Vol. 601 No. 5
47 Mr. Penrose asked the Minister for Agriculture and Food if her attention has been drawn to the continuing increase in the price of farm land identified by the Central Statistics Office, which is running considerably above the level of general inflation; her views on the implications of this rise for farmers who wish to expand or persons who wish to enter farming for the first time; and if she will make a statement on the matter. [14185/05]
Low levels of land mobility have been a long-term feature of Irish farming. The substantial increase in land prices in recent years and the relatively small acreage that is placed on the market annually demonstrate that this situation has not changed. Agricultural land prices have increased by almost 300% from €4,967 per hectare in 1993 to €14,379 per hectare in 2003, the latest figure available. In addition, both the volume of land available for purchase and the average parcel of land sold has decreased significantly. The increase in price reflects a combination of a shortage of land on the market and increasing levels of demand from both agricultural and non-agricultural purchasers. According to the Central Statistics Office, in recent years less than 0.2% of agricultural land has been placed on the open market for sale. The means by which land has changed ownership is through gift or inheritance within families.
Irish farmers have responded to this by altering their behaviour. Rather than buying, they are now leasing the land they need to expand. The high cost of purchasing land has encouraged many farmers who wish to expand their enterprises or enter agriculture to opt for leased land. Almost one fifth of all agricultural land is leased, with one third of Irish farms leasing in some portion of land. For meaningful farm planning, leasing is best done on a long-term basis. The Government has a number of incentives in place to encourage this and to improve the overall levels of land mobility. To this end, my Department operates an early retirement pension for retiring farmers who dispose of land either by sale, transfer or long-term lease.
There are generous income tax disregards for farmers who lease out land on a long-term basis. Lessors aged over 40 years of age can currently avail of annual exemption thresholds of up to €7,500 for leases of five to seven years and up to €10,000 for leases of seven years or more. This has undoubtedly encouraged the better utilisation of land and facilitates better long-term planning by farmers who wish to increase their scale of production at a reasonable cost without having to purchase. There is also a series of measures in place to help reduce start-up costs for new entrants. These include a number of generous grants and tax reliefs. For young, suitably trained farmers there are a number of attractive schemes, including an installation aid grant of €9,520, 100% stamp duty relief on land, a 90% relief from capital acquisition tax and 100% stock relief for four years for eligible farmers.
These are pragmatic solutions to allow those farmers who wish to do so to expand production. Anecdotal evidence points to further increases in land prices in recent times caused by the implementation of the Luxembourg Agreement and the financial platform to be provided by the single farm payment. The Government will continue to review its measures to improve land mobility and is always conscious of the need to encourage production farmers to be able to expand.
Having such a small percentage of agricultural land being offered for sale is clearly one of the factors that will influence the price. Leasing the land is one of the options, as the Minister pointed out. The early retirement scheme is now in place and we have had long discussions recently on that. We would like to be assured that any retirement schemes in place will be appropriate to the needs of those people who opt for them.
Does the Minister think that the installation grant, at €9,250, is adequate given the high start up costs for farming? There are other reliefs as well, but the grant still seems a very small amount.
This has been an issue of considerable debate over the past few years. Macra na Feirme has been anxious to increase installation aid. It is an issue for review and consideration. I am concerned about the early retirement scheme. It is part of the rural development package and we have to see how much money will be made available for the next tranche of EU funding. However, we are trying to encourage most people to stay in employment until they reach 65, yet at the same time we are trying to encourage others to transfer land to allow younger people into farming. We need to develop a partnership approach where young people can be encouraged to take up farming while at the same time leaving 50 to 55 year old farmers in a position to farm adequately.
The early retirement scheme is driving people crazy because it is not index linked, nor is any other scheme in Europe. When people get an entitlement to social welfare, they often do not realise that they must advise the Department of their eligibility. There are also issues with overpayments and so on. Early retirement was very important when self-employed people did not pay PRSI and did not pay into an adequate pension scheme. I am anxious that farmers get involved in private pension schemes as well as paying a PRSI contribution. We will have to look at this, although not in the short term because a new scheme is being introduced.
