I welcome from the Department of Agriculture, Food and the Marine Mr. Aidan O'Driscoll, Secretary General; Mr. Paul Dillon, assistant secretary; Mr. Brendan Gleeson, assistant secretary; and Ms Kay Ryan, principal officer. I thank them for coming before the joint committee to brief it on the priorities of the Department. I bring to their attention the fact that witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Members are 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 Houses or an official, either by name or in such a way as to make him or her identifiable. I ask Mr. O'Driscoll to make his opening statement.
Priorities of Department of Agriculture, Food and the Marine: Discussion
Chairman
Mr. Aidan O'Driscoll
I thank the joint committee for giving me this opportunity to attend. I am sure the Department will enjoy with it the same positive relationship that it had with the previous committee.
It might be timely to mention our new statement of strategy which we are finalising. The requirement for a new statement follows on from the formation of the new Government. The statement has been the subject of extensive consultation with stakeholders and staff and will be submitted soon to the committee, as well as the Civil Service Management Board, CSMB, and the Department of the Taoiseach. The new statement also follows on from an internal organisational review which we conducted during the past year. Teams of departmental staff and senior management looked at the organisation's strengths and weaknesses on strategy, operations and staff development. It was a forward looking exercise which produced a useful and practical plan for change in the Department, which we are implementing. The review was carried out entirely by our own staff, without recourse to external consultants.
The Department is a complex organisation with a wide brief covering the development and regulation of agriculture, the food and drinks industry, forestry, fishing and aquaculture. It has almost 3,000 staff and 12 agencies under its aegis. It has five main business areas: food safety, animal and plant health, in which area approximately half of the staff are engaged; farm supports and controls - this area includes all of the big payment schemes; strategy and policy co-ordination; seafood; and corporate development.
The Department works closely with stakeholders on policy and operational issues. Food Wise 2025, our latest ten-year strategy for the sector, the 400 plus recommendations of which guide many of our actions, was drawn up on this basis, as was our forestry programme and Harnessing our Ocean Wealth. The Minister, Deputy Michael Creed, chairs the Food Wise high level implementation committee, HLIC, in which the CEOs of the main State agencies and I participate. This mechanism ensures joined-up State actions around the Food Wise priorities, as well as providing a platform for interaction with key stakeholders. Of course, we also operate in close collaboration with other Departments, particularly in implementing the programme for Government which contains approximately 100 commitments of direct relevance to the Department.
Our work priorities for 2016 reflect the scale and breadth of our responsibilities, are published on our website and have been circulated to the committee. For the sake of brevity, I will mention just a few key areas, but I underline the importance we attach to our many responsibilities. I will touch, in particular, on Brexit; developments in key commodity markets; climate change; animal health; farm supports, both direct payments and RDP measures, and seafood development.
On Brexit, the United Kingdom's decision to leave the European Union presents enormous challenges for the Irish agrifood sector. The main areas in which impacts are foreseen are currency fluctuations which have been quite dramatic, tariffs and trade, the EU budget, regulations and standards, and customs controls and certification. The UK exit vote also raises complex issues for the fisheries sector. Significant challenges are also foreseen from a North-South perspective.
My Department is engaged in detailed contingency planning and has published a summary of the key actions we are taking by way of an immediate response to the United Kingdom's decision, as well as feeding into the central contingency framework being co-ordinated by the Department of the Taoiseach. We are also continuing to deepen our own analysis of the likely impacts.
Among the early steps we took were the establishment of a Brexit unit within the Department, the convening of a consultative committee of stakeholders and the establishment of a contact group among the State agencies under the auspices of the Food Wise high level committee.
The Department is participating fully in the new sectoral work groups established under the auspices of the interdepartmental group on Brexit and chairs a specific agrifood subgroup. There are ongoing contacts between the Irish, Northern Irish and UK administrations at political and official levels. The Minister, Deputy Creed, had a discussion with the Northern Ireland Minister, Michelle McIlveen, at the North-South ministerial summit in July. Senior officials have met on a number of occasions since then and are currently putting together a joint work programme. Contact with the UK Department of Environment, Food and Rural Affairs is well under way at senior official level, with two meetings in recent weeks. The Department is also working closely with Ireland's EU partners. We are conscious of the fact that while we seek to continue our close relationship with our UK colleagues during this challenging process, we will be on the other side of the negotiating table as a continuing member state of the EU.
Budget 2017 financially underpins the Department's Brexit mitigation efforts through strategic investment in key areas of the Department, its agencies and the agrifood sector. This includes access to an innovative low-interest cashflow loan fund, agri-taxation measures designed to address income fluctuations, increased funding of Bord Bia and Bord Iascaigh Mhara, investment in research and development and innovation and increased expenditure on the rural development and seafood development programmes. The Department and Bord Bia are continuing their efforts to support companies, especially small and medium-sized enterprises, to cope with the fallout from Brexit and the fall in sterling by providing advice at Bord Bia seminars, opening new markets and engaging in market promotion in the UK and alternative markets. The Minister, Deputy Creed, and the Minister of State, Deputy Doyle, led a successful trade mission to China, Vietnam, Singapore and Korea in September. A further mission to Algeria and Morocco will be undertaken next month.
Some agricultural markets, notably in the dairy, pigmeat and fruit and vegetables sectors, had been experiencing difficulties for almost two years prior to the impact of the fall in sterling being felt. This was due to a combination of increased global supply, the effects of the Russian ban on the import of EU agrifood products and fluctuating global demand for dairy products in places, such as in China. The Minister and the Department have sought action at EU level. The Commission has responded to these difficulties through the deployment of support measures under the Common Agricultural Policy, first in an ad hoc manner and subsequently in the form of two wider packages in September 2015 and March 2016. The main elements of these packages have included the extension and broadening of more traditional support measures, such as intervention and aid to private storage. In addition, more flexible and targeted direct aid has been allocated to member states to spend in accordance with their national circumstances.
The Commission presented a further package of measures at the Agriculture and Fisheries Council meeting in July. The main component is a fund of €500 million, which consists of two elements. The first element of this fund is a €150 million EU-wide measure that will compensate farmers at a rate of 14 cent per kilogram for reducing their milk output in the final quarter of 2016 compared with the same period in 2015. Some 4,500 Irish suppliers who produce over 70 million litres applied for the first tranche of the scheme and 500 suppliers applied for the second phase this week. The second €350 million element of the package includes an allocation per member state, with Ireland receiving €11.1 million. In budget 2017, the Minister, Deputy Creed, announced a new low-cost loan fund for the livestock, tillage and horticulture sectors, which will utilise this allocation in conjunction with national funds to leverage €150 million of low-cost loans for farmers. These flexible loans of up to six years, for amounts up to €150,000 at an interest rate of 2.95%, are available to livestock, tillage and horticulture farmers. While there has been some welcome recovery in dairy market prices, we continue to be vigilant. Beef prices have been negatively affected recently by seasonal factors and the fall in sterling. The opening of the Turkish market for live exports is providing some useful support to demand. This underlines the importance of diversification of markets, which we will continue to emphasise in our work. The emphasis in the tillage sector will be on efficient production, added value and the value of native grain.
