Simon Coveney (Cork South Central, Fine Gael)

Deputy Healy referred to the sugar industry. I took a lot of sugar into the former factory in Mallow and I have a reasonably good practical and theoretical understanding of the industry. Nobody would like to see it re-emerge more than I would. However, I will not act on emotion. The industry needs to make sense commercially. The price of sugar internationally needs to remain at approximately €500 per tonne or more for it to be viable to produce and process sugar in Ireland. At the moment the price is well above €700 a tonne. The industry is more than viable at current sugar price levels.

There is a huge shortage of sugar because of a supply problem which is being exacerbated by a quota system in the EU. Over the summer two professional feasibility studies on reviving the sugar industry and building a sugar factory at a cost of between €350 million and €400 million were presented to me. A business plan was attached which outlined how those businesses could be successful,viableand commercial, based on growing sugar at a cost of approximately €40 per tonne. A lot of work is taking place. People have serious proposals and financial backing to try to make this happen.

My role is to try to ensure I provide the political leadership and policy route to allow people to re-enter the industry if they deem it viable to do so. We need to get rid of sugar quotas to allow Ireland to proceed on that basis because we currently have none. We were compensated to leave the current EU sugar regime which comes to an end in 2015. We will not get a quota before then. If the sugar quota regime is to be continued in Europe we need a slice of it at some stage after 2015 or failing that, an absence of a sugar quota to rebuild the industry if we choose to do so. The latter is the likely scenario.

The Commission's proposals yesterday were news to us because we expected the date to be 2016 but it is now 2015. There will be strong lobbying from member states which have large EU sugar quotas and are happy that prices are strong to keep sugar quotas in place in Europe until 2016 or, possibly, 2018. It will be an ongoing political debate. It is clear where I stand on the issue. I will be trying to get rid of sugar quotas as soon as possible for this country, which will allow us to realistically consider the commercial options of rebuilding the industry, something which would excite a lot of farmers in the south and south east of the country.

On the age profile of farmers, that only 7% of farmers are aged under 35 is totally unacceptable. If we are serious about food science and production and continuing to build our reputation as the best country in the world to produce quality, safe and sustainable food and the sustainable intensification of food production, which is what we need to be doing, we need young, educated, bright and ambitious people to put their energies into this sector. I will propose policies in the budget to try to promote and encourage the hand-over of land from one generation to a younger one for the reasons the Deputy outlined. Unfortunately, from a financial point of view we are more limited than we may have been in the past. One reason I have pushed the Commission hard on mandating countries to set 2% of their single farm payment moneys aside for young farmers is that I know we are limited in terms of the funds we can provide for that objective. Therefore, we wanted to try to do it through European funds. Most people would support that as a progressive step.

In response to Deputy Flanagan, I understand there are no implications for single farm payments related to turf cutting. I heard him raise the point before. I will double-check the position. My Department is not responsible for turf cutting; it is the responsibility of the Minister, Deputy Deenihan. The current proposal is that 30% of a single farm payment will require a farmer to do certain things. These include retaining permanent pasture on farms, in which there must be a 5% tolerance; having a crop diversification policy, for example if one is an arable farmer between 5% and 70% of the land needs to have three or more crops, something which will probably change over time; and having an ecological focus area, which means that 7% of land would have to be set aside to promote biodiversity.

The current proposal is likely to change substantially by the time we get a final deal. They are the only three greening proposals attached to the greening payment. It is important that people know that. There are a series of other sustainability, environmental and biodiversity issues which may factor into rural development funds, that is pillar 2 moneys, such as climate change. I support many of those issues, many of which will provide farmers with more opportunities than threats. The major concern for farmers in terms of single farm payments is the 30% figure which applies to greening and is far too large. A lot of what is asked of Irish farmers suits them, such as the permanent pasture element, because 80% of our land is used for this. There will be a lot of change in the greening proposals over the next year or so as we discuss them. Deputy Colreavy asked how I felt about a cap on the maximum payments and to be honest I find it ridiculous that anyone would get more than €300,000 in a single farm payment; it is indefensible. I agree with the principle of caps and the Commission is now proposing that once a person goes above €150,000, reductions will apply to the payment, starting at 20% and moving to 100%, meaning there will be no more payments after €300,000. I would have no problem with that reducing slightly. I am being told that cap will only affect between six and 12 people or companies in Ireland.

While I agree with the remarks on caps, this is not a major political issue for Ireland because it affects so few people. In principle, I support the Commission's stance but this is a potential bargaining chip for Ireland. We have huge political issues surrounding flexibility on the redistribution of single farm payment fund within the country so we should use all of our bargaining power to ensure we get the best deal possible on the most important element of these proposals, the flexibility issue. Rather than making a big stand on the cap issue, we will try to use it to secure the support of other countries on flexibility.

On a joint approach between the Six Counties and Twenty-six Counties, I hope I will be able to speak in a way that many farmers will be comfortable with. We share many of the same concerns with our colleagues in the North. I have developed a good relationship with the Minister for Agriculture and Rural Development in the North, Michelle O'Neill, and we will continue to discuss in detail how we can support each other as CAP negotiations move forward, and how we can help on milk quotas and the soft landing. We have checked if it is possible to transfer quota between North and South and it is not a runner at present. We will continue to examine all possibilities.

One of the interesting things in CAP this time is that outside of the CAP funds, there is a considerable chunk of money for research and innovation available to the food sector that was not available before. We can target research and development funds and innovation funds that are being made available by the Commission under a different category outside CAP that can be applied to the food sector and we should take advantage of it.

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