I welcome representatives of Macra na Feirme, including Mr. Seamus Phelan, president; Mr. Raymond Brady, agricultural affairs chairman; Mr. Frank O'Mahony, agricultural affairs vice-chairman; Mr. James Kelly, agricultural policy officer, and Ms Catherine Seale, agriculture and horticulture student council chairperson. Before I ask them to commence their presentation, I draw to their attention the fact that while members of the joint committee have absolute privilege, the same privilege does not extend to witnesses appearing before the committee. Members are also reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable. I call on Mr. Phelan to make his presentation.
Macra na Feirme: Presentation.
Mr. Seamus Phelan
I am delighted to have the opportunity to make a presentation to the joint committee and apologise for the absence of our chief executive, Mr. Jim McDonald, and national chairman, Mr. Patrick Kelly, who are currently taking part in the partnership talks at the Department of the Taoiseach.
This is a challenging time for agriculture. A number of issues currently before us such as CAP reform, the Fischler proposals, the WTO talks, the Book of Estimates and the budget will determine its shape in the future. One of the biggest challenges facing it is the low numbers of young people entering the industry. This is a matter of serious concern as less than 10% of farmers are under 35 years of age, 45% are over 55 years and 23% are over 65 years. The numbers attending agricultural college to study normal agricultural courses who intend to return to their family farms have dropped, despite the increase in overall numbers which is probably due to changes in agricultural education such as the introduction of diplomas and students remaining in college longer. The numbers of new enrolments continue to fall.
Agriculture remains an important industry, despite the attempts by some to downplay its importance. It is our biggest indigenous industry and accounts for 8% of total exports, 9.7% of our workforce and over 9% of GDP. In spite of this, young people are not entering the industry. Who will farm our 4.4 million hectares of farmland?
The difficulties facing young people entering the industry or already engaged in it can be divided into two main blocs, the first of which is lack of access to quotas or premium rights and the second, the availability of land at reasonable prices. A scheme of 100% stock relief was available to young farmers until the last budget but it has not been continued. The Minister for Finance has not announced its termination, but neither has he said it is to continue. It was very helpful to young farmers. If they expanded their stock numbers by the end of a year, they could have availed of this relief and not paid tax on it. This was important because their home farms are often not as well developed as they could be or farmed to their full potential. The 25% stock relief available to all farmers was discontinued in the budget. This was not so bad but a drop from 100% to 0% was a serious blow for young farmers. It has had a serious affect on a small number of them. This is something that must be addressed. The measure must be reintroduced.
The on-farm investment scheme is also of vital importance. It is currently available and offers a 40% grant, to avail of which a farmer has to have less than 150 income units. If one has between 150 and 200 income units, one is entitled to a 20% grant. The uptake of the scheme has not been at the anticipated level because it is too restrictive. We believe the limits should be abolished. When the upper limit of the installation aid scheme was abolished, the numbers availing of the scheme increased dramatically. Farmers want to avail of the schemes but cannot do so as they are too restrictive. The young farmer top-up element of the scheme, available to young farmers for five years after they take over the farm, is of particular concern. As some young farmers took over their farms in their early twenties, it is unreasonable to expect them to carry out all developments within five years. This should be extended to those under 35 years. This is an EU ruling that should be changed as it does not make any sense.
The early retirement scheme has played a large part in encouraging the older generation to step out and allow the younger generation to enter the industry. It has worked well and was quite attractive when introduced but with the passage of time and the erosion caused by inflation, it is no longer attractive enough to encourage young people to enter the industry. Increased funds need to be allocated to make it more attractive.
The availability of land is the other big limiting factor for young farmers. The price of agricultural land is excessive. It is unreasonable to expect young farmers to purchase land on the open market and the only alternative is land leasing. While conacre is the traditional system, it is not great. We need to encourage a longer-term leasing system. If the lease is for seven years or more, tax relief of €7,600 is available. If it is between five and seven years, there is tax relief of just over €5,000. We want both of those ceilings to be increased, maybe up to €11,000 for seven years and €8,000 for five years. The most important part, though, is to get rid of the age exemption which means that one must be over 55 to avail of it. If that was done away with, if any farmer who no longer wanted to farm could earn the money tax-free, there would be more long-term leasing, which would make more land available at reasonable prices to younger farmers.