Climate change has been a major area of policy work in the Department in recent years and this has intensified recently. Ensuring food security for all and preventing climate change are two of the biggest challenges facing mankind today. This was acknowledged by global leaders in last year’s Paris agreement and highlighted within the sustainable development goals. While Ireland is one of the world's most efficient food producers in terms of carbon footprint per unit of output, there is no room for complacency. The Irish agriculture sector reduced emissions by 13% between 1998 and 2014, but it still accounts for approximately 33% of Irish greenhouse gas emissions. It is predicted that Ireland will fall short of its emissions target for 2020. All sectors will face significant challenges in meeting the national targets that are being negotiated under the EU climate and energy framework to 2030. The Minister and the Department are deeply engaged with this process because of its importance for the sector. In support of our national policy, we are undertaking a range of actions, including subsiding our afforestation programme, promoting best practice through new knowledge transfer groups, carbon-footprinting individual farms through the origin green programme, implementing the cutting-edge beef genomics scheme, supporting emissions reduction through the green low-carbon agri-environment and targeted agricultural modernisation schemes and promoting the carbon navigator tool through several channels. We are far ahead of all, or almost all, other countries in this regard. However, we are also much more exposed because the structure of our economy means that agriculture plays a much bigger role in our national emissions. Climate change, water quality, which is a very important issue, and biodiversity will continue to be priority areas for agricultural policy and action by the Government, farmers and processors in the years ahead.
The Minister, Deputy Creed, launched a consultation process on the national farmed animal health strategy for Ireland, which is a new animal health initiative, last month. It is vitally important for the agrifood industry, public health and animal welfare, as well as in the interests of protecting the environment, that we have a robust animal health strategy in place. The draft strategy proposes a comprehensive set of actions for execution by stakeholders. I will not attempt to summarise those actions here. The main thrust of the strategy is to establish a comprehensive and co-ordinated plan for collective action by all stakeholders to support and sustain animal health, and to avoid losses or risks rather than being reactive to negative events. In essence, it can be summed up in a pithy but well-known phrase, "prevention is better than cure". We have asked for submissions on the draft strategy by the end of this month. It is planned to finalise and launch the strategy by the end of the year. We would welcome an input from the joint committee to the development of this strategy.
While I am on the subject of animal health, I must mention briefly our work on bovine TB. The herd incidence of TB has declined from 5.9% in 2008 to 3.06% as of 10 October last. Obviously, that figure could change by the end of the year. The quality control measures that have been introduced, including interferon gamma blood testing, have had a significant impact on disease levels through earlier removal of reactors. The significant reduction can also be attributed to the wildlife and badger removal programme. At the same time, Animal Health Ireland is working on production or non-regulated diseases which affect farming productivity but are not significant from a public health perspective. It is concentrating on a number of key programmes relating to bovine viral diarrhoea, Johne's disease, infectious bovine rhinotracheitis, beef health check and mastitis. The bovine viral diarrhoea eradication programme, which is led by the industry, has already resulted in a 75% reduction in the incidence of the disease. This has led to an annual estimated return to farmers of €66 million. Animal Health Ireland has a vital role to play in enabling Irish farmers to access best international practice in achieving high standards of animal health.
A robust animal identification and traceability system is essential in the protection of animal and human health. Bovine tagging is an important part of that system. Following representations from interested parties, the Department decided last July to move from a single supplier system for the supply of ear tags, based on a competitive tender process, to a tag approval system whereby multiple suppliers would be approved. Under the new arrangements, the tags will be objectively assessed for compliance with certain standards. This is ongoing and I hope it will reach a conclusion in the next few days. The current rules regarding the tagging and recording of sheep are widely acknowledged as being unduly complex. The system is very labour-intensive at farm and factory levels. Its considerable reliance on manual recording significantly increases the potential for errors. This has the potential to undermine consumer confidence and puts Ireland at a marketing disadvantage. The limited additional costs that would be imposed on farmers by the electronic identification of sheep would be very small relative to the €25 million sheep welfare scheme that was announced recently. Such a system would have a major advantage for farmers as it would significantly reduce the administrative burden relating to form-filling for sheep movements. Therefore, the Minister has decided to initiate a consultation process on electronic identification of sheep. This will commence in the near future.
Again, we would welcome the committee's input on this issue.
Turning to direct payments, the Department continues to prioritise the processing of applications for schemes such as the basic payments scheme and the areas of natural constraints scheme. To date in 2016, some €914 million has been paid to farmers under these schemes and pay-runs continue on a regular basis to ensure cases are paid once they are cleared. The increase in online basic payment scheme applications this year to over 100,000 has helped the Department to introduce further efficiencies into the processing of payments. For example, this year saw the introduction of preliminary checks for online basic payment scheme applicants which allowed certain types of errors to be rectified by applicants in advance of any possible penalty being applied. As the Department moves towards 100% online application in 2018, further efficiencies will accrue which will have direct benefits for farmers. Last year there were some problems with long delays for farmers and advisers in getting through on the phone to the Department on payment queries. They arose principally due to staff shortages and the pressure of implementing new CAP schemes. We have put in place new systems this year that are designed to deal with this and a significant improvement in service is already apparent.
Turning to rural development, in May last year we received EU approval for our €4 billion co-funded rural development programme and since then the Department has successfully rolled out an impressive range of schemes under the programme. It has been underpinned by the introduction of tailored on-line applications systems. The rural development programme measures are a key component in our overall strategy for enhancing the competitiveness of the sector and achieving more sustainable management of our natural resources.
I will mention just a few of the schemes under the rural development programme, although I will not go through all of the bullet points in my written submission to save time. On the green low-carbon agri-environment scheme, GLAS, the committee will be aware that we now have a total of 38,000 farmers in the scheme and a third tranche will open next year. Some of the commitments under the scheme are set out under the second bullet point in my written submission, including the protection of protection of 12,000 km of watercourses and preservation of 90,000 hectares of habitat and so on.
The targeted agricultural modernisation scheme, TAMS, consists of a suite of six measures, as set out in my written submission. The scheme has been opened in three month tranches with the fifth tranche due to close in mid-January 2017. To date, 8,900 applications have been received. More than 5,000 applications were received in the first two tranches of the scheme alone, approvals have issued in more than 80% of these cases and a new online claim system is now open to applicants. A new TAMS tillage scheme will be added shortly.
The six-year beef data and genomics programme is now in its second year with 24,500 farmers positively engaging with the scheme. Compliance with all aspects of the scheme is very positive, with payments expected to commence in December. I expect that the 2016 budget of €52 million will be fully consumed by year end.
The new organic farming scheme was launched in April and has been hugely successful since its launch. When all applications into the new scheme have been processed we should have over 1,600 organic farmers in the system managing some 65,000 hectares of land.
The locally-led measure is a new approach to tackling some of the environmental and other challenges facing the agriculture sector. This will empower local groups to develop new solutions to local challenges. We will recruit projects by open call before the end of the year. At the same time, we are also rolling out two new projects focusing on the conservation of the hen harrier and the freshwater pearl mussel. These too will be locally-led.
We have submitted two amendments to the rural development programme in recent times. The first was submitted in 2015 and the second in 2016. The first was approved in June of this year and provided for some new measures under TAMS, including tillage and sheep fencing, and some adjustments to GLAS and the Burren scheme. The second was submitted to the Commission in September. It includes provision for the new sheep welfare scheme, support for beef producer organisations and some adjustments to GLAS and European Innovation Partnerships. Our expectation is that, given progress to date, formal approval will be issued by year end, but we are dependent on the Commission in that regard.
The €241 million European maritime and fisheries operational fund, launched in 2016, is being rolled out and will be rolled out further in 2017. We will be spending approximately €20 million this year and €40 million next year. This investment will fund a range of programmes including capital investment in the seafood processing, aquaculture and fishing sectors to foster growth in production and to enhance sustainability and competitiveness. The Department also continues to develop the infrastructure at the fishery harbour centres with €15.9 million allocated this year for the six fishery harbour centres and Cape Clear and €4.5 million for local authority harbours.
