Dáil debates

Wednesday, 21 March 2012

Other Questions

Common Agricultural Policy

3:00 pm

Photo of Patrick NultyPatrick Nulty (Dublin West, Labour)
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Question 7: To ask the Minister for Agriculture; Food and the Marine if he will provide details of the consultative policy he will undertake with regard to reform of Common Agriculture Policy which will take place during the Irish Presidency beginning in January 2013; and if he will make a statement on the matter. [14600/12]

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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An initial consultation process was launched with stakeholders by my Department in July 2009 to obtain views on what EU agriculture policies would serve Ireland and the EU best in the years to come. The responses received are helping to inform our position in the negotiations on the future of the Common Agricultural Policy, CAP, after 2013.

In 2010, a consultative committee on the CAP after 2013 was set up by my Department comprising all the major farming and agriculture related representative organisations involved in social partnership as well as a number of academics. The committee has met on several occasions, most recently in November of last year. The most recent meeting provided an opportunity for all the stakeholder organisations to give their initial reactions to the formal Commission proposals. The committee also participated in the stakeholder events organised by my Department during the visit of Commissioner Ciolos in 2010 and again in January 2012.

Commissioner Ciolos also launched a public consultation process during 2010 providing an opportunity for all stakeholders and interested parties to give their views on the future of the CAP. My Department wrote to interested stakeholders in this regard advising them how to participate in this consultation process and encouraging them to do so to ensure Ireland's voice is heard at every opportunity. While it is still early days in the negotiations, my officials and I will continue to consult all stakeholders as the negotiations progress.

Photo of Patrick NultyPatrick Nulty (Dublin West, Labour)
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It seems inevitable there will be radical reform of the Common Agricultural Policy but the nature of that reform is now contested. We need a fair and redistributive approach. Will the Minister consider the proposals that have been made by the United Farmers Organisation to place a threshold on the payment any individual can receive under the CAP? For example, in this State, the single biggest beneficiary of CAP payments is someone like Michael O'Leary, who is not struggling to get by in the current economic climate. In reforming CAP, we must target the resources we have to small farmers - those who need it - to preserve rural life and to ensure small farming continues to be a viable operation for people in this country. That requires leadership and the taking on of powerful interests to place a cap on the payments made to already wealthy individuals.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I know what the Deputy is getting at and I have no difficulty with introducing a cap on payments. There is a proposal to do that. The current proposal from the European Commission is to propose a cap for single payments of €300,000. Of the 123,000 Irish farmers in receipt of the single farm payment, less than 0.2% received more than €100,000. That means only four or five companies or individuals will be affected by the cap being proposed. That is why I have not used a lot of political capital on this issue. We have really important issues that affect practically all farmers in Ireland where we need results around greening, the redistribution of the single farm payment within the State and maintaining the overall budget. My view is that it is inappropriate that anyone would get €300,000 from a single farm payment. It is important, however that we focus on what is crucial to Irish industry in these negotiations. So few farmers in Ireland are affected by this that I have not focused on it. I have made clear that my view is there should be a cap in place to ensure we spend money on those farmers who need it most.

Photo of Patrick NultyPatrick Nulty (Dublin West, Labour)
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I welcome the Minister's agreement in principle that a threshold should be in place for payments. I accept the numbers involved are small but in the current economic climate, there must be leadership. People find it difficult to get by while certain individuals and companies which receive massive benefits in other areas are getting these sums from CAP. That can lead to a negative perception of small farmers. I look forward to seeing the final proposals and hope a cap will be put in place.

Photo of Denis NaughtenDenis Naughten (Roscommon-South Leitrim, Independent)
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Could the Minister outline the progress made to date in getting flexibility at member state level for the revision of CAP? There is concern that there are different issues in different member states. The levelling of payments between those at the higher and lower ends is of huge concern in Ireland to ensure commercial farmers can remain financially viable whereas the overall cap on payments is a bigger issue in some other member states. Has any progress been made on bringing flexibility into that?

