Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

My apologies for being a couple of minutes late. I am pleased to have the opportunity to address the House today on the Common Agricultural Policy reform proposals. Our debate is timely given that we are approaching a crucial juncture in the negotiations. The EU Council of Ministers will meet on Monday and Tuesday of next week with a view to adopting a comprehensive Council position on the proposed reforms.

The proposed reform of the CAP arises in the context of the revision of the EU multi-annual financial framework, MFF, for the EU budget for the coming years. This is a seven-year budget. The reform must be decided by full co-decision between the Ministers of the 27 member states in the Council and the European Parliament. The challenge for the current round of CAP reform is to deliver in good time a Common Agricultural Policy that is fit for purpose and coherent with the Europe 2020 strategy for recovery and growth, and that supports the twin goals of competitiveness and sustainability. Ireland seeks a policy that promotes sustainable intensification of production, environmental stewardship and a vibrant rural economy and that is consistent with our Food Harvest 2020 strategy.

As the current holder of the Presidency of the Council of the European Union, Ireland is at the centre of the negotiations. Good progress was made by previous Presidencies on technical issues, with the result that there were some 30 issues outstanding when Ireland took over the Presidency last January. In parallel, the European Parliament has made substantial progress on the dossier. The agriculture and rural development committee of the EU Parliament voted on its amendments in January and the Parliament's position was confirmed yesterday in plenary session.

My aim is to finalise the Council position and negotiating mandate by the end of March, leading to inter-institutional trilogues with the aim of overall political agreement by the end of June. A significant step forward in this process was achieved on 8 February 2013 when the European Council reached agreement on the EU budget for the next seven years. Subject to the consent of the European Parliament, the agreement provides the necessary clarity on agricultural funding that will allow completion of the negotiations on CAP reform. I hope this occurs under our Presidency.

The agreement was generally positive from a CAP perspective. The CAP will continue to account for almost 39% of the overall budget in year one. It incurred a cut of 3% compared to the Commission's original proposals, whereas the total EU budget was cut by 7%. This represented a good negotiating outcome in the face of significant pressure from several sources for a higher cut to CAP expenditure. Ireland has secured €1.5 billion per year for agriculture, or €11 billion over the seven-year period of the CAP.

Another crucial issue in the MFF agreement is the distribution of CAP funds between member states. The formula agreed by the Heads of State and Government for the distribution of direct payment funds, or Pillar 1 funds as farmers know them, between member states had originally been proposed by Ireland and resulted in a relatively favourable outcome for the country. The result is that the level of direct payments made to Irish farmers has been largely protected by maintenance of our direct payments ceiling at over €1.2 billion per year, with a relatively small reduction to accommodate new member states and because of the overall cut in the budget.

Now that the EU budget has been decided, although it has still to be confirmed by the European Parliament, the main issue for many member states, including Ireland, is the distribution of direct payments among farmers and the attendant rules and regulations. The Commission has proposed moving to a flat-rate payment system. In the case of several member states, including Ireland, this would result in a significant transfer of funds among farmers. I believe there is a need for redistribution but I am seriously concerned that moving to a flat rate, as proposed, would be harmful for the Irish agricultural sector as a whole and certainly for the Food Harvest 2020 strategy. Some member states, especially the newer member states, are seeking alternative solutions, while others, including Germany, are satisfied with the flat-rate proposal.

The February Agriculture and Fisheries Council meeting broadly endorsed a package of measures which I tabled, aimed at achieving a compromise on this rather difficult issue. The package included an option to take a more flexible approach to distribution, the so-called approximation model favoured by Ireland. This would result in a less radical level of redistribution between individual farmers, moving gradually towards, but certainly not all the way to, a flat-rate payment for everyone. It also included a redistributive payment as an additional option for member states. This is essentially a top-up payment for the first number of hectares.

