding in so far as I can. We have not yet formally made any decisions on the flexibility of Pillar 1, although we have received submissions. The 40 submissions we have got range across the board. They are from the groups and organisations that we would fully expect to contribute and from others who have much more limited sectoral interests. We have taken them all and considered them seriously.

As regards the payments convergence mechanism, we had serious difficulties from the outset with the European Commission's proposal to move to a flat rate. It did not suit our policies and we fought tooth and nail from a difficult position when we held the EU Presidency as well. From the beginning, the Minister and his officials pushed strongly for flexibility in this matter. What became known as the Irish model was part of the final agreement. It is in the mix and a betting person would not go far wrong in betting that that is the position we will avail of when we announce our decisions, because that is the one we fought for.