I do not know if we are doing the right thing by encouraging early retirement because that discourages people who are active and who might change their minds in a few years time. At the same time, we want to encourage young people to be part of a farming enterprise. We have considered partnerships with regard to milk production and they seem to work well. Perhaps we should look at the issue that way and reflect it in some of our taxation policies.
I remind the House that supplementary questions and answers are subject to a maximum time limit of one minute.
Will the Minister circulate her initial response to the National Roads Authority because what that authority offers people for land purchased by CPO is a gross insult to them?
With regard to the issue of leasing, has the Minister had any discussions with her colleague, the Minister for Finance, regarding tax relief on intra-family leases? There is no exemption on these although the majority of transfers are on those lines. Has the Minister had any discussions with her colleague, the Minister for Social and Family Affairs, particularly as she is well up to speed in that area, regarding the existing restriction on people on a non-contributory old age pension who lease land? If they lease land, any income generated from that land causes a reduction in their old age pension. Therefore, there is no incentive for them to lease land.
With regard to installation aid, in light of the fact that the cost of an industrial job here is far in excess of the approximately €9,000 installation aid grant, will the Minister consider increasing that grant in line with grant aid for industrial jobs?
On the issue of leasing and social welfare, it is better for a person to lease his or her land than to have it set down as a capital assessment. Even though the capital value was changed in last year's budget, it is always worth confirming that a leasing agreement is better from a non-contributory pension point of view.
There is no financial incentive for leasing.
Over the next few years, particularly when people begin to retire, they will get a contributory pension. I remember the Deputy raised this issue previously when I was in the Department of Social and Family Affairs and it did create some angst. The issue of leasing, particularly intra-family leasing, and changes from leasing agreements into partnership agreements appear to cause some bother. Much of this area has been fleshed out as a consequence of the single farm payment. As people cannot transfer their entitlement this year but must wait till next year, many leasing agreements are taking place. Many of the changes we see and the issues being raised at clinics reflect the changes taking place with the single farm payment. This is something we must evaluate from the taxation point of view in our discussions with the Minister.
I agree there are issues that need further discussion with the Minister for Finance. He did much work regarding five issues we raised and agreed on them in the last budget. The implications and changes currently taking place will be, as issues always have been in Fianna Fáil, reflected in the generous tax reliefs made available to the farming community.
Given the Department of Justice, Equality and Law Reform purchase of land at Kilsallaghan in north County Dublin on the Meath border at a cost of €200,000 per acre, does the Minister feel the Government is a driver of price inflation with regard to agricultural land? What does the Minister think will be the effect of that price on agricultural land?
I do not agree and I will not get into that argument.
There would be plenty of land available for that price in County Roscommon.
No more than in Donegal. I was told when we started with conacre that there would be so much land available that prices would be a disaster and we would not get any money. However, prices have gone through the roof. If we look for 20 or 30 hectares now to activate an entitlement, it cannot be got. Where do we go from here?
Deputy Boyle knows that on an issue people do not want to know about, the price of land goes through the roof. Perhaps the Deputy should put his question regarding the price of land to the Minister for Justice, Equality and Law Reform.
I intend to.
The price of land in north Dublin and south county Meath is much more expensive than land where the Deputies are from or land in Aranmore.
48 Mr. McCormack asked the Minister for Agriculture and Food the plans she has to provide greater support for small farmers; and if she will make a statement on the matter. [14016/05]
I am keenly aware of the need to make available appropriate supports for small farmers. In this regard, small farmers benefit from all of the supports, within the legal framework of the European Union, administered by my Department. One of the areas where this is possible is the rural environment protection scheme. The latest version of the scheme was introduced in June 2004. In addition to an average increase of 28% in payment rates, payment of €200 per hectare is also provided for the first 20 hectares, €175 per hectare for the next 20 hectares and further payment digression thereafter.
