Pat Deering (Carlow-Kilkenny, Fine Gael)
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Today, we will have a briefing from the Department of Agriculture, Food and the Marine on the Common Agricultural Policy negotiations and where we are at present. I remind members and witnesses to make sure their mobile phones are completely turned off. I welcome from the Department of Agriculture, Food and the Marine, Mr. Brendan Gleeson, assistant secretary, Mr. David Buckley, principal officer, Ms Bernie Brennan, principal officer, and Ms Miriam Cadwell, principal officer. I thank them for coming before the committee to brief it on the upcoming negotiations.

Before we begin, I draw the attention of the witnesses to the fact they are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or 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 either by name or in such a way as to make him or her identifiable.

I ask Mr. Gleeson to make his opening statement.

Mr. Brendan Gleeson:

I thank the Chairman. I thank the committee for the opportunity to address it today on developments in relation to the future of the Common Agricultural Policy. With a view to framing the discussion, it might be useful to remind ourselves of the contribution of the CAP to the citizens of Europe and of Ireland. Within the EU, the farming and the food sectors provide employment for 44 million people. Ireland's agrifood sector employs more than 173,000 people, or 8.6% of total employment, and accounts for approximately 7.6% of GDP. This employment is largely rural based and contributes to the survival of rural and coastal communities, where alternative employment may not readily be available.

The agrifood sector is Ireland’s largest indigenous sector, contributing €26 billion in turnover, with an economic multiplier that exceeds that of other manufacturing industries because most of its inputs are indigenous. Total agrifood exports in 2016 were €12.2 billion. This is a 56% increase since 2009, so agrifood was resilient through a period of extreme difficulty in the Irish economy. The raw material for this vital sector is produced by approximately 129,000 farm families, and their activities are supported by the EU's Common Agricultural Policy. The 2016 Teagasc national farm survey indicates that CAP supports account for 75% of family farm income on average, with a range from 37% in dairying to 113% in cattle rearing farms.

In addition to this, CAP, through the rural development programme, funds a range of activities to improve competitiveness and efficiency, and improve technology adoption on farms. It also supports farmers who engage in the public good of positive environmental actions, such as nutrient management, retention of biodiversity, better breeding policy, protection of watercourses and the planting of hedgerows. Within the period of the current multiannual financial framework, Ireland is projected to receive €12 billion from CAP, with €10.7 billion, or approximately 85%, in respect of Pillar I direct payments and Pillar II rural development payments.

We have now reached the point, following the reform in 2013, where it is necessary to look at the development of the policy that will bring us beyond 2020. With this in mind, the Commission opened a public consultation online on 2 February 2017. This ran for 12 weeks up to 2 May 2017. What is most remarkable about this consultation is that of 322,000 replies received, only 7% of respondents described themselves as being involved in farming, which shows CAP is a policy in which the EU citizens who fund it take a significant interest. Some of the themes that emerged from the consultation included public support for the need for CAP to deliver more benefits for the environment and climate change, the need for direct income support for farmers, the need to improve farmers' positions in the value chain, and to support investment in restructuring and innovation.

I want to turn briefly to issues related to the funding of any future CAP. Earlier this year, the budget Commissioner published a reflection paper on the future of the EU finances. The paper is a prelude to financial framework proposals expected to emerge from the Commission in mid-2018. It acknowledges the likely pressure on EU finances arising from the departure of one of the Union's larger net contributors, and the emergence of new priorities, such as migration and security. Against this background, it outlines five scenarios for future funding. Four of these would involve either a reduced overall budget or a reduced share for CAP or both. While this is a reflections paper only and not a proposal, it seems clear that the financial background against which discussions on the reform of CAP take place will be challenging.

I will turn now to a specific reflection on the future of CAP. Many committee members are aware of a document believed to have been leaked from the Commission on 19 October. The document is entitled "The Future of Food and Farming", and it outlines a range of principles and some specific proposals on the shape of a new CAP. I want to be clear that the document has no official status whatsoever. It is a leaked document. The extent to which its content will be reflected in the final communication is therefore unclear. Even if it were clear, the detail in the Commission communication will only be the starting point for a complex negotiation with member states. It is, nonetheless, a useful vehicle for framing a discussion on the future of CAP. In brief, the leaked document proposes a simpler CAP, with significantly more flexibility for member states and a sharper focus on objectives and results, particularly in the environmental area.

Some of the major themes include greater simplification; a commitment to a streamlined CAP, with reduced bureaucracy and administrative burden for farmers and member states; more subsidiarity; greater freedom for member states to implement CAP in a manner that suits their climatic and environmental conditions, with basic policy parameters and objectives laid down at EU level; a smarter CAP, with a focus on knowledge transfer, innovation and technology adoption; continued support for farm incomes; a continued commitment to EU funded direct payments, with a further move towards capping of direct payments, average support rates across the European Union and better support for small farmers - these are issues on which it is stated we need to reflect and as such not exactly proposals but food for thought.

