I shall try to cover every point and I have noted them all. Mr. Healy will want to take up some of them, particularly the way in which inspectors deal with farmers and how the inspection system is operated. Senator Coonan's reference to PIPs — planners, inspectors and penalties — provides a helpful framework for dealing with this issue. However, I also need to touch briefly on the issue of payments. We are inclined to refer constantly to EU regulations but they are a fact of life. Given that the REPS scheme is 75% EU-funded, we obviously have to operate within the regulations.
A payment to a farmer for a REPS undertaking must be justified on the basis of two things: first, the cost to the farmer of whatever he or she has to do — it could be erecting fences, building waste storage facilities, or whatever; and, second, the loss of income for farming less intensively than he or she might otherwise have done. Those are the two matters on which we must justify the payment rates. As regards the incentive, there can be an incentive element but the regulation states that it cannot be more than 20% of the total payment. One of the ways by which we have justified the new payment rate to the European Commission, is that we are using the full scope for paying an incentive — we are paying the full 20% incentive on the basic rates.
Deputy Ferris mentioned the organic rates, which he said were not as attractive as they needed to be. The reason only the basic rates were increased had to do with the discussions on Sustaining Progress. Obviously, the farm bodies sought increases in REPS payments. There was a certain amount of money available; the Minister for Finance made it clear how much would be available for REPS over the next three years. The farm bodies decided to take all the available money and have it allocated to increase the basic rate. Incidentally, they did not look for an increase in the organic rate at all. They sought increases in most of the rates, although, for whatever reason, not the organic one. In the event, they decided that all the money should go on increasing the basic rate.
Deputy Hayes mentioned that it was not a particularly lucrative scheme. He said it should not be seen as such, anyway, but that was certainly the perception in the earlier years. That is why a certain number of people came to grief. They went in under the impression that it was a reasonably substantial payment for which one had to do very little. In fact, however, one did have to do a bit, but they fell foul of that. There can be substantial investment costs and ongoing costs. The experience is that many farmers used REPS as a way of getting money up front to help them make necessary investments in waste storage and other facilities. Whatever the outcome of the nitrates action programme and the derogation arrangements will be, I think it may prove even more important in that context as something that complements the existing on-farm investment support schemes.
In its annual farm surveys, Teagasc regularly finds that farms in REPS are noticeably better off financially than comparable farms that are not in REPS. It is not a huge amount, but there is a clear trend — maintained year on year — that the REPS farmer is making a better living than a counterpart who is not in the scheme.
Senator Leyden mentioned the cost of fencing off all the water courses when farmers first went into REPS. The thing about REPS, however, is that once that has been done it is over, and one does not have the same investment for REPS 2 and 3, even though one gets the same money, or more money this time around. In many cases, the first few years' payments would be ploughed back more or less entirely into the investments. Once it has been done, however, while it may not be a job for life, it is over for ten years or so.
Deputy Hayes asked when the transition forms would be available to farmers and we are actually sending them out. By the end of this month, we will be automatically sending the changeover forms to anyone who had a payment from 1 March to date. Anyone who has an anniversary date from 1 August, September, October and so on, will be sent the transition forms automatically when they get their reminder to apply for the next payment. To an extent, that will help to bridge the information gap.
On the question of selling the scheme to farmers, we agree that is a job that needs to be done. The Minister is having a public meeting this day week, in the afternoon, in Portlaoise, to launch the scheme and the farmers handbook to which I referred earlier. We have already begun a series of eight farmers information meetings. We began on Monday in Athenry and Dunmanway. There was a meeting in Limerick yesterday, and there will be one in Carlow this evening.
I apologise because I have forgotten who suggested it, but the notion of sending a small leaflet to every farmer on the Department's client database is a good idea. We will try to persuade our colleagues that that should be done.
Touching on the planners issue, they have a role. We are trying to reduce the amount of time they spend on it, and consequently reduce their fees. They are all commercial operators. Teagasc provides a planning service and, as I recall, some 40% of REPS plans are done by Teagasc and the balance by private contractors. Every single planner is approved by the Department on the basis of qualifications. Farmers can refer to a list, in their local AES office, of all available planners and can choose any approved planner from that. There is no set fee and we would like to think there is an element of competition. However, as with petrol stations, for example, prices tend to be locally consistent. A farmer can choose any planner from that list but the Department of Agriculture and Food cannot initiate a growth in the number of planners. It is a commercial opportunity whereby they come to us for approval. We have a system of sanctions in place through the use of yellow cards and red cards, the latter of which constitutes a suspension, which has a substantial impact on the relevant planner's commercial viability.
What of the farmer who suffers because a planner has made a mess of things? If a planner is guilty of misconduct, he or she will be penalised by us but ultimately we are dealing with a commercial contractual relationship between the farmer and planner. Senator Scanlon mentioned the case of a farmer who lost €12,000 because of planner error. This man should pursue the planner, who is a professional who should be indemnified. Teagasc planners are indemnified by that organisation. It happens, for example, in the early retirement scheme that some solicitors have done a bad job in looking after a client's interests. There are more than a few retired farmers whose pensions are being paid by the Law Society of Ireland because their solicitors did not make a proper job of applying to the Department of Agriculture and Food. We are not washing our hands of the matter but the contract is between the planner and the farmer. Our role is merely to approve the planner.