The principal issue with which we are concerned in the long-term is the Common Agricultural Policy and its reform, and the Fischler proposals. The central plank of the latter is decoupling. Macra as an organisation is opposed to the principle of decoupling, which involves the separation of payments from production to a land-based arrangement. If we make that quantum leap, it will be much more difficult to defend the payments into the future. The other problem is that those payments will be based on an historical reference. Younger farmers just entering the industry with a low historical reference are at a severe disadvantage. This will be very attractive to the older farmer, perhaps with no successor identified, who can use this to obtain the same money he or she was getting up to now through the various schemes, which at the moment will be subsidised with other costs, and wind down stock numbers and gradually reduce his or her scale of farming. To that type of farmer it is an attractive proposition, but to young farmers who want to develop their farms, it is not attractive and we are very concerned about it.
The nitrate directive is another serious concern to our members. Whatever limit is put on nitrates should be based on solid scientific knowledge, not hysteria or wild comments in the media based on the perception of what is causing pollution. That is fundamental to any measure or directive that is implemented. We are proposing that the limit imposed in Ireland should be 250 kg of organic nitrogen per hectare. Anything less than that will have a severe impact on the more intensive and commercial farmers. A lower limit might be suitable in other countries where farming is far more intensive, but for our method of farming, which is grassland-based with a long growing season, that limit is realistic and not excessive.
In the past we had the old fair system, where cattle were bought and sold by eye. We moved on, thankfully, to a system under which cattle were bought and sold by weight. It is ridiculous that the grade of the carcass in the factory is still judged by eye. We need to move to a system of mechanical grading so that we have more uniformity and more satisfaction among farmers about grading. The problem is that there is no confidence whatsoever in the grading system we have. We need uniformity, and the only way to do that is by mechanical grading. We must advance this.
We have made some progress on a number of issues, some quite recently. As I said already, the elimination of the upper limit for the installation aid scheme has worked well. Many more people are in it now than were heretofore. We also welcomed the announcement by the Minister for Agriculture and Food, Deputy Walsh, last Friday, of what we term the future inheritors' partnership proposal, in which a young person can stay at home to farm and acquire a quota in his or her own name. That is a positive step and is to be welcomed.
Thank you, Mr. Phelan. I now invite members to ask questions.
I welcome the representatives of Macra na Feirme and thank Mr. Phelan for his presentation. It is unusual to see such a group of young people at farming discussions. I agree with Mr. Phelan on the Minister's announcement last Friday with regard to the sharing of facilities, which is a positive development. There are no sour grapes, but often with measures like this I cannot understand why they cannot be done a little more speedily. Why was it going on for such a long period? I do not see any downside to it.
Stock relief was terminated on 31 December, and unless it is in the Finance Act 2003 - it was not alluded to in the budget - stamp duty relief was also due to finish on 31 December. Were there any indications during the talks whether this measure would be extended for a further three or four years? Mr. Phelan mentioned the Fischler proposals and the downside for young farmers. He mentioned earlier on, however, the handicap for young farmers caused by coming into a system of quotas. Does he not think that the proposals might be a positive development for young farmers, which may also lead to the release of land? We might ask the ICSFA about reducing the scale and winding down farms and whether it is the case that this might bring more land on stream for young farmers.
Mr. Phelan mentioned that he was happy with the removal of the ceiling on the installation aid scheme. How adequate does he think is the installation to which people are entitled at present? He also alluded to off-farm jobs and income. Can one differentiate between a young person who remains at home farming and his brother who decides not to with in regard to lifestyle and income? Is lack of income the main issue, or is it the lifestyle? Could one say it was 50:50? Where does the balance lie?
I welcome the young team. It is great to see young people so enthusiastic and committed. I thank Mr. Phelan for his excellent presentation, which was clear and succinct. He did not mention education. What is his overview on the direction it should be taking with regard to farming? He mentioned that while more people are going into education and farming, it is very focused in certain directions and accordingly skewed. Does he have any views on how that might be refocused?
I take Mr. Phelan's point about the nitrates directive being applied indiscriminately across the country, whether people are offending against it or not, but would it not be very difficult, from a bureaucratic point of view, to separate certain sections of the country and apply the directive in the way Mr. Phelan suggested, or on a regional or county basis? As I understand it, a number of other countries, even the bigger ones, are dealing with it on an all-country basis rather than subdividing it. In relation to the mechanical grading of beef, the thrust of Mr. Phelan's comments was that we have a system in place which is perhaps not sufficiently accurate to give us the best result. Does he know anything about best international practice in that area? Could we learn from other countries or have technology transferred here? Clearly, consistency is very important, both in terms of the marketplace and in terms of the export product, so that people know they are always getting the same kind of product.
