Michael Moynihan (Cork North West, Fianna Fail)
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I move:

That Dáil Éireann:

- notes that recent proposals being discussed on the Common Agricultural Policy (CAP) reform will have a detrimental impact on Ireland's agricultural sector and that the suggested introduction of a Single Farm Payment will cost thousands of jobs and decimate agricultural production by up to 30%; and

- calls on the Government to immediately publish its proposals and position in relation to these matters.

I welcome the opportunity to speak on this motion which is one of the most important issues facing the agricultural sector and the entire economy. As has been noted right across the spectrum of the agricultural industry the targets are set out in the visionary document Food Harvest 2020. During the quiet month of August documentation was leaked from the EU to ascertain the response.

Before going into the detail of that documentation we must look at what the Common Agricultural Policy has achieved for agriculture and the primary producers in Ireland since 1973 and for Europe. It has been the backbone of the EU and certainly the backbone of the Irish agricultural industry. It is hugely important in any negotiations that take place in regard to the Common Agricultural Policy that we put them high on the agenda. We put them extremely high on the Government's agenda and on the agenda of this House because the whole essence of the Common Agricultural Policy is to ensure food security.

During the past 25 years, following our accession to the Common Market and subsequent decisions, food mountains and so on, we have witnessed the importance of the Common Agricultural Policy to maintain a vibrant agricultural industry and food security. It is clear that if we do not have a comprehensive Common Agricultural Policy we will not have food security or top quality produce on the supermarket shelves throughout the EU. Last year food exports increased by 11% to more €8 billion. The Government's target is to grow that figure under Food Harvest 2020 by €20 billion by 2020.

The various discussions that have taken place at European and Irish levels have benefited the export industry. However, post-2013, it appears the Minister will be chairing the talks on the conclusion of the Common Agricultural Policy and the decisions that will be taken. There is a need to ensure that the less well-off regions as well as the better regions of Ireland are properly safeguarded. We have had a system of historical payments, based on the reference years 2000, 2001 and 2002, which by and large have served us well and brought a large amount of direct transfer payments from the EU into Ireland and the agricultural sector. To an extent, this has allowed for certain planning at farm gate level in respect of decisions for the period.

Post 2013 and 2014, we have witnessed a tightening of the agricultural budget although the figure is more or less the same. We need to look at all aspects of what can be achieved in the food industry. Through better regulation we now produce some of the best quality food in the world. Farmers, the primary producers, have worked through a huge burden of bureaucracy. Comments from the agricultural sector on the bailout make it clear that we have complied with strict EU and Department of Agriculture, Fisheries and Food rules in recent years. It has paid off given that we have high quality produce that we can sell anywhere in the world.

In recent addresses the Minister has made it clear that the Dairy Board and all in the industry are gearing up for the emerging markets outside the EU, markets considered to be buoyant and those that are moving forward. While we must ensure we have a Common Agricultural Policy that rewards farmers, the primary producers, who are willing to produce a product that can be exported, agriculture is an export-led section of the economy which greatly enhances our national economy.

It is clear there are fears at farm gate level arising from the EU leaked documents. There is also a suggestion that the leaked documents will form part of the legislative proposals due later in the year. What I seek through this motion, and I thank my colleagues for allowing me to table it so early in the term, is to show how serious we are about agriculture. We would like to see the Department, the Minister and the Government's discussions built up and maintained. Prior to decoupling, there was a great deal of activity at farm gate level to find a way to gain an advantage from what was being introduced. Since August, people have been discussing leasing and so forth to try to ensure they can take advantage of the proposals when they come. This will cause confusion and uncertainty. Instead, we should ensure that the volume of direct transfer payments to Ireland in recent years be maintained, as doing so would be vital for our food and agriculture industries.

I will revert to the importance of CAP, but it would be remiss of me not to mention one of the most serious issues facing agriculture at the farm gate level, one that ties into decisions made at EU level, namely, the milk quota. A serious situation is affecting many dairy producers. While I am trying to refrain from making outlandish claims, it is troubling that two Teagasc publications, one in the last week of August and another in the first week of September, advised farmers how to stay within quota despite the fact there were still four, five or six months of milk production remaining. Making sense of this is difficult. In respect of many issues, we are tied by the EU-IMF agreement and required to become more competitive, seek export-led growth and so forth. Given the developments of the past ten to 15 years, it is important that we apply common sense. The majority of the milk produced is used in various products that are being exported outside the EU. We should give this matter serious consideration, given how the situation affects dairy farmers in particular.

Various documentation from official bodies and elsewhere has advised people to engage in cow leasing arrangements with farmers in the North who are working under the UK's regime and, as such, are 20% under quota. This makes no sense, particularly given how we have grown closer politically since the Good Friday Agreement. We share a land border with the UK, which is 20% under quota. Farmers are drying off pedigree stock and making decisions at farm gate level that will have a detrimental effect in terms of, for example, putting back calving times and so forth. According to best practice, what the training bodies are advising is a bad move. Farmers are making decisions to try to live within their quotas until 2015. In 2009 and early 2010, the national quota had not been reached in some time. The assumption was that it would not be reached.

This is a serious issue. Next week, there will be meetings in Brussels. Will the Minister prioritise this issue and seek a derogation? Europe is under quota and Ireland, a small island off its coast, is significantly over quota. Farmers are producing something that is exported outside the EU and is needed in the global market. It would help to increase our balance of payments. This makes economic sense in every way. The House and every part of the agricultural sector need to consider and address this matter in a commonsensical manner. The current situation is farcical.

In recent weeks, many dairy farmers who invested significant amounts have contacted me. They had been informed by their milk processors, co-ops and so on that they would not receive milk cheques between now and May 2012. These farmers have commitments to their banks, staff, contractors and suppliers and are drying off cows. Glanbia, people in better farmland and so on are drying cows off in the middle of July. This makes no sense. Will the Minister take this serious issue on board? No more than the Mulder quota, were it challenged under the Single European Act or other treaties, it would not stand. Producing milk would help us in our economic plight. We should explore the matter collectively.