Deputy Upton asked whether a competent farmer could do his or her own planning. I am not sure we are at that stage or even how we could reach it. We have had to draw up a reasonably complex scheme in order to justify paying this money. It is the planner's job to interpret that complexity although we are trying to make it easier for the farmer to understand. The planner must take the specifications of the scheme and convert them into a five year plan for the farmer to follow. Many other EU member states do not use professional agriculturists in their agri-environment schemes. It is an issue we are constantly reviewing and we considered it seriously for those engaging in extensive farming or those following only a single farming method. We felt unable to go that far at this stage but we will bear it in mind for the future. The message should go out that we feel we have made changes which will enable planners to charge less money. If that does not happen — and I speak for the Minister for Agriculture and Food in this regard — we will look again at the role of the planner. We must be clear on that point.
Regarding penalties, our experience with REPS 3 is that the incidence of penalties is lower than it was during previous programmes. One reason for this may be that for many farmers it is not their first experience of REPS and so they understand the scheme better. Deputy Ó Fearghaíl asked about the crossover rate from REPS 1 to REPS 2. I understand that approximately 25% of farmers who finished their contracts on REPS 1 did not come into REPS 2. The number of new participants in REPS 2 is disappointingly small and that is another reason we considered how to make the scheme more attractive. Another reason for the decrease in the incidence of penalties may be that our inspectors are taking a more light-handed approach to their work. My colleague, Mr. Healy, shall provide more information on inspections.
On the matter of appeals, a penalty can initially be appealed at local office level and a farmer has ten days to appeal. Mr. Healy can tell the committee more about the rate of success of such appeals. Previously, if this initial appeal failed, a farmer could go to a departmental REPS appeal committee. Since 2001, such appeals can be taken to the agricultural appeals office and I am glad to hear Deputy Ferris saying this system is working well. The rate of successful appeals at this stage is approximately one in three and it is a more efficient and customer-friendly system than was in place with the REPS appeal committee. An element of this success is that the agricultural appeals office affords farmers the opportunity to attend the appeal in person to make their own representation or to bring somebody along to do so, whether it be their public representative or planner, for example. There have been cases where penalties seemed harsh and when one is made aware of all the facts of such cases one might be inclined to question the decisions. Many of these cases succeed on appeal. However, there are many cases where penalties are justified.
The Department often receives representations to the Minister from Deputies and Senators on behalf of people who have been penalised. One will often find that people have not told their public representative the full story. We have the relevant files which contain the full facts and they often put a different complexion on the matter. It is true that people are harshly treated from time to time but the appeals system is helping to remedy such cases and Mr. Healy will explain more about how the staff on the ground approach these matters.
A number of members raised the question of giving advance notice of inspections. The Department would like to provide such notice but EU regulations stipulate that inspections must be unannounced except where practical necessities dictate otherwise. During the past system for ewe premiums, for example, a farmer who had his flock dispersed on upland commonage would be allowed a couple of days notice by the EU Commission so that he or she could gather it in. The EU generally insists on unannounced inspections in the REPS programme however. The Department would like to interpret that as liberally as possible. It is a reasonable proposal because in many parts of the country the days of the full-time farmer are gone and many farmers have off-farm jobs. It is no longer practical for an inspector to turn up unannounced at 9 a.m. and assume there will be somebody there to meet him and take him around the farm.
Deputy Ó Fearghaíl asked about the different categories of farmers participating in the REPS programme. Many participants are those engaged in extensive farming as well as the smaller suckler farmers. Commercial farmers are not participating and there are two reasons for this. First, the stocking density imposed on them by the REPS EU management rule, which is essentially two cows per hectare, is not something which the efficient dairy farmer could countenance. The value of REPS would not be sufficient for that farmer to offset the required loss in production. Second, REPS is seen as an over-elaborate and over-regulated scheme and that is something the Department must attempt to counter in its information campaigns.
When the smoke clears on the nitrates directive and we can secure a system of derogations for farmers above the level of 170 kg. of organic nitrogen, we will go back to the Commission and ask that those farmers be made eligible for the REPS programme. Commissioner Fischler has indicated to the Minister that once our derogations are in place under the directive that type of proposal will be favourably considered. We would like the more intensive farmers to join REPS. They will not want to extensify but they can deliver other environmental benefits. When examined more closely, REPS and the nearby diversity options do not require that farmers give up good land to create habitats or grow hedges. There is plenty of scope on most farms on outlying or unreclaimed land to undertake some of these schemes without financial loss.
A farmer claiming a grant for afforestation cannot claim under REPS in respect of the same land. Those two measures are both part of the rural development plan and are subject to the same rural development regulation. Payment cannot be made under both measures in respect of the same land. One of the options under the new REPS is to plant a certain number of native broad leaf trees. Payments under REPS will be made in that case. It would involve a small number of trees occupying a small area. That can be part of the REPS undertaking and a grant is payable under REPS.
I hope I have not omitted anything. I will be happy to return to it if I have. Mr. Healy will speak on inspections.