I welcome Mr. Phelan and congratulate him on his presentation. It is great to see young farmers present their case so well.
Many young farmers on well financed and well run farms are leaving the industry. Why does the delegation think this is the case? It is regrettable. I agree with the point made about the crisis in farm incomes.
I welcome members of the delegation and thank them for their presentation. None of us is in significant disagreement with any of the proposals put to us. There is not much difference between the age profile of those in farming and those in the Houses of the Oireachtas. There is a shortage of young people in the agriculture sector. This presents a major problem. To what extent are the parents who are farming influencing their children? I suspect many parents are actively encouraging their children not to follow them into agriculture because of their experience of fluctuating incomes and uncertainties that are a feature of agricultural life. When I finished secondary school in the 1970s, I was one of a class of 40, 12 of whom became full-time farmers. Now, 25 years later, not one of them is still farming full-time. This phenomenon is not new, it has developed over time.
What does Macra na Feirme think of long-term, part-time farming for young farmers? Are the policies in that area or is the focus of the group exclusively on those involved in full-time farming?
Cuirim fáilte roimh Macra na Feirme as ucht theacht anseo. It is refreshing to see so many young people give their views. I was particularly impressed by Mr. Phelan's presentation.
Older people in farming have difficulties with bureaucracy and over-regulation. What does Macra na Feirme think of this? Young people might not have the same problems filling in forms. The penalties that result from minor mistakes drive many people insane and many farmers leave the land as a result. Farmers' incomes are based on the premiums they receive. There is also bureaucracy in farm transfers and installation aid.
The introduction of partnership schemes for sons and daughters was mentioned as a recent achievement. Does the group favour the setting up of partnership schemes or co-operatives among farmers who are not sons or daughters, among their contemporaries, for instance? That might be a solution to the manner in which young people are tied to their farms when their friends head away for the weekend. Partnership seems to becoming a buzzword in farming.
I also welcome the delegation. The presentation by Mr. Phelan was enlightening. I share the concerns of the farming community and rural areas about increasing hardship, the decline in the farm population and the number of small family farms. The lack of land and its price present an opening for a legislative body such as the Land Commission where the State might intervene to buy a farm that becomes available. It could then lease it at a nominal rate to young farmers in the area or establish a long-term loan to make holdings viable.
There was no mention in the presentation of organic farming which could be a solution for holdings that are not viable but where farmers want to stay on the land. There could be incentives and relief for organic farming, thus allowing a section of the farming community to survive as they fill the vacuum.
I have been involved in the farm retirement scheme with which there have been problems because it is not index linked. Those who took up the scheme seven or eight years ago find that it no longer meets their requirements.
I also welcome Macra na Feirme. What does the group think of the thrust in agriculture now towards part-time farming? Are members of Macra na Feirme happy with that role? What is the policy towards part-time farming?
Many young people involved in farming are concerned about the availability of, and access to, quotas. It is a major headache. What has Macra done about the matter? It is the greatest hindrance to attracting younger people onto the land.
What is the future for agricultural colleges? Near to my home Rockwell Agricultural College produced many top class farmers but has now closed down. There are question marks over some of the other colleges.
Is the policy officer happy with the commitments given by the Government? Which have not been delivered?
I join in welcoming the delegation from Macra na Feirme, of which I am still an associate member and which is very close to my heart.
The proposals in the first section of the presentation deal with Government activity, or the lack of, as the case may be. Will Macra na Feirme indicate its view on the impact of the Fischler proposals and World Trade Organisation negotiations? I know our guests referred to some of the issues, but I would like them to outline their concerns in detail.
We have always seen Macra as a radical, youth-oriented organisation, removed from the mundane work we have been engaged in throughout our lifetimes. I would expect Macra to come forward with a greater concern about the Fischler proposals and to talk more emphatically about the WTO negotiations down the road because these matters will impact greatly upon farming now and in the future. What is happening now will continue to have an impact 20 or 30 years from now. In that context, perhaps our guests will also comment on decoupling.