Simon Coveney (Cork South Central, Fine Gael)
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We are doing that.

Michael Moynihan (Cork North West, Fianna Fail)
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I will set this matter to one side. I feel strongly about it and I hope the Minister will reply to the points I have raised. The quota is vital.

During the summer, Deputies were contacted by people asking whether there was a way of putting excess milk quota into a product. For example, since farmers were not going to get paid for it, could it be used in relief products? This matter relates to the quota's essence, namely, interference in markets. We were asked whether products could be exported to Somalia and so forth. As the Minister knows only too well, though, the EU tied this idea down in knots.

Simon Coveney (Cork South Central, Fine Gael)
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The previous Government signed up to the milk health check, which we are operating under.

Michael Moynihan (Cork North West, Fianna Fail)
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Yes. However, there are serious issues with the check.

Simon Coveney (Cork South Central, Fine Gael)
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As the Deputy is aware, we are working on them.

Michael Moynihan (Cork North West, Fianna Fail)
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We need to work on them. If the constant reply is to be "The previous Government signed up to it", why have an election? The issues are on the Government's desk. This is a desperate plight for dairy farmers. Regarding CAP, the expert advice is to gear up for post-2015 milk quotas. Our competitors abroad have the capacity to gear up because they are starting from low bases and their farmers will be in a better position to take the benefits post-2015, yet we are being held back. As the Minister knows, the best dairy farmers in Ireland are being held back. They are making decisions at farm gate level that are not acceptable and are not good practice, but they must make them to avoid a super levy.

The essence of the motion is the importance of CAP to every part of the farming sector. We must ensure that the direct payments agreed under the last health check will continue. Among the farming community, there is a concern regarding the documents leaked in August, a slow time in Brussels, namely, that the EU might be trying to pull back on something. Following the introduction of legislative proposals in the next month or six weeks, the period of discussion up to and including 2012 and the final decision being taken in early 2013, it will behove us all, in particular the Minister, to be able to say that the best deal for Irish agriculture was attained. We must ensure that the primary producer gets the best out of the deal. The statistics that are always used against CAP and farmers are to the effect that individuals are getting €500,000 and that the greatest benefactors are wealthy aristocrats in Europe. We must ensure that the money is given to the producer at the farm gate.

The agriculture team on this side of the Houses - Deputies Browne and Kirk, Senator Ó Domhnaill and I - visited Brussels in June and will have further discussions on the issues concerning CAP and the milk quota as we see them. When the negotiations conclude, a cap should be placed to ensure some people do not benefit significantly. The figure constantly trotted out is that 20% of farmers are receiving 80% of the payments. This is no longer acceptable and we must examine it. We have a year and a half before the negotiations will be signed off. We must start now and ensure these are the issues that are brought to the fore.

I commend the motion to the House. I ask the Minister to take our views on the CAP very seriously. I ask him earnestly to ensure that, at the meetings next Tuesday, the issue of milk quotas and the plight of the best milk producers in the country will be addressed adequately and that common sense will apply. We have seen regulations coming from the European Union from time to time in respect of which the common sense was not the best. We have a product that is needed and saleable in the European Union and the world market. We now need to address the issues I have raised in a very serious and compelling way. I commend the motion to the House.

John Browne (Wexford, Fianna Fail)
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I support the motion tabled by Deputy Michael Moynihan. It affords me an opportunity to say a few words on the CAP and the various areas of agriculture. Over the past year, farm incomes have increased reasonably. Farmers had a few bad years but they generally recognise that, over the past year, incomes have increased and that they are now in a better position than they were. Prices for various products have improved. As the Minister will be aware, many young farmers now want to stay on the land, perhaps because of the changes in the economic climate and building industry. This is a welcome boost for farming and the production of food generally. Over recent years, particularly this one, we have seen a dramatic increase in the number of young farmers who want a qualification in agriculture.

I appreciate the support of the Minister for those in Wexford in ensuring a programme is up and running through Teagasc. Perhaps it is not the type of programme we envisaged at the start - it was intended that it would be run in a vocational school - but at least a course is now available following the intervention of the Minister and discussions with Teagasc. I thank the Minister for his intervention. I hope such courses will expand and that vocational colleges, other second level schools and third level schools, rather than just Teagasc colleges, will be able to run them. It is important that the system be opened up. I certainly welcome the course for Wexford.

Irish farmers are renowned internationally as food producers. They have constantly adapted to the changing demands of consumers. As a green island, Ireland produces food in a very environmentally friendly way and this ensures the existence of tremendous opportunities for farmers to sell their internationally renowned food products in Europe and farther afield. Having listened to the Minister a number of times on radio and television, I note he is very committed to implementing the measures under Harvest 2020. I hope this will ensure the existence of other opportunities for farmers.

Coming from Wexford and being familiar with Cork, from which the Minister comes and which has been regarded as the home of agriculture and one of the main food-producing counties, it is important to recognise the role farmers are playing not only in conventional farming but also in other types of farming. In my neck of the woods, there is strawberry-growing and cheesemaking. Many alternative products are being produced by farmers and this is the way to go for the future. I hope the Minister will encourage such developments. Strawberry-growing, for example, now extends from April until October or November. There are fewer producers but a longer season. I was at a function last week at which it was stated that Tesco is now, for the first time in many years, purchasing Wexford strawberries. It had not been buying them for a number of years. The change in this regard is welcome.

On CAP reform, Deputy Moynihan and I visited Brussels before the summer and met some senior officials there. They were rather secretive in many ways about what was to be included in the proposals for the CAP. However, we received the leaked CAP proposals for the period after 2013. They have caused some concern among farm organisations, the IFA in particular. In recent weeks, the latter has been in touch with all politicians expressing its concerns over the content of the leaked document. Perhaps the Minister will clear up today some of the concerns of farmers over the leaked document. I wonder whether the Commissioner leaked the document on purpose to obtain a reaction from EU member states and the Ministers. The Irish Minister will be in Brussels next week and I am sure he will be teasing out some of the issues about which farmers are concerned.