In conclusion, the Department is a diverse organisation with a broad variety of skills and experiences providing a dynamic range of services to our customers. We have engaged in significant restructuring over the past number of years. In fact, the staffing of the Department has declined by more than one third since 2005. This restructuring has been driven by investment in IT development and greater use of on-line facilities and facilitated by reductions in animal disease levels. Currently IT technology across the world is undergoing a seismic growth, particularly in the areas of data analytics, social media, cloud computing and sensor technology, and the Department is currently compiling a new ICT strategy which will focus on these rapidly emerging technologies.
During the moratorium on recruitment to the public service, our staff levels decreased to critical levels. However, our staff displayed great resilience and commitment and continued to deliver a high quality service. We are now in the early stages of a rebuilding phase, which will see some increase in staff numbers, but within very strict financial limits.
Before I finish, I would like to mention our new Oireachtas liaison unit. This was set up in June this year to assist Oireachtas Members with individual queries received from constituents. To date, there are 73 Deputies and Senators using the system and it is expected that this will grow quickly. We think it is working very well and hope that Members will find it useful and a more efficient means of getting relatively straightforward queries dealt with in a fast turnaround time.
I thank the Chairman and look forward to working with the committee as we continue our work.
Chairman
I thank Mr. O'Driscoll for his comprehensive opening statement. I will now take questions from the members. We will take groups of two, starting with Deputies McConalogue and Cahill.
I welcome Mr. O'Driscoll and his team here today and acknowledge at the outset the important work of his Department, the courteous endeavours of his staff and his and his Department's important role over the coming months and years with respect to the implications of Brexit and ensuring that the future interests of agriculture in our country are protected. I have a few questions but, first, to follow on from his final point, I also commend his office on the Oireachtas liaison unit which I agree is very helpful.
Mr. O'Driscoll indicated that more than €900 million has so far been paid out in direct payments in 2016. An issue that has come to my attention in several cases recently relates to farmers who are audited on land eligibility. Many of them are not aware that they are under assessment until such time as the payment does not arrive and they make inquiries and then find out. Will Mr. O'Driscoll elaborate on why that is the case? Could those audits not be brought forward and carried out in early or late summer, thereby ensuring farmers' payments are not delayed? Is that a matter of staffing? What exactly is the dynamic behind the delay?
Slurry spreading is a particularly pertinent issue at the moment. The issue is a local one to particular parts of the country where ground conditions were acute until two to three weeks ago. Will Mr. O'Driscoll outline what the situation is for those farmers who were not able to get slurry on the ground in advance of the deadline due to extenuating circumstances? A number of farmers have contacted me about this and there seems to have been quite a bit of confusion in the past two or three days in terms of feedback and the situation that they face. Some flexibility has to be allowed. This relates to a small number of areas but a number of people are affected by it.
Mr. O'Driscoll touched on product prices. Beef, in particular, is under a lot of pressure at the moment. I want to focus on the Department's role in the export trade and, in particular, trade with Turkey. What does the Department expect the level of exports to Turkey to be, in particular over the coming weeks, but also over the coming months? How many exporters have been approved?
I understand that one exporter has been approved. Mr. Cahill might comment on that and whether there is potential for additional exporters to be approved, which would open up that market further and lead to an increase in the number of exports. I understand three vessels have been approved. Some of the vessels approved could be in business in other parts of the world, separate to the Irish export trade. Does Mr. O'Driscoll believe the Department could play a role in addressing that matter?
With regard to the rural development programme, RDP, schemes and the level of underspend so far on the targeted agriculture modernisation schemes, TAMS, and the green low-carbon agri-environment scheme, GLAS, what is the Department's assessment of that level of underspend? The average spend is less than what would have been projected, particularly in the GLAS, and the numbers are less than the total projected in both cases. Mr. O'Driscoll might comment on the level of underspend to date. On the reopening of the GLAS, the removal of low input permanent pasture and hedge cutting as an option in previous GLAS schemes inhibited some farmers' ability to increase their level of payments. What will be the position regarding those two measures when it is reopened in November?
What is the position on the old young farmers, which has been a problem since the current CAP programme came into play? There has not been a resolution of that but is it an issue the Department is willing to look at again? Is it possible, at national level, to seek to change that? My understanding is that it is within our gift. Could Mr. O'Driscoll confirm whether that is the case and, if so, what is his view on it?
I want to make two points, the first of which is on the need to provide sufficient resources to Bord Bia to meet the challenges of Brexit. An increase has been provided for in the budget, but did Bord Bia make specific requests in terms of what it felt its resource need would be to meet that challenge? Were those requests met in full?
With regard to the upcoming deadline for commonage management plans to allow farmers be paid their GLAS payments, that is a particularly acute issue in terms of all farmers, and particularly advisers, being able to submit those in time for payments to be made. Can flexibility be shown regarding that deadline in order to allow farmers to make their submissions and planners to deal with the amount of work affecting them? It would also ensure that the payments for farmers with commonage are not delayed as a result of the deadline.
I welcome the officials from the Department. I dealt with Mr. O'Driscoll for many years in a different role and it has always been a pleasure to work with him.
I want to make a number of points. With regard to the major challenges Brexit poses for us, there is a huge amount of North-South trade. Three million litres of milk a day comes from the North to the South to be processed. Forty per cent of Northern Ireland cattle are brought South to be killed and processed. What impact will that have on the quality assurance schemes we operate here? How will that work into the future? The United Kingdom can operate to different standards from the ones to which we operate here, namely, EU standards. How will that be dealt with in the future?
Deputy McConalogue mentioned the huge difficulties for the beef sector. This is the perennial chestnut in that once our kill exceeds 30,000 head of cattle, market prices go one way. Has there been a submission from the board of Bord Bia in terms of the extra funding it would require to lessen our dependence on the UK market with the upcoming Brexit? Also, what level of resources is Bord Bia putting into live exports? I sat on the board of Bord Bia for a number of years and I often felt that not enough funding was put into sourcing live export outlets for our cattle, and that there was a reluctance on the part of some members of the board to promote live exports. However, we have a significant number of extra cattle coming on-stream. We have had a kill for the past four weeks of 36,000 head but the reality is that next year we will have at least another 100,000 or 120,000 extra stock in the country, which will make a poor situation worse.
Deputy McConalogue made a point about live exports and asked about the number of vessels available to us to get the cattle out of the country. While the Turkish market is open, they are taking a specialised, younger type animal. In the short to medium term, they will not have an impact on the number of cattle killed.
The UK would be a significant market for forward stores. We have found it very difficult to get our cattle killed on an even keel in the UK. Can progress be made on that? If we can export forward stores to the UK, can equal access be secured for them alongside UK cattle to slaughter units in the UK?
Mr. O'Driscoll referred to the uptake of the milk reduction scheme. Applicants can apply for as much under this scheme as they want and no penalty is imposed if there is not full uptake of it. I believe the uptake here will be small. We have had a very good October weather wise and, thankfully, prices have started to recover but we have come through a difficult period of milk prices. Has any analysis been done of when northern European countries will start to increase production again? Prices have been driven up by the reduction in production in several parts of the world. Germany and France have dramatically reduced production, as has the UK. Argentina and New Zealand are having their own weather problems and that has also impacted on production worldwide. With the price of grain at its current level, when will be the next curve that will see a milk production increase? Our industry cannot afford another hit like the one we got over the past 12 to 18 months. Some measure will have to be put in place. Changes to the income tax system for farmers are proposed in the Finance Bill but that will not go any way towards allowing farmers to deal with the current volatility being experienced.
With regard to the afforestation programme, the hen harrier is referenced a number of times in the report we received from Mr. O'Driscoll. If we are to have any hope of meeting the target set in that programme, the blanket ban on forestry plantation in special areas of conservation will have to be reviewed and analysed. There is evidence that the hen harrier will thrive in areas where there are different stages of growth of afforestation. I have been told that the special areas of conservation figures are decreasing where blanket bans are in place. It is crucial that we meet the target set for the afforestation programme at this time of climate change. That needs to be examined and researched.