We have also heard Professor Seamus Sheehy - I hope I am not out of order in mentioning his name, but I think everybody holds him in high regard - saying that, in essence, the quota system will be gone in five years. How does Macra na Feirme see that impacting upon us as we try to compete on world markets? I would like to hear more on that matter because people have serious concerns about it.
With respect, the issues under discussion today are minuscule compared to what could happen in the future unless we get a proper handle on the direction things will take both at European and WTO level. The provision of food aid to starving countries is a matter I raised at previous meetings and I think it is also part of the Fischler proposals. Ireland is a food producing nation and Europe is in surplus in terms of production. I would expect international leaders to assist starving countries. We should see food as the blood of life, and I thought Macra na Feirme would have addressed this issue at some point. There are so many issues on which I would like to hear the organisation's views.
I am very much at one with Macra na Feirme on the items in its paper, particularly those in section two. I have a keen interest in section 2.2 which deals with the environment. I have previously expressed to the committee, and to the Minister for Agriculture and Food when came before us, the view that farmers should be obliged to spread lime on their land and provided with assistance to do so. Half or more of the fertiliser currently spread on land goes to waste. If Macra included that alongside the other items on the final page of its document, it would be a very successful organisation and would go along way towards solving our environmental problems.
I agree with what our guests said about what the EU is trying to implement in relation to nitrate vulnerable zones. We all need to keep an eye on the fact that roughly 30% of farmers are paid 70% of the subsidies that come into this country. That says it all, and it the crux of the problem with Irish farming.
Mr Phelan
I will try to work through the questions. The first question was about stock relief and whether we have any inclination as to what might happen. At present, we do not know the position but we hope to obtain some feedback in the next day or two from the Department of Agriculture and Food through the talks process. Our hope is that there is still a chance of getting it back, but we have no inclination at present. I think Mr. Frank O'Mahony wishes to address the question about decoupling.
Mr. O’Mahony
Macra na Feirme, as a young person's organisation, is vehemently opposed to decoupling as the central principle of CAP reform. In any business or enterprise, if income or support is not linked to production, it leads to a situation where money will leak back to producers who are not actively pursuing farming as an interest. The point was mentioned earlier about making land more available.
Under the decoupling proposals, there will be no incentive for farmers, who are either winding down or becoming less intensive, to exit farming. Under the current structure, if a farmer wishes to retire he can avail of the early retirement scheme, which releases his land for other farmers. If decoupling is introduced, there is no incentive for a farmer to stop farming. He can claim his premia by keeping the minimum amount of stock on the land and just carrying out basic maintenance of his land.
Macra na Feirme, as a rural youth organisation, does not just represent farmers. I have a medium-sized dairy farm in Cork and I deal with approximately 63 different suppliers, ranging from the Dairygold Co-op down to the man who will milk my cows this evening. That is 63 different businesses feeding off the money that the Common Agricultural Policy puts into my farm. If that money was not performance related or linked to production, there would be no incentive for me to deal with those people. I can just take the money, walk away and live a nice relaxed life. It is not only poor for the farmer, but is poor for the product and for the entire rural community.
Decoupling, or any of the other Fischler proposals, will not release more land or improve the quality of farming; they will impact upon the whole rural environment, not just farmers. The WTO talks are a related matter. Like the other farming organisations, we believe the European Union is giving away too much ground before the negotiations. In previous years we negotiated the agenda for the 2000 reforms and were told they were designed to make us better prepared for the next round of WTO talks. However, before the next round of WTO talks had even occurred, the EU began introducing more reforms and gave away too much ground too soon. We should be protecting our blue box status like we did on the last occasion, but we are giving away too much too soon. We are, therefore, vehemently opposed to the current line on the WTO negotiations.
Mr. Phelan
What the EU is suggesting in its initial proposal to the WTO is a 36% cut in import tariffs on food that is coming into the EU. This figure would be the average across all food types, with a minimum cut of 15% on any particular food product. There was a similar reduction in the previous round at Uruguay. The impact of that was minimal because tariff levels were quite high at that stage, but now the levels are low and taking a further 36% off them will have a very serious effect.
