Jimmy Deenihan (Kerry North, Fine Gael)
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Question 201: To ask the Minister for Agriculture and Food the discussions she has had with the European Commission to index link the single farm payment; if she will make the payment in two instalments; and if she will make a statement on the matter. [26210/05]

Mary Coughlan (Donegal South West, Fianna Fail)
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The agreement on the mid-term review of Agenda 2000, reached at the Council of Agricultural Ministers on 26 June 2003, provided a financial envelope to each member state. This envelope represented the average value of livestock and arable aid premia paid in the member state during the three-year reference period 2000-02 calculated at 2002 rates of payment. The outcome, which will reshape the Common Agricultural Policy and secure its future in making it more relevant to modern society, was a balanced one which addressed Ireland's principal objectives. Among these objectives was the preservation of the financial benefits achieved under the Agenda 2000 agreement and the establishment of a policy framework that will allow farmers and the agri-sector the flexibility to adapt to evolving consumer and market demands and international circumstances.

Index linking of the single payment scheme was not an element of the Commission's proposals which included a proposal to provide for a reduction of up to 13% in the single payment, known as degression, to meet future financing needs. One of the major achievements in the negotiations was the removal of this proposal, as it meant a saving of approximately €420 million for Ireland over the lifetime of the agreement. The compromise agreed was to allow the Council to review, from 2007 onwards, the financial situation annually if budget deficits arise.

In so far as making payment in two instalments is concerned Council Regulation 1782/2003, governing the single payment scheme, provides that payments shall be made once a year within the period from 1 December of the scheme year to 30 June of the following calendar year. The regulation also provides that the European Commission may authorise making advance payments in certain circumstances.

My Department is committed to commencing full payments on 1 December next, the earliest date possible under the regulation. The target date of 1 December for commencement of full payments is particularly tight taking account of the fact that this is the first year of the new scheme involving a complete new system and more than 154,000 applications must be processed. Therefore, we will not make advance payments this year. However, in the context of the new charter of rights for farmers, I am committed to requesting the European Commission to provide for advance payment on an ongoing basis with effect from 2006. It should be noted however that if the European Commission were to agree to the making of advance payments, for budgetary reasons it is unlikely that any such payments could be made before 16 October each year.