Andrew Doyle (Wicklow, Fine Gael)
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I welcome Mr. Tom Moran, Secretary General of the Department of Agriculture, Food and the Marine, who is accompanied by his officials, Mr. Aidan O'Driscoll, Ms Bríd Cannon and Mr. Kevin Smyth. I thank them for their attendance to brief members on the Department's six-monthly report on developments in the European Union from 1 January to 30 June 2013. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are also directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name in such a way as to make him or her identifiable.

I invite Mr. Moran and any departmental officials who wish to follow him to make their opening statements.

Mr. Tom Moran:

I thank the Chairman for the invitation. While he has introduced the team, I have added to it Mr. Paul Dillon, a newly-appointed assistant secretary in the Department, who will join us in respect of Pillar 2.

Andrew Doyle (Wicklow, Fine Gael)
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Congratulations.

Mr. Paul Dillon:

I thank the Chairman.

Mr. Tom Moran:

As he commented sotto voce at the outset, Mr. O'Driscoll, who is sitting to my right, has damaged his arm, which just shows members the tough negotiations in the EU in which he was involved. I understand that the joint committee wishes to examine the six-monthly report and then to consider Pillar 2 in private session.

Andrew Doyle (Wicklow, Fine Gael)
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Yes.

Mr. Tom Moran:

I will make a second statement at that time, if that is all right.

Andrew Doyle (Wicklow, Fine Gael)
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Absolutely, yes.

Mr. Tom Moran:

Members have before them the six-monthly report on developments in the EU for the crucial period January to June 2013. The report gives members the details of dossiers progressed and will give them a full sense of the strategic importance of that period. It was a busy time for the Department, coming at a crucial juncture in two very important EU negotiations. We had two major priorities, namely, to complete the negotiations on the reforms of the Common Agricultural Policy, CAP, and the Common Fisheries Policy, CFP, while at the same time, we had the additional responsibility of managing the rotating Presidency of the EU. Our interaction with key players in advance of the Presidency, through numerous meetings with other member states, relevant Commission officials at political and technical level and contact with the European Parliament, particularly the rapporteurs for the major dossiers, paved the way for excellent working relationships, which I think assisted us in achieving the objectives.

At the January Council, the Minister, Deputy Coveney, outlined Ireland’s plan for the six-month Presidency in the agriculture and fisheries sectors. While the key priorities were the reforms of the CAP and of the CFP, the list of legislative dossiers in the agriculture and fisheries sectors covered a broad spectrum of proposals ranging from small and low key to significant and politically challenging. The joint committee already has the list of files on which agreement was reached and the list of dossiers advanced during the Irish Presidency. Before turning to the CAP and the CFP, I would like to briefly highlight a few and update members on where these dossiers now stand.

We reached first reading agreement on the farm accountancy data network, an instrument for evaluating income and the effects of the CAP on farmers. We also concluded on the so-called breakfast omnibus package. This is a series of five directives, which set out specific composition and labelling rules for various products associated with breakfast foods. First reading agreement was also reached on the pet passport regulation, which makes it easier for EU citizens to take their pets into other EU member states and on the directive on the health requirements governing intra-Union trade in and imports into the EU, of dogs, cats and ferrets. Following on the overall agreement reached in June with the European Commission and the European Parliament on the aromatised wine proposals, the Lithuanian Presidency, which currently is in the chair, obtained political agreement on the text in October and the dossier is now concluded.

We had expected publication of the package of five proposals on animal and plant health, seed marketing, official controls and food and feed expenditure early in the Presidency and it had been our intention to expedite examination of these in working groups during the first six months of the year. It was not until 6 May, however, that the four proposals, known collectively as a new package for healthier animals and plants for a safer food chain, were adopted by the Commission. The fifth proposal relating to the management of expenditure in these sectors was adopted by the Commission on 7 June. Department officials attended this joint committee last month to assist in the scrutiny of these proposals.

Turning to the major dossiers, political agreement was reached on reform of the Common Fisheries Policy in May and the newly reformed policy comes into force from 1 January 2014. The reforms agreed will govern the nature and operation of Irish and EU fisheries for the foreseeable future and are designed to usher in a new era of more economically, environmentally and socially sustainable fishing across EU waters. The new policy will allow for the rebuilding of fish stocks in European waters through long-term management of stocks, reducing and eliminating discards where possible and rebuilding stocks to maximum sustainable yield. All of these measures hold the potential to substantially increase catches by Irish fishermen in the short and medium term. The successful conclusion of the basic Common Fisheries Policy regulation, as well as the common organisation of the market in fisheries, involved a huge amount of effort by the Department, involving ten trilogues and numerous technical meetings. In addition, a significant body of work was carried out on the European Maritime Fisheries Fund by the Irish Presidency, thereby enabling the Lithuanian Presidency to reach a general approach at the July Council.