One of the planks of the Fischler proposals is the idea that supply and demand will be better balanced. That theory would be perfect if we cut production and no other food products could come into the EU. However, if there is a drop in input tariffs, more products will come in and rather than allowing prices to rise it could have the opposite effect of depressing current prices. If the opening bid from the EU is an average cut of 36% across all food products, what will be the final outcome? It could be higher than 36%. That would be very serious in the long-term. As an organisation we try to look at the long-term, to see where we will be in the future, but day to day issues sometimes take precedence. That is the type of issue we need to look at. It is something of which perhaps, as a community, we have not taken much notice. Above all the reforms, that measure could have the most devastating effect. At the moment 100,000 tonnes of South American beef are entering the EU which is paying the full rate of tariff at in the region of €250 or €260 a kilogram. If that is cut by 36% or anything close to that, it will have a very serious effect on the price of product. It is, therefore, a serious long-term issue.
A number of Deputies addressed the issue of farmers' lifestyle and part-time versus full-time farming. We are concerned that household income is being equated with farm income. We take the view that a value should be put on every hour spent farming and that farmers should be entitled to a certain return for that, whether they spend only 20 hours, 60 or 80 hours a week farming. I do not like the term farm income. We should talk about farm income and income from another job rather than introduce the concept of off-farm income which can be divisive among farmers. There should be a return for every hour spent farming, regardless of whether farming is full time or part time. That has to be the bottom line. Including another income as part of farm income and saying that farm incomes are not so bad does not wash. It would not be acceptable to any other group of people in society - for example, it would be like saying that teachers did not need an increase because their husbands or wives got a good increase and had a big salary. That is a very dangerous direction in which some commentators on farm incomes are going.
Deputy Upton asked about education and where I see it going. There have been many changes in agricultural education over recent years which have been very good in terms of streamlining agricultural education and bringing it into the CAO system. There is now an outside body which recognises agricultural education and there are many different avenues along which one can come into it and progress from it. What we are concerned about is the amount of capital investment in agricultural colleges. An amount has been set aside in the past for it and agricultural colleges have improved and have climbed somewhat out of the ghetto of third level education. However, we are particularly concerned about the future, given the cuts proposed for Teagasc. I will hand you over to Catherine, who is an agricultural student, to make one or two other comments if she wishes.
Ms Catherine Seale
There have been improvements in agriculture and it has changed quite a bit. It is not as bad as it used to be. However, there is still a bad perception of farmers, especially farming students, in the outside world. They are probably not even considered to be proper students. That is down to facilities. Agricultural colleges do not have the same facilities that IT colleges or universities have. That is why it is so important that there is continued investment. There has been a decline in the number of farmers. If students can get a nice job as an engineer or in IT, if their three years in college is better because facilities such as gyms and even dormitories are better, why would they bother farming? That is the main issue.
It might be asked why farmers need an education because farming is a simple process - there are sheep in a field and the farmer feeds them and sells them. However, the education of farmers needs to be continued. They need diplomas, degrees, even postgraduate qualifications if farming is to advance. That is where we are heading and farming needs to be treated less as a vocation and more as a business. Income is relevant here as well. We need more qualified farmers. We need farmers to make advances. They need to be educated, but unless the money is put in they will not make advances. Money is the main incentive to keep students interested. Income is also important. If farm income is only half what a person in a factory doing ordinary manual work gets, why would anyone go into farming? They could just do the leaving certificate and go into a factory. They are the issues and I hope investment in agricultural education will continue.
Mr. Phelan
I wish to make another point on education, not just agricultural education. We are concerned about the eligibility criteria for third level student grants. Some people express the view that assets should be taken into account in determining eligibility. At the moment, whether a person is a farmer or in other employment, the income determines whether the children can avail of a grant. That has to be fundamental and that has to be the criterion, regardless of the assets a person has. A farmer might be asset rich but that does not necessarily bear any relation to the income he earns. It would be a very negative step in terms of the education of people in the agricultural community if eligibility criteria to that effect were introduced. We would be very much opposed to such a concept because it would discriminate against farmers.
