Oireachtas Joint and Select Committees

Tuesday, 2 December 2014

Joint Oireachtas Committee on Agriculture, Food and the Marine

Forthcoming Agriculture and Fisheries Council: Minister for Agriculture, Food and the Marine

3:45 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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The purpose of today's meeting is to discuss the forthcoming EU Council meeting on agriculture and fisheries, AGRI FISH, and the sea fisheries sustainability impact assessment. I welcome the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, and his officials. 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 or in such a way as to make him or her identifiable. In keeping with our examination of EU matters in relevant policy areas the Minister will brief the committee in advance of next week's AGRI FISH Council meeting. I invite the Minister to make an opening statement. I presume he wants to deal with fish first.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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If it is acceptable I will deal with the agriculture side of the Council first and then the fish side afterwards.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Is that agreed? Agreed.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I welcome the opportunity to appear at the committee today to discuss what will happen at the next AGRI FISH Council on 15 and 16 December. The AGRI FISH Council on 15 and 16 December will be the final Council presided over by the Italian Presidency, with Latvia assuming the Presidency role from 1 January 2015. It is customary for the outgoing Presidency to take stock of developments over the previous six months and this has been reflected in the long agenda for Italian Presidency's final Council meeting. As is customary in December, Council will be heavily dominated by negotiations on the total allowable catches and fishing quotas for 2015. Aside from fisheries, the bulk of the items for discussion are progress reports from the Presidency on the state of play of various dossiers discussed during the Italian Presidency or information items from the Commission and the Presidency.

The fisheries items are of major significance to Ireland. Discussions will focus on the proposed total allowable catches, TACs, and fishing quotas for 2015. These discussions are expected to be lengthy, with intense negotiations between member states, prior to agreement on the second day of Council.

In preparation for the Council, the Department undertook a consultation process with stakeholders seeking their comments on the Commission’s proposal for 2015 fishing opportunities, and I arranged a meeting with the stakeholders on Wednesday last, 26 November, to further inform the process. In line with the programme for Government, I will present a sustainable impact assessment, SIA, to the committee, which will be laid before the Houses of the Oireachtas. The SIA takes account of the Commission's proposal and the views provided via the public consultation process for all stakeholders. I will have more to say on this later.

Turning to agriculture, debates or progress reports are envisaged on a proposed revision of the EU regulations on organics, the school fruit and vegetables and school milk schemes, and the four-part package of proposals on animal and plant health law. There is also a possible item flagged on the future of the dairy sector. The Council is also expected to adopt conclusions concerning measures to assist young farmers in the EU – an issue on which Ireland has been to the forefront - and regarding error rates on expenditure on the CAP – an issue in which we also have a keen interest. Under other business, a number of member states will raise the impact of the Russian import ban on EU agrifood products.

I will be brief on organics as my officials recently provided an update on the progress of this proposal to this committee. Since then, the Italian Presidency has produced a substantially revised text covering matters such as mixed organic and conventional farming, recourse to non-organic seed and breeding animals and the control regime. In addition, the incoming Commissioner has indicated a willingness to have a fresh look at its original proposal. What that means, in practical terms, is that the Presidency will seek at Council to obtain agreement from the Council on these particular issues so that it can open discussions with the European Parliament.

As to the school fruit and school milk schemes, the Commission proposes to combine the two separate EU co-funded school schemes. The proposal was introduced under the Greek Presidency, with discussions continuing throughout the Italian Presidency. There are three main issues outstanding. There is a difference of opinion between the Commission and the Council as to which article of the treaty on the functioning of the European Union is the correct article for the fixing of the level of aid. All member states, including Ireland, believe this should be the sole preserve of the Council, while the Commission favours co-decision with the European Parliament. There are differing views between member states on the scope of products to be eligible for the schemes. Ireland favours expanding the scope of dairy products to include cheese and yoghurts and fully supports the Commission’s proposal to restrict the list of products to fresh fruit and vegetables for the scheme. There are also differing views on the allocation of funding. This concerns the method for allocation of EU funding for the milk element of the scheme. Ireland’s view is this funding should be allocated on an objective basis according to the population of school children as a proportion of the overall population, as opposed to allocation based on the historical use of funds, as favoured by some member states who would do well out of it. These three issues have been the subject of debate for some months without any resolution and it is difficult to see a breakthrough happening at the December Council.