As to the Common Agricultural Policy, political agreement between the three EU institutions was reached on its reform on 26 June under the Irish Presidency. It was the result of months of intense negotiations, initially within the EU Council of Ministers and subsequently between the Council, the Commission and the European Parliament. More than 40 trilogues were held with the Commission and Parliament, with similar numbers of technical meetings, informal contacts and high-level groups. Ireland represented the Council at all of these meetings. Leading up to the agreement, in May the Minister, Deputy Coveney, hosted the informal Council of Agriculture Ministers in Dublin Castle. In a departure from normal practice, given the dossiers on hand – indeed for the first time ever – the Council was joined by the European Parliament rapporteurs on each of the four CAP reform dossiers and the co-ordinators from each of the Parliament's political groups. Normally, the European Parliament attendance at such meetings is limited to the Chair of the Agriculture Committee. However, this additional attendance allowed all three institutions to have a meaningful exchange of ideas and to better understand each other’s positions on some of the key outstanding political issues.

The agreement reached in June sets the policy framework for the EU agriculture sector up to 2020 and secures strong and sustainable growth in the agriculture and food sectors into the future. Elements related to the multi-annual financial framework, MFF, were finalised under the Lithuanian Presidency on 24 September and the reform package was endorsed by the Agriculture Committee of the European Parliament on 30 September. The package was adopted by the Parliament at its plenary session on 20 November and it will be formally adopted by member states at the Agriculture Council on 16 December. This paves the way for the entry into force of the regulations on 1 January 2014. However, to allow member states sufficient time to organise implementation of the reform, the majority of the new measures will apply from 2015. While financial elements, such as the new financial ceilings and share-out of funds between member states, will apply from the beginning of 2014, transitional measures have been put in place for the bridging year of 2014 for the majority of measures. Initial negotiations on the transitional rules took place in the first six months of the year under the Irish Presidency and the Lithuanian Presidency has now finalised this dossier.

I mentioned a moment ago that parts of the CAP agreement hinged on the parallel negotiations taking place on the multi-annual financial framework for the next EU budget from 2014 to 2020 . Although the Heads of State and Government reached agreement on the MFF at the European Council on 7 and 8 February, final endorsement of the MFF elements of the CAP package was only obtained from the European Parliament at the end of September. Last month, after months of difficult discussions, the European Parliament adopted the MFF for the 2014-20 period, setting the expenditure ceiling for heading 2 at €373 billion.

For Ireland the CAP will deliver in excess of €11 billion over the next seven years.

The Minister, Deputy Coveney, already addressed this committee on a number of occasions regarding the substance of the reform agreement. Without going in to excessive detail, and as a useful summary, the key aspects are: a greater emphasis on sustainability through Pillar 1 "greening" measures and Pillar 2 environmental measures; generational renewal through supports for young farmers under both Pillar 1 and Pillar 2; a continuing move towards greater market orientation, with support measures available only as a safety net and specific provision for crises; and flexibility for member states to adapt the policy measures under both Pillar 1 and Pillar 2 to deal with their own specific competitiveness and sustainability challenges. One of the key elements that we were negotiating throughout the package was that member states would have flexibility to adapt the policy to their own specific needs.

One of the most important issues for many member states was the method for distribution of direct payments within member states. On this issue, we faced proposals from the Commission for mandatory movement to a flat rate of payment per hectare which would potentially have had a negative effect on our capacity for sustainable production. The agreement that member states have the option to apply the partial convergence model, as suggested initially by Ireland, subject to a minimum payment of 60% of the national or regional average payment per hectare by 2019, is a reasonable and balanced compromise and a good outcome for this country.

Some of the other important issues of the package from Ireland's perspective are as follows. On greening, the reform package guarantees a minimum level of environmental protection which, for the first time, is enshrined in direct payments under Pillar 1. There is a good balance struck between the three institutions on the practical implementation of the three greening criteria of crop diversification, maintenance of permanent grassland and ecological focus areas.

On young farmers, Ireland was one of the first member states to propose such a payment so as to encourage generational renewal in the agriculture sector. The agreement to introduce a mandatory top-up to Pillar 1 payments was welcome.

Under rural development, that is, Pillar 2, a new framework for the drawing up of rural development programmes has been agreed. Programmes must contribute to the achievement of three headline objectives, fostering the competitiveness of agriculture, sustainable management of natural resources and achieving a balanced territorial development of rural economies and communities. Also, there was agreement to abolish sugar quotas by 2017 and confirmation that milk quotas will cease in 2015.