Under the CAP Rural Development Plan 2000-2006, compensatory allowances payable in the disadvantaged areas moved from a payment per animal to a payment based on area. Under the area based scheme, farmers in the disadvantaged areas with a minimum stocking density of 0.15 livestock units per hectare can qualify for payment on up to 45 hectares of land. Approximately 99,800 farmers qualify for payments totalling €231 million annually. This represents an average payment of €2,315 compared with an average payment of €1,523 under the old headage schemes. The smaller farmer has benefited under the new scheme, which will continue in its present format for 2005 and 2006.
The EU Commission's proposal for the post-2006 rural development framework provides for the reclassification of disadvantaged areas. The suggested new methodology would be based on natural conditions, notably soil and climatic factors. The socioeconomic criteria taken into account to designate the current eligible areas will no longer apply. At meetings of the Council of Ministers, I have stressed that this is an extremely important and sensitive issue. Other member states have also adopted a similar position. I will continue to seek a solution that is equitable and in Ireland's interests. I cannot be definitive as to the shape of that solution, since negotiations are still in progress.
With regard to the dairy sector, under the milk quota restructuring programme which I announced before Christmas, small farmers again receive consideration, in that producers with a quota of less than 350,000 litres will be able to purchase twice the amount available to larger producers in the same co-operative area. Moreover, younger farmers with less than 350,000 litres will have priority access to a further 25% of the pool.
Additional information not given on the floor of the House.
Priority was given to applications from small scale producers under the milk quota appeals tribunal hardship scheme for 2004-05. Under the single payment scheme, there is provision for modulation whereby a reduction of up to 5% is made in each farmer's entitlement to fund certain rural development measures. However, this money will be refunded in respect of the first €5,000 of each farmer's single payment. The result is that up to 45% of Irish farmers — essentially those in the smaller category — will not be affected by modulation. In so far as it is possible, therefore, support is provided under my Department's schemes, for smaller farmers. Support is also available to eligible farmers under the farm assist scheme, administered by my colleague, the Minister for Social and Family Affairs.
I thank the Minister for her reply. Given that farmers with less than 20 livestock units are not eligible for grant aid under the current structure, it will be difficult for them to survive. Does the Minister accept farmers in counties such as Cavan and Monaghan who went into pig and poultry production on small acreage are not eligible either while mushroom producers are in serious difficulty?
I thank the Minister and the Minister of State, Deputy Brendan Smith, for their efforts to designate the remainder of County Monaghan as disadvantaged. It proves the Minister's predecessor ignored the issue and failed to deliver. I pay tribute to both of them.
The poor farmers in Wexford were left out again.
I refer to the Teagasc office in Bailieboro, which is to close. How can small farmers survive if advice is not available within 20 or 30 miles of their homes? This is unacceptable and cannot be tolerated. If small farmers are to remain in business, they must be given realistic grant aid and advice regarding alternatives to generate income outside farming. If that is not done, the industry will change dramatically in the next five years.
People in my county used to be envious of Deputy Crawford's county when it came to intensive farming. I agree there are serious issues in the pig and poultry sectors. We have met everyone involved, including local authority officials, public representatives and the farming organisations, and we are working together on a partnership basis to address these issues. The Minister of State, Deputy Browne, and myself are examining alternative methodologies to reduce costs in these sectors.
I have been saying that for 12 years but nobody will listen.
We are all listening. Mushroom producers have been through a difficult time in recent years. While the number of producers has reduced, the output is still good. We are anxious to maintain and develop the industry. We have provided support and investment and Bord Bia has done a great deal of work to promote the industry.
Deputy Naughten wants commercial farmers to be looked after while Deputy Crawford is looking out for small farmers. There are a few large farmers in his constituency. New methods must be developed to support different farmers. REPS has been helpful for small farming enterprises. With regard to alternatives, we have debated why farmers are not going into organic farming, despite the significant money being made available in this area, which is not being taken up. Free range farming also presents a significant opportunity. It is almost as easy, if not cheaper, than organic farming. Members should visit the farmers in County Louth who have taken up free range farming. They have done well and they achieve higher prices for their products. We must think outside the box.