There are other issues. It was asked whether for the purposes of the nitrate directive we should subdivide the country or keep it as one entity. That will be debated over the coming weeks. It must be decided soon. Denmark got an exemption to the limit and is allowed up to 250 kg of organic nitrogen per hectare for a certain proportion of its land. It based its argument on the fact that that portion of the land was grassland as against the majority of Danish land which is under tillage crops. Here the reverse is the case in terms of our land use profile. The vast majority is grassland and the minority is under tillage crops. If Denmark can argue that because a certain segment of its agricultural land is under grass, it could therefore afford to carry a higher rate of nitrogen input, surely we could argue that the country as a whole would be able to carry far more. It is not comparing like with like to compare the type of farming we have here with the type that exists in Denmark or in countries like Holland where farming is very intensive. They have far more cultivated land than we have, a tillage-based system rather than the grassland-based system which would have the ability to carry far more units of organic nitrogen.
A question was asked about mechanical grading. Other countries are using it both within the EU and outside it. Tests organised by Teagasc were carried out here in one of the meat factories a number of years ago on three different machines for mechanical grading. The results were good but our Department and Brussels are still looking at the results and saying that the machines were not accurate in that they did not agree fully with the decision of the grader by eye. However, I would ask whether the grader was correct. The system is working in other countries and farmers have confidence in it. I do not see why it should not work here as well. It is only a matter of putting it forward and having it introduced. There is no point in dragging our feet any longer. It is working elsewhere and there is every reason to believe it will work here as well.
Another issue mentioned was that of bureaucracy in farming and what was the view of younger farmers of it. Younger farmers have grown up with bureaucracy. They accept it more easily than the older generation and are prepared to work with it. That is not to say that we welcome it. However, there is acceptance that a certain amount of bureaucracy is necessary to enable claims to be made under the various schemes. A certain element of bureaucracy is needed if we are to claim from the schemes.
The Senator asked about the follow-on from the farm partnerships. The milk production partnerships which are in place since last April are very new. We are conducting a series of meetings around the country to try to inform people about what is involved and to encourage their uptake. The farm inheritor partnership announced by the Minister only on Friday is a new concept and people are excited about it. The significance of it cannot be over-emphasised. For the first time it is putting in place a mechanism whereby when the young person stays at home to farm they can acquire quota rights in their own name, can have an input in terms of work and a return in terms of the financial benefits from the farm. That is very significant because up to now if a young person wanted to acquire quotas in their own name they had to break out on their own and set up their own facilities and a separate herd. This keeps them farming at home as against going off and getting an off-farm job and the chances of their ever coming back to farm are limited.
When I received my certificate in farming all, bar two or three on the course, went back to farm full-time. I come from Kilkenny, a strong agricultural county. I presented certificates in farming to students in Kilkenny last year. Out of the class of about 30 only two or three were engaged in farming at home. The rest had gone off to get off-farm jobs. A high percentage of those will not return. That is a concern for the industry and that is why this change is so significant. It allows the young person a say and a chance to build up quota rights and quota in their own name. Eventually, after another few years they can inherit so there is now a link. If the parents are in their 50s and the young person staying at home is, say, 19 or 20 years of age the parents will not be in a position to hand over the farm for a couple of years. This is a very important measure. We need a follow-on for all the other sectors, beef, tillage, sheep and so on. However, that change cannot be made here as it depends on the EU definition of a holding. We were able to change it to suit ourselves for milk to allow two milk quotas to come together and yet have separate individual rights but we cannot do that yet with the other sectors. We need pressure from this committee at EU level and obviously through the Department and the Minister to change that position and allow the same to apply in the areas of beef, tillage, sheep and so on. That would be a progressive step. The whole concept of a partnership, not just the family partnership between the father and son but of two farmers coming together, would solve many of the problems to which different people alluded in terms of lifestyle in farming because it has much to offer.
Someone asked why young people with good farms to go to are not coming home to them. Many of the reasons are they saw that their own parents worked night and day on the farm and were attached to it seven days a week and said that lifestyle is not for them. That is why farm partnerships have so much to offer. If two farmers can come together they can arrange their own work schedule so that one takes the weekend off and the other can run the farm. As well as that it improves lifestyle in terms of the day to day operation of a farm. Farming today can be a very lonely occupation. In the past a number of family members would have worked together. Now, in the majority of cases, one or other spouse works off-farm so that one person remains on the farm all day. The partnership approach has much to offer in that regard apart altogether from economies of scale and the pure social aspects of trying to manage a farm.
