 Thank you very much. I must admit you know with the European edifice sort of visibly crumbling and the gorgeous weather outside to get you here to talk about farm policy yet again is it makes me slightly uneasy but I suppose in in defense of the topic you know clearly we have become much more aware of the importance of protecting and maintaining our natural environment we were meeting in the same week as the Rio plus 20 meeting is going on and even at a more prosaic level if we think about the debate around the European budget in the coming multi-annual period and Gina's excellent background paper tells us that the Commission proposal is for payment appropriations over the seven years of 972 billion euro now a number of the the net contributor member states have argued that they are tightening their belts at home and the European Union should do the same and they have suggested perhaps reducing that by around a hundred billion or so and what we're talking about today the greening of the cap would actually cost us over that period 70 sorry not 70 90 billion euro so you can see that if you're trying to find a hundred billion and if you think that you know what is being proposed are on the table regarding greening isn't very sensible then you can see where greedy eyes might might want to look so just just in terms of the sort of context of what we're talking about now the Commission as everybody knows put forward its legislative proposals for the revised cap regulations and it has sort of three major themes redistribution between the member states at the targeting of the direct payments and the greening of the cap mainly the direct payments but there are other one or two other elements involved as well so greening is really in a sense the big idea of Commissioner Chalice's reform and but it has proved very controversial it's not everybody's in favor of greening it's hard to be against a better environment but the particular measure is that the Commission has proposed to implement and to achieve its targets have proved very divisive we have the environmental NGOs on the one hand at least initially coming out and saying look it's all green wash it's not greening we have the farmers saying look you're you're undermining our competitive ability our ability to produce more food which is what the world needs at this time and you have the member states throwing their their hands in the air and saying oh my goodness yet more bureaucracy yet more complexity and we're trying to simplify the cap so you really have had a range of quite negative reactions in many ways to what the Commission has proposed so what I want to try to do in the sort of 20 minutes I have is to really try to explain the issues at stake and I know looking around that many of you in the audience are perhaps more expert on the details than I am but I want to try to avoid the details I want to try to really take the perspective not so much of the farmer and where obviously this is hugely important and the details become extremely important but rather to take the perspective of the taxpayer and really to try to sort of paint the broad picture rather we can get into the details if people want during the question and session so really the kind of basic theme is you know are we getting are we going to get value for money which I think is a reasonable question to ask it in this time of economic crisis are we going to get value for money in terms of additional environmental benefits from what the Commission is proposing and we might sort of say well why greening and I think the answer is pretty obvious there is no doubt that the natural environment across Europe is under stress we have very good documentation from the European Environment Agency on this biodiversity is declining despite the commitment to achieve stable stability in biodiversity by 2020 there have been improvements in water quality but nonetheless it's highly unlikely that or shall I put it the other way it's highly likely that a significant proportion of Europe's fresh waters will not reach good quality status by by 2020 as required under the water framework directive we have problems with soil erosion diminishing soil organic carbon and we all are aware of the climate change greenhouse gas emissions which represents a substantial challenge for the farming sector and you know there is a sort of growing on ease and concern about the resilience of the type of agriculture that has developed over recent decades to cope with you know pests and diseases the loss of ecosystem services and so on so I think there are really major challenges and it is correct that we try to use public policy to address these challenges the question is of course how best to incentivize farmers and other land managers to adopt farming practices which contribute to improvements in these environmental outcomes and just to sort of take up at this point the argument that you know food production is too important at this point in time to actually be distracted by by by greening it's an argument we hear that you know we can't afford to lose agricultural land in Europe to nature that we needed to produce more food for the global for global demand and of course one argument is that good environment and higher agricultural output are actually at least in the longer term they are actually complements rather than substitutes now I think clearly that is true in the longer term but at the same time I do feel that probably over the period we're talking about that we do have a trade-off but that is not to say that environmental values environmental benefits are not a legitimate goal for public policy in fact one might argue that as farm prices are expected to remain buoyant and in a sense the profitability of agricultural production is going to perhaps be be higher in the future and the opportunity cost of providing environmental services which in a sense the public