From discussions with officials, I noted they certainly implied there would be some minimal changes and perhaps some dramatic ones also. They referred to "greening". Farmers must engage in a certain amount of greening but if one accounted for the manner in which Irish farmers produce their produce, mainly through a grass-based system in an environmentally friendly way, one would not be so sure that a major budgetary allocation for greening would be of any advantage to them. The farm organisations have raised the apparent major emphasis on greening with me and I am sure they have done so with other Members.

The leaked document refers to the single farm payment, the rural development programme and the emergency market support measures. The finalised proposals, which will require EU Commission approval, will be published in October 2011. Key elements of the leaked documents include the change to the single farm payment. The national envelope will be divided into a number of elements, which may include a basic payment, compulsory greening, with an associated figure of 30%, a voluntary payment, voluntary coupled payments for vulnerable sectors, a payment for young farmers, amounting to 2%, and a national reserve figure of 3%. Perhaps the Minister will talk us through this in his reply and outline what other areas he has discussed with his EU counterparts in recent weeks.

The timeline refers to the years 2011, 2012, 2013 and 2014. The one benefit of this is that our Minister will be at the table throughout all the discussions. He will probably be very much to the forefront when we hold the Presidency. I am sure he will ensure Irish farmers are well protected. I appreciate there is and will be a difficulty with the finances. There are not only financial difficulties in Ireland but also throughout the European Union. Therefore, the Minister will not receive everything he is looking for but I am sure he will be fighting to ensure Irish farmers will be well protected on foot of any changes that occur on the implementation of CAP proposals.

We have been listening to debates on changes to the CAP since the MacSharry proposals. I suppose the next deal we will be talking about will be that of the Minister, Deputy Coveney. Farmers will be able to look back on his proposals in years to come, as they do on the MacSharry proposals, and say he did a good job for Ireland.

We have heard various farm organisations saying in recent weeks that the way to surmount some of Ireland's present difficulties is through the agriculture sector. Coming from an agricultural county, I believe there is a tremendous opportunity for the sector to expand, develop and enter other areas of production.

Deputy Moynihan touched on milk production. I know the Minister's hands are tied on this issue but because of the situation in 2009 and 2010 when there was not an overproduction of milk, farmers in Wexford and, I am sure, in other counties continued to produce milk this year. Now, they find they are over quota and this is causing severe problems. I have met small farmers who continue to produce milk for Wexford Creamery but who will not have cheque payments for the coming months. It is ridiculous that Europe and the United Kingdom are under quota but Ireland is over quota. I do not know how the Minister will work a miracle on this to have the quota considered a European one rather than an Irish one.

These farmers need help and support. They did not receive much help or support from Teagasc or the milk companies in recent months. Now, they are being warned that they must pull back, cull or milk once a day. They should have been receiving advice on this issue as far back as last Christmas but they were not well advised at that time. I appeal to the Minister to do what he can at EU level to ensure such farmers are not penalised to the extent they will be. Not alone will they be penalised by not being able to produce milk for the rest of the year but they will not have any income and they will find it very difficult to support their families. This is a major issue. It has landed on the Minister's desk and I have every faith that he will do his best.

This week, I read an article in the Teagasc magazine, Today's Farm, with the headline, "Quota Alert". What is suggested in the article would not be helpful to farmers. Teagasc should have been more proactive in helping and supporting farmers and in making them aware of the difficulties that may be coming down the line. In 2009 and 2010 this problem did not exist and farmers did not expect to have it in 2011. Unfortunately, it is with us. I support the motion tabled by Deputy Moynihan and I have every faith that the Minister will be at the coalface in the coming years ensuring Irish farmers and farm products will be well protected.

Timmy Dooley (Clare, Fianna Fail)
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I welcome the opportunity to contribute to the debate. I thank our spokesperson on agriculture, Deputy Moynihan, for tabling the motion. Those not involved in the agricultural sector might be confused, and because agriculture seems to be doing well at present and farmers have had a relatively good year they might suggest it is unusual for us to discuss it in the House. In the past, many of the discussions in the House took place after the horse had bolted, and it is appropriate that we take a long-term view on this issue, recognising the significant and serious pitfalls that lie ahead for the sector, and address it in an open and frank way. We should try to do so in as non-partisan a way as possible with agreement in the House, when we do not have thousands of farmers protesting outside the gate with an imminent crisis on our doorstep. Therefore, I welcome the approach taken.

Agriculture is and always has been a major plank of our economy with regard to output, employment and exports. It has faced many challenges over the years and the stakeholders have shown great resolve, innovation and capacity to change and to remain relevant, competitive and sustainable. This includes farmers, processors and all those involved in the agricultural sector. It is also important to recognise the tremendous work done by farm representative bodies. They have been to the forefront in raising local, national and international issues. They have shown a great capacity to understand the workings of the Commission and the important role Europe place in the sector. They have identified some of the major challenges and sought to resolve them domestically and internationally.

The president of the IFA, Mr. John Bryan, led an exceptionally important campaign to level the playing pitch for Irish beef against South American imports. It was one of the highlights of the organisation's work. I do not want to single out any one organisation; others have been very strong advocates on behalf of the farming community at times when it did not seem popular or relevant to some. It is their work, together with the stakeholders, that has brought agriculture back to the fore. For some years, agriculture has been put to one side and recognition was not given to its employment capacity and the major stake it has played in our economy.

I will now turn to the issue at hand and the concerns raised about the proposed changes to the CAP, in particular the position taken by the Commission on the greening effect. Farmers have modernised their business and are compliant in many ways. It seems ludicrous that payments will be connected with a new requirement or necessity to get involved in a further greening process. To some extent, we need to call a halt to this over-regulation. The farming sector is over-regulated and is well-policed across the board. Previously, we dealt with the matter of who would ultimately manage the nitrates directive and whether it would be the Department with responsibility for the environment or local authorities. If we return to this type of process it will take away from the capacity of the farming sector to play an exceptionally important role in the regeneration of our economy. If unnecessary boundaries or false ceilings are put in place merely for the sake of greater regulation, it will spancel the capacity of a productive sector in our economy to flourish and thrive and meet the needs of our society.