On the issue of land and its availability, in the past the Land Commission intervened. Something like the Land Commission could have much to offer. A neighbour of mine who is a year or two younger than me said that in the past number of years he has made three attempts to buy three different parcels of land which were for sale and close to him. Each time he was outbid by a person who was not a farmer but had another business in a nearby town and wanted the few acres to run a pony. That is all well and good but it is very difficult for a farmer to compete against that person on anything up to €10,000 per acre. He could not continue bidding at the auction because the price went too high. They had money to spend and he could not compete with them. I am of the view that something could be done about who can own agricultural land and that is an issue that will have to be looked at in the future and it could prove to be very important.
Mr. Frank O’Mahony
Perhaps I could reinforce what Mr. Phelan said. As a young farmer organisation we would like to see all farming policy actively discriminating in favour of active farmers. If decoupling and various policies are introduced there would be a leakage of moneys from the Common Agricultural Policy to people who are not actively farming which would make it desirable for non-farmers to have land because they can avail of moneys from agriculture. We would be unashamedly in favour of active committed farmers and that all policy must be weighted in favour of them. This would make it most attractive for active committed farmers to keep farming as opposed to hobby farmers or others who see it as a desirable pastime rather than an actual occupation.
To answer Deputy Hayes's question on the policies one liked or disliked, we could be here all night outlining those we do not like, such as the doubling of the disease levies and the introduction of sheep tagging. We sought the introduction of a suckler cow restructuring scheme last year. There are plenty of policies of which the Department would not be totally in favour. However, there are some that need to be acknowledged, many of which have been mentioned here. Something for which we can claim credit for having influenced the Department is the retention of stamp duty. It is a significant measure at transfer stage and it is important for a young farmer not to incur that cost at set-up stage. In relation to the abolition of the upper eligibility limits on the installation aid scheme the cut off point was previously 150 income units but the Department has made it more flexible. Results have shown a major increase in the number of participants in the scheme in the last couple of months of 2002.
Mr. Phelan referred to the future farm inheritor's policy. We ask the committee to take this policy to Europe and seek the changes needed so that it can apply to sheep, beef and cereal enterprises. We feel strongly that it can go some way towards reversing the trend in the numbers entering farming and those leaving the land.
In regard to our stance on CAP we met the Minister last week and impressed upon him our outright opposition to the Fischler reforms, modulation and so on. We acknowledge that he went to Brussels and adopted an outright stance against it. The committee is probably aware of the FAPRI analysis document which was launched last week; there will be a presentation on it in the morning. The FAPRI analysis said the cut in production would lead to higher prices. That may be so but the FAPRI analysis did not take into account the reforms in the dairy sector or the modulation and the effect that will have on prices. It took the direct payments as being constant for the next couple of years. Mr. Phelan referred to the cut in WTO import tariffs and export refunds. A classroom scenario would suggest if Europe was a closed environment there would be no imports and in the event of a cut in production that prices would rise. This will not be the case and we have put our point across clearly today.
Mr. Raymond Brady
A comment was made earlier about whether access to quotas or access to land would be a major problem for young farmers. Both are major obstacles for young farmers at present. If the Fischler proposals become reality and quotas are freed up, land may become a bigger issue than quotas. That is why we have proposed a taxation measure for land-leasing, whereby all farmers, regardless of age, can lease their land and obtain the tax benefit of doing so. We know that less and less land is becoming available for sale. Even if farming goes through a tough period during the next decade or so, the indications are that this situation will not change. People are attached to their land and the last thing they will do is sell their holding. In order for young people to progress, land leasing is an imperative measure and we must do everything to encourage it.
Mr. O'Mahony talked about how the Fischler proposals will affect young people. The reality is that land will have a higher rental value in the future. People will take into account the entitlements that land has in relation to what premium was collected on it in the reference years. For the young farmer taking on that land, it will acquire extra value. Nobody benefits from that. It is a case of robbing Peter to pay Paul.
Regarding installation aid, I join my colleagues, James Kelly and Seamus Phelan, in welcoming the lifting of the upper income unit ceiling. At the other end of the scale, if one has 50 income units for more than two years, one cannot apply for installation aid in the third year. In many cases, young farmers might lease some ground for three or four years and then, a few years later, the father might hand them over the family farm. They then find, to their horror, that they cannot apply for installation aid. We propose that if they could stay under the 50 income units for five years, they could then acquire their parents' holding and apply for installation aid. The scheme would therefore be available to more young farmers. I ask the committee to take that on board.