has to pay for because there is no market for many of these services and that in a sense that environment is one where perhaps farmers have less need for direct income support and the environment has greater need for support and it's also interesting of course that many of the people who argue or many of the voices who argue that we can't afford at this point in time to to transfer you know to take land out of food production and you know are also quite strong advocates of biofuel policies and I would argue that in fact the biofuel mandates are doing far more to reduce in a sense Europe's contribution to food supply than greening is likely to do. Now having said that of course that's not to say that there isn't as I say a conflict and we should design policy to try to minimize the trade-off as much as possible so we do need an efficient policy and we do need a policy which justifies the taxpayer resources the very considerable taxpayer resources which will be attributed or allocated to this objective. Now greening of course is already a part of the cap and has been for quite some time so we're not starting with it with a green sheet and we have greening in so-called pillar two that's the rural development programs these are what funds the the agri-environment measures in member states what's characteristic of these measures is that they are voluntary for farmers and that the payments reflect the costs of providing the particular environmental benefits and that link between payment and cost of course makes these payments compatible with WTO green box requirements. In addition we have had mandatory greening through cross compliance standards the the GAIAC the general the good agricultural environmental conditions standards some of those concerned greening since 2003 and also in the health check in 2008 we had greening introduced through article 68 technical terms many of you will be aware of but essentially it allowed for the first time some pillar one money to be used to support agricultural activities which were beneficial for the environment and indeed the Irish government has used that opportunity to support farming in the Berlin for example but that was the first time that we actually had payments through pillar one for greening purposes. Now in terms of the options available to the commission so the commission wants to do something with greening how to go about it and essentially there were four options on the table one was to pursue greening through strengthening pillar two which indeed had been increased as a share of the cap budget through the Fischer years through the Fischer bull period and the difficulty here of course is that there was clearly no willingness on the part of the member states to increase the pillar two budget and what's important to recall here is that the pillar two budget the share of the cap going to rural development as opposed to the direct payments and market support pillar one element is not going to be determined by the agricultural ministers that is part of the debate on the multi-annual financial framework which is being discussed by the European and foreign affairs ministers in the general council so in a sense the agricultural people really have very little outcome very little influence you might argue on that particular debate but as it was quite clear that there wasn't any real appetite to continue increasing the share of pillar two in part because pillar two is co-financed by the member states and many member states are having difficulty coming up with their share of the the funding in order to draw down the EU funds so they didn't want more of that another possibility would have been to have raised the GAIAC standards these mandatory standards for good agricultural environmental condition which farmers and are required to observe in order to become eligible for the pillar one payments and we come back to to look at that in a moment a third option is what was called conditional greening now this had a brief appearance in the Albert des report and the first version of the Albert des was the rapporteur for the Committee on Agriculture and on the the Commission's communication in 2010 setting out its vision for how the cap reform might might look and Albert des I met him when I was there in February very nice man he got roasted for this particular proposal and it disappeared from his final report but conditional greening would have meant that in a sense farmers would get their green payment in pillar one by enrolling in a sort of an entry level of basic agri-environment scheme in pillar two so in a sense the the bureaucracy and so on of monitoring and auditing and so on that would be part of pillar two where member states are well used to doing this they run these schemes now for over two decades but the payment would come from pillar one but as I say that's not a runner so we have the fourth option which was to pursue further greening through pillar one which is what the Commission opted for and their legislative proposal I just sort of quote an important element is to enhance the overall environmental performance of the cap through the greening of direct payments by means of certain agricultural practices beneficial for the climate and the environment that all farmers will have to follow which go beyond cross-compliance and are in turn the basis for pillar two measures a payment 30% of the annual national ceiling of each member state for the pillar one for farmers following agricultural practices beneficial for the climate and the environment three are mentioned crop diversification maintenance of permanent pastures and ecological focus areas and organic farming is automatically assumed to meet the criteria an issue which I'll come back to and small farmers this is small farmers enrolling in the so-called smaller farm scheme would be exempt from the requirements so just to sort of in case people are