The reality is that Ireland is facing two sets of demands on this issue. On the one hand, there are farmers on low payments per hectare who are arguing for a larger share of the available funding on the grounds of equity and fairness, and on the other hand there are farmers on high payments per hectare who have invested single farm payment funds in improving the productive capacity of their farms and have no wish to move back from this position. They have earned these entitlements over time. Both sets of demands are understandable and reasonable, but they are difficult to reconcile. We need a solution that is fair to everyone and that will represent a real move away from historical payments - such payments seriously disadvantage some farmers - but that avoids unreasonably large cuts to those on higher payments. This is why I have put forward the approximation model, which would give member states such as Ireland the flexibility to do that.

Under the Commission proposal, we have estimated, using our 2010 database, that €280 million would be transferred between farmers. Under the Irish proposal, a minimum of €74 million would be transferred, with flexibility to transfer more if we wished to do so. The key will be reaching a fair compromise which levels the playing field without putting productive farmers out of business. As is the case with any negotiation, the final position will be somewhere between my approach and that of the Commission. I am fighting to ensure that the best possible outcome for all farmers is reached in a balanced and fair way.

A second major issue for member states is the Commission's proposal on greening the CAP. There is broad support for the Commission's approach of adopting three basic greening criteria. However, member states have a range of views on how the proposal should be implemented. We in Ireland have our own particular issues that need to be resolved. These include our desire to make the greening payment a percentage of a farmer's overall payment rather than a flat rate and the need to adjust the three criteria to suit Irish farming conditions. We have tabled proposals aimed at dealing with all of the concerns expressed and the compromise proposals have received support from member states. A number of issues which remain outstanding mainly arise from the concerns expressed by individual member states about some of the detailed aspects. I hope these can be sorted out at next week's Council with a view to obtaining a full Council position.

In essence, our proposals on greening retain the three greening criteria proposed by the Commission, namely, crop diversification, maintenance of permanent grassland and establishment of ecological focus areas. However, we have built additional flexibility into the proposals in a number of ways. For example, we are proposing that member states may elect to apply the obligation to maintain permanent grassland at regional or national level. This makes perfect sense in a member state such as Ireland which is dominated by grassland. We are proposing progressive implementation of the crop diversification requirements in order that small holdings under 10 ha would not be bound by these requirements and that a two crop obligation would apply to farms between 10 and 30 ha, with three crops required above that level. We are also proposing a graduated approach to ecological focus areas, starting with a 3% requirement in 2015 that would gradually be increased to 5% in 2016 and, depending on the outcome of a review, 7% in 2017 and beyond. We are also proposing to increase the scope of what is deemed to constitute an ecological focus area to ensure the land would be productive as long as it had a positive value from an ecological point of view such as carbon fixing in the soil. In addition, we are proposing that farmers might be excused from applying the three greening criteria provided they undertook certain agri-environmental measures deemed to be equivalent. Our purpose in providing this additional flexibility is to ensure greening the CAP would provide added value in terms of benefits to the environment, while at the same time was workable and practical for farmers and administrators alike. Where good ideas have emerged in the European Parliament, we have taken them on board in our proposals to the Council.

A number of other complex, difficult and potentially divisive issues are included in the compromise proposals and will be put to Ministers next Monday and Tuesday. These concern matters such as supply management measures in the sugar and wine sectors; the future of market support measures; the status of producer organisations; the designation of less favoured areas which are now to be known as areas of natural constraint; the future of the single area payment scheme operated in new member states; and the extent to which coupled payments will be allowed in the reformed CAP. I aim to reach agreement on all these issues in the Council of Ministers in order that we can proceed to the next phase of negotiations with the Commission and the Parliament. I am focused on achieving an agreement during the Irish Presidency that will be of long-term benefit to Irish and European agriculture. From my point of view, this exercise is about protecting family farms, supporting productive agriculture and the ambition of the Food Harvest 2020 plan, fair distribution of direct payments for all farmers, maintaining rural development funds to support vulnerable sectors, while also incentivising innovation and competitiveness, and the sustainable, safe and traceable production of increasing volumes food. This CAP reform needs to protect agriculture and the agrifood industry as the most important contributors the economy and reaffirm their status as the heartbeat of rural Ireland.

See this speech in context