I mentioned earlier that the agreement reached gives a high level of discretion to member states regarding implementation. Consequently, in July last the Minister initiated a process of consultation with all relevant stakeholders to ascertain their views on the most appropriate application of the Direct Payment Regulation in light of Ireland's unique agricultural profile and circumstances. The consultation process closed on 20 September with a total of 46 submissions and these are receiving careful consideration. In addition, modelling of the various scenarios that have arisen is also ongoing within the Department. This committee has already received a detailed briefing from senior officials on the various options involved and the Minister indicated publicly his hope to be in a position to make decisions across the range of alternatives during the next few weeks. Incidentally, the committee contributed to the consultation process with a useful document which is on the table as well as part of the issues we are considering. Drafting of the rural development programme is also already well underway but we will leave that until later.

That concludes my opening statement and I am happy to take any questions or provide clarification on points that might arise.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I thank the Secretary General for the outline.

We will be discussing Pillar 2 later but in terms of the wide negotiations, why did the Presidency agree to a co-funding rate in Pillar 2 that was as low as 25% and 20% on such a wide range? Across Europe that had the possibility of reducing funds to farmers dramatically because there is the temptation now for national governments only to co-fund at the minimum rate to draw down all the European funding. Normally, when one sets a co-funding rate, the idea is to keep the rate up to force the other party to come up with the money. Does this potentially take a great deal of funding out of European agriculture that would be guaranteed for agriculture if the co-funding rate was higher?

There have been ongoing negotiations between the United States and the European Union and I understand that the committee has considered extending a memorandum of understanding between the United States and the European Union that would allow hormone-free beef into Ireland. I wonder how is this likely to affect us if we allow the big cattle rangers of America into the Irish and European markets. I understand that more than 90% of our beef is being sold on the European market and there is little in the way of third country exports. I wonder about the ongoing Mercosur negotiations. If we open up all our markets to international beef that might not be produced at the same standard as our beef and that might not be subject to all of the animal health regulation of Europe in terms of animal health and the method of farming of which would be totally different, what effect is it likely to have on beef prices here? We already have an agreement with Canada.

What will be the effect of all of these agreements? One agreement seems to lead to another. My understanding is that there is domination in Europe by those who want access to all of these markets for industrial goods. There is, to put it bluntly, a willingness to sell out agriculture by the powerful industrial countries in Europe in order to gain access to the industrial markets of the other countries and that one of the down-sides for Ireland of all of this pressure from Europe could be that agriculture, particularly the beef sector, would be the big loser.

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank Mr. Moran for his presentation. He states that a mandatory movement to a flat rate of payment per hectare would potentially have had a negative effect on our capacity for sustainable production. Was there any consideration given to a flat rate with front-loading up to 32 hectares and if such were the case, what would be the negative effect?

Mr. Moran mentioned that the Department received 46 submissions on its deliberations. Can he give a breakdown on these submissions? Were they wide-ranging or specifically focused on a direction on which they would like to see the negotiations concluded?

Regarding Pillar 2, I do not want to go over the point made by Deputy Ó Cuív on something that would be serious for many of us. On the co-funding or shared funding of Pillar 2 payments, is there any indication of what will be the percentage from the Department? The farming organisations are adamant on it being 50:50. There has been speculation on this in newspapers and elsewhere. Can Mr. Moran give us any indication of the position?

Thomas Pringle (Donegal South West, Independent)
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I thank Mr. Moran for his presentation.

On the Common Fisheries Policy and the conclusion of the new policy, individual transferable quotas are part of the policy at a European level with individual countries having at this stage the right to opt out. If Ireland decided to opt in, is that an option? What would it require for that to happen?

As I understand it, all that is required is that a Minister decide we are opting in. Is that the case?

What is the input of the Department on Ireland's stance on the EU–US free trade agreement negotiations? A controversial element of the agreement concerns investor-state dispute-resolution processes and it could have implications for Irish agriculture. The Department of Jobs, Enterprise and Innovation is leading on this but I am wondering about the consultation in which the Department of Agriculture, Food and the Marine is engaged. Have the witnesses any views on this?

Martin Heydon (Kildare South, Fine Gael)
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I thank the officials for attending. I note the very significant contribution they made during the CAP negotiations. The period of our of EU Presidency was acclaimed across the board. Negotiating the CAP in the manner of the Minister and his officials was the key. I congratulate them on it. I wish to highlight two phenomena that had the Irish stamp all over them. One concerned young farmers and the other concerned the abolition of the sugar quota. Both were very difficult to achieve. There was much opposition but the achievements will leave a lasting legacy.

For young farmers, in particular, it is important that the issues of land inheritance and mobility be borne in mind. It is important that we support young farmers. We all accept that the sugar industry is one that we should not have lost. I hope we will have an opportunity to get back into it.

Deputy Éamon Ó Cuív referred to certain free trade agreements being negotiated by the European Union and a number of countries. This week, the Taoiseach and Minister announced a very exciting development that will work wonders for our reputation. Japan is to import Irish beef for the first time in a number of years. What effect would a positive conclusion to the EU–Canada free trade agreement talks have for our agriculture industry? I am interested in hearing the views of the officials on that.