not fully aware we're going to be talking about these three measures as a crop diversification the idea here is that any arable farmer should have a minute should have at least three crops at any one at any one time where the arable land exceeds three hectares that was the commission proposal and and it was was not used entirely for for grass production so it doesn't affect grazing livestock farms this is really a measure for arable farms and farms with permanent crops then the permanent pasture requirement that farmers shall maintain as permanent grassland actually the areas of their holdings declared as such in the claim year 2014 we'll come back to that year in a moment but the idea that farmers at the individual holding level should maintain I think to the tolerance of about five percent but they should maintain as permanent grassland the that area of permanent grassland they declare in 2014 just to make the point that there is already a requirement to maintain the level of permanent grassland in a member state okay so that already exists which is a bit different to the other two requirements the commission proposal would move it from the member state where the idea is perhaps you could make up for a farmer who plowed grassland in one part of the country by a farmer who took land out of arable farming in another part and this would now apply at the individual holding level and the third measure is the so-called ecological focus areas farmers again it's arable arable land and permanent crops shall ensure that at least 7% of their eligible hectares so that's excluding areas under permanent grassland is ecological focus areas and they give a number of illustrative examples this isn't a full list land left fellow so if you leave land fellow terraces if you have slopes landscape features which would include things like hedges lines of trees small water areas and so on buffer strips along waterways and certain types of forested areas so the commissioners very careful to point out that he doesn't intend this to be set aside we had set aside as a supply management measure in the past where farmers were required to take land out of production and leave it fellow he sees the this is quite different to set aside this is intended to promote environmental and ecological benefits and we'll see of course that whether that happens a lot depends very much on the management of these areas now the novelty of the Commission's proposals as I say mandatory greening in pillar one why well three reasons first of all the Commission argued that pillar two is inadequate in terms of really focusing in on the areas the farmland areas where the environmental pressures are greatest pillar two is a voluntary scheme obviously if you enter the scheme you accept certain obligations those obligations have a cost so it's clear there will be some self-selection of farmers the farmers for whom it because it's easiest to meet the requirements will be the ones who will join the scheme and if you're an intensive arable farmer if you're an intensive dairy farmer you're probably not going to be interested so only 24% of the farmed land area is actually enrolled in pillar two schemes and the pillar and the Commission has consistently argued that they want every farmer to be involved and that wasn't going to be possible they argued through pillar two the second reason I will explain the lack of political support to increase the budget for pillar two so if only 24% of the land is covered enrolled at the moment clearly you'd need a much bigger budget if you wanted to get up to close to 100% and the third reason which I think is probably at the heart of things is what the Commission documents called visibility in other words what we are engaged in here is an exercise really to justify the continuation of the stream of direct payments it was clear that the old arguments they were compensation for price reductions and so on no longer were convincing how do you justify to taxpayers that farmers continue to get the stream of payments essentially you require some additional conditionality some greening conditionality the idea here is that in a sense the stream of payments should continue but we're looking for ways and from some perspectives the minimum amount of conditions which will actually justify the continuation of the payments the other alternative is to see the direct payments we have 30% it's about 13 billion a year the pillar two schemes are about 3.5 billion a year so it would be a major increase in spending on agri-environment measures let's take that 13 billion so it means the basic payment to farmers drops by that amount and let's ask if we had 13 billion a year how would we use that money to get the maximum environmental benefit it's a very different question and I think as I would come to at the end we would actually arrive at a different answer to where the Commission has come however we're going to stick with the Commission's proposals for a moment their pillar one proposals that immediately imposes certain constraints on the type of measures which you could include or require farmers to abide by because pillar one measures are annual measures the annual payments and if you want all farmers to be involved they have to be simple they have to be generalizable and they have to be annual and that immediately limits the list of things really to the three that that we have just come come down to and just to in parentheses to make the point that it seems to me is not explicit anywhere but it seems to me that in coming to the proposals the Commission have been very influenced by the Swiss example because essentially what Swiss farmers are required to do by and large is what the Commission is proposing for European farmers there are differences but just to make the point that if you want to look at how the the greening measures might work out in practice Switzerland is where you