Mr. Phelan
A question was asked about access to quotas and whether the Fischler proposals would give better access to young farmers. The opposite would actually be the case. At present, we have the milk, sheep, and suckler quotas. In terms of sheep, we are not producing anything near our quota. If one wants to become involved in either of the other areas, one has to purchase the quota either through a restructuring scheme or on the private market.
One can get into beef production and claim a nine month and 21 month premium without having to buy a quota. In the future, if the credits, as Mr. Fischler called them last week, are attached to the land and a farmer wishes to increase his low reference, he will have to buy his way into it. It is effectively a quota on all entitlements. The system replaces separate quotas on different commodities with an all-encompassing quota on entitlements.
Someone asked what could be done on the environment. We need improvements to the REP scheme. The first REP scheme worked quite well and was quite attractive but, as with the early retirement scheme, the passage of time and inflation eroded that appeal. The new REP scheme, which includes more restrictions, is proving to be more unattractive again. It was anticipated that 70,000 farmers would enter the scheme, but currently there are only 35,000 to 36,000 participants. The uptake is nothing like what it should have been or what was anticipated.
Anything that was set aside for the scheme in the national development plan last year was not availed of. We need to make that scheme far more attractive. It would be very beneficial for the environment if more farmers could be encouraged to avail of the scheme. Some 75% of the funding for the scheme comes from Europe, so it is a win-win situation for this country. We should surely put as much as possible into any scheme in which so much of the funding comes from Europe. We get a threefold return on every euro we invest.
A question was asked about whether we should be promoting organic farming. We have emphasised only some of the main issues in our document here today as we do not have time to address them all. We would obviously encourage organic farming, but it is an option that is really only available to a relatively small number of people. It is a niche market. People who produce organic food are finding it difficult to find a market in this country and some supermarkets are taking organic produce off the shelves because of the lack of demand for it. When consumers go to the supermarket, their fundamental concern is to obtain good value. If the product looks reasonable, they will buy it. This has been demonstrated by some of the newer supermarkets, which are more competitive in terms of cutting the price of foodstuffs. It is a niche market that should be encouraged, but it is not a solution to all our problems.
I visited Wales last weekend, where there is a lot of organic farming. Farmers there told me that they are coming under severe pressure again on price. The differential between organic and non-organic foodstuffs is narrowing and to survive in organics, which involves far higher costs, one must have a strong price differential or premium. Their premium is coming under pressure, despite ready access to a population of 50 million, which is something we do not have.
Mr. O’Mahony
The point is not made often enough within the farming community and to the wider community here that our product is as near to organic as one can get. It is a high quality product. Our beef and milk are among the best quality and most efficiently produced in the world, with the best environmental practices. Even in northern Europe, where organic food was extensively promoted and encouraged in the 1990s, they are increasingly finding that their product is being sold at a discount on the market and that they are, therefore, not getting a return. In Denmark and Holland in particular, farmers are moving away from organics and back towards commercial production as the margins are just not competitive. Given our small market, if we had a large organic sector we would have to export to these countries and compete on their markets against domestic produce. While organic farming is a niche sector that should be encouraged to a limited extent, it is not the solution to all the problems in Irish agriculture.
We must cut this fairly short because there are other groups that have been waiting a long time to contribute. Perhaps one representative could respond to the remainder of the questions.
Mr. Phelan
The one organic research facility in this country is in Athenry and, due to the financial constraints currently being placed on Teagasc, there is talk of it being closed. That would be a negative development for the future of organic farming.
The point was made about parents who, discouraged by their own experience of farming, are discouraging the next generation from entering the industry. That is a factor is determining whether young people go into farming. As an organisation, we have always tried to promote the positive aspects of farming, which, all too often, are not emphasised. The factors influencing the prices farmers get are often political. We, therefore, have to highlight the problems and negative aspects of our industry. That, in turn, often has a negative impact upon potential farmers or their parents. They conclude that there is no future in farming. That is a consequence of political lobbying. As an organisation, however, we have always tried to emphasise the positive aspects of farming.
I think I have dealt with most of the questions at this stage and hope I have not omitted any. I thank the committee for meeting us. We found the exercise worthwhile and it is something that we would look forward to doing in the future.
I thank Mr. Phelan and his colleagues for the way in which they responded to the questions raised by members. They will be welcome back at any time. I wish Mr. Phelan well in his presidency.