Mr. Aidan O'Driscoll:

I thank the Chairman and the members of the joint committee for raising a range of issues. I will take them as they came up. Various points were made about the same issues. The first issue to be raised was climate. It is no secret to people in this room that for five or six years now, Ireland has been pursuing a fairly lonely road within the EU in drawing attention to the conflict between the EU's food security and climate change objectives. We have also emphasised the need to evolve or develop a coherent policy covering climate change, agriculture and forestry. That whole thing is known in EU-speak as agricultural land use, land use change and forestry. The conclusions reached at last October's meeting of the European Council are enormously significant because the EU has taken that logic on board for the first time.

I repeat the point that we wrote the relevant paragraph. I do not want to blow it into something it is not, as it is just one paragraph. However, it is significant that it is one paragraph in the conclusions of the European Council - that is to say, the council of prime ministers - and therefore carries a great deal of weight and is binding on legislators as they go forward to develop the proposals for the implementation of the EU's 2030 target. The EU has decided to pursue a target of a 40% reduction in emissions by 2030. The detail of that has yet to be worked out. A decision has to be made on whether we will have national targets. If there are such targets, they will have to be worked out and decisions will have to be made on how they will apply in the various sectors. It will be hugely important in those negotiations to have the conclusions that were reached last October there to guide us. That is why we were so pleased about those conclusions.

The second important aspect of this issue, following on from the general point about reconciling agriculture and climate change, is that the inclusion of the sequestration value of afforestation in the system of accounting would have enormous significance for us. It is not included at present. Our agriculture sector emits between 19 and 20 megatonnes of carbon dioxide equivalent each year. Between now and 2030, our forestry sector will sequester approximately 4.85 megatonnes of carbon dioxide, or 25% of the emissions from agriculture, each year. If that is accepted as a mitigation measure, we will be on course to achieve a 25% reduction in those terms. That would be an enormous thing. The way afforestation is referred to in the text of the conclusions of the Council points in the direction we want to go, although it is not in the bag. I should say an attempt to unpick that was made at a meeting of the Environment Council in March, but we think we saw that attempt off.

I would not say, in response to a question asked by Deputy Ó Cuív, that we have achieved everything we want in terms of getting the balanced approach to agricultural targets that we are seeking. However, I think we have taken a large step in that direction. That is where we are. The important point is that we are going into the detailed negotiations armed with that achievement, which strongly underpins the importance of our afforestation programme. If we get what we are seeking to achieve in terms of recognition of afforestation, it is very important that we continue fully with our afforestation programme.

As the committee knows, it is quite expensive. We think it will cost about €3 billion between 1990 and 2030, which is the relevant period. I will come back to any of the points if members wish.

On the issue of Russia, Deputy Ó Cuív asked an interesting strategic question about the implications for other areas at other times. It is very fair to say that we were taken by surprise by this. In terms of Russia and the Irish dairy industry, various Irish companies, including the Irish Dairy Board, had very developed plans for significant expansion in Russia which were pushed sideways by an event that had nothing to do with the agriculture sector. It is a fair point. We have to be capable of dealing with, and be ready for, events that may arise from other sectors. In terms of the impact on Ireland, the total agrifood trade to Russia in 2013 was €235 million. However, prior to the presidential decree in retaliation for EU sanctions, the Russians had already taken a series of measures banning various products. They had undertaken, in January 2014, an EU-wide ban on pork due to African swine fever. In May 2014, they undertook an audit in Ireland and temporary restrictions were placed on a range of plants in the beef, dairy powder, seafood and other sectors. In June 2014, there was an EU-wide ban on beef trimming imports. All of this was prior to the main ban.

There has been a process of escalation. When one asks about the impact of the ban, it depends on whether one takes all of those things into account. The terms of the ban affect up to 42% of the trade that we undertook but most of that trade was already affected by the previous measures, to which I referred. A equally important effect from an Irish perspective was the fact we had very significant growth opportunities and plans in Russia, which have been significantly derailed. There is no doubt that is a problem.

Measures were taken by the Commission, as I said, and Ireland took up some of them, in particular private storage aid. We used it for 7,000 tonnes of cheese, 8,000 tonnes of butter and 2,000 tonnes of skimmed milk powder during the worst of the impact. One of the difficulties in the dairy sector is that for other reasons, dairy prices have been moving. It is a little difficult to measure the specific impact of the Russian ban.

On the question of the superlevy, the intention is that payments will be made in instalments over a period of up to three years. That is for what the provision allows. The question of interest is a policy decision so I will leave that aside. We will make announcements on it in due course. I was asked about the logic and common sense of it by Deputy Ó Cuív and a number of other members. We would agree completely and we repeatedly made the point that imposing superlevies in the last year of a quota regime makes absolutely no sense.