The Council will also deal with a number of progress reports, the most notable of which are reports on the four-part animal and plant health package. In May 2013, the Commission launched a legislative package of four regulations dealing with animal health, plant health, seeds and propagating material, and official controls. The aim was to consolidate existing legislation in these areas into a single legislative framework and, in the course of doing so, to modernise and replace outdated provisions. The file on animal health is close to being agreed by Council and work is continuing on the plant health and official controls proposals. After the proposal on seeds and propagating material ran into difficulty in the European Parliament earlier this year, the Commission undertook to engage in extensive redrafting.

I am aware that a number of Agriculture Councils have taken place since I addressed the committee last May and I would like to mention some of the issues that have dominated proceedings since then. Since September, the main focus of the Council has been on the impact of the Russian ban on agrifood products from the EU. The sectors most affected are the dairy and fruit and vegetables sectors. Mackerel is also heavily affected. The Commission has taken a number of steps to assist producers in these sectors, including, most recently, a compensation package for dairy farmers in the Baltic member states. The main issue arising was the funding of these measures.

Ireland was the first member state to make the point that EU farmers were disproportionately affected by a decision taken on security policy and political grounds. Thus, funding should not be confined to the EU agricultural budget lines. Along with 20 other member states, we vehemently opposed the Commission’s proposal to deploy the agricultural crisis reserve to pay for these measures. I am pleased to report that the Commission subsequently withdrew this proposal.
On milk quotas, earlier in the year there was a concerted attempt by a number of member states, including Ireland, to ensure a more effective soft landing in all member states in the run-up to the expiry of milk quotas next March. Unfortunately, it has not been possible to reach agreement on this in the Council and we are now facing the unpalatable situation whereby Irish producers gearing up for the abolition of milk quotas, in all likelihood, will face a bill for a super-levy next year. At this point, I urge dairy farmers to manage their production so as to minimise that bill. Obviously, we will do what we can to make sure that any super-levy that must be paid will be paid over a manageable period.
With regard to climate change, in October we had a very useful exchange of views on climate change and agriculture, focused on the need for recognition of the special position of the agriculture sector and the need for coherence between policies on climate change and food security. Ireland can claim credit for that discussion. We were the first to raise the issue at the Council last May but it was not long before we were joined by other member states. Following the exchange at the October Council, the European Council took on board the conclusions of EU agriculture Ministers in their decisions on the climate energy framework to 2030 at the end of October. This was a pretty good success from our perspective.
The Council had a number of exchanges on current trade negotiations in which I reiterated Ireland’s position on the Mercosur and TTIP negotiations. To be clear, we have both offensive and defensive interests in relation to the proposed agreement with the United States. However, when it comes to Mercosur, I have serious concerns about the impact of an agreement on Irish agriculture, particularly on the beef sector. We should proceed with extreme caution in that regard.
As I said, much of what is being raised on the formal agenda from an agricultural point of view the week after next really comprises an update on technical issues. There will be an effort to get a number of those issues over the line. Some proposals will succeed and some of the more controversial ones probably will not. The main focus will be on fishing and quotas for next year. If members have any questions on the agriculture issues, we will try to answer them.

3:55 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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I am conscious that we will be discussing the fishing sector after this item.

Photo of Martin FerrisMartin Ferris (Kerry North-West Limerick, Sinn Fein)
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I thank the Minister for his presentation. I have one question on fisheries. The Minister said he had a meeting with the stakeholders on Wednesday, 26 November. Could we have an update on how the meeting went, if possible?

The Minister mentioned mixed organic and conventional farming, recourse to non-organic seed and breeding animals and the control regime. Could he elaborate on that? Does it include GMOs?

What effect is the Russian ban having on Irish produce at present from a monetary point of view? Could the Minister give us his assessment of the effects of the ban?

The super-levy bill to be faced next year will inhibit many in their preparation for the abolition of the milk quotas. The Minister said he is trying to ensure the levy can be paid over time. If people who are currently investing to prepare themselves for the abolition of the quota find they are to be penalised for a number of years, it will be very counterproductive.

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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I thank the Minister. He stated it is not possible to reach an agreement on the milk quota. There is obviously a bit of a gap. How wide is it? I totally understand what the Minister is saying.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I referred to the super-levy.

Photo of Martin HeydonMartin Heydon (Kildare South, Fine Gael)
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With regard to the super-levy and over-production, I understand farmers have to be responsible and careful about what they do in light of the fact that there is no agreement. Is the gap seismic or will further attempts be made to try to reach agreement on this?

