Mr. Fabien Santini:

I am not a politician, so I may give a bit of a technocratic answer. I will try to adapt the message because the Deputy's question is important. Even though we are an administrative service or an administration, our client is the EU farmer. One of the five objectives of the CAP is to ensure a reasonable farm income level and livelihood in rural areas. That is a clear objective. There are others, which may be contradicting. We also need to ensure food supply, affordable prices for consumers and increased productivity for the farming sector. I do not remember the fifth one. The equation is complex, but clearly, farm incomes and farm livelihoods are important. It is the objective of the CAP to ensure a farm income level.

I said in my opening statement that we are in a situation where there are increases in one production cost of farmers, which is not the whole cost, but a significant one. It is a very sharp increase. The Deputy said that the cost has quadrupled. Even if it is only doubled, that is a significant increase and something which is difficult to adapt to. First, I would not say that we are not doing anything. We have a policy which has been in place for 60 years, namely, the CAP, and for 20 years we have had a format which is similar to the current one, based on the big amounts of what we call decoupled direct payments that are there to provide a buffer for the viability of income from one year to another.

The viability of income can come from an increase in the cost of production. In the past it came from other elements. Members will remember the 2015 and 2016 crisis relating to milk prices. That is also something that direct payments normally provide a buffer against. I understand that it is not sufficient to rely on this element, but we should not forget that it is in place. If we look at other similar economies such as the US, for example, with similar levels of revenue, the volatility and fluctuation of income for US farmers from one year to another - I am not talking about the big ones, I am talking about all US farmers, there are many small US farmers also - the volatility for these US farmers is far more acute than it is for EU farmers. Still, there is some volatility for us to absorb and members are right to point this out.

Where is the light? In this case, we are depending on energy markets. The expectation of energy specialists - I am not an energy specialist but I read the projections - is that there should be a moderation of these price trends on the energy markets in the coming year, probably not to the point that we will return to the previous level, the level of two or three years ago, but they will not be at the level we have now. There is a problem to go through this year. That is why I mentioned these different elements. We have these direct payments that are there to act as a buffer. For 20 years, we have had this possibility. It has probably not been taken up enough by farmers or by member states into their mix of policies. They have looked to risk management insurance. Under the income stabilisation tool, you can dedicate part of your rural development envelop to a mechanism that would compensate even more than direct payments do for fluctuations in income. In fact, this instrument has only been implemented by three member states, despite all the incentives that the Commission gave to try to do it.

In the new CAP strategic plan, there should be a specific section describing what is the risk management strategy. I have not read what has been written in Ireland, but I hope this is taken seriously by all the farmers who are contributing to this CAP strategic plan and by the Government, which is presenting this CAP strategic plan.

If this does not prove sufficient, there is always the possibility to try to trigger exceptional measures as we did at the beginning of Covid. Members might remember that in the context of Ireland, when there was much uncertainty relating to Brexit for the beef market, we took a little measure. This implied that there is a budget. As members may know, the budgetary framework of the EU is constrained by the member states. As a result, if we need to find money, the EU budget is not open-ended. We also need to find a way to reduce the expenses somewhere else. That is always a tricky debate. There is a financial reserve - this has been agreed by the co-legislator - of €450 million that can be mobilised for this kind of element but we have to collectively decide where the real need is for these elements.

As some members mentioned, there is a framework for state aid that allows each member state to target one or other of the particular elements. This has been actively implemented by the member states in the Covid situation. Many state aid mechanisms have been decided by the different member states. We have a more relaxed approach from the Commission because of this particular situation. We are still in this situation. This temporary framework for state aid will be in place until June so we are covering the situation up to then.