Seán Sherlock (Cork East, Labour)
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Question 10: To ask the Minister for Agriculture; Fisheries and Food his views on the three options outlined in the Common Agricultural Policy reform proposals communication recently published; and if he will make a statement on the matter. [45473/10]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I propose to take Question Nos. 10 and 11 together.

I must first underline some fundamental points that we should bear in mind in this CAP reform. Now, more than ever, we need to focus on ensuring security of supply of safe, high quality and sustainably produced food - at reasonable prices for our consumers, and with reasonable returns to our farmers and processors. In order to achieve this we will require a strong and adequately resourced CAP. I agree with the communication that "the CAP should remain a strong common policy, structured around its two pillars". However, I would caution that, to be meaningful, this will require appropriate resources and this must be reflected in the new financial framework.

Although three options for CAP reform are outlined in the recent Commission communication, it is clear that the main option under consideration is the second option for a better targeted and effective policy. I had the opportunity to give my first reaction to the communication at last Monday's meeting of the EU Council of Agriculture Ministers. This was the first step in what will be a lengthy process of negotiations. Over the coming months, we will discuss the communication in greater detail with a view to agreeing conclusions on the general orientation of policy for the CAP after 2013, before the legislative proposals, due next July, are framed. I will be participating actively in that process and I will continue to build up alliances among my colleagues in other member states to secure support for my position.

The communication is short on detail so I would reserve our position on many of the substantive issues until such time as detailed proposals are presented. Having said that, I welcome the commitment of the Commission to a strong CAP in the future and I subscribe to the three strategic aims that have been identified of ensuring security of food supply, sustainable management of natural resources and maintenance of viable rural areas. I also welcome the commitment to the continuation of decoupled direct payments, the maintenance of the current rural development themes and the retention and enhancement of market management measures, although I would have preferred to see more specific proposals to address the increase in market volatility.

The communication makes brief reference to the distribution of funds between member states under pillar 1 and pillar 2. I believe that Ireland's current share of these funds is entirely justifiable, and I will be defending this strongly in the negotiations.

The issue of payment models, that is, the distribution of funds between farmers within each member state, is an entirely separate matter. I favour allowing member states considerable flexibility in this area, as is currently the case. The agro-ecological and social conditions of farming vary hugely within the European Union, as does public perception of the role of agriculture in the economy. We should not, therefore, impose a "one size fits all" payment model on all member states.

With regard to the proposed "greening" of the direct payment, I am particularly concerned that we should not underplay or undervalue the substantial environmental public good already being delivered through the current cross compliance requirements. I welcome the commitment in the communication to simplification, but we must bear that issue in mind when discussing any further "greening" of the single payment.

I welcome the continued emphasis on competitiveness and sustainability in rural development policy. I note the increased focus on the environment, climate change and innovation and the suggestion to link investments to both economic and environmental performance. This is acceptable provided it is complementary to the investment necessary for restructuring and modernisation. It is vital that we use rural development measures to improve the competitiveness, as well as the sustainability, of our family farms. In addition, Ireland has a strong preference for retaining LFA payments in pillar 2.

The communication mentions the importance of targeting support towards active farmers. I agree in principle with this approach but I would wish to see further details of what is envisaged before taking a definitive position. I am also prepared to examine the introduction of upper ceilings for large-scale farms and a simplified direct payment system for small farms but I would need to see in more detail what precisely is being proposed. I would have no major objection to the retention of limited coupled support for specific regions, provided it falls within clearly defined limits.

I am open to exploring the proposal to introduce a new risk management toolbox and await further details with interest. For us it would be important that such a toolbox would have optional application in member states and would respect the wide diversity of production systems and farming throughout the EU.

Finally, I would emphasise that the communication is merely a first step in the formal negotiating process. There is a long way to go before we arrive at a conclusion of these negotiations. The negotiations will not be easy but I am determined to fight for the best possible outcome for Irish agriculture. Agriculture is our largest indigenous industry and we have much to gain from a successful outcome.

Seán Sherlock (Cork East, Labour)
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I welcome the Minister's response. It is one of those issues where we need a broad political consensus for the final outcome. I welcome the fact that the Minister is beginning to tie down the three options and is being specific about the second option. I also welcome his statement on payments and upper ceilings for larger farms. I acknowledge what the Minister is saying about potential capping and the need for further detail on that.

If Ireland is to go for the second option - I realise that it is early days in negotiations - and there is a basic rate envisaged in that for income support, how does the Minister envisage that this will work out in real terms?

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I thank Deputy Sherlock for his broad support for our approach to date. That was amplified very clearly at the joint committee meeting with the Commissioner. We are one of the few countries where the office of the Taoiseach, the Minister for Finance and the Minister for Agriculture, Fisheries and Food are all singing from the same hymn sheet.