Photo of Michael ColreavyMichael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Could the Minister look at the average payment from a different angle? Could he look at what would be needed to bring the average income of the lowest paid farmers up to the average industrial wage?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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We had a long discussion and debate in the European Council yesterday on greening, an area where there is a flagship change in policy on the part of the Commission by insisting on 30% of the single farm payment being for greening. Farmers would only get it if they met certain criteria in how they farm. We have some difficulties with that and we are trying to negotiate solutions to it.

The real issue for Irish agriculture is the switch to an area-based flat rate payment, which is what the Commission is proposing for every member state. Irish direct payments have developed on a historical productivity basis, with productivity determining support, and that became the basis of the single farm payment. Farmers in Ireland have huge discrepancies between what they are being paid in some areas and other areas. The idea that everyone would get the same payment per hectare farmed would mean those with large, lowly stocked hectarage, and very intense commercial farms would get the same payment. That does not reflect the fact that we should be trying to support food production. Ireland, Italy, Spain and a few other countries have a huge problem with what is called internal distribution of direct payments, in regard to which we are working with the Commission to try to have some flexibility.

We will, undoubtedly, have to redistribute money. People who have been doing really well owing to their level of productivity in 2002 and 2003 will lose some of their direct payments in order to increase the payments for those who traditionally or historically have not done so well because they were not as productive in the base years of 2002 and 2003. We must try to manage the losses and the gains in order that we can move everybody towards an average payment. However, we certainly cannot get there overnight because if we were to do so, approximately 50,000 farmers would lose on average 30% to 35% of their payment - many of them might lose 60% or 80%, with the other approximately 80,000 farmers receiving an average increase in their payment of 60% or 70%. That type of redistribution of direct payments would impact in a very negative way on the productivity of Irish farmers in the context of Food Harvest 2020. There will be some redistribution, but we must put limits on it. That is the subject of the negotiations under way.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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Question 8: To ask the Minister for Agriculture; Food and the Marine the developments in the Common Agriculture Policy reform post 2013; his plans to reduce the income loss in single farm payments to 10-15%; and if he will make a statement on the matter. [14603/12]

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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This question is about what I have just been discussing. The Deputy refers to the need to limit any reduction in the single farm payment for current recipients to 10% to 15%. I believe that figure comes from the Irish Farmers Journal of a couple of weeks ago following a farm talk I gave in Bandon in which I said I was hoping to try to limit the reductions in single farm payment support - outside the greening area; therefore, it is for the other 70% - to 10% to 15%, which would probably mean increases for others, perhaps 15% to 25% on average.

I was trying to get the message across that instead of having a drastic redistribution away from the historically productive sector of Irish farming to the less productive sector, although there is capacity for much of that sector to become much more productive, we would try to limit the transfer to make it more manageable. Many farmers will have taken out loans and made investment decisions on the basis of a single farm payment supporting their businesses. I do not wish to undermine the traditional productive sector of Irish agriculture because we want to achieve increased performance and efficiency from those farmers. However, I recognise that there must be some redistribution for equity reasons. One cannot have payments in 2019 based on productivity levels in 2002 and 2003. That would not be right either. This is about trying to manage the redistribution in order that the losers will not lose massively and the gainers will not gain to the extent that it will undermine the productive sector of Irish agriculture. It is difficult to get the balance right.

Photo of Séamus KirkSéamus Kirk (Louth, Fianna Fail)
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The Minister has just made the point I wished to make. The new flat rate payment and the possible reduction of 10% to 15% for many of the farmers in what is the engine of the agriculture industry in Ireland, particularly the provinces of Leinster and Munster, mean there is every prospect that under the new arrangement farmers who are extremely productive - some of the best farmers in Europe reside in these areas - will be seriously and adversely affected by the proposals outlined. While the flow chart in the agriculture industry might be good and buoyant, as sure as Deputy Simon Coveney is Minister for Agriculture, Food and the Marine today, price volatility will kick in at some point in the future. The single farm payment provides the support that takes farmers through the difficult period when repayments and normal family expenses and costs must be met.