The truth is that the previous Commission had options open to it, but the previous Commissioner said he would only act if there was a qualified majority in Council. We made significant efforts to get that qualified majority but unfortunately a minority of member states would not play ball and we could not get that qualified majority. That happens in a community of 28 member states, in particular when there is at least one large member state on the other side of the fence.

One must remember that some member states are not happy with the end of quotas, so they were not particularly inclined to make it easier. That is really why it did not happen - they felt they could not explain it to their own people.

There were a number of questions on trade issues and TTIP. I cannot really say whether there will be a deal in 2015. There is very strong commitment on the EU side to doing a deal and there is also evident commitment on the American side. One difficulty is that the Americans are very focused on the Trans-Pacific Partnership, TPP, on their other coast at the moment and until that has been agreed, one could ask whether they are fully focused on the TTIP negotiations. Will agriculture be treated as an unfortunate consequence or side-event in these negotiations? I do not think so. Agriculture is very important for both sides in these negotiations. It is a very big deal and promises very significant economic benefits. All studies have shown that a good TTIP deal could deliver significant economic benefits to both Europe and the United States, and to Ireland specifically. However, there are both offensive and defensive interests on both sides. On the agriculture side, we have very significant offensive interests in dairy, for example. We see significant possibilities for increasing our dairy food ingredients exports, for example, infant formula and so on, into America. Other subsectors are also very positive about America. One need only look at the export of Irish oats to America, which is an extraordinary growth story in recent years and which still seems to have a great deal of potential. Irish oats have become the badge of quality in the US oats market and that is something that can be exploited.

The complication arises in the beef question. If I had been asked this question three or four years ago, I would have said the benefits are on the dairy side while the costs to us would be on the beef side of the deal. The calculation has become a little more complicated because beef prices in the United States have risen to very high levels and have now exceeded EU levels. We now have access to the American beef market and are looking to widen that access to include beef for grinding, as they call it, which is mincing. The prices for many of those cuts of beef are far higher in the US than in Europe. The potential for Irish beef exports to the US is significant but at the moment, it is constrained by an overall quota of 64,000 tonnes, which applies across a range of countries. In the context of a TTIP deal, one would probably get a larger quota for the EU itself. It would widen the exports we could make to the US. At the same time, we remain very defensive on the question of the export of high-value cuts of beef from the US to Europe. That is an extremely sensitive market. It is only about 6% or 7% of the total beef market and, therefore, relatively small shipments of those high-value cuts of beef from America could have a disproportionate effect. In other words, we take a very balanced approach. We see significant benefits for the agrifood sector but we also recognise that we have a major defensive issue. I should also mention poultry in that space.

The question of small-scale producers versus large-scale producers is relevant in the poultry sector. It is true that the US beef production system is based on very large-scale feedlot production and it is very different, therefore, from our system. However, it comes down to prices, trade and supply and demand. If we can compete in a market, we should compete in it. There is no doubt that we can compete in the high-value food service market in the US and also for beef for grinding, at the very least.

Moving on to simplification of CAP, Deputies Penrose, Ó Cuív, Deering and several others expressed - I do not know if they used the word but I use the word - exasperation, and it is fully shared here. As a person who has been involved with the CAP for a long time, I have been through quite a few pushes for simplification and I know that previous exercises have failed. We must be more hopeful this time, partly because I believe the Commissioner is seriously committed to simplification and because there is no doubt that a large number of member states are at the end of their tether on this issue and are determined to get real simplification this time. I think the same mood is in the European Parliament. There is an alignment at the moment which makes real simplification more likely. There would still be differences.

We highlighted in our opening statement the fact that there is a danger of this simplification exercise tipping over into CAP reform which is not a sensible outcome and creates more uncertainty for farmers. It is a beguiling idea to go back to the basic text and try to simplify it. What happens if one goes back to the basic text, however, is that one would kick off a whole new CAP reform. We must be very careful in this area. We are pointing more at Commission implementing acts and Commission guidelines. We see a huge amount of the complication coming from Commission interpretation of the basic acts and, therefore, we see a significant possibility to get simplification in that area. There is some support for that view although I have to say there are also others who want to open up the whole basic acts. We will see where that discussion leads in the coming period.

At the Council yesterday, Commissioner Hogan announced a number of proposals, some of which are definitely helpful to us. I took it as an indication of good faith. He was showing that he was putting practical real proposals on the table but I am sure he will go much further.