Dáil Éireann debate -
Thursday, 19 Feb 1998

Vol. 487 No. 5

Adjournment Debate. - Installation Aid.

Mr. Naughten

I thank the Minister of State for coming here this evening.

Between 1994 and 1996 there has been a 17 per cent drop in the number of people under 35 running family farms, and there has been a 9 per cent drop in the number of entrants to agricultural colleges in the 1997-98 college year.

Farm incomes are on average just above £10,000 a year, yet the Government has abandoned installation aid for young farmers. It was one small financial encouragement which these young courageous people received to take up this difficult profession.

Young people are given no encouragement to take up full-time employment in farming. In 1996 the IDA grant-aided 13,319 jobs at a cost of approximately £11,920 per job. Yet the meagre grant of £5,600 to young farmers was cut and this is a disincentive to young people choosing farming as a career option. How can the Minister for Agriculture and Food expect young people to choose a career in farming, with its long hours, 365 days a year in all weather, with variable and unstable income and huge overheads over a stable and well paid Government-subsidised industrial job?

We are reaching a stage where there will be shortages in the agricultural employment sector. This can be seen in rural areas where people are moving to towns and cities to take up well-paid jobs, leaving rural communities without the valuable resource of young people to work the land. More young people are taking up third level courses, except, the certificate in farming course in our agricultural colleges. For the first time in ten years, these colleges are unable to fill the places on offer. This is because of the Minister's inability to display confidence in the industry and in young farmers through the provision of installation aid and proper support systems.

Fianna Fáil stated in its election manifesto that in Government it would initiate a comprehensive programme of rural development. Judging from the Minister's actions, it is a programme of rural destruction. He will be remembered as the man who killed rural Ireland. I ask him to deliver on his promise and that of the other Fianna Fáil candidates prior to the general election that installation aid would not be abandoned. Talk is cheap and the Minister now has the opportunity to deliver on this promise on which he reneged following the general election. It would be a small step in bringing to an end discrimination against young farmers at the hands of previous Governments, but especially this one. How can the Minister stand over a policy of funding one job to the tune of £11,920 while cutting grant aid for another?

Teagasc also need to maintain better contact with their green certificate students following completion of their course; it must put in place a discount scheme. It is a disgrace that it costs £550 for a young person to draw up a REPS plan with no help available. The enlargement clause in the farm retirement scheme regulations inhibits young people from entering the agricultural industry. The State will fund a young person to the tune of between £10,000 and £12,000 if he goes to college, yet it will not allocate £5,600 to a farmer.

Given the current concern about the reform of EU Agenda 2000, the Minister must instil confidence in the industry. I appeal to him to immediately reintroduce installation aid and bring forward a comprehensive package to support young farmers through grant aid, tax relief and restructuring the farm retirement scheme. This should include a proper subsidised service provided by Teagasc and other State agencies.

Mr. E. O'Keeffe

Since the early 1970s the Government has been involved in initiatives aimed not only at encouraging but also facilitating the early release of land to younger trained farmers. Direct intervention has revolved around the introduction of the scheme of installation aid for young farmers and, most significantly, the 1994 scheme of early retirement from farming. Indirect support facilitating land transfer has been through successive reforms to the tax code.

The scheme of early retirement from farming was one of the programmes introduced as part of the CAP reform measures following the revision of the Common Agricultural Policy in 1992. The scheme, which was introduced in January 1994, is helping to redress two of the main structural defects in Irish farming, viz. farm size and the age profile of farmers. It also provides a generous pension for farmers who retire and hand on their lands to younger farmers, who very often are the family successor.

The scheme has been a major success and this is reflected in the target of 7,000 participants in 1997, a year ahead of expectation. At the end of January this year 7,059 farmers had qualified for pensions totalling £66 million annually. Some 225,000 hectares has been released under the scheme to young trained farmers. They have achieved an average increase in farm size from 31 hectares to 49 hectares, which is a significant structural improvement. More than £140 million has been paid to date to retired farmers under the scheme, the average annual pension being £9,370.

Mr. Naughten

They are not young farmers.

Mr. E. O'Keeffe

The installation aid scheme has been very successful in assisting young farmers embarking on their careers. Up to the end of last year some 6,400 young farmers had been paid the installation aid grant. Under the current Operational Programme for Agriculture, Rural Development and Forestry a total of £17 million was set aside for the SIA scheme. Due to the level of demand it was necessary to suspend the scheme late last year when 3,500 young farmers had been paid representing a total public contribution of almost £20 million.

I recognise the importance attached to this scheme by young farmers and am committed not only to meeting all existing valid applications but to the reintroduction of the scheme. The Minister for Finance provided an additional £3.5 million in the budget to cover applications received up to its suspension. In addition I have gained agreement to the introduction of a revised and more focused scheme. Discussions are being held with the various farming organisations on the nature of the new scheme. There will be a meeting in this regard with Macra Na Féirme next week. When it is finalised I will approach the European Commission to ensure that the revised scheme is approved as quickly as possible.

Indirect support facilitating land transfers has revolved primarily around successive reforms of the tax code. Changes to the code over the last decade have greatly alleviated the tax burden on the young entrant to farming to the extent that the majority now entering farming do so largely free of any significant tax burden.

Stamp duty remains the most significant tax burden for the majority of transferees. Under the Programme for Competitiveness and Work this was reduced to 1 per cent for transfers to young trained farmers. However stamp duty can still be a heavy burden for some young farmers. The programme An Action Programme for the Millennium, includes a commitment to abolish this remaining tax burden and I will press to have this implemented as soon as possible. Furthermore, the changes introduced in the budget in the administration of capital gains tax relief should encourage more farmers to avail of the early retirement scheme and support farm transfers.

The Government continues to recognise that the provision of incentives to young trained farmers is central to the maintenance of a vibrant rural society and every effort will be made to ensure that the special position of young farmers is taken into account where programmes are being reviewed or new programmes are being submitted.

Mr. Naughten

I thank the Minister for reintroducing this badly needed scheme.

The Dáil adjourned at 5.15 p.m. until 2.30 p.m. on Tuesday, 24 February 1998.