Regarding the US–EU memorandum of understanding on the exportation of US hormone-free beef to Ireland, it has already been said there are concerns about imported beef that might not meet the very strict Irish standards. We know the added cost incurred by the Irish producer in meeting our standards. We need to ensure that there is no trade-off that posits agriculture in general in the European Union, but particularly in Ireland, as a poor relation for industrial reasons. This ties in with the ongoing EU-Mercosur negotiations on allowing Mercosur countries to gain access to the EU beef market. Could we have a brief overview on that?

Willie Penrose (Longford-Westmeath, Labour)
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I compliment the officials on their work. This is an important area, particularly the method of distribution of direct payments. This will be the kernel of the discussions from here on in. The structuring should achieve one of the central tenets of the CAP, namely, to keep the maximum number of farmers on the land. This will not be achieved without the structure I advocate. It means large payments to corporations, etc., must go off the agenda. We must ensure the money is diverted to where it will have the maximum impact. I hope this is what we have achieved. For too long, the payments have been lopsided and have not achieved what they should have achieved.

In this context, the Department has received some detailed submissions from the representative group of the organic farmers. They want a review and to increase the scheme payment rates in light of the significant costs associated with organic production in the areas of fish, beef and sheep. They have a number of structured ways of payment. They say the target, even that in Harvest 2020, will require a fourfold increase in the area of organic farming land in a short period. Has cognisance been taken of this?

I compliment the Minister in respect of the initiative on young farmers. It is necessary to ensure dedicated support for young farmers under both pillars. An instrument that was very useful and important in the past was the installation aid scheme. Will any such scheme be considered again? The educational structure has been built up and is very well fleshed out but there is no use being under 35 and having all the education in the world if one cannot get out of the traps. Installation aid was only €10,000, and €7,500 eventually, but it even helped significantly with legal costs and resulted in free flow in that regard. It is critical that we promote intergenerational transfer and adopt a positive view on partnerships. We must redefine these concepts and not be afraid to grasp them.

A free trade agreement between the European Union and Canada is being negotiated. Will the officials reflect on this? What will its impact be on the agriculture industry in Ireland? It runs in parallel to what other Deputies have said in regard to Mercosur, the issues pertaining to the importation of US hormone-free beef and the lifting of the quotas. I would be interested in seeing how this will feed into the overall distillation of the effects on Irish agriculture in the longer term.

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.

Andrew Doyle (Wicklow, Fine Gael)
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Deputy Penrose mentioned the organic issue.

Mr. Tom Moran:

The organic issue is a key part of our wider agricultural area. It is one of the tapestry bits that is needed and is now provided for under Pillar 2 of the new rural development programme. That is something we will be looking at. We already have an organic scheme under the existing pillar and it is provided for under the new one also.

Andrew Doyle (Wicklow, Fine Gael)
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Is that okay, Deputy Penrose?

Willie Penrose (Longford-Westmeath, Labour)
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Will it be strengthened because obviously it has not been adequate to deal with some of the issues? Every group has an ultimate objective, but will there be a significant improvement on what is there in terms of the Pillar 2 arrangement that Mr. Moran hopes to implement when they are all finalised? I know he cannot give a definitive answer but perhaps he can comment in so far as trends or objectives are concerned.

Mr. Tom Moran:

The target has increased under the new arrangement, but we will definitely bear that in mind. Organic must be part of the tapestry of a food sector like ours. It is on our fish side and on the agricultural side also. Deputy Pringle will be aware more than anybody of where we were concerning the fishery negotiations, including the risk of losing quota. That was a key element from the outset. The Deputy is asking how one can opt back into that, but I want to check the technicalities before reverting to him.

Susan O'Keeffe (Labour)
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I would like to congratulate Mr. Moran and his officials for their hard work, enormous effort and perseverance with this matter, not just over the past six months but well before that.

I wish to seek a couple of clarifications. Mr. Moran mentioned the team that has gone out to China, but I would like to hear more about what they are hoping to achieve there. It sounds as if negotiations with India are more bogged down for all kinds of local reasons.

Will the officials update us on the position concerning exports to Vietnam and Thailand? Will they expand on the ad hocgroup on forest financing?

I know the Department has been heavily involved in CAP reform and trade agreement negotiations? What progress has been made at European level on the horsemeat scandal, as well as food safety and standards in general? While it would not be part of the CAP negotiations, were there observations or conversations about the scandal, given that it involved almost every member state? Were any agreements or promises made in this regard to prevent it happening again in the future?

Brian Ó Domhnaill (Fianna Fail)
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I thank the Secretary General and his officials for the presentation. The trade agreement between the EU and Canada has been hailed in Canada as a win-win for its agriculture sector, particularly for the Canadian beef and pork industry. The only benefit for the Irish sector, according to the industry, will be in the dairy sector. There is a challenge to the Irish beef and pork sector from this agreement. Has the potential impact been quantified by the Department?