Reference was made to the decrease in the incidence of bovine tuberculosis, TB. If we were to talk to farmers in County Wicklow, we would not get agreement on that. While we have made great progress on the vaccination of badgers - and where there was a breakdown in tackling the problems presented by badgers - we have ignored the problem of deer contributing to the spread of TB. We have had a very bad outbreak in the past two weeks in my county, which has seen a decrease of 80% to 85% in dairy herds. There would be forestries near those holdings. We have to research whether deer numbers are contributing to the spread of TB, how they are contracting it and from which species are they being infected. I saw figures for County Wicklow which show that 18% of deer that were captured had TB.
It will be an ongoing issue and the Department must address it. We cannot ignore the deer population. Recently, I met farmers from Wicklow who feel that the issue of the deer population must be tackled immediately.
The Secretary General talked about Animal Health Ireland and the progress we have made on disease. In the bovine viral diarrhoea, BVD, eradication programme, the non-compulsory removal of persistently infected animals, PIs, was inexcusable. At the start of the scheme, we were promised it would last three years. Farmers are getting worried that it will run and run. I cannot understand how PIs were left in herds. I know the rules have been tightened. However, it should never have happened. There should have been legislation with the scheme to specify that PIs had to be automatically removed. Farmers cannot understand it. The failure to remove PIs was unacceptable.
The Secretary General talked about tenders for tags. We are moving from the single tender of the past to multiple tenders. The standard of our tags cannot be compromised. We have built up our reputation as producers of top-quality food based on our traceability scheme and our tags have stood up to much scrutiny over a number of years. However the tender works out, the security of tags must not be compromised.
On the single farm payment issue, improvements have been made and there are not as many people waiting for their single farm or areas of natural constraint, ANC, payments as there were last year. However, there are still too many, in a year when farmers incomes are on the floor. I cannot comprehend that, with all our computerised systems, where an application is submitted in mid-May and money is due in mid-October, a farmer finds out there is a problem only when he or she does not receive the money. It must be more streamlined and farmers must be told in mid-summer if there is a problem in order to allow time to resolve it so the payment can be made in time. Farmers' cashflows are at a low ebb. I have received a number of calls since the single farm payment was issued last week. The satellite inspections should all be dealt with before the payment deadline. It is not acceptable.
Approvals are still very slow to come from the targeted agricultural modernisation schemes, TAMS. We have dairy farmers who want to do work during the dry cow period. A number have contacted me, and approvals are very slow. It must be speeded up. When an application goes in for approval, we need something. There must be a turnaround period for the applications. It is not fast enough and it must be improved. Last Friday morning, I contacted my local office and they told me they did not have the computer system to issue payments for work completed. I know farmers who have had their work done since last spring. To be told there is no system in their local office to issue their payments is incomprehensible. It must be sorted immediately.
The Secretary General mentioned organic farming. When the quality assurance inspection is being done, there should be a section for farmers who want to seek organic status so they could be certified on the same day. A couple of organic farmers groups have raised this with me. There are different criteria for different organic organisations. The Department and Bord Bia should get hold of the organic sector and make it part of the quality assurance inspection system. We have a dairy side and a beef side. It would be very easy to have an organic side for those who want to opt for it and have all the inspections done in one visit.
Chairman
We will go back to Mr. O'Driscoll. Many areas were covered.
Mr. Aidan O'Driscoll
They were two very comprehensive interventions. I thank the Deputies. Both mentioned Brexit, in particular the North-South dimension. The issues are complicated and stretch across a whole series of areas. We are particularly conscious that there are companies that straddle the Border and take supplies from both sides. This happens in dairy and in the movement of sheep, pigs and cattle for slaughter up and down between the two jurisdictions. A hard Border could be extremely disruptive, to put it at its mildest. We have been having detailed discussions with our colleagues in Northern Ireland and have set up a series of work streams with them to try to prepare as best we can. There is a huge amount of uncertainty. We cannot predict the exact outcome of the negotiations. Members have heard the desire on the part of both the Irish Government and the Northern Ireland Executive to ensure that there will not be a hard Border. Therefore, we have to imagine what it might mean when Brexit unfolds.
We are doing a couple of things. We have a very strong engagement with all the stakeholders, by which I mean the companies involved, the farming organisations and so on. We are co-ordinating with our agencies to provide assistance to companies which are trying to cope with the uncertainty. Bord Bia has hosted a number of seminars, particularly for the smaller companies that are most challenged. We are working with our colleagues in Northern Ireland to try to imagine our way forward under various scenarios and see how things might operate in practice. We have a very close relationship with our equivalents in Northern Ireland and this work will prove useful, regardless of what comes from it.
Deputy McConalogue asked about land eligibility and the reason for the delay, as he put it, in audits. While inspections are spread through the year, risk analysis must be done on what inspections to undertake, and this can be done only after applications come in. The level of inspections is set out very clearly in the regulation. In most cases, the level of inspection is approximately 5% for land eligibility purposes across most of the measures. To try to reduce the burden on farmers, we try to stack inspections, where we can. When we can do two inspections in a single visit, we do it. This reduces the number of inspections for eligibility purposes from approximately 17,500 to 7,500. It is a very effective way of reducing the burden. Within this are included ground inspections and remote sensing inspections.
We are also trying to ensure that once a farm has been inspected, we process it to finalisation as quickly as possible. One of the reasons for the high rate of payment and the significant increase in the rate of payment compared to recent years - higher amounts of money paid to more farmers - is the rapid processing of inspections and the results relating thereto. Claims are moving forward to approval. So far in 2016, we have paid €735 million to 113,000 farmers under the basic payment scheme, BPS. This is the latest figure. It is a 13% increase on last year. Likewise, we have paid €179 million to 84,000 farmers in the ANC scheme, which is an 8.5% increase on last year. Only four member states have paid at all. Members have heard this from the Department before, and will have to forgive my saying it again. We are so far ahead of the curve in our payments we are out of sight of all the other member states. While I realise it is no comfort to those whose payments are delayed, it must be understood that we are far ahead of others. We are processing the inspection cases as rapidly as we can in order that everybody will get paid.
The situation on slurry spreading here is pretty tricky. Slurry spreading is directly the responsibility of a different Department but I will not hide behind that because it is a major issue for farmers. If any confusion has arisen, we have said that if individual farmers have specific difficulties, particularly of an animal welfare nature arising from their inability to spread slurry, they can contact the nitrates unit of the Department and we will look into it. We expect this will arise more when animals are housed than right now. If issues arise that give rise to animal welfare concerns, we can look at it on a case-by-case basis but I do not want to make any promises here I cannot keep.
On the general issue of the slurry spreading deadlines, we have a really big challenge here. Next year we have to introduce our new nitrates action programme, which will determine the derogations we will have going forward. The nitrates action programme is renewed every four years and our 7,000 derogations are up for renewal. These derogations are extremely important to us as are the dates on which we allow slurry spreading. In recent times, there have been a number of developments that give rise to some degree of concern. The Danes have not had their derogation renewed because the Commission was not satisfied with the progress they had made on water quality. The Dutch have been told they have to reduce cow numbers as part of their renewal. I do not want to overstate this or cause any alarm but in very recent days, the EPA has issued new water quality assessment which indicates a slight decline - about 3% - in unpolluted waterways. We have some of the cleanest water in Europe so it needs to be understood that we are starting from a very good base. Nevertheless, there has been some decline in water quality. The EPA has identified agriculture as being responsible for some portion of that. In the context of all of that, we have to be very careful about slurry spreading deadlines. From a purely agricultural perspective and in the interests of the agricultural sector, given what has happened in other member states, we have to be careful here.