Other themes include continued support for investment and financial instruments; support for farm investments for modernisation and diversification, including in new opportunities in bio and circular economy and climate friendly energy production; and better risk management. We know that some of our sectors have been affected by dramatic price volatility in global markets in recent years and the document refers to an integrated approach to risk management, combining EU level interventions with member state strategies and private sector instruments with different types of instruments tailored to regional and sectoral needs. The document also refers to more results based and relevant sustainability measures, which puts the flexibility back to member states in that they are required to define measures and targets to meet environmental and climate objectives laid down at EU level; and prioritising generational renewal. This is a challenge worldwide; as we know, the average age of farmers in Ireland is 57.

This would allow member states to develop their own incentives through CAP, cohering with national measures such as tax incentives, land regulation inheritance law or territorial planning and addressing consumer concerns, for example, about food security, the production of foods with specific characteristics, such as geographical indications or organic foods, addressing health issues such as antimicrobial resistance or in promoting healthier lifestyles through measures such as school schemes for fruit or dairy products.

As I said, this is a leaked document. If these are the basic principles underpinning the EU discussion on the future of CAP, then Ireland can support many of them. However, as always, the devil will be in the detail. We know from experience that greater latitude for member states is not always necessarily consistent with simplification. One needs to look at the specifics of a proposal to determine whether it is workable. Nonetheless, the leaked document would appear to be a reasonably good platform from which to initiate discussions on the future of CAP, and perhaps also to initiate a discussion today.

I look forward to hearing members contributions and I will endeavour to answer any questions that emerge. This is, I believe, the beginning of future engagement on CAP as we move forward.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank Mr. Gleeson for his opening statement. I will take questions from members in the following order - Deputy Cahill, Senator Mulherin and Deputy McConalogue, following which I will come back to Deputy Kenny.

Jackie Cahill (Tipperary, Fianna Fail)
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I have been at the table of a number of discussions on CAP renegotiations. On each occasion, I heard of how CAP was to be simplified only for every renegotiated CAP to end up more complicated than the one preceding it. I will believe what we are being told this time when I see it come to fruition. Farmers have seen no simplification of CAP. It has not happened up to now and I do not believe it will ever happen.

In terms of the pressure on the budget, we can argue about how to divide the cake but if we are starting off with a smaller cake, then we are starting from a bad place. The defence of that budget and the EU budget must be our primary concern. We must keep the EU budget in tact and following on from that we must keep the agricultural budget in tact. We have two battles to fight on that front.

Mr. Gleeson did not mention intervention. We forgot about intervention for a number of years. There are 380,000 tonnes of skimmed milk powder in intervention, which has been there for some time now.

While milk prices have increased significantly, skimmed milk powder prices have not. Had the intervention structure not been in place in 2015, I do not know where milk prices would have ended up. The intervention mechanism is extremely important to us in terms of the floor it put under milk prices and the storage of skimmed milk powder. We should not lose sight of the intervention supports. While we might have thought that floor was bad there is, at least, a floor now. This must be borne in mind in the context of the negotiations. It is not popular to talk about intervention but the floor price is extremely important and we need to keep our eye on the ball in that regard.

In regard to small farmers and the redistribution of the CAP budget, our definition of a small farmer and Europe's definition of a small farmer are completely different. As a country, we need to be extremely careful about budget redistribution. The European average in comparison with our average is far apart. On volatility in the different sectors, I do not know if the single farm payment should be linked with the management of volatility. I would have serious concerns about how that would be done. For example, would it be done through the type of insurance arrangement that has been spoken about previously? Insurance comes at a cost. On the dairy side, fixed price schemes are being put in place to address volatility to which people, depending on their financial circumstances, can sign up. Some people need stability if they have a large amount of bank debt. I would be worried about Brussels getting involved in volatility. Its proposals are cumbersome and would probably benefit farmers less than they would cost them. I would need to see more flesh on that proposal. I would not be anxious to go down that route.

On greening and the move towards environmental payments, as a country we should not be afraid of this. We are in a far better place than the rest of Europe in this regard. This is something we could push for the benefit of our sectors. Our agriculture is more sustainable and we can prove that without any fear of contradiction. I would have no concerns about that.

Mr. Gleeson mentioned health issues. I believe it is going to become a big issue in this area. Mr. Gleeson also mentioned consumer concerns and consumers looking for better value for money. This is in direct contradiction to what we see happening with Mercosur. How it is proposed to get the two to lie in the one bed will be interesting. Again, this is something which we can use to our advantage. On access for beef imports to Europe from other parts of the world this could lead to consumer concerns being raised in CAP and rightly so because at the end of the day the European taxpayer pays for CAP. We produce food to a very high standard. The European consumer makes no apology for demanding high standards. There must be a level playing field for European farmers. If there is to be access to our market then other countries must also have to meet high standards.

