Simon Coveney (Cork South Central, Fine Gael)

To deal with the last question first, we want to ensure that it is Ireland that decides how single farm payment money is distributed in future. My preference would be to ensure that we keep payments as close as possible to where they are at present. There is an argument, which has some currency, around consideration of recoupling some payments or some element of single farm payment, particularly in the beef sector. I believe that suckler beef farming, in particular, needs support more than some other sectors at present. We are examining whether it makes sense to make the case for the partial recoupling of some payments to support the beef sector. However, the Senator can rest assured that I am certainly not advocating a wholesale redistribution of funds from one part of the country to the other. That would cause carnage in Ireland and would mean the productive sector would be unable to reach the potential that is being planned at present.

On Senator Ó Domhnaill's question about the financial envelope, we know what the starting position is. It is a good starting position, given the context of where we are coming from. When I was a Member of the European Parliament people were talking about halving the agriculture budget, so the starting position is good. We must ensure we can build on that. There is also a series of other funds outside the CAP envelope that is available to the food sector in terms of research and development, exploiting new markets, research on climate change and food security, which is a huge issue on which I would love to answer questions.

The basic CAP envelope is for single farm payment, pillar 2 money, regional development, rural development and so forth. There is also a research budget, which is in a separate category. It is a substantial budget that is now available to the agrifood sector. It is time we started talking about the agrifood sector rather than talking about farming in isolation from the food industry. We are successful in this area. Whenever I speak, I talk about being a Minister with responsibility for agriculture, food and the marine. This is a food industry that collectively must expand and grow. When farmers produce a litre of milk, they must do so with the consumer in mind. When they produce high quality beef cattle from a suckler herd, they do it because they will get more money because a consumer in some part of the world will pay more money for that meat. This is about everybody in the food supply chain understanding that we need to be better than any other country at producing food because we must find a home outside Ireland for all the extra food we produce. We do not have the luxury that other countries enjoy of having big domestic markets. It is important to emphasise that point.

We will know the Commission's CAP proposals in early October. As regards the flexibility the Senator said was necessary, my view is that the initial draft is likely to contain a set payment per hectare and we will have a hell of a job changing that. That is my anticipation at present but we are making strong representations to the Commission on that issue and I believe it understands our position. There is a view among many new member states that historical payments such as single farm payment are almost a dirty concept, because they developed in a way that could never be possible in those states given that they did not have historical payments. This is also about the education of some member states which were not historically part of the CAP.

I met the Commissioner, Mr. Dacian Ciolos, for breakfast yesterday with a number of other Ministers. He is a very approachable person and I believe he has a good understanding of agriculture in Ireland. He is a slightly quieter than some of the other Commissioners, and does not operate with the type of ego many of the Commissioners have. However, he is actually quite effective and the proof of that is the result of the budget debate within the Commission.

Senator Healy Eames spoke about AEOS versus organic farm schemes. AEOS is not about organic farming. It is about encouraging commercial farmers and farmers who are farming on hillsides, such as in constituencies like the Senator's. It is about giving them a payment in recognition of a change in farm practice that is in the interest of the environment. The calculation of AEOS payments is based on the financial cost to the farmer of changing his farm practice to protect the environment. Whether we take the route of supporting organic farming is a separate argument.

Schemes such as the rural environment protection scheme, REPS, and AEOS are about persuading farmers, whether they are involved in intensive production or farming in commonage areas, to farm in a way that is environmentally friendly. We put the set of rules in place regarding the targets they must meet to get their payments. Those rules must be approved by the European Union because 75% of funding for AEOS comes from the EU.