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister referred to error rates on expenditure in the CAP. What exactly is likely to be discussed? Is it likely that there will be a less penal regime than currently exists, which is totally disproportionate in regard to mistakes people make. It is difficult to count rocks and to figure out how much is rock. As one knows, there is a big debate occurring at present on what constitutes a forage area where there is heather and other plants. Will the Minister give us some outline as to what the error rates pertaining to expenditure on the CAP mean in reality?

I am interested in the super-levy. There was a statement from the Minister that we are penalising farmers significantly for over-producing milk, within five months of the regime being done away with completely. I saw in the media that the Minister had spread out the repayment over a long period. Perhaps he could indicate whether he could achieve a softer landing in Brussels. If not, will he create an Irish soft landing?

Photo of Pat O'NeillPat O'Neill (Fine Gael)
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Most issues have been dealt with but I wish to return to milk quotas. I raised in the Seanad today the fact that we are 7.1% over quota. In October 2013, we were only 1% over quota. We are facing a super-levy bill of €113 million. I welcome the announcement by the Minister that he may consider a phased payment. It was inevitable this year with milk quotas disappearing next year that people would go into over-production. I disagree with Deputy Ferris in that I believe the payments must by phased over a long period. With the price of milk depressed all the time, possibly going down to 24 cent or 25 cent per litre, it is important for cash flow that the final super-levy bill we are to face in Ireland be phased over a long period. I welcome the Minister's announcement.

On the Russian ban, could I have an update on what we are actually doing to get it lifted? The Minister and his Department are being criticised by the Opposition, in the Seanad and the media, for sitting on their hands while countries such as Denmark, France, Italy and the Netherlands have now got a bilateral agreement with Russia to lift the ban at the end of December. I would like the Minister to make a statement on that.

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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Let me return to the quota regime. Given that there is a depressed market, will producers be allowed to switch the co-operative or dairy they supply without having to give statutory notice when quotas end on 1 January? It seems people are able to play with that. People would have a stronger negotiating position if they had fewer than three months of notice to give. For quota purposes, it always had to be three months or one quarter year in advance.

I have a question about producer organisations. Thankfully, the new Commissioner has welcomed the initiative. It has been announced that we have a consultation. Is there agreement at the Council that this will be applied across Europe? It is referenced in the CAP.

4:05 pm

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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On the question about producer organisations, this is included in the new CAP regulations. The Commission is encouraging the setting up and recognition of producer organisations in order to improve and develop the bargaining position of primary producers. The Commission wants to use them to increase the negotiating power of primary producers versus retailers and wholesalers and so on. We intend to do this in this country and in the beef sector in particular. In our view if a structure can be put in place that is farmer-owned, that works and that is a legal entity that can negotiate price on behalf of its members, which is not the case at the moment for farming organisations, we think this will lead to a much better structured beef industry with regard to the relationship between farmer and factory.

On the three months notice question, that is a matter between farmers and their co-ops and the terms and conditions to which they have signed up. I cannot instruct co-ops on what they should do with the terms and conditions between them and their members. I understand the Deputy's point and we can look at it.

In reply to Senator O'Neill, it is not true to say that a series of countries are doing bilateral deals with Russia to avoid the embargo. There have been some conversations around beef offal as a particular issue, the importation of which Russia is looking to trying to facilitate. The position and the policy of the EU with regard to the broader embargo is that we should stick together and that there would be a collective decision on negotiation. That is what is happening. A number of weeks ago I met the Russian ambassador to discuss a series of these issues in order to make some progress on removing restrictions applying to some Irish products that are not subject to the embargo. Examples include some dairy products, such as casein. The purpose of the meeting was also to ensure that if and when the embargo is lifted we would hopefully be in a position to re-enter those markets quickly. I hope the embargo will be lifted in the not too distant future although I have my doubts because there is still a very difficult and intractable relationship between the EU and Russia with regard to the Ukraine.

Pig meat was banned for entirely different reasons long before the embargo was introduced. It was banned because of an outbreak of African swine flu in Latvia. There are other issues such as the complications that have arisen from inspections of some of our dairy plants which in our view we can answer without too much difficulty. The products that have been banned are, live animals other than pedigree animals; beef, pork, poultry, seafood, dairy products, other than products for infant formula; and lactose-free products such as vegetable, excluding seed potatoes, and fruit. In total, Europe would have exported about €12 billion worth of agrifood products to Russia and between €5 billion and €6 billion of that total is subject to the embargo, while the remaining half is not. A lot of the Irish exports to Russia could still go ahead but some have not been able to do so.