On generation renewal, the age profile of our farmers is a serious concern. We are trying to encourage young people to enter into farming. The retirement scheme of the past was successful in terms of encouraging farmers to hand on farms to the next generation. I would welcome more detail on the proposals from Brussels to finance a scheme that would allow older farmers to pass on the land and also have financial security.

Mr. Gleeson made a huge number of points in his statement. They must all be seriously developed to ensure that we get the best we can from them. It is like cattle negotiations. We start in one place and end up in another. The budget is definitely key. In my view, the CAP has never been under as big a threat as it is at the moment. We have a big battle ahead and we need a united front. At the CAP negotiations, the percentage of the budget and the overall amount of the budget are the two key components with which we have to start.

Michelle Mulherin (Fine Gael)
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I welcome this discussion. These meetings give us an opportunity to think about CAP and the position in which it has put Europe and its member states. We are the largest agrifood exporter in the world. Many of the concerns which our farmers have are about South American countries having access to the market, but we are the biggest agrifood exporter. Why are we the biggest agrifood exporter? As has been said, it is because we have quality food, traceability, sustainability and innovation. Our country is punching above its weight. We are leading the way and pioneering in many areas. It is very heartening because it means that we are carrying on a tradition into modern times. We know the world has to be fed and that there are climate change targets, so all of that is very good.

I know that, for good reason, we can be cynical about simplification, an issue which Deputy Cahill raised. Simplification is absolutely key from many points of view. It is an issue which Commissioner Hogan has to take a hold of and he must ensure we see some results from it. Farmers want to farm. They are busy enough farming. They do not want to be constantly tied up with documents and bureaucracy and so on. In all of this it is key that, for once, rather than managing agricultural schemes and measures in minute detail, Europe sets out the broad objectives but empowers member states, including Ireland, to implement them in a style and in a fashion which is no less accountable, but which is appropriate to the unique Irish farming situation, farm families and so on.

As we know, questions have rightly been put about what has led us to Brexit. Very often, when there is volatility in the markets, in farming or in security, we see a rise in anti-European sentiment. That sentiment gave breath or life to Brexit. When these types of issues arise, the Irish Government has to point to Europe, which it is right to do in many cases. That is not very desirable because for the most part, other than in the case of our MEPs, government is at local level. Elected local and national politicians are the people in whom the general populace has put its faith. Therefore, they need to be trusted.

Implementing such a formula, perhaps in a number of sectors across the European Union, might inspire more confidence and more realism, because it is all too easy to blame Europe at times. It would definitely be more empowering for us as a country and better for the European Union. It has to be about more than simplification, even though I accept what Mr. Gleeson said about simplification not being a given if more power is given to governments. It has to be both. We cannot keep just being messengers for Europe. That is not to take away from all the work which goes into negotiating the CAP and the fine job which was done previously.

We have to be more active players as this is critical for us and the European Union. I know that some advances are being made in the simplification of the Common Agricultural Policy and wonder what that will entail. I would welcome the comments of the officials on the areas where we could take a grip of the situation and best proceed at national level. Could there be more autonomy in how we design schemes while at the same time complying with the overall objectives?

Charlie McConalogue (Donegal, Fianna Fail)
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I join the Chairman in welcoming the officials from the Department of Agriculture, Food and the Marine and thank them for their presentation, much of which focuses on the leaked European Commission communication. That is understandable because it is probably a good signpost as to the direction the Commission wishes to take in reforming the Common Agricultural Policy, CAP. Since the officials are appearing at the Joint Committee of Agriculture, Food and the Marine, I am interested in hearing what the Department is seeking to achieve in respect of the CAP and an outline of the key priorities and objectives and how much is reflected in the leaked communiqué. Will the officials update us on the submissions that have been made by the Department and the Minister in the consultation process? Are the negotiations being held in public? What other submission have been made and will the officials enlighten us on the approach taken and Ireland's key asks in the reform of the CAP?

I echo the point made by Deputy Jackie Cahill about the importance of the budget for the CAP. That budget will be crucial. As has been pointed out, it is under massive pressure. I have little doubt that it will require Ireland and other countries to be willing to step up to the mark in the provision of additional funding in terms of being willing to put more funds into the budget for the CAP. That is where we should be at and we should be willing to do so as a country. I know that the Minister has not yet given a clear indication that that will be our position. The assistant secretary, Mr. Gleeson, outlined how the budget for the CAP, in terms of contributions and single farm payments, accounted for a figure of 37% in the dairy sector and 113% in the beef sector. Although Brexit has dominated the debate on agriculture in recent months, the stakes in respect of the CAP are as high, if not higher. If we were to see a significant drop-off in the budget for the CAP, it would impact immediately on incomes and put people out of farming.