We speak daily about the need to create jobs and the farming sector can do this. The Food Harvest 2020 programme sets out an agenda for a thriving indigenous sector. We spend much time speaking about foreign direct investment, which is a hugely important part of our economy. If Intel or Microsoft suggested to us that we need to examine or be careful about regulation we would take it seriously. The farming sector has a far greater impact on our economy than any of the multinationals and we must take very seriously its concerns with regard to our negotiating position on this subject. I appeal to the Minister, and I have every confidence in him and his team, to find a workable solution which allows the sector to play an important role in the regeneration of our economy.

Deputies Moynihan and Browne have already spoken about the significant and serious issue with regard to the quota regime. While quotas will no longer exist from next year, it seems ludicrous that while other areas are 10% below quota we are over quota and will be penalised. Farmers will be drying off cows, selling pedigree herds and reducing their capacity and output at a time when the country needs it for our balance of payments, as it will not be subsumed into our economy but will predominantly affect exports and value-added jobs in processing.

I appeal to the Minister to use whatever leverage and muscle he has in Europe. Some seek to suggest that because of other issues Europe may not look favourably on us. It has looked favourably on us with regard to other matters, including today when the interest rate for the facility provided by the Commission has, without any great effort on our behalf, been reduced. This is significant and a recognition by some that we need appropriate assistance. We should make our approach with regard to the quotas as a plank in our capacity to trade our way out of this. We are not calling with the begging bowl; we are seeking fair play and a little bit of a push, particularly in this sector and we will work our way out of it. I ask the Minister to bring the matter forward as quickly as possible in whatever way he can so that next year farmers will not be challenged by trying to re-establish their herds and output as quotas are lifted. I look forward to working with him and his colleagues in this regard.

Simon Coveney (Cork South Central, Fine Gael)
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I am sharing time with Deputies O'Mahony, Heydon, Barry and McFadden.

Michael Kitt (Galway East, Fianna Fail)
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Is that agreed? Agreed.

Simon Coveney (Cork South Central, Fine Gael)
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I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"— recognises the importance of the agriculture and food sector as a driver for economic recovery and export led growth;

— notes the commitment of Government to the Food Harvest 2020 strategy and the progress in 2011 towards implementation of the targets as set out in the Food Harvest: Milestones for Success document published in July, 2011;

— endorses the clearly articulated policy of Government to date in relation to Common Agricultural Policy (CAP) reform;

— reaffirms the following key priorities in relation to the upcoming negotiations on the CAP on which formal proposals from the Commission are expected to be published in early October:

— ensure that the vital role of the CAP in promoting sustainable and competitive food production is maintained and that a commensurate EU budget is provided to support that objective;

— protect payments to Irish farmers and the agrifood sector under both Pillar 1 and Pillar 2 of the future CAP and to ensure that Ireland receives a fair share of available CAP funding;

— provide appropriate flexibility to Member States to determine direct payment systems best suited to their conditions and to the future development of their agricultural systems; and

— provide appropriate support for competitiveness and sustainability in food production in the rural development pillar of the CAP (Pillar 2); and

— in this regard, notes and expresses its strong support for the efforts of Government to build alliances with other like-minded Member States in pursuit of these stated objectives.

I thank the Opposition for tabling this motion. However, it is difficult for the Government to accept because it is not a fair reflection of the broader Common Agricultural Policy, CAP, debate. I hope Opposition Members will examine my amendment to the motion. They will probably find it difficult to oppose when they do. I have tried to ensure the amendment to the motion is as broad as possible. It would be helpful if we had a strong statement of support from other parties in this House for my efforts with CAP reform, regardless of domestic politics and the build-up to the budget.

Opposition Deputies know me well enough to know I do not normally read prepared scripts. This evening, however, I will because I want to put several matters on the record which people will find helpful.

The Government is fully committed to the development of the agrifood industry. It recognises the agricultural sector will be a key driver for national economic recovery and export-led growth. We have taken on board the Food Harvest 2020 strategy and have worked actively and tirelessly towards implementation of its targets. Many Members will have already seen the progress made towards implementation of these targets as set out in the document, Food Harvest: Milestones for Success, published in July 2011.

In that connection, the CAP will be a key instrument underpinning our Food Harvest ambitions. Accordingly, the negotiations on the future CAP are of enormous importance for this country because the policy decisions taken on foot of these negotiations will set the context and many of the conditions for the development of Irish agriculture.

So far the European Commission has not published any proposals on the future of the CAP. These are not expected to be published until early next month. The recent media reports refer to leaked drafts which have no status and which could be subject to significant changes before they are finalised and presented to member states. Rather than speculate on the impact of what might be in the eventual proposals, I would like to give an outline of what we do know about the CAP reform debate to date and to present the Government's views on this.

We know from the EU budget proposals that the intention is to freeze CAP spending at 2013 levels. This represents a reduction in real terms but stability in nominal terms. As there was pressure for a substantial nominal cut, this represents a reasonable starting point for the negotiations, one with which we can certainly work. The eventual outcome will be determined by Heads of State in the financial framework negotiations. I will be working closely with my Cabinet colleagues to ensure a satisfactory result for Ireland.

As well as setting a benchmark for the funding available, the Commission's proposals for the future EU budget provided more guidance on Commission intentions for the CAP of the future. It confirmed the intention to redistribute CAP funds between member states and proposed a pragmatic method be used for distributing pillar 1 direct payments that would close some of the gap between those member states with low levels of payments and those with high payment levels. It went on to suggest the use of objective criteria to determine allocations between member states for pillar 2.

A pragmatic approach that looks at both pillars together is needed. The current distribution key as a starting point and eligible area as a comparator must be used. On this basis, Ireland has below average payment levels per hectare for pillar 1 and 2 and would see no justification for any reduction in our allocation. Clearly other member states will see it differently. Accordingly, there is no certainty at this point about the outcome of the negotiations.