should look at now a number of general issues and as I'm going to skip the details because we can cover those in in passing in questions I mean an obvious question why 30% where did that figure come from was it based on an analysis of environmental need of the sort of investments required to get to certain environmental objectives seems to have come from the air and as a result it's going to be very difficult to defend that position member states are already suggesting that 10% would actually be a very quite sufficient thank you very much and one of the the curious effects of taking a percentage 30% is of course that the value of the greening payment will differ across the member states because the value of the entitlements differs across the member states that of course is one of the issues that the reform is intended to address and but it it will mean that and you know I think there is an argument that if you have a basic income support payment what a Latvian farmer needs is not the same as what an Irish farmer needs but if you have a greening payment why why should the Latvian farmer get less than the Irish farmer it's harder to justify in a supposedly common policy and in fact if we actually think take it to the Irish case one of the options in the legislation is that a country can regionalize its direct payment so this is an issue we're not really talking about but another part of the proposal is that countries should move to a flat rate uniform value of the payment entitlements over over time in Ireland we we have the historic basis that means that what farmers receive as the value of their entitlement depended on what they were doing in 2000 to 2002 some farmers get a lot of money other farmers get nothing at all and so it's clearly not justifiable commission has proposed that we should move to a uniform system uniform value of the entitlement but they do say look it doesn't have to be uniform across every hectare you could you you have flexibility if you want to divide your country into regions and there's different ways you can do it by administrative boundaries you can do it by by a physical boundaries you can have different payments now let's suppose hasn't been suggest but let's suppose they the the Irish government decides to have two regions in Ireland because there is a big debate as to whether moving to to a uniform regional payment wouldn't shift payments from more productive areas in the in the country the south and east to so-called less productive areas in the north and the west somewhat skeptical of that argument but there certainly would be a shift of payments of that kind one way of sort of limiting that is that you would divide the country into two regions and have higher payments in the east and south and you would have lower payments corresponding to the sort of average that's there at the moment and in the in the west and north now the greening payment is to be 30 percent of the overall total it's not clear in the regulation whether that also has to apply to the individual farm payments but my understanding maybe you can correct me later is that indeed that would be the case so we have the situation where you're intensive dairy farmer in Waterford doing a fantastic job at producing milk on sort of the singles world ryegrass farm not much biodiversity is getting 30 percent that's maybe 200 euro per hectare and your farmer in Connemara and who maybe has very species-rich grasslands something you actually want to maintain is going to get 50 euro per hectare um you know can you justify that to the taxpayer if indeed this is meant to be an environmental payment so there's many interesting sort of general questions that arise mandatory or not the right basic regulation is confusing on this respect it's clear that the commission wanted every farmer to take up this measure but how to enforce that I mean if you're intensive arable farmer decides it's 30 percent I can actually make that by farming boundary to boundary I'm not interested and there is some suggestion that there would be penalties and the way this has been interpreted is that you could indeed lose some of your basic income payment if indeed you weren't fulfilling the greening requirements now that would be in a sense mandatory because we know how important the basic income payment is to most European farms but um if indeed that was the case why not actually simply put the requirements into the GAIAC which already apply to every farmer why create a sort of second stream of payments to farmers and indeed if it's meant to be voluntary which is quite clearly the way it's going both the council of ministers and the rapporteurs report in the comagre in the parliament suggests that there would be no penalty to your basic payment so it will be a voluntary scheme so if it's a voluntary scheme why not make it in pillar two rather than in pillar one so those are some of the general issues I'm conscious of the time so I'm going to just mention the two other big issues of course is the administration the fact that member states already are having difficulty interpreting the the regulations for the payments and spending some time in Denmark you might think if any European country could get it right it would be Denmark Denmark is facing huge fines from the commission at the moment for misinterpreting the current cap rules so there's a problem about increasing complexity and the other issue is the one size fits all the idea that you know from Riga to Ronstone that the same type of agricultural practices are appropriate to address the environmental needs that we all accept are there and you know if you talk or listen to the people from the ecology side of the fence and the biology so it seems that measures need to be much more targeted much more locally oriented than these generalized one size fits all measures and that has been the major two areas the administrative costs and