The current programme for Government commits the Government to moving towards a cap of €100,000 on the maximum payment under the current CAP programme. Have efforts been made by the Government to direct the Department to achieve that objective? The next Common Agricultural Policy should provide for a cap of €60,000 on the maximum payment. Has the Government taken a position on that issue? I note that the leaked communiqué indicates that the Commission is considering capping the maximum payment to individual farmers at between €60,000 and €100,000 under the next CAP programme.

A system of averaging was applied in Ireland and in other countries. Does the Department have a view on whether that system should continue as part of the next CAP programme?

Some young farmers missed out under the last CAP programme. What position is the Department taking to ensure the young farmers who missed out under the previous programme will be helped under the next one?

Will Mr. Gleeson update us on the current position on areas of natural constraint, ANC, payments? Will they form part of the next CAP programme and will they continue to be considered under the current programme? If farmers are to progress, we must discuss their income levels, profit margins and their position in the value food chain. How does the Department envisage the next CAP programme addressing these issues and ensuring to include them as key priorities?

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.

Charlie McConalogue (Donegal, Fianna Fail)
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The €100,000 cap is in the programme for Government to be worked towards. Has there been progress in that regard?

Mr. Brendan Gleeson:

Under the current legal framework, we have applied the maximum capping that we can do. We cannot go beyond €150,000 under the EU legal framework, which we have already applied in full. Based on the current legal framework, that is something that will have to wait until next time around.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Could Mr. Gleeson comment on areas of natural constraint, ANC, payments?

Mr. Brendan Gleeson:

The first ANC payment run was on 19 September 2017. We paid €160 million to 75,000 farmers and that compares with €140 million and 65,000 farmers in 2016. We are making payment runs twice a week. As of 6 November 2017, €187 million has been paid to 87,000 farmers. There was a question as to whether there would be an ANC provision in the next CAP.

I cannot imagine that there will not be. While it does not refer to the term "ANC" in the leaked document, it does refer to support for rural areas and I think that necessarily means some kind of payment in recognition of disadvantage. I cannot envisage a situation where we would not have some kind of payment for disadvantage.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Could Mr. Gleeson comment on provisions for young farmers?

Mr. Brendan Gleeson:

The leaked document refers to regeneration and it mentions the words "installation aid". I do not think that necessarily means the kind of installation aid we had the last time around but it means some kind of payment for installation. This time around we have already done a number of things for young farmers based on the flexibility we had, including a 25% top-up on direct payments for young farmers. We have a number of tax reliefs as well. We have succession farm partnerships to encourage succession, because apart from the age profile, surveys indicate that many farmers do not have a successor in mind or do not have a successor.

We spoke about simplification a minute ago. What is clear is that the simplest tool is the one we chose, which was the young farmers top-up. The fewer schemes we have, the simpler it is. It is easier to top up a basic payment than to create a rural development scheme with a lot of deliverables and criteria with which one must comply. The idea behind young farmers schemes generally is to encourage people to start to deliver some change. That is why we opted for the maximum young farmer payment the last time around.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Before I call the next member, I have a question. I think Mr. Gleeson indirectly indicated in some of his contribution the possibility of the current Common Agricultural Policy, CAP, being rolled over, rather than the 2020 date being final. Was I picking up the right or wrong implication?

Mr. Brendan Gleeson:

Maybe the Chairman picked up something I intended to say but did not. He makes a very good point, because the reality is there is a very crowded agenda for the next few years. We have European Parliament elections in 2019, a Commission whose term expires in October 2019, a multi-annual financial framework the first document of which will only be published in mid-2018, and Brexit. If I was asked whether it will be possible to negotiate a significantly reformed CAP in the middle of all of that by 2020, I would say it would be a very significant challenge. That is my own view, and I have a feeling that the Commissioner might have hinted slightly, more than once in public, that it is a very crowded agenda.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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In the event that this was the case, for how long would it be rolled over? I presume there is precedent for this.

Mr. Brendan Gleeson:

I think there has been a reference in some of the narrative to 2022 or 2023. The possibility of rolling it over to 2023 is also referred to in the European Parliament report, with implementation of a new CAP starting in 2024 or 2025. That has not been conceded yet and nobody has said it formally but one can see there is a lot going on in the next couple of years that will make it politically and practically difficult to negotiate any significant reform.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I call Deputy Kenny.

Martin Kenny (Sligo-Leitrim, Sinn Fein)
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I thank the Chair, and I welcome the witnesses and thank them for their time and their contributions. CAP from its outset was meant to provide cheap food to the European market. It has changed its emphasis over the years and has now become more about providing a very high-quality product or high-quality food. It is now more focused on that and on issues of environmental sustainability. They are the two things that will be pushed more than anything else in any CAP reform. The witness mentioned direct payments. Direct payments are vital to farmers in Ireland. In that regard, while we know what we are looking for from an Irish perspective, do we have much indication as to the position of others?