The Canadian beef industry is based on ranch-style farming and grass feeding. Canada is the second largest landmass in the world and it has the acreage to produce a lot of grass-fed beef. This will be a challenge to Irish beef. What discussions have taken place at European level to safeguard the Irish beef and pork industry against this challenge? There is also the issue of Canadian and US hormone-free beef production. How could this become a competitive threat to Irish beef? Has there been any cost-benefit or strengths-weaknesses-opportunities-threats analysis, SWOT, on the possibility of cheap, grass-fed and hormone-free Canadian beef imports?

I welcome the work done in emerging markets and the news from Japan yesterday lifting the 13-year ban on Irish beef exports. There is, however, another market closer to home, the British beef market, which was discussed at a recent committee meeting. What work has been done to develop that market for live Irish beef exports? The farming organisations are anxious that we do more to open up the live export market there.

On the greening issue in CAP reform, how will the Department implement it? Will it be a flat-rate greening? Will there be additional incentives to those farmers who work and protect natural heritage areas, NHAs, special areas of conservation, SACs, and special protection areas, SPAs, given the designation of their lands? Very often, farmers in such areas did not have the opportunity to make the case to be exempted from a designation. For example, farmers on such lands are so constrained that they cannot cut their grass without the prior approval of the State. We have to be careful with greening. If greening measures are to be introduced, those providing the most greening in co-operation with the State have to be taken into account.

What is the Department’s thinking on a maximum payment under internal convergence? When does the Department envisage having Pillar 1 and Pillar 2 of the CAP finalised and agreed with the European Commission?

Éamon Ó Cuív (Galway West, Fianna Fail)
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It has been brought to my attention that there is some regulation under discussion in Brussels as to whether Irish farmers who live in the six north-eastern counties will be able to use Ireland as their place of origin. I would be interested to hear the Department’s view on this because I understand there would be a need for its strong input to protect the right of Irish farmers to use Ireland as their country of origin for their beef.

Many Southern cattle go to the North to be processed. We need to have that open market because it is bad enough not being able to get cattle into the British market. If we do not take a firm stand on this proposal, cattle slaughtered in the North will become stateless. They will not be Irish because they were not slaughtered here and they will not be British because they were not bred there. What is the Department doing about this? I am of the view that in the long term, taking a chauvinistic Twenty-six Counties view of the world does not serve us well because of trade across the Border. I am always reminded of Sean Quinn describing Derrylin as some things South of the Border, others North of the Border and everything on the Border. He knew all about working the Border.

Andrew Doyle (Wicklow, Fine Gael)
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The committee had a meeting recently with officials on the new package for healthier animals, plants and safer food. We had a full meeting discussing eight articles out of a total of 162.

It is a slow burn. There are fairly profound implications for the entire sector if these go counter to the Irish position. If not today, I ask Mr. Moran give us an update on that, because we said we would come back to it.

Mr. Tom Moran:

I will be brief. The team that is going to China today is still in the air at this stage and probably looking at films if it is lucky. The purpose is to get down to the technical negotiations on standards that would apply to the export of beef. It is a big market for dairy products and baby food and has huge potential. Beef would be another string to our bow. I visited there with the Minister in April of this year and I am confident we can succeed because we have a very good reputation in China for food safety. I might have said this before at the committee, but when we brought President Xi Jinping to a dairy farm in Limerick, I never saw a head of state or government who was so impressed with the specifics of dairy production in Ireland and the control we had over such a large sector. They had an issue with baby food at the time and a subsequent one. Given that we supply about 12% to 15% of the world's baby food, there is a huge market there so I would be confident enough. The only area where I would urge caution in respect of China is the fact that things take a bit longer than one might like. The Minister visited there in April 2012 and the working group is now going out today. It is not for want of trying on our part or that of the Minister, the embassy or Bord Bia.

Believe it or not, the products that would be a possibility for us in respect of India under a free trade agreement would be dairy and whiskey. Whiskey would be a large opportunity for us and is one of the most exciting products that comes within our family basket in terms of the world. The market is growing exponentially and the potential is enormous. It is origin-rooted in Ireland and there are possibilities in respect of that.