Deputy Moynihan's motion centres on the issue of the distribution within member states. There is strong pressure from the Commission, European Parliament and many member states for uniform national or regional flat rates for direct payments. In that regard, there is very little support among other member states for the retention of the historic model, as used in Ireland. My priority is 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. A lengthy transitional period will be needed if there are to be any changes. This is a key issue for me. Other member states are pressing for flexibility in regard to other areas of the CAP and it will be important in the upcoming negotiations to arrive at a solution that is satisfactory for all member states, including Ireland. Yesterday in Poland, I conveyed my views on this point to the Commissioner and to my European ministerial colleagues. I am actively seeking allies in favour of maximum flexibility and sensible transition arrangements.

The Commission and the European Parliament are pressing for a 30% mandatory green component in direct payments for additional agri-environmental measures beyond current cross-compliance. This was one of the policy elements mentioned in the Commission's budget proposal, aimed at strengthening the perceived legitimacy of direct payments. The greening measures being mooted include retention of permanent pasture, crop rotation and ecological set-aside, all of which are already part of normal practice in Irish farming.

The Government supports the idea of encouraging sustainable forms of agriculture which is at the heart of the Food Harvest 2020 strategy. However, we need to keep matters simple and to avoid creating excessive additional bureaucracy. While the greening measure that would be predominant in Ireland - retention of permanent pasture - should not create major compliance problems, the existence of separate greening conditions would complicate our single payment scheme. There is considerable greening already in place through cross-compliance and we must question what value will derive from such proposals.

A further complication for Ireland is that a 30% flat-rate greening component would exacerbate the movement towards uniform national or regional payment rates. We should consider whether there are alternative simpler approaches to achieving the Commission's objectives.

There is also strong pressure from the Commission and the European Parliament for introducing progressive capping of payments in respect of large farmers, although, there is, equally, strong opposition from certain member states, in particular Germany and the UK, to such a proposal. This is not a major issue for Ireland as most of our farms are small family farms. Only six farmers in Ireland would be affected by such proposals. It should be used as a bargaining chip to get our ways in other areas.

The Commission communication suggests the introduction of a scheme directed at small-scale farmers. The details of such a scheme are still somewhat sketchy. It appears to be mainly directed towards the large number of essentially subsistence holdings in some of the new member states. I look forward to seeing more detail on this but my initial reaction is that it needs to be discretionary for member states to apply.

Ireland, almost alone, has been lobbying the Commission on payments to young farmers. It would be very desirable to have additional measures in the CAP to support young trained farmers. These are the people who will drive Irish agriculture forward to achieve the targets set out in detail in the Food Harvest documents. I was pleased that this point was referred to in the Presidency conclusions on the CAP under the Hungarian Presidency.

The European Parliament has also been campaigning for special provisions to encourage young farmers and I would expect the Commission to come up with some specific proposals in this regard. I would be interested to have the option of applying measures targeted at young farmers in both pillar 1 and pillar 2 and I understand our lobbying in this regard has been having some success. This is to be welcomed.

The next issue is coupled payments. In line with the trend towards full decoupling in all member states, I would expect the Commission to make provision for limited coupled payments - probably no more than 5% to 10% of national ceilings. I have no objection to retention of coupled payments for vulnerable regions or sectors on a voluntary basis, provided this does not distort the market or prices. Subject to that condition, it would be useful to have a reasonably flexible and voluntary provision for funding coupled payments from reductions in the single payment. I believe all member states should have the same flexibility and options.

The next area is what is termed payment for area of natural constraint and to which we refer to as LFAs, less favoured areas. The Commission has signalled that it would like to divert a proportion of direct payment funds in pillar 1 to areas of natural constraint, formerly less favoured areas. This would be in addition to disadvantaged area payments under the rural development programme. I would like this to be an optional proposal.

Rural development is known as pillar 2. The Commission's intention is that this will have a greater focus on competitiveness, innovation, climate change and the environment and that it would cover multi-annual programmes. The Commission is also pressing for greater coherence between the different EU funds and to ensure that all objectives line up with EU 2020 strategy priorities. All of this is acceptable, provided the various co-ordination mechanisms are streamlined and are simple to implement.

I have considerable misgivings about the level of bureaucracy that might be involved in some of these proposals. The priority for Ireland is to maintain support for on-farm investment in order to assist the restructuring that may be necessary to improve competitiveness. It is also a priority to ensure that the review of less favoured areas is acceptable and that there is a sufficiently broad menu of rural development measures to meet our needs.

Regarding market management mechanisms, aside from direct payments to farmers and targeted support under rural development programmes, it is very important to maintain the market stabilisation supports in place in the CAP of the future. I understand that the Commission's aim is the retention of intervention capacity and other supports as a safety net should there need to be a price floor. I agree with this policy. The dairy crisis in 2009 showed the value of market supports and we need to retain the possibility of bringing them into play if and when they are needed.

In summary, in light of our ambitions for the sector as set out in Food Harvest: Milestones for Success, the Government has a number of key priorities in these CAP negotiations which are to ensure that the negotiations on the next EU budget framework deliver a well- resourced CAP to support sustainable food production in the EU; to retain Ireland's funding both for direct payments and for rural development in any redistribution of CAP funds between member states; to obtain flexibility for member states with regard to payment models and transition arrangements for distribution of single payment funds to farmers; to ensure that rural development policy includes appropriate targeted measures to support competitiveness and sustainability; and finally,to keep CAP processes as simple and as effective as possible and to minimise unnecessary bureaucracy for farmers and costs to the State.

Since taking office, I have engaged actively with the Commission and the European Parliament to put Ireland's case. In particular, I have worked to build up alliances with like-minded member states to ensure a successful outcome for Ireland in these negotiations which will underpin the future development and prosperity of this vitally important sector. I am fully committed to continuing this work.