All the members have asked questions about the super levy. No Minister from any country has been more vocal than me with regard to the levy. For 18 months, if not two years, we have been talking about the soft landing policy that simply is not working for countries like Ireland, the Netherlands, Denmark and one or two others. In the past six or eight months other countries have been joining in with that concern, including countries such as Germany, which has gone from one side of the argument to the other. As a result of strong milk prices there has been an increase in milk output in Germany. Other countries are adamant that it is irresponsible to encourage more milk production at a time when milk prices are weakening, even in the short term between now and when quota ends. In their view there was an agreement that there would be a quota and that there would be a super levy for those who were over quota, until next April. The actual agreement was that in the final year of quota there would be a discussion and a decision around a soft landing. I have made that view known in a forceful way but unfortunately, countries are digging in.

Some countries are uncomfortable with the prospect of abolishing quotas. They want to keep a full quota regime in place for as long as possible and they want to discourage countries - or they do not want to be seen to be rewarding countries for over-producing in advance of the end of the quota regime. This poses a big problem for Ireland, in particular because on the lack of very strong prices up to a few weeks ago. Irish farmers were calculating a super levy fine at 28 cent a litre on the back of very high prices and some farmers were deliberately making the decision to take the hit for 28 cent a litre if it meant getting 45 cent a litre for their milk and being able to plan for expansion and easing their way out of a quota system. The problem now is that the price is changing and it is moving in the wrong direction. There has already been a significant drop in dairy prices and a super levy fine of 28 cent a litre out of 30 cent a litre for milk is a very big hit. We need to manage that situation but given the strength of feeling, I do not think there will be a compromise agreed on super levy between now and in three months time, which is what we are talking about. In the absence of that compromise we are talking to co-ops about how they could draw down those super levy payments from farmers over a period of time that would allow for a sensible approach with regard to cash flow in that period. This is the current discussion.

Everyone has known about the super levy. We have been very clear that farmers should be looking to avoid it rather than trying to factor it into their costs. I have been saying this for three years and my views on this issue are well known in the Council of Ministers. I am sure I will be expressing them again before the end of quota. However, I would not hold out a huge amount of hope that we will get a major result.

Deputy Ferris asked a question about organics. This has nothing to do with GMOs, genetically modified organisms, but it is really about managing practical things such as if product like stock or crops from a non-organic farm is brought to an organic farm the period of time to be allowed before this is considered organic. For example, if cows are brought from a non-organic farm to an organic farm which produces organic milk, under what conditions and time-frame will that milk be considered to be produced in an organic way? These are the kinds of practical definitions required to ensure a common approach to the production of organic products across the EU, as opposed to different countries applying different rules. It is a significant challenge in Ireland to produce a sufficient volume of organic dairy products, whether that is goats milk or cows milk. We have to import significant volumes of organic dairy products from the UK because we cannot produce it here - we can produce it here but farmers have chosen not to produce it. If that situation changes in the future we need to understand what farmers need to do before they can make that transition. That is my understanding of the main issues around organic farming. We have a very strong package in the rural development programme to encourage more organic farming. We have more or less doubled the funding available to support that sector but we need to get that approved by the Commission in terms of the overall RDP package.

If the Chairman is agreeable, I will deal with the stakeholders meeting under the fisheries heading. We can discuss it in detail if Deputies so wish.

4:15 pm

Photo of Andrew DoyleAndrew Doyle (Wicklow, Fine Gael)
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That is fine. Before we finish, there was a question about error rates.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
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I share Deputy Ó Cuív's view on error rates. The approach the Commission has taken towards penalising countries for error rates has caused a lot of problems for many member states, including Ireland. I expect we will have a discussion in due course whereby Ministers will demand as much clarity and flexibility as possible when rural development programmes are being signed off, so as to reduce the likelihood of error rates that result in significant disallowances. The extent of the disallowances that have been applied to some countries is causing serious concern - more than €1 billion for France, €400 million for the UK and similar for Italy. The penalties imposed on Ireland to date have been among the lowest for any member state, but we are now facing a large disallowance of €181 million, which we are looking to negotiate. It is a major challenge and we will go through arbitration to seek a solution.

The other commitment we are seeking - Deputy Ó Cuív will understand where I am coming from here - is for a degree of flexibility in terms of the introduction of new schemes. For example, if we change the way we measure active farming on a commonage and this results in a transition period, then we will be looking to the Commission for flexibility and a reasonable timeframe within which to introduce new or changed farm practices and so on. This is necessary to allow farmers to adapt in a practical sense, as opposed to their being asked to do the impossible overnight to maintain their single farm payment. We have had long discussions on this issue with the Commission and will have more in the future.