I refer to our other European colleagues, particularly the big powerhouses such as Germany and France which may have a slightly different agenda. How open are they to maintaining or expanding some of what Ireland is looking to do?

On the issue of greening, we have had GLAS and various schemes down the years. While farmers find them difficult at times because there is so much red tape involved, at the same time they have provided a stable payment. They know that money will come once they do the job right. I wonder is it perceived that we will go more in that direction so that there will be a greater emphasis on the greening measures than on the direct payments in the future. How comfortable would Ireland be with that? The farming community would not be comfortable with it. It needs the surety of the direct payment in place.

The other issue already mentioned was volatility, how to shore that up and whether some of the CAP moneys can be used for that. Many in the farming community would fear that if that were to happen it would eat into what they consider to be their entitlements and that would be a dangerous track to go down. However, from what we hear, that is the direction many of the other European countries want to go.

While much of it has already been discussed, I would like to know, while we know where we want to be and where we want to go in a broad sense, what obstacles will we meet and where are other countries in respect of all of these issues.

Marcella Corcoran Kennedy (Offaly, Fine Gael)
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I thank Mr. Gleeson for his presentation.

I wanted to ask about the reduced budget, which is essentially guaranteed following the exit of the UK from the European Union. How will the Government advocate for us in terms of managing that shortfall? There will have to be forward planning, which would have been going on, I suppose, over the past couple of years in any case.

Is the Department taking the use of glyphosate into account in terms of the ongoing CAP negotiations? As part of our report on the tillage sector, we heard from Science Foundation Ireland that it did not think it would be possible for farming to continue at the current level without the use of glyphosate. What is the Department's position on that?

Food waste is a significant issue. Whether it be waste in supermarkets or waste on farm, for example, if supermarkets reject produce because it is not at a particular standard, how can that be addressed during the CAP negotiations?

With regard to changing our practices to take into account the need for biomass for renewable energies, we heard that there seems to be a reluctance from the farming sector to use what it would see as good land for the growth of trees. it would prefer to see it being used for food, yet we hear from the sector that wants to get biomass that it cannot get it here and has to import it. Is the Department examining this in some way or how will it approach that as part of the CAP negotiations? Is it an issue in other countries?

Michael Fitzmaurice (Roscommon-Galway, Independent)
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I thank Mr. Gleeson for his presentation, and I note that not once in it was the family farm mentioned. We started off with 300,000 farmers when we joined the EU. We have 120,000 now and the number is falling. There does not seem to be a policy to ensure that we protect the family farm.

At present, although Mr. Gleeson says now that there may be a roll-over of it, approximately 80% of the funding goes to a small percentage of farmers. If one looks at the information that came out in Agriland last week, those in certain parts of the country get on average twice what farmers in another area get. Will the Department ever realise that there are parts of the country where one will not be able to keep a youngster engaged in farming?

We talk about bringing in schemes to try to keep youngsters engaged. Is it not recognised by Europe and the Department that there is no way we will keep youngsters in farming if they are only getting €3,000, €4,000 or €5,000 in the single farm payment. The witness talked about €150,000. I have been in Europe. Europe will tell us it is up to the member state to decide what it can give. Why is there not an agenda in Ireland to increase the single farm payment to €50,000? Europe has said clearly to us that it is up to the member state to do what it wants. Why was the maximum area for applications to the young farmers scheme put at 90 ha? We were told Europe had said that but I found out that France, Wales and other countries had set it at 25 ha and 30 ha. Why do we not bring in an average payment? I was in Brussels and talked to people with responsibility for the scheme and that is exactly what they said to me. If we roll this over, the reality is we will lose more and more farmers. My understanding from the figures I have looked at is that Britain pulling out will cost Ireland €100 million in CAP. Is it not the case that we are under ferocious threat from the eastern bloc countries? Will they take a bigger slice of the budget? Is Britain actually our smallest fear in this situation?

The witness mentioned the climate. Is he saying we will be promoting renewable energy, whether wind or anaerobic, to farmers? Will there be new types of payments for that? How will environmental schemes be introduced? I met some of the witnesses during negotiations for the programme for Government. We were told there would be a review of the CAP payments in 2017, but that did not happen. We understood the current imbalance, which results in some people getting €150,000 and some getting €2,000, would be sorted out. That did not appear to happen. The years 2010 to 2015 and 2008 to 2010 were looked at but there was a category of farmers before that who walked away from farming. We talk about bringing in young farmers. That group of forgotten farmers was never sorted and it does not look as though it will be sorted. Is there any budget there for them? The Department has said that as a result of elections or whatever political thing is going on it could be 2023 when it happens. Many of these farmers will just throw their hands up in the air and we will see the demise of more farms. Is the €25 million that was agreed for the ANC going to hill areas or lowland areas? Has a decision been made on that yet?