Beef prices is one of the main issues concerning us at the moment. As Deputy Cahill said, there has been very significant downward pressure on prices recently. Beef slaughterings are up approximately 56,000 this year to date. This tends to put downward pressure on prices. In addition, there is the movement of sterling, which also has an effect on prices. UK prices had been moving in the opposite direction but have taken a sharp downward turn in the last week or so. They are now about €3.95 per kilogram in the UK overall - slightly higher than that in Great Britain and below it in Northern Ireland. A number of factors also are at work in the background. In global markets, there has been a rise in world beef production, which is reflected in an increase in Brazil's exports and in a rise in production globally as projected by the USDA. Furthermore, as Deputy Cahill correctly says, the general expectation is there will be an increase in slaughterings in 2017 also. All of that paints a rather difficult picture.
On the positive side, Turkey has opened its market and we have seen two movements there of 1,700 cattle and then 3,300 weanlings last week with a third shipment being assembled now. The Minister is going to Algeria and Morocco in the next week or so. One objective of that mission is on the live export side. My impression at the moment is that boats are not a particular limitation. I am open to correction on that. We are always available to examine and approve boats. I am not aware that it is a particular constraint at the present time. Trade to Turkey is new. There is one exporter involved in it. It is putting some strain on the Department's systems because it is new and the cattle have to be assessed for health, quarantined, certified and so on. There are about ten assembly centres around the country being operated at the moment. It is a new burden of work for the Department but there is no hold-up there. We see some potential to further develop that market. We are also looking at other markets. It is also important to say that in recent times we have opened a large number of markets for beef around the world. It is part of a strategy of diversifying our markets as much as possible. We have always said that a single dependence on the UK was very undesirable. While the UK is and will remain one of our markets, we have opened a wide number of markets throughout the world -14 for Irish beef, four for pigmeat and four for sheepmeat. The beef markets we have opened are in Singapore, Egypt, Japan, Iran, Lebanon, Namibia, Philippines, New Caledonia, Turkey, Oman, USA, Israel, Maldives, China and Canada. We are working hard on China. The significance of this is that the best risk mitigation measure we can take in difficult market conditions is to have as many market options as we can find. That is why we have worked so hard in China and why we have worked on the USA. Our main strategy at this time is to open the live export markets, facilitate them as much as we can and then to open as many markets globally as we can. There is no point in me disguising that the movement of sterling, given that 50% of our beef goes to the UK, is very difficult. This affects products across the board, not only beef. The UK is a major importer of many of these products. Past experience suggests that we should expect some pass-through of devaluation into prices eventually. We realise we cannot depend on that.
I will move on a little bit more quickly on the other items. Deputy McConalogue asked about the RDP scheme underspend. The main point I would make is that the reason for the underspends is that we always make generous provision in the Estimates for our RDP schemes. Our RDP schemes are, almost without exception, demand-driven. If we do not make sufficient provision, we could find ourselves in a position where we run out of money, if we have very tightly estimated the amount of money required in any year. It is always a difficulty. These are multi-year schemes but we have an annual budget cycle. It is an issue that in a previous life I tried to explain to previous committees because the interaction of those two things is quite complex. It is important that we have adequate provision in the Estimate each year for our RDP schemes. That is why it is so significant that the Minister has announced we will have over €600 million for the RDP schemes in 2017, which is a record amount.
Deputies McConalogue and Cahill asked about resources for Bord Bia. If my namesake Aidan Cotter was here, I have no doubt he would tell you he could usefully spend lots more funding. I have no doubt that he could spend it usefully. We have a continual engagement with Bord Bia on the resources it uses. The Minister has indicated that in the Revised Estimates, Bord Bia will get a significantly increased allocation in 2017.
That will be used to deal with the marketing measures around Brexit. It has already announced an interesting €500,000 marketing innovation measure in recent weeks, which will assist small and medium enterprises which are struggling a little in the current circumstances. It is a good initiative and shows that quite a small amount of money can be usefully spent. We will be assessing what is required, in addition to the 2017 allocation. Brexit, unfortunately, is not a one-year affair. It will probably take a few years of uncertainty before we find our way through all this. We will be assessing what additional actions are required on foot on Brexit and we will not hesitate to knock on the door of the Department of Public Expenditure and Reform for the funding that we consider is needed.
Regarding commonage framework plans, we have introduced a measure to make it somewhat easier for advisers who are undertaking commonage framework plans under GLAS, recognising that they will have to accommodate farmers who are coming in under the third tranche of GLAS and who do not yet have their plans fully completed. We have also appointed advisers where advisers could not be found to undertake commonage framework plans. We have gone ahead and appointed advisers through Teagasc to provide that service to the farmers in those areas. Our aim, very definitely, is to ensure, as Deputy McConalogue suggested, that 2016 GLAS payments should not be delayed for the want of commonage framework plans. That is our intention.
Chairman
Mr. O'Driscoll might also address the issue of old young farmers.
Mr. Aidan O'Driscoll
That issue is one that cuts across EU provisions. There are EU provisions in place relating to the definition of a young farmer that we cannot change. Built into both the direct payments and the rural development regulation is a definition of a young farmer that we cannot simply get around. There is a significant EU element to that issue, which makes that difficult. Deputy Cahill was right in what he said about the milk reduction scheme. There were 4,400 applicants for the first tranche of that scheme. There is no penalty in that respect so many of those applications may not follow through. The farmers who applied for it were quite clever to do so and why would they not? It was a free shot, as it were, at getting extra funding. There is €150 million on the table under that scheme and if farmers can get hold of it, why not? However, as a country, we are not going down the milk production reduction route, rather we are going down the route of increasing milk production. If some of our farmers find advantage in the scheme, there is no reason they should not take advantage of it.
I cannot say when grain prices will turn. It is a very significant global issue. We are introducing a series of measures that we think will benefit our tillage farmers. The tillage TAMS, targeted agricultural modernisation scheme, will be introduced by the end of the year. The agri-loan scheme, to which I referred - the SBCI scheme mentioned by the Minister in the Estimates - should be of significant benefit to tillage farmers. There are measures under GLAS and so on that are very relevant to tillage farmers.
On the incidence of bovine tuberculosis, TB, Wicklow was specifically mentioned and it is regularly mentioned. It is true to say that in west Wicklow, in particular, the incidence rates of TB are quite high. Currently the incident rate is 11.9% in west Wicklow and 7.15% in east Wicklow and those rates contrast sharply with an incidence rate of a little over 3% nationally. Therefore, we have a problem in that area, of that there is no doubt.
We are talking to the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs regarding the deer population. We are hoping to have a limited cull in the Calary area, working through the two Departments in the near future. There is also a proposal to introduce a pilot deer fencing project, which may also help. Every initiative helps. Another proposal is to undertake a more comprehensive study of the incidence of TB in the county as a whole. The deer population may be part of the issue in Wicklow. My animal health experts tell me that it is not the whole picture by any means. Therefore, a detailed examination of exactly what is going on in the Wicklow area is merited and, hopefully, that will provide a way forward but we are also undertaking a cull. I read in a newspaper article today that over 4,000 licences for deer hunting have been awarded to hunters around the country.