Senator O'Keeffe asked about horsemeat, the knock-on effect on food safety and whether this was raised. The answer is "yes". It came at us out of left field at the beginning of our Presidency and we had to take it on board. It was a big issue for us and a big source of concern. The Senator is right. It did become a Europe-wide problem. It was identified here and went on to become a European problem. It highlights the fact that in any food industry and bio sector as big and as export-dependent as ours, the broad spectrum of issues that can arise in respect of food safety can come out of the blue and one must have one's systems, mechanisms and risk assessment and mitigation in place. We would not be the only ones in that regard. Go and ask New Zealand how it feels at the moment about the exposure when it exports the volumes it does. We took that issue extremely seriously. It went on to the European stage. There was a special Council of agricultural Ministers devoted to it, with the Minister for Agriculture, Food and the Marine in the chair. A number of EU decisions were taken in respect of that and I think the members are aware of them because they have been aired again and again in the Dáil. It is an indication of the kind of thing that happens when one is involved in the food or agri sector. It is a bio sector and one never knows what will happen so one maximises controls and trades on one's reputation.

The more we put our heads above the parapet in terms of international trade and the more we rely on the reputation that will sell our product and differentiate it from others, the greater the risk of an issue arising of any type and in any sector. That is why we must rely heavily on controls, inspections and audit throughout all our sectors. I cannot emphasise how important they are in any area.

Susan O'Keeffe (Labour)
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Is Mr. Moran happy that they are being maximised?

Mr. Tom Moran:

Yes, I am happy that they are maximised. Am I satisfied that they will always be successful? No - nobody can be. No major company or country can be. We have had these discussions with the biggest food company in the world. We spent a day with Nestlé and went through these kind of issues with it. If one asks Nestlé the same question, that would be the answer one would get. One can never stop improving or consolidating the controls one has. It is something that needs to be spread right down to primary production level and right up to the final moment. The Senator will be aware of that. I know I am preaching to the converted.

In respect of greening, we are not in a position to say precisely how we will apply the flexibilities we did get. I made a point in respect of convergence that the Irish model was something we fought for. People can draw conclusions from that. We also pushed very strongly for the logic of variable greening so that the greening would relate to the payment of the individual. That is a green point as well an equitable point because if somebody was getting a large payment and the element of that which related to greening was so small that it did not make a difference, it would be an anti-greening mechanism because the incentive is not there. By making it a percentage of a person's single payment, one is enhancing the greening element of the CAP.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Can I get clarification? If I gave two people €70 for greening, surely if the incentive for one is such that he does not engage in the process, it will be the same for the other guy? Why would he bother with greening? My understanding from a parliamentary question I asked is that greening is a bit more complicated for the arable sector, but peculiarly enough, it does not have particularly high single farm payments. I got from the breakdown from the Department. For everybody else, greening is virtually having permanent grass except in designated areas where one might have to comply with all sorts of directions in respect of the designation. Thus, the person with the least incentive to engage in greening is likely to be the person in the designated area because there will be a huge onus on him or her in respect of stocking numbers, rules and a load of things one can lay down that will not apply to anybody else. For everybody else, it is just permanent grass. Is that not correct? Therefore, the biggest cost and downside of greening relates to designated areas where if one does not engage one will not be caught by all these rules. According to figures provided to us by the Department, once one gets to €400 per hectare, productivity does not increase if one measures productivity by livestock units per hectare, so the argument does not hold water.

Mr. Tom Moran:

I take the point made by the Deputy, but the point I was making was that if a flat rate amount is paid to someone for greening and they get a small amount, that is a relatively large proportion of their single payment, while if they are on a large amount per hectare and get the same amount for greening, it is less of an incentive for them to engage in greening.

Andrew Doyle (Wicklow, Fine Gael)
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Could Mr. Moran clarify one point? Is it true that 30% of Pillar 2 must go towards greening measures?

Mr. Tom Moran:

Yes - towards environmental measures.

Brian Ó Domhnaill (Fianna Fail)
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The point I was making in respect of greening was that if one compared someone on a single farm payment of €40,000 or even €50,000 with someone with a payment of €3,000, one can see that the person with a payment of €3,000 is more restricted with his land. If he is on the lowest possible payment, which is around €150 per hectare, he is very restricted because of stocking rates and rules concerning what he can do. He has 39 conditions from the National Parks & Wildlife Service to comply with in respect of a SAC or SPA. Surely that person needs to be compensated for that and the only way to do that is through greening?

Andrew Doyle (Wicklow, Fine Gael)
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We might develop that on Pillar 2. Is that okay?

Mr. Tom Moran:

Yes, we can examine that.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Can Mr. Moran clarify that prescriptions regarding designations will apply to greening in designated areas? The Minister seemed to imply that in a written reply to a parliamentary question of mine, and I presume he was correct.

Mr. Tom Moran:

He was right, but I want to check that.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I hope he was.

Mr. Tom Moran:

I am convinced he was. I have no doubt that he was.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Otherwise I would be afraid he was badly advised.

Mr. Tom Moran:

That would be a horrific thing.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I know he checks them all personally. I would not like him to be caught out.

Andrew Doyle (Wicklow, Fine Gael)
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Could we move on? I would rather we finish the report on the six months and we can deal with that in the Common Agricultural Policy. Senator O'Keeffe asked about the forests ad hoc group on a legally binding agreement on forests in Europe. Mr. Moran may not have an update on that.