The Deputy asked a question about capping and a ceiling on payments. There will be a strange group of people with like minded views in opposition to our views on that. I met the British Minister of State for Agriculture and Food, Mr. Paice, last Monday morning and we discussed this issue. The British are totally opposed to a capping measure, as are the eastern European countries, because they have different farm structures to our own, some of which is due to their history.

Members should focus clearly on a number of issues. Further simplification is required, even in advance of the CAP reform, as is flexibility. There is the question of the distribution of funds between member states and in that distribution, account must also be taken of the different costs of production and living between member states. Some arguments that are made, particularly by the 12 newly-acceded member states, do not stack up and Ireland has carried out plenty of research to back up our particular arguments.

Flexibility is also required. A concern I have regarding some of the matters contained in the Commission's communication is that they would be moving away from simplification. I believe measures such as the greening issue, tiered payments and so on all would mean additional bureaucracy.

Brendan Howlin (Wexford, Labour)
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I wish to allow supplementary questions.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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One must ensure the distribution of funds between member states and flexibility for distribution of funds within member states. The proposed model for direct payments is of crucial importance to Ireland, as is the need to retain investment measures for farm modernisation and for competitiveness.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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In response to Deputy Coonan's first question, I stated I would reserve my position in respect of the definition of active farmers but nothing else, regarding the CAP. Since the first Council meeting back in September 2008, Ireland has outlined strongly its position with regard to reform of the CAP. I stated this was in respect of active farmers and I am sure that were one to canvass the views of Members or farm organisations, there would be variations on the definition of active farmers. In addition, I have spoken of the need for flexibility for the different schemes within each member state. I probably also mentioned, while appearing before the joint committee, that I see a need to provide incentives to bring more young people into farming. In recent years, as additional milk quotas becoming available to Ireland, I have had in place a scheme whereby new entrants may obtain a mil quota. This was one of the first times that this has been done. The Department still is paying out substantial funds under the farm installation scheme and under the early retirement scheme. The latter scheme has been suspended for new entrants, which is the position at present.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I have outlined clearly the Government's position with regard to CAP reform.

Brendan Howlin (Wexford, Labour)
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I wish to facilitate questions from each Deputy.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Moreover, the Government is clear with regard to the success thus far of the CAP as it has been and major reform is not needed.

Seán Sherlock (Cork East, Labour)
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I acknowledge the Minister's response with regard to capping and to the United Kingdom's position. It is clear the British would be against a cap for reasons arising from their monarchy, the Queen's progeny and the amount of land they own. Consequently, this would stand to reason. However, I refer to the flexibility arrangements about which the Minister has spoken. Does he refer to flexibility in the sense that there would be an envelope for Ireland regarding the greening aspect, whereby Ireland would have a degree of flexibility as to how it could spend such funds? Alternatively, does he refer to a degree of flexibility for Ireland with regard to the overall envelope? The Minister should clear this up.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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First, I wish to ensure that it is a common policy but there should be flexibility within it. At any particular time, a sector or region could be under pressure. For example, in recent years the sheep sector has been identified by Members as being one that required assistance. Fortunately, the Department has been able to introduce a scheme this year to help that sector arrest the decline in flock numbers. However, I refer to a degree of flexibility that does not work against the common policy as such. In some of the larger countries, the French Minister in particular has spoken at length about this in respect of regions such as the Alps, some regions are regarded as geographic areas that need particular assistance and flexibility. Ireland may have a sector or geographic regions, such as parts of my native county and the west of Ireland in particular, that suffer a particular disadvantage. As Deputy Sherlock might expect, I disagreed with the British Minister with regard to his view about capping.

Seán Sherlock (Cork East, Labour)
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That is reassuring.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I also disagreed with the view on capping held by eastern European Ministers. The eastern European perspective is that a farm may have a large number of staff and that consideration should be taken of that point. However, on the greening issue, one could easily lose sight of the fact that cross-compliance is a highly important and worthwhile toolkit in maintaining the high environmental standards we have on our farms.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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The Government is not only outlining clearly its view on the Common Agricultural Policy. Deputy Coonan would have heard me express my views at the Joint Committee on Agriculture, Fisheries and Food. He would have heard me discuss this matter with Commissioner Ciolos as well. I have outlined clearly the Government's position, which I believe is shared by Members in general, and its policy regarding the need to have a properly-resourced and adequate CAP and to have two pillars. First, direct income support is needed to provide some income stability to farmers. In addition, better and stronger market support measures are required.

The market management measures, be they intervention, aids to public and private storage and export refunds, will be essential in the future. In addition, the Government has argued that payment under the less favoured areas, that we in general refer to as disadvantaged areas, should remain in pillar 2 and that direct income support should be in pillar 1. In addition, the Government has argued that the rural development policy under that subheading, which is of crucial importance to give some assistance to on-farm investments,-----

Brendan Howlin (Wexford, Labour)
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We have run well over time.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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----- from the point of view of ensuring sustainable agriculture production and making us more competitive, is necessary in the future. The Government has reiterated this point repeatedly and will not deviate from it.