We are making a good deal of progress on the issue of bovine viral diarrhoea persistently infected, BVD PI, animals, but as the Deputy knows, we have found that we have to make more and we have to continue tissue tagging. I agree with the Deputy that it is very unsatisfactory for farmers to retain PIs on their farms; it is not acceptable. The Department has made a great deal of effort to persuade farmers to cease holding PIs and it makes payments to farmers who do not hold them. There are still approximately 200 herds that are restricted due to retained PIs and we are trying to reduce that number. It used to be at a much higher level. We are also notifying PIs to neighbours as part of that continuing effort. In terms of addressing BVD, the estimated benefit to farmers is €66 million to date from 75% reduction we have got. If we got 100% reduction, that benefit to farmers would be more than €100 million. It would be money in farmers' pockets. We have to press on with this and we cannot allow a limited number of people to hold us back. I am completely at one with the Deputy on that.
I agreed that we should not compromise on standards in terms of tags. We are moving to have multiple tags. I imagine the evaluation committee may be sitting as we speak, but no tags are being tested independently and that process is ongoing.
On the issue of TAMS approvals, more than 80% of applications in the first two tranches have been approved and we are working through the approvals in the other tranches, but we have hit a completely different problem. The Deputy was misinformed about the payment system or the information he got may have been somewhat out of date. The payment system is in place now. The claims system is in place.
It is not entirely up to date, or it was not on Friday. Someone was telling me lies then.
Mr. Aidan O'Driscoll
I take the Deputy's point. I will get on to the Tipperary office. I do not know what is going on. The claims system is in place. However, what we have found is a real issue for us. Under the first tranche, there were 2,952 applications, 2,483 of those were approved and 234 claims were submitted. I cannot be sure about what is going on here. My colleague, Mr. Paul Dillon, has arranged for farmers who have not submitted claims to be texted to ask if they are going ahead with their investments. Of those who received the text, about half replied. I cannot remember the exact number of those-----
Mr. Paul Dillon
Of those, half of them said they were-----
Mr. Aidan O'Driscoll
About half of those said they were going ahead. I am glad to have the opportunity to raise this matter with the committee because we have a problem here. We issue all these approvals. Our debt, our outstanding commitment, mounts and mounts to tens of millions of euro. We cannot do that indefinitely. The Department of Public Expenditure and Reform will not allow us to do that. We need to know how much we are actually going to spend each year or we will not be able to continue issuing approvals. It will block future approvals. We have a problem with people either not telling us what they intend to do and not simply withdrawing their approval or whatever.
We have not made a decision on that. It is up to the Minister to make the decision, but we definitely will have to consider new ways of doing business. At present, we are offering approvals for up to three years but if those approvals sit behind the clock on the mantlepiece, are not acted on and end up blocking other farmers from getting approvals, we have a problem on our hands. We will have to do something different on this, and that is the main problem we envisage.
That might be due to the cashflow side.
Mr. Aidan O'Driscoll
I accept that. However, if people decide not to do it they should cancel the approval. At least then we will know it is not happening and we can approve other people. I must sound a word of warning though. The Department of Public Expenditure and Reform will not allow us to continue issuing approvals willy-nilly for any amount of money. We must operate within budgets.
Chairman
To clarify, does that mean that until tranches 1 and 2 are sorted out, the Department will not even look at tranches 3 and 4?
Mr. Aidan O'Driscoll
No. We are looking at them and approvals are being worked on, but slowly, to be honest, because we have a big block outstanding. At present, our bigger emphasis is on urging people with approvals in tranches 1 and 2, who perhaps are doing the work, to move forward to claim stage so we can begin to see the expenditure on this. When we did not have the claim system in place - it was put in place only last July - we were getting quite an amount of grief about it, with people saying that because the claim system was not in place there were many claims waiting. In fact, there were not. They have not materialised. I understand there is significant paperwork to be completed around some of this and that people sometimes submit claims with the wrong paperwork and so forth. However, there is a broader and more fundamental problem here of people perhaps not doing the work, not completing it or not telling us what they are doing and we will have to find a way forward on that.
On organics, there are up to 1,600 farmers in organics, which is approximately 65,000 hectares of land. It is still tiny by EU standards. I was talking to our staff in organics within the last week. Organic payments in 2015 amounted to €8 million and projected expenditure in 2016 is €11 million. There are 1,680 organic farmers in the system. I believe there is a significant market opportunity here. When we were in Singapore with the Minister we went to a massive, very high end supermarket. The manager reached up and took a pot of Glenisk yogurt from the shelf and told us that in his supermarket demand for organic product is increasing by 30% per year. It is all at the high end. He was very flattering about the Glenisk product and said he could sell as much of this stuff as we could produce. At the same time, we produce infant formula for a company that exports globally, but its organic infant formula in China is sourced in Denmark because the volume does not exist in Ireland. We see a future for organic product. People have different views about organic produce, but that is not the point. The point is the market is there and we should just see it as a market opportunity, whatever one's view of the issue.
I am sorry for talking at length.
Chairman
There were many topics to discuss. I will take more questions from members.
One of the important issues is cashflow and everybody here understands that. The €150 million will be a huge benefit, if it gets out to the people concerned. That is the issue, so let us not tiptoe around it. If the pillar banks impose criteria that disallow the money from being disbursed, it is pointless. What are the Department's plans regarding the criteria for the €150 million and to what extent does it intend to be involved with that? Chairman, I believe this committee should make a presentation on those criteria to the Secretary General of the Department of Agriculture, Food and Marine. If this money is going to replace farmers' other loans and the only benefit to farmers is that they will have a lower interest rate, that is not a real benefit for the tight cashflow scenario in which people find themselves. That is one matter.
Regarding the TAMS and the breakdown, does Mr. O'Driscoll have data relating to the number of people who contacted the help-line with regard to slurry storage? Will he also give the breakdown of the €4.5 million for the local authority harbours?
On the pilot deer fencing project, while I am a Deputy from Wexford, the parish in which I live is bordered by Wicklow. The wooded areas and forest land reach into north Wexford, so there is a huge problem. There is no need to tell Mr. O'Driscoll about it as he is aware of it. Where the information and research is available, there should be prioritisation in the deer fencing project for people who have wildlife problems, particularly when a person's livelihood is at risk. It is really important. I am a dairy farmer and most of us might go down in the test once or twice in our lifetime. However, for people whose land bounds woodlands, going down every three years does not give them a viable livelihood. This is something every member of the committee should encourage. Those farmers are really stretched when they go down on that number of occasions.
Approximately 50% of our livestock beef goes to the UK market. It is important not to over-sell the penetration into some of the markets Mr. O'Driscoll itemised. We might have a presence in 60 different markets but the UK market might account for more than those. Perhaps Mr. O'Driscoll could give us a breakdown in that regard. I recall there was a benefit in getting back into the US market, but there were very few high end top cuts going there. Does Mr. O'Driscoll have a breakdown of the value of the product per market? I do not need the breakdown for all 50 or 60 but perhaps he could provide the top four or five if he has that information. That would be helpful.
Some of my questions were already answered. The main problem with the Department's staff being cut by a third is that it is reflected on the ground in the relationship between the Department of Agriculture, Food and the Marine and the farming community. At one time the Department was portrayed as always having somebody at the end of the telephone to give advice. The further automation of the Department really concerns me. In addition, there are no plans, now that the moratorium has been lifted, to increase the number of staff in the Department. Farmers in rural Ireland want a relationship with a human being, not a machine. That is a major concern.
Will there be a national reserve in place for 2017? When will existing young farmers be paid? With regard to dairy farming and the emergency fund put in place last year whereby dairy farmers received the same payment across the board, currently moves are being made to equate the level of payment to the amount of milk produced. This would see the large producers gain more from the fund at the expense of small dairy farmers. That is causing much hardship for small dairy farmers, particularly in the area from which I come in Mayo.
