Simon Coveney (Cork South Central, Fine Gael)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"— recognises the importance of the agriculture and food sector as a driver for economic recovery and export led growth;

— notes the commitment of Government to the Food Harvest 2020 strategy and the progress in 2011 towards implementation of the targets as set out in the Food Harvest: Milestones for Success document published in July, 2011;

— endorses the clearly articulated policy of Government to date in relation to Common Agricultural Policy (CAP) reform;

— reaffirms the following key priorities in relation to the upcoming negotiations on the CAP on which formal proposals from the Commission are expected to be published in early October:

— ensure that the vital role of the CAP in promoting sustainable and competitive food production is maintained and that a commensurate EU budget is provided to support that objective;

— protect payments to Irish farmers and the agrifood sector under both Pillar 1 and Pillar 2 of the future CAP and to ensure that Ireland receives a fair share of available CAP funding;

— provide appropriate flexibility to Member States to determine direct payment systems best suited to their conditions and to the future development of their agricultural systems; and

— provide appropriate support for competitiveness and sustainability in food production in the rural development pillar of the CAP (Pillar 2); and

— in this regard, notes and expresses its strong support for the efforts of Government to build alliances with other like-minded Member States in pursuit of these stated objectives.

I thank the Opposition for tabling this motion. However, it is difficult for the Government to accept because it is not a fair reflection of the broader Common Agricultural Policy, CAP, debate. I hope Opposition Members will examine my amendment to the motion. They will probably find it difficult to oppose when they do. I have tried to ensure the amendment to the motion is as broad as possible. It would be helpful if we had a strong statement of support from other parties in this House for my efforts with CAP reform, regardless of domestic politics and the build-up to the budget.

Opposition Deputies know me well enough to know I do not normally read prepared scripts. This evening, however, I will because I want to put several matters on the record which people will find helpful.

The Government is fully committed to the development of the agrifood industry. It recognises the agricultural sector will be a key driver for national economic recovery and export-led growth. We have taken on board the Food Harvest 2020 strategy and have worked actively and tirelessly towards implementation of its targets. Many Members will have already seen the progress made towards implementation of these targets as set out in the document, Food Harvest: Milestones for Success, published in July 2011.

In that connection, the CAP will be a key instrument underpinning our Food Harvest ambitions. Accordingly, the negotiations on the future CAP are of enormous importance for this country because the policy decisions taken on foot of these negotiations will set the context and many of the conditions for the development of Irish agriculture.

So far the European Commission has not published any proposals on the future of the CAP. These are not expected to be published until early next month. The recent media reports refer to leaked drafts which have no status and which could be subject to significant changes before they are finalised and presented to member states. Rather than speculate on the impact of what might be in the eventual proposals, I would like to give an outline of what we do know about the CAP reform debate to date and to present the Government's views on this.

We know from the EU budget proposals that the intention is to freeze CAP spending at 2013 levels. This represents a reduction in real terms but stability in nominal terms. As there was pressure for a substantial nominal cut, this represents a reasonable starting point for the negotiations, one with which we can certainly work. The eventual outcome will be determined by Heads of State in the financial framework negotiations. I will be working closely with my Cabinet colleagues to ensure a satisfactory result for Ireland.

As well as setting a benchmark for the funding available, the Commission's proposals for the future EU budget provided more guidance on Commission intentions for the CAP of the future. It confirmed the intention to redistribute CAP funds between member states and proposed a pragmatic method be used for distributing pillar 1 direct payments that would close some of the gap between those member states with low levels of payments and those with high payment levels. It went on to suggest the use of objective criteria to determine allocations between member states for pillar 2.

A pragmatic approach that looks at both pillars together is needed. The current distribution key as a starting point and eligible area as a comparator must be used. On this basis, Ireland has below average payment levels per hectare for pillar 1 and 2 and would see no justification for any reduction in our allocation. Clearly other member states will see it differently. Accordingly, there is no certainty at this point about the outcome of the negotiations.

Deputy Moynihan's motion centres on the issue of the distribution within member states. There is strong pressure from the Commission, European Parliament and many member states for uniform national or regional flat rates for direct payments. In that regard, there is very little support among other member states for the retention of the historic model, as used in Ireland. My priority is to seek as much flexibility as possible for member states to determine the payment models best suited to their conditions and to the development of their farming systems. A lengthy transitional period will be needed if there are to be any changes. This is a key issue for me. Other member states are pressing for flexibility in regard to other areas of the CAP and it will be important in the upcoming negotiations to arrive at a solution that is satisfactory for all member states, including Ireland. Yesterday in Poland, I conveyed my views on this point to the Commissioner and to my European ministerial colleagues. I am actively seeking allies in favour of maximum flexibility and sensible transition arrangements.

The Commission and the European Parliament are pressing for a 30% mandatory green component in direct payments for additional agri-environmental measures beyond current cross-compliance. This was one of the policy elements mentioned in the Commission's budget proposal, aimed at strengthening the perceived legitimacy of direct payments. The greening measures being mooted include retention of permanent pasture, crop rotation and ecological set-aside, all of which are already part of normal practice in Irish farming.