Susan O'Keeffe (Labour)
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I would like some clarification and a little more detail. The Department cannot put the kitchen sink into the report but must compress it.

Andrew Doyle (Wicklow, Fine Gael)
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I asked a question about animal health and Senator Ó Domhnaill asked for the magic date. There was also a question on the conclusion of the CAP agreements.

Mr. Tom Moran:

I apologise for missing those questions. The Minister made clear that he intended to make decisions by the end of the year on Pillar 1 and Pillar 2 and that is still the intention.

Éamon Ó Cuív (Galway West, Fianna Fail)
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When he makes a decision, he makes it public. We are debating this in a vacuum. We do not know what the Government will co-finance. Will the Minister have a public consultation process on his proposals? What is the latest date in 2014 on which he has to give the whole package to Brussels? I take it there will be a debate on his proposals once we get some idea of what is available because at the moment we do not know.

Mr. Tom Moran:

Deputy Ó Cuív is correct. Pillar 2 is a journey which began with the multi-annual financial framework, MFF, and went on through the CAP. We are at the stage in that journey where the Government is deciding how it should be funded and co-funded. It is hoped that decision will be taken soon. After that, we give the broad outline of the schemes we hope to put in place, after which we will enter into discussions with the European Commission by sending a draft programme. We hope to do that in early January.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Pillar 1 and Pillar 2 are inextricably linked. One can even transfer funds between the two.

Mr. Tom Moran:

That is right.

Éamon Ó Cuív (Galway West, Fianna Fail)
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If Pillar 2 is short of funding it will have to be made up in Pillar 1. Will there be a month's delay between the Minister's announcement and the draft programme being sent to Brussels in order that farmers, farming organisations, Oireachtas Members and this committee can respond to the Minister's proposals and so that the proposals reflect what they think?

Mr. Tom Moran:

There will be much more than that.

Andrew Doyle (Wicklow, Fine Gael)
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The whole thing is a package. Nothing will be sent to Europe until the Pillar 2 co-financing has been signed off at whatever level. The implications for flexibility or swapping, depending on the rate and whether it is needed-----

Brian Ó Domhnaill (Fianna Fail)
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What is the final date on which the Commission needs the final agreement from member states?

Éamon Ó Cuív (Galway West, Fianna Fail)
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It is a proposal.

Brian Ó Domhnaill (Fianna Fail)
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I mean the final agreement.

Mr. Tom Moran:

The Commission must approve the programme as early as possible in-----

Andrew Doyle (Wicklow, Fine Gael)
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I presume the schemes must be written up and designed.

Mr. Tom Moran:

When I say it is a journey, I mean there is the outline of the funding to meet the various objectives and criteria set down, the funding and co-funding elements, and the broad outline of the types of schemes and scheme areas. There will be plenty of opportunity for consultation, including with this committee. Then the-----

Andrew Doyle (Wicklow, Fine Gael)
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We are straying into Pillar 2.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Pillar 1 is being dodged. All along there has been a policy of agreeing Pillar 1 before the Government tells us what is in the other lucky dip. When we find the other lucky dip is empty, it is tough luck because we have agreed Pillar 1. From the beginning we have received assurances that the broad outlines of Pillar 1 and Pillar 2 would be decided together. I am not talking about the minor detail. The Minister is to make an announcement on 17 December about the outline of Pillar 1 and Pillar 2 and co-funding. That date was never officially announced but everyone seems to know. How long between that date and the date the Minister sends our proposals on Pillar 1 to Brussels?

Mr. Tom Moran:

Pillar 1 is finished.

Éamon Ó Cuív (Galway West, Fianna Fail)
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It is not.

Mr. Tom Moran:

As far as the EU is concerned the negotiations have been completed and the flexibilities that are given to member states are set down. It is now up to member states to adopt whatever proposals and drive on with implementing Pillar 1. Pillar 2 is a programme that has yet to be agreed with the Commission.

Éamon Ó Cuív (Galway West, Fianna Fail)
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So at no stage do they have to go back on Pillar 1 and they do not have to go back to Brussels regarding it.

Andrew Doyle (Wicklow, Fine Gael)
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The broad thrust of the Pillar 1 schemes has been agreed. The money is in play, depending on the co-funding. On Pillar 2 if there is an upland environment scheme, an agri-environmental options scheme, AEOS, young farmers package or anything else, it will have to be agreed how such schemes will be structured. The money is still in play. There is €313 million from Pillar 2 that still has to be negotiated. The whole package has to be approved with a series of schemes proposed for Pillar 2 that have to be agreed. There can be a robust political debate on that, if it is not up to everybody's satisfaction, which will be 47% or more. If that is not in place, there will be an argument about that internally, but that does not affect Europe's approval of the CAP. Is that correct? The exception is Pillar 2 and Pillar 1 interchange, if that were to happen.

