Seán Kyne (Galway West, Fine Gael)

I am pleased to have this opportunity to speak on this very important topic, namely, our indigenous industry of agriculture. Many are employed in the sector. It is an export industry and much of the profits are retained in the State. It is very important in a recession that we have a star sector, such as agriculture, and we hope to see it shining brighter and brighter over the coming years.

We are in the process of negotiating the CAP reform with the European Commission. The most important issue that arises at present relates to the future of the single farm payment entitlement. The entitlement was based on food production by farmers. In considering this, it is important that we acknowledge the paramount importance of our beef herd and suckler cows. The suckler cow number peaked at 1.2 million in 2005 and this coincided with the first year of decoupling. Since then we have seen a gradual reduction in the suckler cow number, which is worrying. Some attempts were made by the last Government to combat the reduction through the introduction of the suckler welfare payment of €80. Unfortunately, this was halved to €40. The €80 payment was to halt the reduction in the suckler herd number and return some confidence to the industry. With the halving of the payment, that confidence was reduced again. Thankfully, this trend reversed slightly in 2010, perhaps due to a number of circumstances, including the reduction in the number of part-time farmers working in the construction industry. Farmers now have more time to spend on their farms and, therefore, may be returning to suckler cow farming.

We will have a huge challenge and opportunity from 2015 with the removal of quotas. This will lead to an expansion of the dairy herd, resulting in added value in the dairy sector. Milk powders, cheese, infant formula and such products will be considerably important to our export industry. The current status of the agri-food sector represents a good news story. While this is all very positive for the dairy herd and will result in an increase in by-products, such as beef cattle, it is important that we ensure during the period of expansion in the dairy herd that the suckler herd is not downgraded.

Consider the statistic that the output of a suckler cow amounts to €1,000, which may be a conservative figure. We have seen the herd number drop from 1.2 million to less than 900,000, a reduction of 300,000. This has a knock-on effect on the economy and exports and we must ensure the trend is reversed as much as possible.

I welcome the Minister's comment that member states will have flexibility to determine the direct payment system best suited to themselves, rather than having one system imposed on all countries. There are negotiations on this and there will be divisions within this country. There will even be divisions within the IFA on what is best for farmers.

Coming from Connemara, I realise the disadvantaged area payments are very important to the farming community. It is also very important that a basic rate of payment be maintained for the farmers and that there be a proper compensation mechanism for farmers whose farms are designated as SPAs, SACs and NHAs. The REP scheme was very lucrative and it was closed to new entrants after 2009. The agri-environmental options scheme, AEOS, was introduced, but many farmers feel it is not adequate for these areas. It is very important that next year's budget puts in place an AEOS scheme for these areas which are designated in Connemara and along the west coast. I urge the Minister to ensure that Natura and designated areas are looked after in the next budget by ensuring an AEOS scheme exists for them.

I also wish to speak about areas of restriction such as the Twelve Bens in Connemara, and I note the Minister for Arts, Heritage and Gaeltacht Affairs, Deputy Deenihan, is listening intently to this debate. Farmers in these areas have had restrictions imposed on them and have reduced their stock numbers. It is important that these restrictions are ended and that the farmers are allowed to expand their flocks.

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