Simon Coveney (Cork South Central, Fine Gael)

Yesterday, the European Commission published its reform proposals for the Common Agricultural Policy. These proposals are complex and detailed requiring time to digest them in full. There are also points of detail on which clarification will be required. Accordingly, my speech today is my initial reaction. At this stage, these are proposals only, not final texts. Negotiations will take place at political and technical level over the next year or more. It is highly likely the current texts will be significantly altered before final agreement is reached.

I already gave the House an outline of the Government's priorities in the CAP reform process in September. Today, I will present the Government's initial comments on the formal legal proposals and will elaborate on any points raised in this debate during the question-and-answer session.

The Commission's texts to hand do not contain too many surprises and there are good points, as well as difficulties in them. The parallel proposal on the multi-annual financial framework for the next EU budget, presented by the Commission last June, retains the current level of CAP funding at least. This is a good starting point in the negotiations as it compares favourably with the pressure for severe cuts to the CAP from certain elements of the Commission, as well as a good number of member states, earlier this year.

As to the distribution of funds between member states, I am pleased the Commission has adopted the pragmatic approach in respect of direct income supports, one advocated by Ireland for some time. We strongly advocated this issue should be examined on the basis of each member state's average payment per hectare of eligible area. I am pleased the Commission has adopted this approach, which Ireland was initially alone in proposing. The net result, on current figures, is a relatively small reduction in our national ceiling for direct payments from €1.255 billion to €1.236 billion in 2017 and subsequently. The results would have been very negative for Ireland if another measurement, utilised agricultural area, had been used as the basis of the calculation, as was the Commission's original intention. We will be subjecting the calculations to detailed scrutiny in the negotiations and will continue to seek to maximise our position.

I would have preferred if the Commission had also adopted this approach for the distribution of pillar 1 and pillar 2 funds. However, the Commission's proposals indicate it will make a separate proposal on rural development - pillar 2 - funding on objective criteria and past performance. It is clear from the impact analysis that such a proposal could threaten our rural development funding depending on the precise criteria used. I note, however, the Commission has said there will be a small change in the distribution of rural development national envelopes.

I am determined to retain our rural development funding. This will, to some extent, be facilitated by the fact the Commission has chosen to analyse the distribution of pillar 2 funds on the basis of funding per hectare of pillar 1 eligible area. Again, this was advocated by Ireland as it demonstrates that our allocation per hectare is below the EU average. This provides a useful argument to deploy in defence of our rural development funds, as does our good past performance in using these funds.

The Commission is proposing the current single payment scheme will be replaced by a new payment model made up of several different elements and moving eventually to a uniform national or regional rate of payment. The proposals envisage the individual historic reference will be replaced by a model based on regional or national averages. A target date of 2019 has been set for achieving a uniform value of all basic payment entitlements in a member state or region of a member state.

I acknowledge there is little support among other member states for the retention of the historic model as used by Ireland. In those circumstances, my priority will be 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.

I will also be seeking appropriate transitional arrangements, as I am not happy with the front-loaded transition process in the Commission's proposals. When I discussed this issue recently with my French ministerial colleague, Bruno Le Marie, we agreed on the need for such flexibility for member states in both payment models and transition arrangements. I believe we can get good support at the Council and European Parliament for a reasonable level of flexibility for member states, including a longer and slower transition than envisaged by the Commission. This will be a major focus of the negotiations over the next two years.

My Department has already engaged with stakeholders on this issue and will now intensify consultations on appropriate payment models for Ireland. We need to examine all possibilities with an open mind to determine what is best to support family farm structures and our ambitions for the sector as set out in Food Harvest 2020.

There has been much speculation in the media recently about the use of 2014 as a reference year for the establishment of entitlements. Under the proposal, new payment entitlements will be allocated in 2014 to active farmers who used at least one payment entitlement in 2011. The inclusion of this proposal is as a result of lobbying by Ireland and other member states. Entitlements will be established for the farmer who declares the land in 2014 and will be based on the eligible area declared by the farmer for that year.

There is concern the proposals could lead to land market distortions and would not be in the best interests of productive farmers. I have conveyed these views to the Commission and will continue to press this point. The proposals already contain some changes from what was in earlier drafts because of Irish pressure.

The provisions surrounding establishment of entitlements are complex, requiring a great deal of clarification. Moreover, it is likely they will be altered significantly during the course of the negotiations. Against that background, I would strongly urge farmers not to prejudge the situation or rush into decisions which they may later regret.

As expected, the Commission has proposed 30% of the national ceiling be set aside for greening, a new payment per hectare payable to farmers for following agricultural practices beneficial to the climate and the environment. The Government supports the idea of encouraging sustainable forms of agriculture which is at the heart of the Food Harvest 2020 strategy. However, I have considerable difficulty with the proposals as they stand. The existence of a separate greening measure will complicate our existing single payment scheme and hasten the movement towards uniform national or regional payment rates. I am aware that the CAP already delivers considerable greening. To avoid excessive bureaucracy, we should consider alternative approaches which achieve the same ends but with less red tape. I would also take issue with some aspects of the three greening criteria proposed but these can be discussed in more detail later.

As a result of Irish lobbying, there has been a positive development in terms of prioritising young farmers. I welcome the proposal, which mandates member states to use up to 2% of the national ceiling to make top-up payments to young farmers for a five-year period while they are under 40 years of age. This is a proposal that Ireland was particularly active in pressing with the Commission. We are all aware that there is a need to improve the age structure of our agricultural work force and to support well educated young farmers who will be the platform for further innovation and growth in the sector. It is sensible to provide support for young farmers in pillars 1 and 2 of the CAP.

I look forward to Deputies' comments and I will try to be as open as I can when answering.

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