Mary White (Fianna Fail)

I welcome the Minister. Ireland's agrifood, fisheries and forestry is our largest indigenous industry. Collectively, the industry employes 250,000 people either directly or indirectly and has an annual output in excess of €24 billion, including an €8 billion export industry.

Three significant reports on agriculture, food and forestry have been launched in the past three months, one of which is Food Harvest 2020 - a vision for the Irish Agri-food and Fisheries by the Minister, Deputy Brendan Smith. The Oireachtas Joint Committee on Enterprise, Trade and Employment produced a report entitled, What is Required to Expand Employment in the Agri-food Sector? The other report was produced by the Minister of State, Deputy Kelleher, and is entitled, Trading and Investment in a Smart Economy.

There are 250,000 people employed either directly or indirectly in the agrifood industry and it is an €8 billion export industry. The agrifood industry is indigenous in nature, has a regional focus and is international in orientation. We are recognised internationally as a strong food producing nation.

We have had good news in recent months with the improving exchange rate. We have increased meat export volumes and a stronger export performance in the beverage, dairy and seafood sectors. During the first five months of 2010 the value of exports was more than 8% higher than a year earlier at almost €3 billion. The rate of recovery has accelerated as the year has progressed, with exports up to May some 23% ahead of the same month in 2009.

As every business person who is exporting understands, the exchange rate with sterling has been fairly bad in recent years but sterling is currently 6% stronger against the euro compared with this time last year. Likewise, the US dollar is currently 12% stronger against the euro relative to September 2009. Even if one is not exporting directly to the United States, many countries deal in the US dollar for their imports.

Until we joined the European Union in 1973, the agri-food sector was based on small-scale and co-operative businesses engaged mainly in exporting live animals and basic commodities. With EEC membership, the sector experienced substantial change and expansion of market efficiency in production facilities, technological development and improvement in market access and distribution systems. A recent report by IBEC showed that Ireland was the biggest net exporter of beef and lamb in the European Union, the largest supplier of food and drink to Britain and produced 15% of total global output of infant formula. Less than 17% of raw materials was imported by the sector, compared with a figure of over 60% for manufacturing generally.

The challenges facing the agri-food sector include changes to CAP and WTO arrangements. On 1 October I had the pleasure of attending the meeting of the Joint Committee on Agriculture, Fisheries and Food with the EU Agriculture Commissioner, Mr. Ciolos. The Commissioner stated Ireland and the European Union shared two fundamental ideas, first, that the EU agriculture sector needed a strong CAP and, second, with tongue in cheek, a heavy purse makes a light heart, as can be seen in Ireland. In other words, getting money from the European Union lifts our hearts and makes life easier for farmers and those involved in the food industry. He also said a broad public debate on the future of the CAP had ended in July. During the public debate, in response to questions about why we needed the CAP in the first place, the various contributors identified seven major challenges, namely, food security, the competitiveness of agriculture, globalisation, environmental change, territorial balance, diversity and simplicity.

Based on the discussions with EU member states, the Commissioner said we could summarise the main objectives of the CAP as falling into three main priorities, the first being food production. Food security presents one of the biggest challenges the world faces in the years ahead. The UN Food and Agriculture Organization forecasts that global food demand will increase by 50% by 2030 and double by 2050. The strategic importance of agriculture will increase significantly. All 27 EU countries have a responsibility towards the citizens of the world. We should maintain our capacity to help countries facing challenges in feeding their citizens without blocking the growth of their agriculture industries. Two months ago I was part of a humanitarian mission to Malawi where I saw for myself the bare existence of the people. It is our responsibility not to do anything that would prove detrimental to such countries and to let them develop their agriculture industries.

Our second main priority is to dea with environmental change, namely, climate change, biodiversity loss, water scarcity and depletion of soil. Farmers are the first to be affected by climate change and extreme weather conditions. Commissioner Ciolos has said agriculture can provide a major response to all of these challenges. To fight them, we must maintain our production capacity throughout Europe, thereby ensuring a sustainable use of natural resources.

Our third main priority is to maintain the vitality of rural areas. The CAP, with its two pillar structure, allows for coherence between approaches in supporting agriculture and rural areas in Europe. The first pillar would be our response to the major challenges, common to all EU member states, such as social, economic, environmental and territorial challenges. The first pillar would provide support for all European farmers on an annual basis. The second would concern the development of our agriculture sector and territories, addressing climate change and contributing to the sustainable management of natural resources.

The Commissioner has said there is a crystal clear truth, namely, that direct payments are crucial for the future of European agriculture. The direct payments provide income support for farmers. The ways they are distributed will be adjusted, but the principle is not under discussion. Direct payments are indispensable to ensure the sustainability of agriculture across Europe. Without them, agricultural production would decline severely in vulnerable sectors or regions. The economic and social damage would be considerable and the Commissioner has said he does not imagine for one moment that we are ready to take this risk.

That said, Commissioner Ciolos did not advocate continuation of the status quo. In these troubled times we have to make the CAP Europe's investment in its future. This will not be the case if the support for our farmers is based on what they did in the past. Direct payments must evolve towards better targeting of active farmers in order to optimise the use of public funds - this is on the agenda of the IFA in the form of payments to reward active farmers. These payments must better reflect the care farmers take of the environment, thereby providing stronger incentives to engage in sustainable farming, but must also retain the elements of income support for the many farmers who need it.

The reformed CAP must move to a system where taxpayers can understand what farmers are doing for them. Under the current system there are considerable differences in the rate of aid farmers receive from one member state to another, which will not be justifiable in the period after 2013. Direct payments must be more equitably distributed among member states, regions and forms of agriculture. The aim of the 27 countries of the European Union is to bring forward a balanced solution acceptable to all member states. We will not solve problems in some countries by creating difficulties in others.

Another issue raised by the IFA is that of retaining market support measures to minimise the effects on farm incomes of price volatility. The Commissioner has said the volatility and speculation in the markets have never had as much impact on farmers, processors and consumers. The European Union must ensure hyper-speculation is not jeopardising entire sectors of agriculture. New tools have to be put in place within the reformed CAP to address this extreme volatility in prices and farm incomes. We need more progress on the question of distribution of bargaining power within the food chain.

The future CAP will need stronger rural development programmes which will have to accompany agriculture on the path of modernisation, adaptation to climate change and innovation. Agriculture has a crucial multi-functional role to play in all of the territory of the European Union. I am confident that in the hands of the Minister, Deputy Smith, and Commissioner Ciolos we will have a reformed and successful Common Agricultural Policy.