Jimmy Deenihan (Kerry North, Fine Gael)
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Question 44: To ask the Minister for Agriculture and Food the discussions she has had with the EU Commission to index link the single farm payment; and if she will make a statement on the matter. [37720/05]

Mary Coughlan (Donegal South West, Fianna Fail)
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The agreement on the mid-term review of Agenda 2000 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 2000-2002 calculated at 2002 rates of payment together with the 2005 decoupled dairy premium. 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. There was, however, a proposal to provide for a reduction of up to 13% in the single payment, known as "degression", to meet future financing needs. I believe one of the major achievements in the negotiations was the removal of this proposal, which means a saving of some €420 million for Ireland over the lifetime of the agreement. The compromise agreed was to allow the Council to review the financial situation annually, from 2007 onwards, if budget deficits arise.