Before attempting to answer these questions, I should give more background information about what is happening in Brussels. The proposals were presented in January and were discussed at the Council of Ministers at the end of January. At that point, Ministers gave their broad political responses to the proposals. Since then, they have been discussed at the Council meetings in February, March and April. The April meeting took place just yesterday. In between the Council meetings, the proposals have been discussed at committee level where civil servants represent member states and go into the detail of the proposals at some length. That process is not yet finished.
A number of Deputies and Senators raised technical points about base years and about the effect on dairy farmers, young farmers and farmers in the early retirement scheme, some of which we may be able to answer. Mr. Andy McGarrigle has been attending the relevant committee and will attempt to answer them. We may not have answers to other questions because the proposals have not been fully teased out and, in certain cases, the Commission has promised to respond to the difficulties member states have presented at these meetings. We do not know yet what will be the Commission's response to those difficulties. There is a certain amount of uncertainty, particularly on the technical aspects of the proposals. There is obviously uncertainty about the entire matter. It is appropriate to begin with Deputy Timmins's question regarding when the whole business will be completed.
The Greek Presidency aims to have the proposal agreed by the end of June. We believe this will be a difficult proposition. There is a link with the WTO, as Deputy Timmins mentioned, and the most recent deadline, 31 March, for agreement on modalities, or broad rules for the WTO negotiations, has been missed. The next milestone in the WTO negotiations is a ministerial meeting in September in Mexico. There are two schools of thought in the EU in approaching these negotiations. One argues that we should negotiate on the Fischler proposals, reach agreement in June and July and then attend the Mexico meeting, stating "thus far have we decided to go and no further".
The other school of thought argues that if that is done, a base will be created from which we will be pushed by our WTO negotiating partners. Both schools of thought are highly respectable and it is a matter of judgment as to which is the best. We believe the second approach is best. We should not agree on the reform proposals in advance of movement within the WTO.
Deputy Timmins mentioned the final deadline for the WTO of 2005. However, if the deadline for 31 March had been met last week, we would know the shape of the WTO outcome. Nobody is saying we should wait until we know all the details of the WTO outcome before we take decisions on the reform of the CAP. Those on that side of the argument are saying we should wait until we know the shape of the outcome. If one knew the shape of the modalities negotiations, it would be sufficient to tell how far we had to go or may not have to go in CAP reform.
It is difficult to predict what the overall outcome will be of the mid-term review negotiations and it might even be inappropriate to speculate. One of the possibilities that a number of member states have mentioned is that of partial decoupling instead of full decoupling. A large number of member states have mentioned this and there is a distinct possibility that the end product will not be full decoupling but some form of partial decoupling. Again, to speculate what partial decoupling will entail is difficult and inappropriate.
The second chapter of the FAPRI report is expected on 13 May and will be made public on that date. Deputy Timmins referred to the connection with the Gulf War. I saw the press report to which he referred. I can state categorically that there is no such pressure on the Irish delegation arising from the Gulf War.
Deputy Upton asked if any good will come out of the Fischler proposals. Not much good will come out of them as they stand. This is very often the way with Commission proposals in that one has to negotiate back from them. We have a number of precedents for that, when we successfully negotiated back from the Commission's proposals to obtain a very good outcome.
On the question of measures to be put in place to ameliorate any problems that may result from the Fischler proposals, we have not arrived at that point. It would be defeatist to do so. We have not arrived at the point because it would require us to predict the outcome, which we are not able to do.
Deputy Wilkinson mentioned that some farmers are in favour of the Fischler proposals. That is also our information, but we do not know who are those farmers. Deputy Wilkinson mentioned the €5,000 ceiling, which we believe is too low. The Minister for Agriculture and Food has also said this.
The Deputy and others mentioned the distribution of direct payments. It may be that, in the EU as a whole or in certain member states, 80% of direct payments go to 20% of the farmers, but that is not the case in Ireland. In this country 36% of direct payments go to 20% of farmers with the highest incomes. Given that the CAP is not a social welfare policy, but a production policy, that is not a bad outcome. If we were to argue for equity in payments, we would encounter a number of problems. The first of these is the fact that it is not a social welfare policy, it is a production policy. We would also encounter the crucial issue that the EU does not fund social welfare policies. This would, therefore, leave us exposed to the argument of "fund-it-yourself", whereas direct payments are 100% EU-funded.
One could put the position in danger if one argued strongly in favour of a social welfare bent to the policy. Our average farm size is 33 hectares. There are countries in the EU at present that have average farm sizes of seven hectares. If one is into a social welfare policy, I suspect that the farmers in those countries are the ones who would get the lion's share. Ireland, as a whole, could lose out if there are no direct payments which are, in some reasonable way, related to production.
Deputy Wilkinson mentioned rural development. There are a number of rural development measures in the existing national development plan. Another member referred to on-farm diversification, such as agri-tourism, which is covered in the existing plan. The sort of rural development measures to be funded by this modulation being discussed are the existing measures of farm retirement, agri-environmetal schemes, the REPS - in our case - and forestry. New measures, to which I referred in my introductory remarks, will be added. All of these measures will then be eligible for these modulated funds.
Senator Coonan asked about the balance of moneys intended for future market needs. The Commission has carried out estimates of the budget until 2013. These indicate a deficit in the budget in the year 2009. The Commission also has in mind the bringing forward of further reforms, particularly in the sugar sector. It wants money to cover the deficit in 2009 and any future reforms that may take place. That is the reason the degression proposal has been put forward. We have rejected it on the basis that one does not take money from farmers now to fund possible future deficits.
We cannot be certain that there will be a deficit in 2009. If there are to be future reforms, decisions can be taken then, not now, as to how they can be funded. One does not take an automatic decision and put in place an automatic mechanism to fund reforms that may never happen.
A number of Deputies and Senators mentioned the fact that the Agenda 2000 agreement was to last to 2007, or at least until the end of 2006, and that it is unfair and unhelpful to farmers and the agri-food business to bring forward amendments at this stage. They are absolutely correct in that regard. I have two points to make. The first is that the Agenda 2000 agreement provided for four reviews in particular sectors, including the budget. Those reviews were to take place in 2002 and 2003. The mid-term review is, in part, a response by the Commission to that mandate given to it by the European Council. The other point is that the Commission, under the treaties, has the power of initiative and can make proposals on anything at any time and does not need a mandate. The Commission is within its rights to bring forward these proposals. Having said that, we still oppose the idea of fundamental reform of any kind before 2007. That is the position of a number of member states.
Senator Peter Callanan mentioned cereals reform, which Ireland, and a number of other member states, have opposed. That is all I can say on that matter at present.
The Senator and others referred to keeping young people on the land. It is difficult to say what can be done about that. The attractions of alternative employment are great. There is a great deal of hard work to be done on the land, particularly in dairy farming, and young people do not seem to like that. There is a young farmers' installation aid scheme, which is aimed at keeping them on the land and which offers significant financial incentives. The early retirement scheme also helps in that it encourages earlier retirement so that a young man or woman will not have to wait too long before he or she inherits the land. That said, it is difficult to see what more can be done.