The Teagasc office issue is a kick for touch job. The issue has been raised and the three Ministers will meet Teagasc representatives in this regard. However, the issue must be examined in a pragmatic, sensible way. Will we approach this in a professional manner or will we leave the service as it has been for the past 40 or 50 years? Teagasc's advisory service is superb but a first class service, including an outreach facility, must be provided while working with farmers. Many Teagasc employees go out and about to talk to farmers and they are very much part of the community. A number of issues arise regarding the closure of offices, which are politically sensitive. We will examine them but the Teagasc board makes the decisions, not the Department.
It is ridiculous. Teagasc is short of money.
Teagasc has plenty of money. A more modern approach to farming must be taken and this can be reflected in many ways. The smaller farmer could be as adept as the larger farmer at adopting the new approach. The Department's role in providing support will be examined. We will also examine the way in which the role of Teagasc will change because farming has changed. The three Ministers will discuss these issues with the Teagasc board in the next fortnight.
49 Ms B. Moynihan-Cronin asked the Minister for Agriculture and Food if it is intended to provide additional aid for farmers who may face significant extra waste management costs arising from the EU nitrates directive; and if she will make a statement on the matter. [14188/05]
Additional aid to farmers to enable them to complete investment work required to comply with the provisions of the EU nitrates directive has been provided for under the farm waste management scheme. Under Sustaining Progress in 2003, it was agreed that improvements would be made to the grants available under the scheme and this commitment was achieved by the introduction of a revised scheme in January 2004.
Consultations are ongoing with the European Commission regarding the action programme for the implementation of the nitrates directive in Ireland. The question of further changes to the conditions of the farm waste management scheme will be considered in the light of the requirements of the action programme, when agreed.
What discussions has the Minister held with the farming organisations? Are they ongoing? When is she likely to reach conclusions arising from these discussions?
She met a number of representatives in Donegal recently.
I meet representatives of the farming organisations ad infinitum. I was seriously considering building a flat for a number of them because I see them two or three times a week. Negotiations are ongoing. I instructed my Department and Teagasc to evaluate the current needs and to examine new earthen banks, wintering pads and so on. That work has been done and we have engaged in a great deal of consultation. There will be further consultation over the next number of months to address this issue, which is at the top of the agenda of all the farming organisations.
I appreciate the Minister has had ongoing meetings with the personnel from Teagasc, especially in her constituency regarding pigs and poultry. Some issues, such as the technicality of transferring slurry and manure of a definite value from one farm to another, need not be significant and could be solved, but it is now tied up in red tape. An elderly farmer who is not fully utilising his land could utilise this valuable asset but instead he is required to sow bags of imported fertiliser. Can an effort be made to remove some of that red tape? A farmer must have a C2 before he can accept manure from a pig farmer. If we were sensible we could get around many problems without major expense.
Deputy Crawford is correct and this issue has been raised by the cross-Border group and pig farmers. Another practical issue is that there are many part-time farmers and it is easier for them to spread artificial manure on a Saturday as opposed to meeting another farmer to acquire organic manure. Teagasc and farmers state that organic manure is better than bags of bought fertiliser. We have examined this from a REPS point of view. People are afraid of it, which is silly as it is organic.
They are afraid that they will break a rule as that would mean they would lose their single premium.
We are examining that issue and other measures such as reducing water content, change of feed and methodologies of farming. The bottom line is that we sent our people abroad to investigate and learn as much as possible from what is happening in other countries to address this matter. In Denmark, there are spread lands, but there are still difficulties.
50 Mr. Cassidy asked the Minister for Agriculture and Food the expected tree plantings in 2005. [14134/05]
It is not clear at this stage what the planting outturn will be for 2005. Planting outturn is entirely dependent on demand. Most new planting is now carried out by farmers, and demand from farmers will dictate how many hectares are planted this year. Best estimates at this time are for a planting level of between 11,000 and 14,000 hectares.