John O'Mahony (Mayo, Fine Gael)
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I am pleased to have the opportunity to contribute to this debate. Among much of the gloom and doom of 2011, agriculture has been a good news story and it has given a lead to other sectors of the economy in the manner in which it has bucked the trend and increased production to record levels in many of its sectors. This has contributed to the significant increase in exports in the food and drink industry and the creation of both direct and indirect employment. Thankfully, the bounce in the agriculture sector looks like continuing into the immediate future. However, the period of time of the next two years must be used wisely so that the potential of agriculture can be fully developed. It seems that all sides of the House are in agreement on the desired destination even though there will be differences of opinion on how to get to that destination. I welcome the comprehensive statement by the Minister which answers many of my questions regarding the future negotiations on the future of farming in Ireland. It is very clear that there is no slippage nor any lack of support or of investment. Agriculture has demonstrated its ability to deliver the goods whether the country is in bust or boom times and therefore, it needs to be allowed a fair crack of the whip.

I note the Minister's request for flexibility for member states to determine direct payments, a system best suited to the conditions of the country. This is a critical issue because it would allow our Minister to tailor the schemes to best suit the needs of our country, to keep things simple and to avoid bureaucracy, as he stated.

My constituency is made up of small farmers, and farmers in SAC areas. It is important that their needs and requirements are not forgotten in the bigger picture. Farmers in the SAC areas have been constrained over the years. They have destocked their lands and they have been asked to restock. They have always co-operated with these schemes. However, it is important they are compensated for these restrictions. Small farmers must be remembered for their significant contribution over the years. We all agree that small businesses need to be supported so that they can produce one or two jobs but land is a resource and farms provide jobs too.

I acknowledge that the coming negotiations will be difficult but they will also provide great opportunities. I was pleased to hear the Minister refer to the need to encourage young farmers. The young farmers of this country have shown the way in their attendance at agricultural colleges and an open door is being pushed. They must be supported. There was a kick-back as a result of the withdrawal of the installation aid and the farm retirement schemes a number of years ago. It is important to support young farmers by whatever mechanism can be found. I support the Minister's amendment to the motion.

Martin Heydon (Kildare South, Fine Gael)
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I too am delighted to get the opportunity to speak on this motion. I welcome the Minister's positive comments on the progress to date in the negotiations albeit that they are at an early stage. There is agreement in the House that agriculture and the agrifood sector are good news stories at a time when we have few such stories. The sectors offer an opportunity to drive economic recovery and export-led growth.

The negotiations on the new Common Agricultural Policy proposals will be some of the most important undertaken by the Government and officials this year. They offer us the opportunity to ensure the vital role of the Common Agricultural Policy in promoting sustainable and competitive food production is maintained and that an acceptable European Union budget is available to continue to support that role. The proposals to be published by the European Union in October will set the framework for the development of those industries for the next five years. I am pleased that the Minister has taken not just an active role, but almost a lead role in the negotiations. Too often in the past Governments have sat back and allowed EU directives and policy to be negotiated regardless of the consequences. The way forward is to be on top of the issues, to formulate policy and fight our corner as best we can in advance so that we get the best outcome for the country.

To put the Common Agricultural Policy in context, I wish to highlight its importance to the economy, not just the agricultural sector. In the five years from 2007 to 2013, this country will have received a total of €12 billion in payments under the Common Agricultural Policy. That represents a staggering 85% of total funding from the European Union in that period and 1.4% of the total European Union budget.

The Common Agricultural Policy is a critical part of current industry funding and needs to be protected to allow the agricultural sector to grow to its full potential and realise the spin-off benefits for other aspects of the economy that are possible. Given that savings of more than €150 million to €200 million still need to be found in the Department this year, it is even more vital. No farmer wants to survive on direct payments. I made the point in the House previously. Farmers wish to reach a point where their produce generates an optimum return. Until we get to that stage, the Common Agricultural Policy regime is critical. Average farm incomes in 2010 were €17,770, just over 50% of the average industrial wage. Direct payments from schemes such as the Common Agricultural Policy represent 98% of average farm incomes.

If we can continue to develop our agricultural and food sectors, I firmly believe they can be a strong element of our home-grown recovery. The combined agriculture and agrifood industries support jobs and local economies all over the country. Almost 15% of total employment comes from these industries with 300,000 jobs either directly or indirectly related to agriculture and food. Farmers spend almost €8 billion annually on agricultural inputs and living expenses, the majority of which are purchased in their local areas. One statistic that emphasises the pervasiveness of the agriculture industry is that every €100 of agricultural output produces an additional €73 of output, creating a total of €9.25 billion in the economy.

Before getting involved in politics I was a young farmer. I benefited greatly from the receipt of installation aid which helped me to push through my ideas and grow the enterprise when I took over the family holding. I am encouraged by the proactive efforts of the Minister in highlighting the plight of young farmers. Those who came after me did not receive installation aid as it was removed by the previous Government. That was a kick in the teeth for many young farmers who are the future of the sector. The Food Harvest 2020 targets are ambitious. It is only by encouraging young farmers and putting them at the heart of policymaking that we will reach the targets.

Tom Barry (Cork East, Fine Gael)
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I welcome the opportunity to speak on the motion. In order to look forward we must see where we have come from. It is important to realise that area aid was a price support when we took reductions in commodity prices. Those were the days of milk lakes and beef mountains. We are far away from that. Since those MacSharry reform days we have always had a good record of negotiating in Europe. We started off with coupled production whereby one received payment for the product. Decoupling then became the buzzword whereby in essence one got the payment regardless of production. Farmers continued to produce and issues arise in that regard currently. In order to get payments currently, the environmental impact is taken into consideration. That is all well and good but when one links the environmental input with production, the two elements tug in slightly different directions. While both are important, there is no point in having fabulous looking countryside but no production. We must be careful about where that might lead.

Price fluctuations are also a reality at the moment. While 2011 has been a great year in most sectors bar the pig industry, we should bear in mind that in 2010 and 2009 most people were barely able to keep going. The single farm payment comprised a major part of their income.

I attended a meeting this evening which the Minister had attended previously concerning Beet Ireland. The group has put together an impressive feasibility study showing that we possibly have a future in commercial sugar production. I commend the Minister for giving his time to those involved. Sugar production is part of the Common Agricultural Policy negotiations. Last week, it was announced that the sugar quota could come to an end in 2016. Sugar is also a vital part of the food economy in the future.