Mr. Tom Moran:

The Chairman has encapsulated it correctly. We have flexibility points in Pillar 1 and would have to let the Commission know what we are doing. However, there is no programme under Pillar 1 to be agreed with the Commission. It applies directly. Pillar 2 is a programme which is an amalgam of schemes which must fit into a framework set out in the rural development regulations. The first step is to get the money and co-funding right and see what is what and what is possible. Next we must send the draft report with the outline of the schemes to Brussels and start negotiating. From our experience with the rural development programmes, the Commission will have views on every one of those schemes and the balance between them. Even though there are different levels of co-funding between them, they will sit down with us and there will be robust discussions with the Commission. There will be lots of time along that journey. This committee made a very valuable contribution to the Pillar 1 discussions. It can make known its views on the nuts and bolts and the operation of the schemes.

Éamon Ó Cuív (Galway West, Fianna Fail)
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On what date does the Department intend to inform Europe about its intentions on Pillar 1?

Mr. Tom Moran:

There is not a specific date.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Is the Minister going to pre-empt us and announce it on 17 December?

The big concern is that he will pre-empt us and announce on 17 December, send over his intentions on Pillar 1 by Christmas and then say that because he has told them he cannot go away-----

Mr. Tom Moran:

That would not be the intention. Pillar 1 deals with the direct operation of the schemes. We would inform the Commission what we are doing, but it is not the same. We are not going to seek approval for a programme, as is the case with Pillar 2.

Andrew Doyle (Wicklow, Fine Gael)
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I will come back to this in the private session discussion on Pillar 2. I seek responses to two other questions; one was my own and the other was on the forests. We can then conclude this session.

Deputy Eamon Ó Cuív:

Mr. Moran did not answer the question on the origin. There is an agreement on whiskey. Irish whiskey is sold as Irish whiskey; any whiskey produced on the island, including-----

Andrew Doyle (Wicklow, Fine Gael)
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It is like the beef processed in the North.

Pat O'Neill (Fine Gael)
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I thank Mr. Moran for his presentation. I welcome the announcement on Japan and I hope we will get good news from China. What is the status of EU negotiations with South American countries, regarding the reopening of the EU market to Brazil, Argentina, Venezuela and Uruguay? How far are we from allowing South American beef back into the EU?

Mr. Tom Moran:

There are a number of issues on labelling. There is a commercial issue with cattle being slaughtered in the Republic and then going off to Britain and whether commercially people want to take them as such or take in live exports in the UK and slaughter them in the UK. That is really a matter for the commercial operators in the sector. I know there are some tensions over that and I can understand why.

On the origins of meat, proposals are going through at the moment to extend the beef-origin issues into other meats. The origin of beef and other meats is, if one likes, a departure from the normal Single Market arrangements because if standards are the same throughout the EU, then, as with other products, the origin does not really matter. However, when a product can be reared in one place, finished or fattened in another and slaughtered somewhere else, it gets complicated. What is unusual is that sometimes the origin issue for meat depends more on where it is being sold than where it was produced. It might suit some people to have meat described as Irish, British, Northern Ireland or whatever. It is possible to shine the light in two directions: where it is being sold, which might determine one approach; and where it originates.

From our point of view, origin always relates to the standards, guarantees, safety and quality that apply under the jurisdiction we are in. If we can stand over the product, then there is product. I agree completely that it is not possible to stop borders either within or outside. Product moves; milk, meat and live animals all move. It is a complicated area and it has also regard to where the product is being sold.

I take the point on the forestry. I have just read the paragraph. We might amplify that and send it directly to the-----

Susan O'Keeffe (Labour)
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That would be great.

Mr. Tom Moran:

We will do that.

Andrew Doyle (Wicklow, Fine Gael)
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I presume Mr. Moran will also furnish us with an update on the plant regulations.

Mr. Tom Moran:

Yes.

Pat O'Neill (Fine Gael)
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I asked about South American beef.

Mr. Tom Moran:

On South American beef, as the Senator will know, international trade relations can go on and off the boil. I think there is no prospect of offers being exchanged this year. So the conclusions of those negotiations will be a long way off. The same point I made earlier applies. Our interest in those negotiations was to ensure that the sensitivities of our concerns over beef in the European market were fully taken into account at EU level. We must not forget that the EU is the negotiator on this. It has the mandate and the legal competence. I believe we have made our points very clear in that context. I do not expect that in the near timeframe.

Pat O'Neill (Fine Gael)
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So it is not back on the agenda at present.

Mr. Tom Moran:

No.

Andrew Doyle (Wicklow, Fine Gael)
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It is on the backburner, rather than on the agenda. I thank Mr. Moran and his officials. We will now go into private session to discuss Pillar 2.