This year €124 million, the largest allocation in the history of the State, is being provided to enable farmers to seriously consider forestry as a land use option that will provide a generous income for up to 20 years, with 100% of the planting costs being met by public funds. This, together with the opportunity of planting up to 50% of a farm holding while still retaining the full single payments entitlements, must make forestry an attractive proposition. In addition to the planting and premium payments, my Department also funds a wide range of support schemes, including provision for the construction of forest roads and woodland improvement. An active research and development programme pursued by COFORD is also funded by my Department. Forestry provides a real land use alternative that is both economically and environmentally sustainable over the long term and one which offers a real future to farmers, their families and their communities.
Forestry has a key role to play in the environment. Forests are "carbon sinks" which trap and hold the carbon created by our modern economy. It provides us with clean air, recreational areas and new habitats for our wildlife. However, to maximise these benefits we must continue to plant. The combination of generous grants and premiums with the new stacking concessions means that there has never been a better time to plant.
The proposals contained in the draft rural development regulation, under negotiation in Brussels at present, will have implications for our ambitious afforestation programme, which under Sustaining Progress targets an annual planting level of 20,000 hectares. Certain improvements in the proposals from a forestry point of view have been made and while recognising that forestry is only one element of a wide-ranging rural development proposal I will be pressing for an outcome on forestry which best suits the particular needs of this country.
Has the Minister of State considered the implications of the early retirement scheme? Farmers on the early retirement scheme cannot apply to get the enhanced grant available to someone who has been farming full time. Will the Minister of State comment on that? The Minister of State is aware of a particular situation regarding grant aid in my constituency. Are there plans to review the provisions for planning permission to ensure that planting takes place in a sensible and appropriate manner and that communities and individuals are not isolated by the type of planting that takes place?
The rural development regulations are currently under discussion in Brussels. We must debate that and bring it to a conclusion.
Is the Minister of State confident that it will be changed?
The Minister and I are working closely to achieve the changes required——
We do not have much support.
The process will be spread wider and it will be more difficult given the ten new member states in the EU.
The Minister of State has proved to be a great political fighter in Wexford.
We have set up a stakeholder's committee within and working closely with the Department and a number of strong representations have been made to Brussels. We have been working closely with local authorities throughout the country on planning guidelines. Some local authorities adopt a strong line on planning permission and others do not. Representations have been made by Deputies across the country from all sides of the political divide and I have been in contact with a number of local authorities to ensure that afforestation continues and serious impediments are not put in its way in the future. I am aware of some of the problems in Deputy Naughten's constituency. I understand they might now be solved.
51 Ms B. Moynihan-Cronin asked the Minister for Agriculture and Food her views on the very small increase in farm incomes in 2004 as reported by the CSO which are not keeping pace with inflation; the proposals she has to improve farm incomes; the proportion of farm incomes which is derived directly from payments from her Department; and if she will make a statement on the matter. [14189/05]
In February 2005 the Central Statistics Office reported a 3% increase in aggregate farm income for 2004. It calculated that the value of the cattle, sheep and pig sectors increased by approximately 8.3%, 6.1% and6.2%, respectively. From an income perspective, the livestock sector had a reasonably positive year, with the dairy sector experiencing steady milk output and prices.
These improvements reflect continuing positive trading conditions on EU markets for beef with consumption within the European Union exceeding production, good national and international demand for sheep meat and strong pig prices, while steady demand for dairy commodities helped maintain milk prices. The consumer price index, which measures the annual rate of inflation in Ireland, increased by 2.2% during 2004 so the increase in aggregate farm income was marginally higher than the rate of inflation.
This increase in incomes should be viewed in a positive light when account is taken of the fact that a substantial amount of the payments on 2004 premia entitlements will be paid this year in conjunction with the single payment scheme. In the past few years an 80% advance was paid on many premia schemes. In 2004 only a 60% balance could be paid. Therefore, the 2005 figure will include a 40% balancing payment due on livestock premia compared with 20% in the previous years.