the desire for flexibility which has driven in particular the council of agricultural ministers and there was a paper produced in in April at the council formally tabled by Luxembourg but I think it had the support of about 15 member states which basically wanted to give flexibility and we've discussed the other options and a menu approach a menu approach could could could take place at the EU level in other words instead of just having three measures if we could find other sort of simple generalizable annual measures green cover for example or it's actually quite hard but if you could extend the menu at the at the European level or you could extend the menu at the at the national level you could have a range of options different measures that farmers would have to choose a number of them in order to become eligible for the payment and green by definition I mentioned earlier that organic farmers would be considered exempt or exempt is perhaps not the right word they would be considered as having met the greening criteria by virtue of being organic and therefore would receive the payment and that has given rise to a number of member states have seen this as a sort of an opening in the door why not farmers who are already involved in any type of agri environment scheme I mean surely these are green by definition farmers there they're farmers who are doing more for the environment than than than other farmers why not simply say okay you're doing your bit you'll get the green payment automatically and again I think this is probably going to happen that the council minister seems to want it the com agri rapporteur has supported it but from the taxpayer point of view and farmers who are in pillar two yes they're doing more for the environment but they're getting paid for it there's a very detailed costing of each of the measures that they undertake they're getting paid for that we're now saying okay we're paying you for your your the practices you're doing in pillar in pillar two but we're also going to give you the green payment in pillar one I think there's a real issue of double payment there which the commission really didn't think through in their organic farming measure so there are other issues to raising the GAI standards which I know is something that has been pushed by our own department and maybe we can come back to that and but let me just conclude because I've run over my time and just to sort of say well you know I've been critical of the proposals as I say there's a lot of detail in the three measures that has raised a lot of concern particularly in terms of how they would be implemented at farm level um what you know what would be a way forward and of course I have the luxury of being an academic so I don't I don't have to worry so much about whether one's thoughts are feasible or politically real realistic and I'm fully aware that the argument could be made look the train has left the station the commission has made its proposals the member states are engaged on those proposals the rapporteur and Campoulos Santos has in a sense actually supported by and large the the framework of the commission's proposals while making various amendments to to kind of make them a little bit more more flexible and so on but it seems to me that what we might have done is to have actually used the pillar to approach and we might have taken that 30 percent and over a six-year period we might have moved it and it could be done not by the foreign minister as it's sitting in the general council but through something called modulation it's possible to modulate it's it's there is one of the options anyway and up to 10 percent but require the 30 percent to be moved to pillar two not in one year because clearly you can't bump up agri-environment schemes which currently are absorbing about three and a half billion to absorbing 16 billion but over a five or seven-year period that would be possible and of course the basic payment would be reduced so there is a an implication there for for farm for farm incomes and specify and monitor the environmental targets it is rather extraordinary that we are proposing quite major changes in European agricultural policy without any clear idea of what are the are the objective how are we going to evaluate whether we're actually getting better environmental outcomes there's very little discussion in the impact assessment in terms of what these measures are going to achieve beyond sort of general measures so I think let's specify the measures if necessary and I think it would be necessary let's put into the GAYEC and where member states do have some flexibility interpretation and the three measures that the commission has proposed and so these would be offered sorry let me going a little bit too fast so I'm suggesting one could have modulated the money to pillar two you should specify clearly what the the targets and objectives that member states should achieve with this money you should require as part of member states agri-environment measures that they offer the three funding to support crop rotation maintenance of permanent grasslands and ecological focus areas and but I would also include these in the GAYEC standards so that it simply isn't an optional extra that it does in a sense deal with the commission's concern about universality and indeed I would go further and suggest that resources should be shifted from those member states that are not you know don't implement agri-environment measures which are sufficiently successful in terms of the objectives and to shift resources over time to those member states that actually are achieving overachieving on the environmental benefits that would be my suggestion as I don't accept I agree that it's probably not politically realistic but I think it's only fair to at least put my own thoughts on the table when I'm perhaps critical of the commission's approach thank you very much