Paul Daly (Fianna Fail)
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Most issues have been covered. We all have our own aspirations and we know where we think CAP funding should or should not go. What I am taking from the presentation today is that we are in a bit of a vacuum. We are expecting a document in November but there is a rumour the whole thing could be rolled out in 2023. Are we being side-tracked by Brexit? Could something come down the line that we are not expecting? The Department built its presentation around a document which it stressed is a leaked document and cannot be believed. The witness gave the impression that if it was the real thing we would meet it with open arms. Are we getting side-tracked? Could something come down the line that none of us expected? Are we being fed information about the possibility of it being pushed out and the implications of Brexit? Is there more to this than meets the eye?

Mr. Brendan Gleeson:

I will take the last question first. I do not believe we are getting side-tracked. We stay in very close touch with the Commission, the Cabinet, the Commissioner and other member states.

It is absolutely true we are living in an environment in which there are a lot of uncertainties. That is the reality. I do not think there is any kind of an agenda to mislead anybody. I am simply trying to present the facts we are aware of now. The fact is there is a leaked document from the Commission. I would be a little bit more cautious than to say we would greet it with open arms. It sets out a set of principles with which we can work but it would only be the start of a discussion. To greet something with open arms, we would need to see the detail. We have not seen any detailed proposals.

I did not answer one of Deputy McConalogue's questions about the position of farmers in the supply chain and the role that the CAP can play. There are specific proposals being prepared at the moment on unfair trading practices outside of the CAP. Our view has always been that if these things are to be effective, because we export 90% of what we produce, they need to be done on a pan-European level. We have introduced legislation in Ireland but it is not enough to resolve that issue. In terms of what the CAP can do, the focus of its interventions in this area has generally been on supporting collectivisation from farmers. It has been on supporting producer groups. We have launched a programme for developing food producer groups in the beef sector. We will fund a facilitator who will help farmers to get together and provide them with guidance on governance and that sort of thing. They will have the latitude under the current competition rules and the CAP to negotiate collectively. That has been the kind of intervention the CAP has made available to deal with supply chain issues. It is a difficult issue to deal with. When one looks at public consultation and the responses from farmers and non-farmers, which are quite different in some areas, 100% of respondents favoured strengthening the position of farmers in the supply chain.

Deputy Kenny asked about environmental sustainability and whether we see the CAP going in that direction. The reality is that the CAP scheme was greened the last time around and that trend will continue. Do we foresee a threat to direct payments? There are those who feel there should be a shift in funding from direct payments to rural development and the departing member state was one of the major proponents of that. It is not something we would necessarily support. We had the option the last time around to move funding on the basis of national discretion from pillar one, direct payments, into pillar two, CAP, and we chose not to do that. If one is looking at threats to the CAP and its shape and the proposals for modifying it, it is a proposal that could emerge. The balance of funding could be shifted towards public good, RDP measures and away from direct payment. That is something we would have to look at very carefully if we receive a proposal. Our position has been unequivocally that the direct payment is the fundamental pillar of supporting farm families. We remain in favour of that.

President Macron made a speech a while ago and perhaps that is what the Deputy was thinking about. He talked about being unafraid to address the old taboos when it came to the CAP. He made the point that even though farmers complain about the CAP, when we come to a point where we have the opportunity to fundamentally reform it, they tend to oppose that. If one examines the detail of President Macron's speech, it is a bit similar to the leaked paper; it is a set of principles on which one could fit many policies. He has allowed himself sufficient margin for movement in what he said. At the time when he made the speech there was quite a violent reaction when he said we cannot be afraid to discuss the old taboos. I am not sure it was matched by the substance of the speech.

Deputy Corcoran Kennedy asked about the budget. There are a number of elements to the budget.

We are not at the point where we will accept in any kind of a formal way a reduction in the Common Agricultural Policy, CAP, budget. We do not know what the financial arrangements will be when the UK leaves the European Union. It is one of the largest net contributors to the budget, some €10 billion a year. If 38% of the overall EU budget is CAP funding, then that could be a cut on its own of €3.8 billion. That is the first piece of the jigsaw.

The second piece is that there are new political priorities in some member states, such as migration and security, for which they will be looking for funding. The next piece is the eastern bloc countries looking for a bigger share of the budget. We looked at a proposal for external convergence of payments per hectare across member states before and we are absolutely certain we have nothing to gain from it. Would we lose from it? We would have to see specific proposals to determine whether we would lose from it or not. The last proposal from the then Commissioner, Dacian Ciolo, was to move everyone to the average payment per hectare across Europe. When we looked at the specifics at the time, our payments per hectare were more or less bang on the average. At that time, we would not have been significant losers from external convergence.

