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Statement on the CAP (Common Agriculture Policy) made by Minister Simon Coveney TD at the Private Members Business in Dail Eireann last night

Introduction

I welcome the fact that this motion has been put to the House, because it gives me an opportunity to inform you of the facts of the matter.

This Government is fully committed to the development of the Agri-Food industry. We recognise that the agricultural sector will be a key driver for national economic recovery and export led growth. We have taken on board the Food Harvest 2020 Strategy and have worked actively and tirelessly towards implementation of the targets in that strategy.  Many of you will have already seen the progress made towards implementation of these targets as set out in the Food Harvest: Milestones for Success document that was published in July of this year.

In that connection, the CAP will be a key instrument underpinning our Food Harvest ambitions. The negotiations on the future CAP are therefore of enormous importance for this country because the policy decisions taken on foot of these negotiations will set the context and many of the conditions for the development of Irish agriculture in the years to come.

Background

The CAP debate has been ongoing since 2008 in preparation for the new Multiannual Financial Framework for the EU budget from 2014 onwards. This framework is known colloquially as the MFF and will determine the amount of EU funds available for the CAP in the period after 2013.

Policy debates on the future of the CAP have taken place at meetings of the EU Agriculture Council of Ministers and these have been augmented by a vast amount of informal discussion and analysis.  Ireland has participated actively in all of this. The European Parliament has also been centrally involved and has produced two reports to date.

A Commission communication of November 2010 gave a strong indication of its thinking and on 29 June last the Commission released its proposal for the MFF.

At this stage in the debate, there are no detailed proposals from the Commission on the future of the CAP. These are not expected to be published until early next month. The recent media reports refer to leaked drafts which have no status and which could be subject to significant changes before they are finalised and presented to Member States.

Rather than speculate on the impact of what might be in the eventual proposals, I would like to give you an outline of what we do know about the CAP reform debate to date and to present the views of Government on this.

Taking together all of the hints provided by the Commission in policy debates, in its communication and in its EU budget proposals, we know that the main issues in the upcoming debate will be the following:

Size of CAP budget

We know from the EU budget proposals that the intention is to freeze CAP spending at 2013 levels.  This represents a reduction in real terms but stability in nominal terms. As there was pressure for a substantial nominal cut, this represents a reasonable starting point for the negotiations, one that we can certainly work with. The eventual outcome will be determined by Heads of State in MFF negotiations and I will be working closely with my colleagues in Government to ensure that there is a satisfactory result for Ireland.

Distribution among Member States  

As well as setting a benchmark for the funding available, the Commission's proposals for the future EU budget provided more guidance on Commission intentions for the CAP of the future. It confirmed the intention to redistribute CAP funds between Member States and proposed that a pragmatic method be used for distributing pillar 1 direct payments that would close some of the gap between those Member States with low levels of payments and those Member States with high payment levels. It went on to suggest the use of objective criteria to determine allocations between Member States for pillar 2.

My view is that we need a pragmatic approach that looks at both pillars together.  We need to use the current distribution key as a starting point and eligible area as a comparator. On this basis Ireland has below average payment levels per hectare - for pillar 1 and 2 together - and would see no justification for any reduction in our allocation. Clearly others will see things differently and there is no certainty at this point about the outcome of the negotiations.

Distribution within Member States

There is strong pressure from Commission, European Parliament and many Member States for uniform national or regional flat rates for direct payments. In that regard, there is very little support among other Member States for the retention of the historic model, as used in Ireland.  My priority is to seek as much flexibility as possible for Member States to determine the payment models best suited to their conditions and to the development of their farming systems. I also believe that a lengthy transitional period is needed if there are to be any changes. This is a key issue for me. Other Member States are pressing for flexibility in regard to other areas of the CAP and it will be important in the upcoming negotiations to arrive at a solution that is satisfactory for all Member States, including Ireland. I have already conveyed my views on this point to the Commission and to my fellow Ministers, and I am actively seeking allies in favour of maximum flexibility and sensible transition arrangements.

Introduction of greening component in direct payments

The Commission and indeed the European Parliament are pressing for a 30% mandatory "green" component in direct payments for additional agri-environmental measures beyond current cross compliance. This was one of the policy elements mentioned in the Commission's budget proposals. The Commission thinking is to strengthen the perceived legitimacy of direct payments, and the "greening" measures being mooted include retention of permanent pasture, crop rotation and ecological set-aside.