Is land with heather still excluded from permanent pasture measure under the green low-carbon agri-environment scheme, GLAS? There was no room for this kind of marginal land in the previous two schemes. Has it been addressed in the new scheme? Restricting the maximum of permanent pasture and traditional hay meadow to 10 ha has greatly reduced income from GLAS. Will that be increased? When will GLAS payments for 2016 be made?
Beef prices are down to €150 per head. It is quite evident in the marts, particularly in the west, that the number of Northern buyers has been greatly reduced. What plans has the Department to address that?
One way to help farm income in disadvantaged areas would be to increase the ANC, areas of natural constraint, payment in line with the islands payment? Has the Department any plans to do that? When will the sheep scheme be up and running?
After the court case taken by a farmer on agricultural inspections, has an audit been done in the Department as to how many inspections were carried out without the control report sheet being signed?
What part can the Department play in maximising the potential of the seaweed industry, particularly along the west coast, and avoid a monopoly where it is controlled by a limited number of producers?
I welcome the delegation. The ANC areas are up for review next year. Many of the farmers in these areas, particularly those with marginal land, will be hoping they will get a bit extra out of it. When will the criteria be set for this?
Some farmers are ineligible for the young farmer scheme because they have been farming for too long but are underage. I accept the Department's point about how it breaches the EU guidelines. Is there an opportunity to develop a solution to this? It only involves a small cohort of farmers. Naturally, they feel aggrieved they have been left out and nothing has been done.
In Sligo and Leitrim, there are many investors buying up land to plant it with forestry. The fact a non-farmer can get the same level of forestry grant as a farmer has caused many problems as local farmers cannot compete when buying land. It used to be the case the active farmer got a higher level of grant than the non-farmer. Is there any scope to revert back to that system again? The level of tax-free income a person can make from forestry is limitless. Is there any possibility of reviewing that? I accept the whole afforestation drive is to reduce CO2 emissions. However, small farmers, particularly in my community, have seen this become a gravy train for wealthy people to make much money at their expense. It is an issue which needs to be examined.
Due to the recent wet weather, there is a possibility of a fodder crisis later in the year in some parts of the country. That also relates to the slurry-spreading problem we have. Farmers, certainly in the west, could not spread slurry anytime between July and September because of the wet conditions on the land. However, the weather has been good this October but they were not allowed to spread slurry. Farming by calendar rather than conditions on the ground is not working. Is there any possibility of addressing this?
The fodder crisis would be greatly alleviated if there were a drainage scheme in place for farmers on marginal land. The last time a grant aid for a drainage and reclamation scheme was back in the 1970s. There is nothing for it now. For example, one can get a grant of over €3,000 per hectare to establish forestry. If even half that amount was available for land drainage, many farmers would feel they had the opportunity to work their land better and appropriately.
There seem to be little supports for the equine sector. I am sure I am not the only Member who has got e-mails from various groups, such as Connemara Pony Breeders Society, and other sectors, who feel they get little or no support for marketing, breeding and so forth. While some of these may be niche industries, they could be developed with more support.
The mushroom and poultry industries rely considerably on heat. North of the Border there is a grant scheme in place for farmers to use woodchip boilers rather than oil or other fossil fuels. This scheme is partly funded through Europe but we do not have it here. Our mushroom and poultry farmers are competing with farmers north of the Border who can produce at a much keener price because their input cost is lower because of that scheme. Is there any possibility of looking at a similar scheme for here?
Mr. Aidan O'Driscoll gave a fantastic and in-depth presentation. One issue he raised was the TB eradication programme. Margaret Good, who works in the Department, is the European, if not the world expert, on TB. One issue that comes up is the eight-hour test compared to the 24-hour blood test and how they fit into the system. I have heard of cases where a skin test, an eight-hour test and 24-hour test have been done but with different results and a different view taken after. Then there are issues over different district veterinary offices, DVOs, taking issues regarding a reactor and when a neighbours' herd is locked up or not. There are different approaches across the country. Is there one straight view regarding this? I admit I am a vested interest at the moment but that is another issue. However, we need to work out in detail where the skin test falls into the 24-hour test, or the eight-hour test and what is considered to be a reactor afterwards. If the animal goes to the factory and has lesions, how is this dealt with? Farmers need clarity in this area.
Mr. Aidan O'Driscoll spoke in detail about the BVD, bovine viral diarrhoea, eradication scheme. It has been a fantastic initiative which has worked very well. Johne's disease is now another issue, particularly for the dairy industry, and how that fits in with what we do abroad and how we market our product. Will Mr. Aidan O'Driscoll expand on where the Department is going with its Johne's disease programme, its long-term plan and how it will drive the initiative?
It is positive that direct payments have increased by 13% and 8%, respectively. There is a question about the number of people who have not been paid and not been notified. People have been phoning around asking others if they got the text and if they had been paid. It is like the lotto. There is a better way of doing this. If there is an issue, people should be informed rather than waiting for a text. If they do not get a text, they should be brought into the loop. I never quite understood why we could not pay the 70% and then take the reductions out of the 30% payment in the second round.
People need that 70%, particularly this year. If there is to be a reduction, unless it is a huge reduction, which rarely happens, the 70% should be paid automatically and the 30% can be worked on after that. The number of queries on this issue is amazing. The main queries I received this year, as opposed to other years, were from people who had two or three transfers, whether they were going into a company or leasing entitlements. I am aware of four people who have gone into a company and are renting their own entitlements. Those are the people who have been held up. Is it that they are falling through the Department, so to speak, or are those cases just falling on my desk? Is that an issue we are propping up, so to speak?
It would be remiss of me not to ask Mr. Paul Dillon about the position on the Haulbowline project, which is unique to the Department of Agriculture, Food and the Marine and in terms of driving forward development in Cork Harbour. Mr. Dillon might give us a brief update on that issue in terms of how the project is progressing.
I want to highlight an issue and ask a question. The extension of the accelerated capital allowances to sole traders, which in effect gives a tax break to farmers investing in energy efficient equipment and allows them to write off 100% of the purchase price, was a welcome provision in budget 2017. That will result in a saving in their energy costs and reduce the carbon emissions. I believe the initial scheme for the accelerated capital allowances was extended to the end of 2017 in budget 2015. With regard to farmers who might like to buy a wind turbine or solar panels and engage in micro-generation or a district heating system to address issues of heat and contain those costs in an energy efficient manner, the scheme was previously extended for three years but is 2017 the window of opportunity for farmers to invest in such energy efficient equipment or has the scheme been extended further?
Chairman
Mr. O'Driscoll has a long list of queries.
Mr. Aidan O'Driscoll
I have, but all of them are interesting. I will deal with them as best I can in the order they were put to me. I will start with Senator Conway-Walsh. I take the Senator's point that farmers want human contact. The Department tent at the ploughing championships is amazing in terms of the thousands who visit. My colleague beside me, Kay Ryan, organises it and it is a sight to be seen as farmers come through in huge numbers. They do that because they want to see a human face. They come with all their problems, and the set-up in the tent is fantastic. If they need to, farmers can go from one part to another to get various issues sorted out, whether it is animal health, payments, GLAS issues or whatever. The Senator is right that they want the human contact. At the same time, we are going down a route of increasing automation and online services. Are they a contradiction? I do not believe so. Going down the online route means the initial trigger, the scheme application and so on, is done much more quickly.
In terms of what that has allowed this year, for example, farmers who previously submitted their claims on paper but on which a small error was made would have had them returned or the Department would called them to say it was completed incorrectly and the application might end up going back and forth and so on. That is not a contact a farmer wants. This allows pre-checks to be done before any penalty is applied on the basis of the online application. The farmer submits the claim but if there is something on it that does not make sense, we can contact him or her to say that they may incur a penalty and to have another look at it. That is a welcome development.