As for now, we would definitely not gain from external convergence. At the same time, we cannot take it for granted that we would lose from it. We would need to examine the proposal at the time, look specifically at our payments per hectare, compare them to the European average and assess the proposal.

The three threats to the budget are the UK's departure, the political imperative for funding other priorities and the desire of the eastern bloc member states to have what they view as a fairer share of the pot.

Regarding additional contributions, that is a little bit beyond my pay grade and is not even a question for our Minister to answer. All I can say is if the budget remains the same and the size of the CAP reduces, Ireland will become a bigger net contributor. Since 2014, Ireland has been a net budget contributor overall. If one divides the budget on a proportionate basis, however, we are still a significant net beneficiary of the CAP. The ratio is about 2:1. If the budget remains the same and the CAP is diminished, then Ireland will become a larger net contributor. If the CAP is to remain the same and if these additional priorities are to be funded, even if one discounts the loss of the UK money, then member states will have to pay more. If the CAP is to remain the same, one takes into account a significant loss of funds from the UK and these additional priorities to be funded, then member states will have to pay more.

Ireland has never been found wanting when it comes to a willingness to support the CAP. In the context of this discussion, people will assess matters on a logical basis and what is in the national interest. That is as far as I am prepared to go in determining it. I am an official and that is a question of policy to be answered by somebody else.

We based our position on glyphosate on the science. The view from the European Food Safety Authority, EFSA, is that there is no public health risk from the use of glyphosate. Based on that, the European Commission has proposed a five-year extension to the approval for glyphosate, which we support.

We are sensitive to the pressure on rural areas and the reality of farming.

Food waste is a real issue. It goes back to public confidence in the system we have for funding farming. I am not sure what the CAP can do in that regard. It can fund information campaigns. That might be the kind of initiative which could potentially emerge. Again, it seems to me that it needs to be done on a pan-European rather than a national level.

I referred to family farms but Deputy Fitzmaurice might have felt not as often as I should have. The position on capping is that we have gone as far as we can under the current legislative framework. There is a specific reference in the leaked document to a reflection on whether we should cap between €60,000 and €100,000. The Minister has said it is something he is prepared to consider but we do not have a specific proposal yet. During the 2013 reform, we went some of the way towards flattening payments across farms. The political and factual reality is that when one talks about shifting funding from person A to person B, it is difficult and divisive while people have strong views on it. There was a view taken at the time that if we moved to a flat rate everywhere, it could be disruptive to farm incomes and productivity. There was a balance. By 2019, we will have shifted €100 million from the highest paid farmers to the lower paid farmers. Quite a few people view that as inadequate but that is what is being done. Based on the leaked paper, it will be possible to continue on that journey in the next reform.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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Does the cap include greening?

Mr. Brendan Gleeson:

No. When I spoke about the flattening of payments, it was the basic payment scheme, BPS, payment without greening.

Ms Bernie Brennan:

Yes, the €700 per hectare inclusive.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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Would it be fair to say then that €60,000 will be nearly €100,000 with greening?

Mr. Brendan Gleeson:

It would be €90,000.

As for the forgotten farmers, they do not all have the same story to tell. There are farmers who feel they have missed out and have low entitlements. If they were to be funded, it would have to be through a linear cut in other direct payments. We have contacted the Commission on this. Based on its advice, it is not possible to apply a linear cut to deal with this issue.

There is an omnibus proposal, however, making its way through the system, which is an amendment to 15 EU regulations across a range of sectors, including some of the CAP regulations. Part of the omnibus proposal would allow a linear cut to fund what would be termed as specific disadvantaged categories. That is not defined in the omnibus regulation. However, it might be possible under the omnibus regulation to apply a linear cut to fund categories of disadvantage. It would have to be decided what the categories were. The omnibus proposal could be applicable from 1 January but it is looking that it might be shoved out a bit. If the proposal goes through as it stands now, it would be technically possible to apply a linear cut across all direct payments and fund a variety of areas of specific disadvantage. However, that would be a linear cut in everyone else's payments.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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What about Deputy Fitzmaurice's last question?

Mr. Brendan Gleeson:

It is a question of the €25 million and whether we have decided yet how to allocate it. The answer is that we have not. The options ranged from a flat rate increase for everybody to targeting higher increases for farmers in more disadvantaged areas. A range of possibilities is being considered but a decision has not been made yet.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Is there a timescale for the decision?

Mr. Brendan Gleeson:

I am told it will have to be soon because it is affected by the omnibus that will affect the implementation. Therefore, we will probably have to decide before the beginning of next year.