With regard to the reference year, the Commissioner for Agriculture and Rural Development appears to be adamant that it will be 2014. Having regard to the very significant amount of land in the rental sector each year in this country and the uncertainty and unpredictability this has introduced, does the Minister accept there is a need to address the issue urgently to give some certainty to individual farmers in the decision making that will be necessary shortly?

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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I am not quite clear on what the Deputy is asking. He is correct that there will be price volatility in the future. The price trends for food will continue to increase for dairy and meat products, but there will be dips at times which will cause problems. While farmers are doing well in the marketplace, we should be mindful that the average farm income is still relatively modest by any standard. Direct single farm payments as well as Pillar 2 rural development moneys form a very significant part of the income of farm families. Drastically changing that balance overnight, as would be the case if we were to implement the proposals from the Commission, would significantly unbalance Irish agriculture.

It is up to me to make a very persuasive case with all the necessary data to back it up. We are gathering that data to try to get the flexibility we need from the Commission. We can go some of the way with it in terms of rebalancing payments within Ireland, but we certainly cannot go as far as is being proposed without there being a very significant redistribution of money, which would undermine many farming practices. There is a better way of doing it which I hope the Commission will take on board. When the Commissioner for Agriculture and Rural Development came to Ireland, we spent a long time talking about this issue to ensure he understood the full consequences for Ireland of pursuing the policy he was advocating.

Photo of Denis NaughtenDenis Naughten (Roscommon-South Leitrim, Independent)
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To pick up on what the Minister said in response to the earlier question about trying to manage the redistribution and the alliances he had built with a number of other member states in a similar position to Ireland, what hearing is he getting from the Commission? Is it not the case that even in counties such as Roscommon which would not be considered one of the most productive in the country, a number of farmers will lose significantly as a result of redistribution? The movement of the big payments will be towards large land banks and commonage areas on foot of a complete redistribution if there was a flat rate across the country. I am glad the Minister acknowledged the modest incomes of farm families. While product prices have increased, input costs have increased significantly and many farm families are on very moderate incomes, even taking account of current product prices.

Photo of Simon CoveneySimon Coveney (Minister, Department of Agriculture, the Marine and Food; Cork South Central, Fine Gael)
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The Deputy's final point is very relevant. It is also important to recognise that when prices were not so good, many farm families had alternative sources of income. A couple of years ago approximately 47% of farm families did not have an alternative income coming into the home; now the figure is approximately 56%. That is the obvious consequence of unemployment. Therefore, the income being derived from the land and through direct payments is more important than ever. This must be acknowledged.

On the Deputy's question as to whether I am making progress with the Commission, I have met the Commissioner to discuss this issue on a number of occasions. In fact, practically every time I meet him we discuss it. He has not decided to make significant compromises at this stage. That is a political decision. At some stage, however, he will have to compromise on a series of issues to get agreement in both the European Parliament and at the European Council because a co-decision is required. To date, we have been working hard to ensure he, his advisers and cabinet understand in detail why Ireland simply cannot work with the proposal as it stands.

We have received support from countries such as Spain, Italy and France which are very concerned about the level of redistribution that will occur as a result of these proposals. These are big, powerful countries and I am hopeful that at some stage towards the end of the year we will be making progress on this matter. I do not want to pretend, however, that the problem is solved because it is not. We are currently outlining in clear terms why this cannot work. I can assure the Deputy that many EU states are adamant that countries like Ireland and others will be forced to move away from a historical basis of payment because they see that as unfair competition in terms of the levels of payment that go with that. There is a political negotiation to be done here around flexibility. While Ireland wants flexibility in this area, we must understand that other countries want flexibility in other areas.

One of the advantages we have in trying to get a deal on this is that we will hold the EU Presidency for the first six months of next year, when the CAP will be agreed. Therefore we will be in a position to influence the compromises that will emerge, because I will be in the chair trying to do that. I hope that will allow us to find a solution to this problem for Ireland as well.