We had cheap money and we have cheap food, but that may not always be the case. While China has 8% of the world's land mass and 20% of the world's population, there will be a demand for food.

Nicky McFadden (Longford-Westmeath, Fine Gael)
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The European Common Agricultural Policy allows farmers to produce a sustainable supply of high quality food. The agrifood sector is this country's most important indigenous manufacturing sector, which accounts for more than 7.5% of national employment.

The Common Agricultural Policy also provides for services including environmental protection, landscape management, food safety and animal health and welfare standards. Most importantly, the Common Agricultural Policy supports the continuation of the family farm of which there are 128,000 in the country. A total of 1,100 food and drinks firms are dotted around the country.

The Common Agricultural Policy is critical to ensuring sustainable and viable food production across the European Union, thus securing a supply of high quality food that is affordable. In the absence of the Common Agricultural Policy, the Irish consumer would be exposed to volatile markets and prices with lower standards of food production and environmental protection. Consumers and the people I represent expect security of food supply, guarantees on food traceability, food safety and environmental and animal welfare standards.

European consumers spend 13% of their household budget on food. The Common Agricultural Policy post-2013 allows farmers to respond to the food demands of the European consumer. It also supports viable farm families and, importantly, ensures that farmers are not forced to produce below the cost of production. It supports environmentally sustainable grass-based production.

The good news story of 2010 in terms of farm incomes seems set to continue in 2011. Dairy exports have increased by 40% between January and May and the sector has increased by 14% for the six months of 2011.

Harvard Business School issued a series of recommendations and the one I liked the most was its use of the term "Brand Ireland". This is an amazing brand for us given our wonderful artisan food, which was demonstrated to us by the IFA before the summer recess.

I commend the Minister on his forward planning and lobbying, especially on behalf of young people. We must encourage the next generation to get involved in the agrifood sector. I commend him on building relationships and alliances, and I welcome the Minister's statement that he will endeavour to retain Ireland's funding for both direct payments and rural development. I also commend him on wanting to keep the process simple and straightforward.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I thank the Minister for his report. I confess that although I have sometimes been known to speak at length, perhaps too long, about matters, when I initially saw the Fianna Fáil motion, I was not entirely clear about the intentions. I reckoned I would speak for two minutes as a result and would not have much more to say after that. I broadly understand what the motion is getting at and I am delighted it has been put forward; I thank the Fianna Fáil Party for doing so as it has merited a good response from the Government.

I read the Government amendment this evening and if I had more time, I could have put down an amendment to that amendment. All sides could then have signed up to my amendment tomorrow morning and we would all have been happy. History will never be proven on that but there we go.

I will not rehash discussions concerning the importance of agribusiness and agriculture in Ireland. I have described agriculture as one of the few major functioning areas of the real Irish economy, with agriculture and agribusiness showing characteristics that are not present in any multinational companies nor many of the national companies or employers. Agriculture will not suddenly be whipped to Taiwan or China in order to gain increased profits for shareholders and most of the profits from the inputs to agriculture are sourced locally, which contributes to the Irish economy. All of the wages are spent locally in developing communities, and profits from output are generally held within the Irish economy. All sides would agree that it is an important industry in the country.

Despite the economic downturn, the agrifood sector appears to have weathered the storm better than others. I have no doubt that agriculture has the potential to lead this nation into economic recovery. We must look after and protect the industry as it has always been our country's backbone, which we need now more than ever. We must develop strategic plans, and I am aware that the Minister will deal with our Northern counterparts to ensure the sector, at an all-island level, can thrive and act as an economic driver while other sectors begin to recover. We must increasingly consider this all-island approach to agriculture and the agrifood industry.

Key to this is the EU Common Agricultural Policy, CAP, which supports and promotes agriculture throughout the EU. It is true that the imminent EU reforms of the CAP have the potential to make or break this valuable Irish agricultural industry. We must ensure the Government can strenuously defend the rights of Irish farmers, food producers, fishermen and consumers in drawing up new policies and maintaining payments through 2013 and beyond. I have said before and will repeat that my party will strongly support the Minister and Department responsible for agriculture for as long as they strive to achieve the ambitious targets set out in Food Harvest 2020 and the report on our fishery harbours.

Certain elements should be considered, although there is much in the Minister's statement that I welcome. The Minister can see clearly the fundamental importance of the industry for the future of the country, with the critical importance of EU support continuing. Freezing the CAP at 2013 budget levels will represent a reduction in real terms and perhaps there is scope for further debate in that regard. All of us must bear in mind that many people, particularly in the west and north west, are small farmers who held small jobs as well. In many cases those jobs are gone and overall income is well down as a result. It would be wrong for the EU to assume that the average income per capita, particularly in disadvantaged areas, would be as strong now as when the Union last assessed it. The chances are that incomes are well down and people will depend on the farm as a sole source of income aside from farm assist. There is much work to be done in this regard.

With regard to distribution among member states, there is a suggestion that objective criteria would be used to determine allocations between states for Pillar 2. I know all of us are interested in this and would like further information on the type of criteria being spoken about. We must talk to our communities in this regard. Government must be prepared for what is coming and communities should also be prepared in order to gain pole position in availing of what comes from CAP reforms. As soon as the reforms take shape, we must ensure the communities can benefit from them. We must take a pragmatic approach that can consider both pillars. Distribution within member states is key. Every state will seek the best it can get for itself, which is one of several advantages to closer collaboration with colleagues in the Six Counties.

The introduction of a green component to direct payments is potentially a dangerous issue for Irish agriculture. I know the Irish Farmers Association has serious concerns in this regard. Nevertheless, this could provide tremendous advantage as much of what farmers are already doing works towards a green agenda, although they may not label it so. They manage farmland to ensure it is ready for the next use, crop or season, working in harmony with nature to ensure the land remains as fertile as possible. That is the kind of activity that has a green element, although the EU may not always support it financially. Perhaps we should have a discussion with the EU about precisely what is meant by "greening". If it is the good management of land in order to maximise potential yield from that land, it is not something of which the IFA, the EU or farmers in general should be afraid. We must ensure that when the Minister's counterparts in the EU speak about greening, it is not simply about inserting limitations which anecdotal evidence suggests will improve the land's prospects. Good land management is in everybody's interest and that is what we should support.

