Mr. Brendan Gleeson:

I will try to deal with the issues raised. I will respond first to Deputy Charlie McConalogue's question about the Irish position. I should probably have mentioned our position on these issues in my opening statement. My view is that the Irish position is reflected to a significant extent, or at least elements of it, in the leaked document.

The budget is the first matter. The Deputy asked whether the Department had made formal submissions on the Common Agricultural Policy, CAP. At this stage that is not the nature of the beast. As a member state, we did not formally respond in the public consultation process. We do, however, engage on a regular basis with other member states. Officials have accompanied the Minister and met most of our traditional allies to discuss Brexit and the CAP. There is a group of G5 member states with which we meet regularly at official level. There is an ongoing process of engagement before an event such as this takes place.

I will reiterate the issues that are of critical importance to us. First, there is the budget. One can have all the schemes one likes, but if one does not have a sufficient budget, they will not be as effective as they could be.

In terms of there being a commitment to make direct payments, there has been a lot of discussion about the tension between risk management and direct payments and what direct payments should be made. One must remember that we have just one pot of money and that we must decide what to do with it. Our view is that direct payments are the fundamental barrier against productivity in the sense that they provide a guaranteed income for farmers. We oppose the idea of co-financing because some member states would be in a position to co-finance, while others would not, thus undermining the Single Market.

We need to address our continued contribution to environmental initiatives. The issue is relevant to the budgetary discussion because if we want to convince the citizens of Europe that their tax funds should be used to support the Common Agricultural Policy, we must demonstrate that not only is there a public good beyond employment and an income for farmers but also a benefit for the environment.

Despite what I have said, we strongly support the idea of further subsidiarity. We did the last time around and will this time around. As Senator Michelle Mulherin pointed out, we are conscious of the fact that the European Union stretches from Cyprus to Sweden and from the west of Ireland to Hungary. Therefore, farming conditions are not the same everywhere. We need to be able to adjust the implementation of CAP policy to suit local conditions. The Department strongly supports adopting such a stance. Like everybody else, we are a strong supporter of simplification, but executing the idea of simplification is more difficult than saying it. These are the critical points we have made in all of our engagements with member states and the Commission. Certainly, significant elements of Ireland's position are reflected in the leaked paper.

Deputy Jackie Cahill mentioned intervention. He is right that it is critical. I have talked about risk management. In the leaked paper there is talk about combining action at EU level with action by member states and the private sector, a principle with which we agree. The Deputy is right that the paper is slightly unclear on where the Commission stands on traditional intervention mechanisms. There is a range of EU interventions. As the Deputy mentioned, there are intervention measures for skimmed milk powder, SMP.

There is intervention for butter. There are aids to private storage. These tools, however inefficient, have helped to put a line under prices in some sector, and we needed it. We have 380,000 tonnes of skimmed milk powder in intervention at present and without it, matters would have been very much worse in 2014 and 2015. We are strongly supportive of the retention of those existing mechanisms.

Also, at EU level, there are more flexible tools now. There are exceptional measures. These, in the form of additional payments to member states, were used during the dairy crisis as well. We used the first tranche of what we got to make a payment to dairy farmers. We used the second tranche in a more imaginative way to provide seed funding for a loan fund for dairy farmers of €150 million. That is a new tool introduced in 2013. Then there is a range of private sector tools, such as fixed-price contracts which have become more common, and in some economies futures markets that operate well. None of these is enough on their own to deal with the issue of volatility. One needs a combination of these measures and I think that is what the paper is saying. Specifically, what it is saying about the traditional intervention mechanisms is unclear. However, this is not a proposal. It is only a framework document. Our position unambiguously would be that we need to retain those schemes.

Volatility management is all part of that picture. We had options in the current dispensation to introduce voluntary measures on volatility management. We could have, for example, supported an insurance scheme. We could have supported the establishment of mutual funds, and there was an income stability mechanism, but the last time around - this was the product of consultation with all of the stakeholders - the view taken was that there was one pot of money here and some of the facilities here were constrained. For example, on the income stability mechanism, there would have to be a reduction in somebody's income, compared to the average in the previous three years, of 30% and then one could only bring the income back up to 70% of the original threshold. I have not done the maths but, I suspect, if I looked at the recent dairy crisis, I am not sure that we would have triggered that mechanism had we had it available on a national basis in those circumstances. I would simply say that there were other mechanisms available to member states. Very few member states adopted them, in part because of their inflexibility. It is all coming from the one pot of money. We could decide, for example, that we would take a slice of the single farm payment and use it to deal with volatility management but it would mean taking money out of the pot and using it for those purposes. I am not sure how supportive farmers would be of that.

Deputy Cahill mentioned health and consumer concerns and Mercosur. I have a feeling I will be in here in a fortnight's time to talk about Mercosur. I can talk about it now but perhaps that would be a better time to do so.

Senator Mulherin mentioned simplification and I fully agree with her. We spend €1.8 billion of CAP funding every year. In the next round of the CAP, the need to get value for money and public goods from that funding would be critical, as it is now. There is a tension between a number of elements. The simplest scheme we run is the basic payment scheme. Once one gets into schemes that require specific actions of recipients to deliver public goods one is into measuring outcomes and outputs, which is a desirable activity but which can lead to complexity. Similarly, as I said, we are very much in favour of more subsidiarity for member states but we have to try and avoid undue complexity if we do that. Simplification is achievable but difficult, and one needs to see the detail of proposals to understand whether they are simpler or not.

Things can be simpler for the Commission or for the member state and not simpler for the farmer. One has to make sure things are simpler for all of those pieces in the supply chain, that is, that it is simpler to operate for farmers, member states and the Commission. The amalgamation of regulations might simplify things from a Commission point of view, but it might not change anything on the ground. One has to be careful to try to achieve real simplification.

In response to Senator Mulherin, we have talked a little about subsidiarity and the need to reflect the needs on the ground. I absolutely agree with that.

In regard to Deputy McConalogue's question, we have spoken a little about the Irish position and the extent to which we have published our position at the moment. We have not published a document at this point. We have not submitted a formal document. We are right at the beginning of a discussion. We certainly have tried to influence the shape of what has emerged and I think we have succeeded in doing that. Another time for a good discussion on this would be after the publication of the formal proposal from the Commission at the end of November, if it happens then. Then we will have to reflect in detail on what emerges. It could be that what emerges then is much like what we have here, which is a set of principles. To be perfectly frank, they are principles with which one could agree. However, they are principles with which more than one policy could fit. We need to see the specific legislative proposals that emerge and that will probably not happen until the middle of 2018. That will be about the time when we expect to see proposals on the financial framework as well. In the past, these things have moved in parallel. We have had proposals on the modifications of the CAP and in parallel, proposals on the financial framework. It will probably be mid-2018 before we will see a detailed proposal.

Capping was referred to. The last time around in the proposals, there was a requirement for degressivity once one got to €150,000. The payments had to diminish once one got to €250,000. We applied the full degressivity after €150,000. Applying that 100% degressivity effectively led to a cap. A second part of our capping proposal was that we applied a cap of €700 per hectare on direct payments as well. That will be applied in full by 2019.

That is what is allowable for under the current regulations. The next time around, and I have been asked for a view on whether we should look at this the next time around, the leaked document says we should reflect on whether to apply a cap of between €60,000 and €100,000. For me to say what we should or should not do requires me to prejudge a policy issue that will be determined ultimately by the Minister. However, I think the Minister has already said in public that he has no ideological problem with capping. The detail will emerge when we consider whatever specific proposals arise at the time. I cannot tie a Minister's hands here by answering that question.