Simon Coveney (Cork South Central, Fine Gael)

I will try to deal with the questions on an issue by issue basis. I cannot go into detail on environmental impact assessments and the land reclamation amendment in the Environment (Miscellaneous Provisions) Bill that is coming forward, because the detail is not agreed yet. There is much concern among farm organisations, and rightly so. There is also much frustration in my Department, and rightly so, because we are being forced to reduce thresholds significantly from where we have been in the past. We have shown much good faith in an effort to satisfy the Commission. It is the Commissioner for the Environment and not the Commissioner for Agriculture who is seeking this.

New thresholds will be applied for removing ditches, draining wetlands and increasing field size by removing boundaries. They will be outlined in the new section to be inserted in the Environment (Miscellaneous Provisions) Bill. We do not have an option, or I should say we do have an option. We can do nothing and get fined about €4 million a day. That is the option. We will not win a court case against the Commission on this issue.

It has been suggested that we seek a derogation. We have already looked for more time. The Commission has taken a hard-line approach to the issue, which is regrettable. Agriculture has been dragged into an environmental issue, rightly so, because farmers have a responsibility for the environment. What is being asked of my Department is unreasonable but we need to put something in place to ensure that we meet thresholds that will result in Ireland avoiding EU fines. That is the vulnerable position we are in. We are not in a strong negotiating position. That is unfortunate but it is reality.

I have been trying to keep the threshold as high as possible. I have tried to keep the length of ditch as long as possible before a Department inspector must give sanction. A departmental inspection would not cost anything but I have also tried to keep the length of ditch as long as possible before an environmental impact report is required. That might cost thousands of euro and failure to do so might criminalise a farmer.

Much of this is already required of farmers under cross-compliance if they are to draw down single farm payment. What is being proposed is what I have outlined be extended into law and that it would be illegal to remove a ditch without following due process.

I agree that the thresholds need to be changed. However, the extent to which it is being demanded that thresholds be reduced is not appropriate. I wish to make clear that no one is seeking planning permission or even a departmental inspection in respect of opening a ditch - as in opening a gateway. I am not happy with regard to the thresholds we are being asked to implement. However, our hand is being forced to some degree in respect of this matter.

The position with regard to Leader funding is complex. Essentially, most of the funding from Europe comes under pillar 1, which relates to the single farm payment. Pillar 2 funding relates to rural development programmes. There are different annexes within pillar 2. Under what is traditionally described as annexe 3, we were able to provide financial support predominantly to small food companies in order that they might expand and grow, explore markets and undertake research and development in the context of developing products such as cheeses, yoghurts and ice creams and in respect of establishing micro-breweries, etc. Our goal in this regard is to promote food entrepreneurship. The provision of this funding has proven to be quite successful.

Some of the Leader structures that are in place are very good, while others are not. We should be careful in the context of uttering generalisations regarding how Leader funding is managed. Some of this funding is managed very well by those who understand their communities and the people who live in them.

Supporting food-based projects is no longer possible under annexe 3. In other words, even if we provide co-funding we cannot fund food projects under annexe 3 to pillar 2. If we are going to fund food projects under rural development funding, we are obliged to use annexe 1. Annexe 3 is predominantly delivered by the Department of the Environment, Community and Local Government, even though my Department draws down the funding from the European Union. Annexe 1 funding is all drawn down and delivered by my Department. The targeted agricultural modernisation schemes, TAMS, are funded under annexe 1.

These schemes provide capital grant aid to poultry and pig farmers to allow them to upgrade their units to meet new animal husbandry standards set down by the European Union. They also provide grant aid to dairy farmers to upscale their facilities in advance of 2015. Furthermore, they provide grand aid to sheep farmers to allow them to put in place new pen and collection facilities. In other words, the funding provided is aimed at upgrading rural agricultural infrastructure to improve animal husbandry and food production. I will not be taking any more applications under TAMS until I know how much money I will have to spend next year.

If we are going to fund food projects through Leader, we are going to be obliged to do so under annexe 1. There is already a commitment of funding relating to the latter under TAMS. We are trying to identify a way whereby we can switch from annexe 3 to annexe 1 in order to that we might be in a position to fund food projects. We are also seeking to discover which Department would be the appropriate one to provide matching funding in order that we might draw down moneys under annexe 1.

Traditionally, the Department of the Environment, Community and Local Government has always provided matching funding in respect of food projects. However, annexe 1 funding is managed by my Department. There is an element of toing and froing involved between the two Departments at present.

I am only too conscious of how important this matter is for many small food companies which are only starting out and which would have anticipated, in their business plans, obtaining funding through local Leader programmes. The companies are now discovering that such funding has stalled. We are trying to resolve the matter and we are hoping to achieve some form of resolution in the coming weeks. We cannot allow matters to drift any longer than that.

On food production and the question of who is responsible for identifying markets, we need to move away from the fairly simplistic idea that one person produces the food and that it is another's responsibility to identify a market for it. We must begin from the other perspective and try to identify what consumers want and where they want it. We must also identify the premium product that is demanded in respect of which the producer can obtain a premium price and then try to discover how this product can be produced.

There is a change in attitude among food producers at present, particularly those in the dairy sector. This change is being driven by price but also by the necessity of identifying new markets. It is being assisted by the co-op sector because farmers actually own co-ops which buy and then need to sell on milk. It is not just about milk, however. It is also about all the other sectors. There are only approximately 17,000 dairy farmers in Ireland but there are 128,000 farm families. Dairy farmers, therefore, constitute only a small minority.

In the context of the food we are producing, Bord Bia has a responsibility to carry out a great deal of consumer research in respect of establishing what consumers want and where they want it in order that we might meet the demand. It has been doing a good deal of strategic thinking in this area. Matters under consideration include hosting beef tastings in Germany, which has been happening a great deal in recent months; implementing a carbon labelling scheme for beef here, in which respect it has been anticipated that consumers will want to see evidence relating to the carbon footprint of the beef that is being produced if they are going to be obliged to pay a premium for it at some point in the future; seeking to attract representatives from the primary production and processing sectors and major companies such as Kerry Group, Glanbia, etc., in order that they might brainstorm in respect of the markets that need to be targeted; and, before returning to me, seeking resources to focus in on certain areas and identify where offices need to be established. In many ways, Bord Bia is driving the business plan relating to Food Harvest 2020 from a strategic point of view.

That brings me to the point Senator Ó Domhnaill raised in respect of the high-level implementation group for Food Harvest 2020. I chair that group, which has already met on three occasions if not more. As already stated, we are setting targets for the short as well as the long term. We have already revised the targets for the beef sector. Food Harvest 2020 contains a target whereby the value output relating to beef coming from Ireland should be increased by 20% by 2020. We have already upgraded that target to 40%. We asked the beef subgroup that is attached to the Food Harvest 2020 implementation group to examine the position relating to the beef industry and to return with revised recommendations because of our view that the 20% target to which I refer was not very ambitious. The subgroup did so and produced a detailed document which forms the basis of its revision of the target relating to beef.

A great deal is happening in the context of the hands-on implementation of Food Harvest 2020. The latter is basically a set of targets.