We need to keep things simple and avoid creating excessive additional bureaucracy. I welcome that inclusion in the Minister's report. With regard to capping, Sinn Féin has argued for some time that there should indeed be a cap on the grants being paid. There should be scaled payments so that small and medium-sized farms get more support than large farms. Furthermore, the money from these schemes should not be used to pay businesses which have no direct involvement in agriculture. If those businesses require support, they should get it from some other fund. The Common Agricultural Policy fund should be used to maintain those who produce the food in the first place. We support capping in that regard and would support a mechanism that ensures there is fairness and equity in the distribution of the fund, whereby those who need most, get most.

I note the Minister has some reservations regarding payments to small scale farmers. There is a need to make the qualification criteria simpler and less demanding for smaller farmers or organic producers. Perhaps this will be an opportunity to open that door to a number of people in the country.

Simon Coveney (Cork South Central, Fine Gael)
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The proposals in that area are still very unsure. One of the reasons I am not as certain about that area as the other areas is that we just do not yet know what the detail will be.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Yes, but perhaps in the discussions the Minister would suggest it as a possible opportunity under that heading.

All of us welcome the Minister's insistence on the desirability of having additional payments to support young farmers. In the north west I see many young people leaving farming. They do not see a future for themselves in agriculture. The worst thing that can happen is to have hope taken from these young people. Anything the Common Agricultural Policy or the Government can do to make it easier for these young people and to give them hope that by staying on the farm they will have a half decent future would be welcome. That is all they are seeking and it is what we should be fighting for on their behalf. I believe the Minister will do that.

Michael Kitt (Galway East, Fianna Fail)
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The Deputy has two minutes remaining.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Is that all?

Michael Kitt (Galway East, Fianna Fail)
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Yes.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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There is a great deal in the Minister's report. I do not know if this relates to the CAP negotiations but there should be discussions with farmers before their areas are designated special areas of conservation, SACs, as this can tear the bottom out of the local farming industry.

The final point I wish to make is a criticism. Regardless of what grant system is in place, if it is one in which people are owed money since last December and still have not received it, there is something very wrong with it. A number of farmers have received bills for over-payments of area aid payments that were paid to them. Apparently, there was a miscalculation by the Department and it sent out bills asking farmers to repay the money. The farmers were told that if the money was not repaid within a month, penalty interest would apply. Most of the cases I am aware of involved small amounts. I deal with small farmers. However, what if the same system applied to the Department, which is holding up some payments since last December? The payments run to many thousands of euro for some of the same small farmers. It is unfair of the Department to expect a small farmer to pay penal interest when the Department is not penalised even though grants due since God knows when are still unpaid.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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I thank Fianna Fáil for putting down this motion, which is very relevant. I also thank the Minister for giving such a comprehensive response. He is doing well so far and, hopefully, he will continue in that direction.

There is a great deal of talk in Ireland at present about how great it would be if oil or gas were found here. At times we forget we already have something far more valuable, that will never run out and that we can generate every year. Perhaps that is our version of oil and gas. I mention this because in my constituency the search for gas could potentially put an end to agriculture in view of the fracking issue, although I will not discuss that now. However, people should be reminded that we have one hell of a resource. We should be proud of it and make use of it.

The Common Agricultural Policy has served some of us well in many ways, but under both the old and the current systems it appears, and I am open to being proven wrong, that certain people benefited a great deal more than others. The idea of protecting small farms and the rural way of life does not appear to be the main priority but rather feathering the nest of people who have plenty of money already and, as Deputy Colreavy hinted, who are not really in the farming industry. They are in something connected with it, but not in the industry. I would like to see that change in whatever changes occur. If the CAP is about protecting small farms and if there is only a certain amount of money to be distributed, it makes sense to give more of it to people who might survive on a 50 acre farm rather than to those on a 1,000 acre farm.

The CAP has served us well with regard to exports and keeping us competitive. However, I hope that in future it will help to develop the local economy as well, through its rural development component. This takes in the greening issue. Surely it is more environmentally friendly for somebody in Roscommon to eat potatoes that are grown in Roscommon. I am not saying one should have to or that we should go down the insular route, but from the environmental point of view it makes far more sense than bringing the potatoes from other parts of the world. In other countries such as France, Germany and Spain one will see local produce being sold locally. That is almost absent in my area.

As I said previously in the House, I conducted a study in my constituency before the general election. I spoke to all the greengrocers and supermarket operators in the area. Between €9 million and €10 million worth of fruit and vegetables are sold in my local area. It is only an estimate but after talking to these shopkeepers I established that only approximately 5% of what is eaten locally is produced locally. Under the CAP reforms more money should be directed towards this area. Obviously, we will not be producing grapefruit or the like but if even 50% of the products were produced locally, it would mean another €4.5 million going into our local economy. The farmer who makes the money does not simply leave it in his pocket. It is spent on other things and the money circulates throughout the local economy.

I do not have much time but I will conclude by pointing out that we should be wary of the greening issue. While I am an environmentalist and believe strongly in it, sometimes people can get a little fundamentalist on the issue. Ireland should be very wary of rushing headlong into this and of thinking that because Europe is giving us this money we had better do what we are told.

From what I can see, from 2013 onwards we will become a net contributor so we do not necessarily need to go in with our heads bowed quite so much in the future. I hope we do not see a situation down the line where people will get payments and then discover, as in the case of one of the battles I am fighting, that if they cut turf next year, they will lose their single farm payment. Will that be a component of greening or will greening be a case of good farm practice? I would like an answer to this question because we cannot establish one.

Under the current single farm payment system, there is a kind of insinuation or a threat that if people cut turf on one of the 55 SAC bogs next year, they will lose part of their payment. We cannot get a definitive answer to that question but would like to get one. It would be good to know it now and for the future. Will this greening prevent us from doing something else? What will be next which we never thought of when we signed up to previous agreements?