Michael Fitzmaurice (Roscommon-Galway, Independent)
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When can we find out about the omnibus and the various things that can go through?

Mr. Brendan Gleeson:

I am happy to send the Deputy the details. On the question of whether it will go through by 1 January, I will be happy to let the Deputy know as soon as I know.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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From the conversation we are having, it seems it will be virtually impossible to have capital negotiations complete until Brexit negotiations are completed because of the financial implications. Maybe I am missing the point. We will never get agreement on a budget because we do not know what it will be until we know how much the divorce settlement will be. I refer to fitting the whole thing together. Would I be right or wrong in saying that?

Mr. Brendan Gleeson:

If I am being asked for a view on whether it is possible before some of those matters are clarified, it is very difficult for me to answer. I would not disagree with the Chairman. It is possible to come up with a set of broad principles before having any idea as to what the budget will be but it is difficult, however, to get into specific legislative proposals, for example, until one has some sight of what is proposed in other areas. All of that will depend on the outcome of the Brexit proposals, or at least a partial outcome, and at least the outcome of the exit negotiations at which the future financial dispensation will be decided.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I have two further points. Based on our Food Wise 2025 targets, we are to increase exports by 50% by 2025. This must be balanced with our climate change targets. We have read a lot about this in recent days, obviously. Fitting all this into a new Common Agricultural Policy will be very challenging. How will we balance the environmental and food production sides of the equation?

Mr. Brendan Gleeson:

What we have in Food Wise 2025 is a vision for the sector that was decided by industry and facilitated by the Government and the Department. The target is to increase the value of exports. There are several elements to that, including moving up the value chain and increasing production.

On the question of balancing the equation, the contribution that is made to the environmental discussion is underplayed significantly. What is remarkable about agriculture is that, since 1990, we have succeeded in reducing carbon emissions significantly at the same time as increasing the output dramatically. Therefore, farmers, the farming community and the agri-community generally have made a huge contribution in the climate debate. More has to be done. I do not believe one will find farmers disagreeing with that. There is absolutely no doubt but that it is a challenge. There will have to be a strong environmental and climate change component to the next Common Agricultural Policy.

In terms of what has been achieved through GLAS, examples include the conservation of some 280,000 hectares of permanent pasture, the protection of 16,000 km of watercourses, the preservation of 127,000 ha of habitat, the management of 120,000 ha of land in accordance with farmland bird actions, and 1,300 km of new hedges. These are achievements of farmers based on the scheme. We will need to do more. and we have targets now that we must meet. We have moved on a little bit. and it is important to acknowledge the contribution that farming and agriculture have made in combating climate change.

That is not to deny that more has to be done. As I said, farm bodies and farmers will not be found to be in any way resistant to the idea of making a contribution. It is important, however, that they are remunerated for that contribution. It must be recognised in any Common Agricultural Policy which we develop, because these things will not happen on their own. They require active management by farmers.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I want to raise the controversial issue of the so-called active farmer. This was a point of major debate during the previous negotiations four or five years ago, and it may need to be redefined again. To follow on from Deputy Fitzmaurice's point, the productive farmer also needs to be protected and acknowledged into the future. We need to have productive farming and we have to accept that some farmers are going to be more productive than others for one reason or another. That also has to be acknowledged.

Mr. Brendan Gleeson:

The Chairman is absolutely right. This is one of the most difficult areas across member states. There were many efforts to define active farmer in 2013. In the end, what was produced was a sort of negative list which member states could add to if they wished. That is because it was difficult to produce a definition. The phrase used in the leaked paper was something like farmers who are reliant to a significant extent on farming for their income. What does that mean? At its worst extreme, that could be interpreted as excluding part-time farmers. That would exclude 60% of dry stock farmers in Ireland, so it is clearly not an acceptable definition. I am not suggesting that is what is intended in the leaked document. It is not. I am simply trying to point out the complexity of coming up with a definition. I believe everyone agrees in principle that CAP payments should be directed at farm families. By and large the evidence given in the leaked paper suggests that will be the case. Coming up with a definition of an active farmer is fraught and difficult. If it was easy, we would have done it in 2013, but we did not. We came up with this effort to resolve the issue, which I hesitate to call a fudge. As I said, it was really a negative list and it meant that someone running an airport or a golf course or whatever was not an active farmer.

The other thing is that if the definition is too complicated, we end up with extraordinary administrative complexity. People might say that is a problem for us, but if there is administrative complexity for the Department, it inevitably reflects back on farmers. It makes schemes complicated and there would be various kinds of difficult assessments. I do not have a simple answer for the Chairman but I would say that it is a complicated area and we have been talking about it for a long time.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Do any other members have questions before we wrap up? As there are no further questions, I thank Mr. Gleeson and his team for coming before the committee today. I am sure this discussion is, like "Coronation Street", to be continued for many more days to come.