To underpin the financial stability of the sector, my Department operates a range of measures, including market supports and direct payments aimed at supporting farm incomes. In 1990 direct payments accounted for 23% of aggregate farm income. Since the CAP reform of 1992, direct payments to farmers have risen and by the late 1990s they accounted for 50% of aggregate farm income. Direct payments paid by my Department to the farming sector in 2004 amounted to €1.64 billion or 74% of aggregate farm income.
I have vigorously pursued the goal of supporting farm incomes by maximising the level of direct payments to farmers, ensuring that the European Commission utilises all available management tools to support the markets, and by providing the best possible development framework for the sector. These very substantial direct payments reflect the real commitment of the Government to support farm incomes. These payments are in addition to other forms of market supports and grant aid for investment in farm structures.
I appreciate the statistics on the current situation of the entire farm industry. A significant factor is the large drop in the number of full-time farmers. The number of part-time farmers has increased accordingly, although not quite in the same proportion. What plans are in place to ensure the viability of those part-time farmers? Off-farm income will become more significant than it is currently.
I agree with Deputy Upton. As she is aware, the review carried out by former Deputy Alan Dukes indicates the number of farmers involved. That number is detailed in the reply to another parliamentary question, but I cannot locate it. There is a change in profile of farmers. Many of them are involved in part-time farming and it is difficult to get young people to enter farming on a full-time basis. There should be a balance between both.
I do not agree that anything below a certain livestock unit is uneconomic. While it may be uneconomic in some terms it has an economic advantage in that it is part of the fabric of our rural society and that is the way it should be. We have tried to provide the opportunity, through the single farm payment, to those who wish to expand to do so and decide the way they want to go forward when it comes to the development of their enterprise as they are not now tied into retention periods, stocking densities or whatever. The change taking place in respect of practical issues such as marts being held in the evening to support part-time farmers, the provision of education at night and similar ideas reflect what is now happening in agriculture. We should try to achieve a fair balance but we must give particular supports to the people in farming for the long haul, who wish to have a viable income, and allow them to develop and flourish. Equally, there is nothing wrong with part-time farming. It allows investment as a consequence of an off-farm income being available to farmers.
I will give the Minister another statistic to consider as she has doled out many of them in the past few minutes. Since her Government took office in 1997, 70 farmers a week have left agriculture. In the context of the single farm payment post-decoupling and the proposals on the nitrates directive, farmers with less than 20 livestock units will be in severe difficulty, as will the large commercial farmers. In respect of the smaller producer, however, traditionally many small producers in some parts of the country would have used ring feeders for wintering out cattle. That can no longer happen. Teagasc must focus on alternative methods, whether in respect of storage, wintering of cattle and alternative products such as organic products.
In that respect, will the Minister ask Teagasc and the other Ministers, when she meets them, to reconsider the closure of the farm in Ballinamore, County Leitrim? It has a major benefit in terms of the type of marginal land, which could be used as a test farm to try out new enterprises that could provide alternatives for many of those part-time and small farmers in the western region, whether in respect of slurry storage, new wintering out procedures or alternative products, be they free range or organic.
I will toss back that low ball to the Deputy and also send him a curved one. The reason many people have left farming is that there are better opportunities available due to the good economic climate that has been supported and progressed by this side of the House.
They can do two jobs now.
They could do three jobs if they could get away with it. It is a little like ourselves, except we get the same salary.
On the other available initiatives, Teagasc has provided me with the results of some work on earthen banks. It is now preparing guidelines for me. In the next fortnight it will complete some more work with regard to alternative ways of wintering out cattle. That will be made available to me in the next few weeks, at which time it will be made available to everyone.
On the issue of 20 livestock units, I indicated to Deputy Crawford that I am anxious to deal with these issues.
Answer the question, Minister.
Ballinamore is closed. It is for sale. The cattle have been slaughtered and I would rather not hear any more about Ballinamore. I say to people in the local communities and the county councils that Teagasc is favourably disposed to facilitating any community initiative people wish to progress. Much of the work that took place in Ballinamore has been transferred to Ballyhaise, which is just down the road.