Of course we fully support the idea of encouraging sustainable forms of agriculture and indeed this is at the heart of the Food Harvest 2020 strategy. However my view is that we need to keep things simple and to avoid creating excessive additional bureaucracy. While the greening measure that would be predominant in Ireland - retention of permanent pasture - should not create major compliance problems, the existence of separate greening conditions would complicate our single payment scheme.  We have to bear in mind that there is considerable greening already in place through cross compliance and question what value-added will derive from such a proposal. There is a further complication for Ireland in that a 30% flat-rate greening component would exacerbate the movement towards uniform national or regional payment rates. I believe we should consider whether there are alternative simpler approaches to achieving the Commission's objectives.

Capping

There is also strong pressure from the Commission and the European Parliament for introducing progressive capping of payments in respect of large famers, although, there is, equally, strong opposition from certain Member States to such a proposal. The reality is this is not a major issue for Ireland as most of our farms are small family farms.

Payments to small-scale farmers

The Commission communication suggests the introduction of a scheme directed at small-scale farmers. The details of such a scheme are still somewhat sketchy: it appears to be mainly directed towards the large number of essentially subsistence holdings in some of the new Member States. I look forward to seeing more detail on this but my initial reaction is that it needs to be discretionary for Member States to apply.

Payments to young farmers

I believe it would be very desirable to have additional possibilities in the CAP to support young trained farmers. These are the people who will drive Irish agriculture forward to achieve the targets sets out in detail in Food Harvest: Milestones for Success. I was pleased that we got a reference to this point in the Presidency Conclusions on the CAP under the Hungarian Presidency. The European Parliament has also been campaigning for special provisions to encourage young farmers and I would expect the Commission to come up with some specific proposals in this regard. I would be interested to have the option of applying measures targeted at young farmers in both pillar 1 and pillar 2.

Coupled payments

In line with the trend towards full decoupling in all Member States, I would expect the Commission to make provision for limited coupled payments - probably no more than 5 to 10% of national ceilings. I have no objection to retention of coupled payments for vulnerable regions/sectors on a voluntary basis, provided they do not distort the market. Subject to that condition, it would be useful to have a reasonably flexible and voluntary provision for funding coupled payments from reductions in the single payment. In this regard I think all Member States should have the same flexibility.

Payment for area of natural constraint

The Commission has signalled that it would like to divert a proportion of direct payment funds in pillar 1 to areas of natural constraint (formerly Less Favoured Areas). This would be in addition to disadvantaged area payments under the Rural Development Programme.  I would want this to be optional.

Rural Development

As to rural development or pillar 2 as it is also known, the Commission intention is that it it will have a greater focus on competitiveness, innovation, climate change and the environment and would cover multi-annual programmes. The Commission is also pressing for greater coherence between the different EU funds and to ensure that all objectives line up with EU 2020 strategy priorities. All of this is acceptable provided the various co-ordination mechanisms are streamlined and simple. I have considerable misgivings about the level of bureaucracy that might be involved. The priority for Ireland is to maintain support for on-farm investment to assist the restructuring that may be necessary to improve competitiveness. It is also a priority to ensure that the review of Less Favoured Areas is acceptable and that there is a sufficiently broad menu of rural development measures to meet our needs.

Market management mechanisms

Aside from direct payments to farmers and targeted support under rural development programmes, it is very important to maintain the market stabilisation supports in place in the CAP of the future. I understand that the Commission's aim is retention of intervention and other supports at safety net level. I can agree with this. The dairy crisis in 2009 showed the value of market supports and we need to retain the possibility to bring them into play when they are needed.

Summary

So to summarise: In the light of our ambitions for the sector as set out in Food Harvest: Milestones for Success, the Government has a number of key priorities in these CAP negotiations. These are:

  • To ensure that the negotiations on the next EU budget framework deliver a well- resourced CAP to support sustainable food production in the EU.
  • To retain Ireland’s funding both for direct payments and for rural development in any redistribution of CAP funds between Member States;
  • To obtain flexibility for Member States in relation to payment models and transition arrangements for distribution of single payment funds to farmers;
  • To ensure that rural development policy includes appropriate targeted measures to support competitiveness and sustainability; and finally,
  • To keep CAP processes as simple and as effective as possible and to minimise unnecessary bureaucracy for the farmer and costs for the State.

Since taking office, I have engaged actively with the Commission and the European Parliament to put Ireland’s case and I have worked, in particular, to build up alliances with like-minded Member States to ensure a successful outcome for Ireland to these negotiations that will underpin the future development and prosperity of this vitally important sector.  I am fully committed to continuing this work.

Date Released: 15 September 2011