The Government supports the idea of encouraging sustainable forms of agriculture which is at the heart of the Food Harvest 2020 strategy. However, we need to keep matters simple and to avoid creating excessive additional bureaucracy. While the greening measure that would be predominant in Ireland - retention of permanent pasture - should not create major compliance problems, the existence of separate greening conditions would complicate our single payment scheme. There is considerable greening already in place through cross-compliance and we must question what value will derive from such proposals.

A further complication for Ireland is that a 30% flat-rate greening component would exacerbate the movement towards uniform national or regional payment rates. We should consider whether there are alternative simpler approaches to achieving the Commission's objectives.

There is also strong pressure from the Commission and the European Parliament for introducing progressive capping of payments in respect of large farmers, although, there is, equally, strong opposition from certain member states, in particular Germany and the UK, to such a proposal. This is not a major issue for Ireland as most of our farms are small family farms. Only six farmers in Ireland would be affected by such proposals. It should be used as a bargaining chip to get our ways in other areas.

The Commission communication suggests the introduction of a scheme directed at small-scale farmers. The details of such a scheme are still somewhat sketchy. It appears to be mainly directed towards the large number of essentially subsistence holdings in some of the new member states. I look forward to seeing more detail on this but my initial reaction is that it needs to be discretionary for member states to apply.

Ireland, almost alone, has been lobbying the Commission on payments to young farmers. It would be very desirable to have additional measures in the CAP to support young trained farmers. These are the people who will drive Irish agriculture forward to achieve the targets set out in detail in the Food Harvest documents. I was pleased that this point was referred to in the Presidency conclusions on the CAP under the Hungarian Presidency.

The European Parliament has also been campaigning for special provisions to encourage young farmers and I would expect the Commission to come up with some specific proposals in this regard. I would be interested to have the option of applying measures targeted at young farmers in both pillar 1 and pillar 2 and I understand our lobbying in this regard has been having some success. This is to be welcomed.

The next issue is coupled payments. In line with the trend towards full decoupling in all member states, I would expect the Commission to make provision for limited coupled payments - probably no more than 5% to 10% of national ceilings. I have no objection to retention of coupled payments for vulnerable regions or sectors on a voluntary basis, provided this does not distort the market or prices. Subject to that condition, it would be useful to have a reasonably flexible and voluntary provision for funding coupled payments from reductions in the single payment. I believe all member states should have the same flexibility and options.

The next area is what is termed payment for area of natural constraint and to which we refer to as LFAs, less favoured areas. The Commission has signalled that it would like to divert a proportion of direct payment funds in pillar 1 to areas of natural constraint, formerly less favoured areas. This would be in addition to disadvantaged area payments under the rural development programme. I would like this to be an optional proposal.

Rural development is known as pillar 2. The Commission's intention is that this will have a greater focus on competitiveness, innovation, climate change and the environment and that it would cover multi-annual programmes. The Commission is also pressing for greater coherence between the different EU funds and to ensure that all objectives line up with EU 2020 strategy priorities. All of this is acceptable, provided the various co-ordination mechanisms are streamlined and are simple to implement.

I have considerable misgivings about the level of bureaucracy that might be involved in some of these proposals. The priority for Ireland is to maintain support for on-farm investment in order to assist the restructuring that may be necessary to improve competitiveness. It is also a priority to ensure that the review of less favoured areas is acceptable and that there is a sufficiently broad menu of rural development measures to meet our needs.

Regarding market management mechanisms, aside from direct payments to farmers and targeted support under rural development programmes, it is very important to maintain the market stabilisation supports in place in the CAP of the future. I understand that the Commission's aim is the retention of intervention capacity and other supports as a safety net should there need to be a price floor. I agree with this policy. The dairy crisis in 2009 showed the value of market supports and we need to retain the possibility of bringing them into play if and when they are needed.

In summary, in light of our ambitions for the sector as set out in Food Harvest: Milestones for Success, the Government has a number of key priorities in these CAP negotiations which are to ensure that the negotiations on the next EU budget framework deliver a well- resourced CAP to support sustainable food production in the EU; to retain Ireland's funding both for direct payments and for rural development in any redistribution of CAP funds between member states; to obtain flexibility for member states with regard to payment models and transition arrangements for distribution of single payment funds to farmers; to ensure that rural development policy includes appropriate targeted measures to support competitiveness and sustainability; and finally,to keep CAP processes as simple and as effective as possible and to minimise unnecessary bureaucracy for farmers and costs to the State.

Since taking office, I have engaged actively with the Commission and the European Parliament to put Ireland's case. In particular, I have worked to build up alliances with like-minded member states to ensure a successful outcome for Ireland in these negotiations which will underpin the future development and prosperity of this vitally important sector. I am fully committed to continuing this work.

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