Where we have fallen down, and we fell down last year, which I admitted in my opening statement, was in terms of farmers who like to pick up a phone and call someone. The days of going into the local office are over. Farmers are busy and they do not have that much free time, but they like to pick up a phone and talk to a human being. Last year, we were introducing over 20 new schemes in the Department. Our staff numbers were way down and we were struggling. My colleagues did a fantastic job but where we fell down was in the responses on the telephone. Farmers could not get through to the Department. Deputies and advisers could not get through either, and we were getting it in the neck, so to speak, from everybody. A new system has been put in place and it seems to be working well. Currently, we are getting about a 75% response rate on telephone calls. That means when farmers ring, 75% of the calls are being answered on the spot while 25% of them go to voicemail and are answered within 24 hours. Approximately half of the queries that come in can be dealt with on the spot by the person who answers the phone. The other 50% are more complex and have to be referred to somebody who has more detailed knowledge, but the clearance rate on those is very high. That is the human contact farmers want. They want effective human contact. They are not looking to have a chat. The future is online applications and very effective telephone systems for people to follow up on their queries, problems, issues or whatever. I hope it will also mean that the Senator will get better responses to queries brought to her in her clinics.
On the national reserve, that is a policy decision for the Minister; it is above my pay grade.
I will let that slide.
Mr. Aidan O'Driscoll
It is above my seniority level.
That is more like it.
Mr. Aidan O'Driscoll
With regard to the €1,200 payment last year to dairy farmers, that was one way of doing things. Obviously, it was very welcome. Everybody likes to get a cheque in the post. When we got the €11 million this time around, we could have sent a very small payment to everybody but it would have been very small because the €11 million was available to all livestock farmers. The Deputy can imagine that it would have amounted to a few shillings. It would not have been an effective thing to do, so we have gone down the other route of this loan scheme, which has taken some engineering. We hope it will be available to everybody. I will not go into all the technicalities but we intend it to be available to livestock, tillage and horticulture farmers. At the same time, there is another process going on in parallel, which is the payment for reducing one's production. One could say that the bigger producer gets more from that, but I do not believe that is the way it will work out. I believe that the producers who are reducing their production anyway will get it, which in this country would tend to be a smaller farmer. The big guy is expanding, not reducing. I do not see that money going to bigger farmers. The position could be different in other countries. Farmers in the Netherlands are required to reduce their cow numbers, and this subsidy is being used to help those who are doing that. It might be going to the bigger farmers in the Netherlands but in our circumstances I do not believe it is going to the bigger farmers here.
The Deputy is right that heather does not qualify. Somebody asked a question about slurry storage. I am told there were 22 calls to our slurry storage helpline. I dealt with the question on the national reserve.
On the reserve, what is dictated to make up the reserve in terms of what is available? Is there enough for a reserve scheme?
Mr. Aidan O'Driscoll
The reserve can be funded in a number of ways, one of which is that there is a take from entitlements sold.
Of course, it is possible to run a national reserve by taking a cut from everybody. I do not know if it is an option that would be taken, but it is available. That is why I say there is a policy decision in the middle of this that I cannot get into.
There were a number of questions on the areas of natural constraint, ANCs. Can the payments be increased? As members will know, the programme for Government makes a commitment to provide additional funding for ANCs in 2018. I assume the extra €25 million will be available for ANCs at that time. It is also true that for 2018 we have to have an ANC redesignation, in other words a reclassification of lands available. ANCs, or disadvantaged areas as they were known, have been around for a long time and farmers are very attached to their payments. It is a huge issue involving 100,000 farmers. The slightest suggestion of any change in this scheme always brings people out in a rash. What are the criteria?
We could say Sinn Féin wants it.
Chairman
I ask Mr. O'Driscoll to proceed.
Mr. Aidan O'Driscoll
The criteria are known. There are eight very specific biophysical criteria as follows: low temperature, which probably does not apply in our case as it means really low temperature; dryness, which definitely does not apply in our case; excess soil moisture, which applies a lot in our case; limited soil drainage, which applies a lot; unfavourable texture and stoniness, which is a significant issue in some areas; shallow rooting depth, which is less of an issue in Ireland; poor chemical properties, which applies in some parts; and steep slope. Those are the criteria and they have been fixed for some time.
Our scientists have effectively been mapping; it will all end up as maps. They have been testing soil samples throughout the country for these eight biophysical criteria. Out of that will emerge a set of maps to see what areas do and do not qualify under these criteria. Obviously, this will be a huge issue and I have no doubt it will attract considerable political attention. It will probably be early next year before we begin to see the results of that. However, we need to finalise it in 2017 because it has to be applied in 2018.
While the technical work is quite scientific, I should mention a few additional aspects. One is called fine-tuning. If an area is deemed to qualify, we are required to examine that area in more detail to see if within that overall area parts of it may have been improved sufficiently that it should no longer qualify as suffering from a natural constraint. If a former natural constraint has been dealt with, it is no longer a natural constraint. That is how the regulation is written.
Second, there is a provision that if an area is falling out of qualification, it can be phased out over a number of years. Finally, there is a discretionary provision for 10% of the natural land area of the country that we can add in. The national land area of the country is approximately 6.8 million ha, with about 4.4 million ha of agricultural land. That would allow us an additional approximately 680,000 ha. I ask members not to hold me to those figures, but it is of that order. That allows for a good deal of flexibility, which it is to be hoped will assist us significantly in all of this.
What is the rationale for that?
Mr. Aidan O'Driscoll
Political, if I was entirely honest. It is a provision in the regulation. This is also a very sensitive issue in other countries. Some countries do not apply this at all even though they would qualify, but they just decide not to pay it. It is a significant issue in the countries where it is paid. However, they do not have to pay it at all. It is part of the rural development pot of money. Like everything in the rural development area, the more we spend on ANCs, the less we spend on others. Some countries do not apply it at all and others only apply it in very extreme cases.
We ended up with these eight biophysical criteria because the Commission ended up in trouble either with the European Court of Auditors or the European Court of Justice - I cannot remember which - about not having consistency across Europe. Therefore, these eight biophysical criteria now apply across Europe.
Does that mean that any changes to be made will be made as a result of these criteria rather than anyone else's views or considerations? Mr. O'Driscoll is telling us it will be very scientific.
Mr. Aidan O'Driscoll
The initial mapping would be a scientific product. There might be some judgment in the fine-tuning and then we have the discretionary 10%.
Will this be broken down by electoral areas or divisions, or how will it be done?
Mr. Aidan O'Driscoll
That is a very good question. I think it is district electoral divisions, DEDs. I would need to double-check that. We pressed for it to be townlands. I need to double-check if we got that. I have a feeling we got stuck with DEDs.
If it could be done by electoral division, the problem is that in my part of the world the electoral divisions are huge.
Mr. Aidan O'Driscoll
Yes, they are. I recall in a meeting with the Commission about this, struggling to explain to people that nobody in Ireland knew what DED they were in, but everybody knew what townland they were in, but they just did not get it. DEDs are recognised in EU law. I have a feeling we did not get that, but I had better double-check before I confirm that.
The townland boundaries tend to be natural ones - streams etc., meaning that in general the land is similar within a townland. It would have made sense from that point of view.
Mr. Aidan O'Driscoll
I completely take the point that it would be better, but I cannot quite remember which way it ended up. I know we were struggling with the Commission on it.
It is much of a muchness. One field could be a terrific field and the field beside it might not be.
Chairman
I would like to recap on the timescale. It must be completed by 2018.
Mr. Aidan O'Driscoll
We have to bring it in in 2018. We have no choice. It is a pure coincidence that there is an extra €25 million. That was something the Government decided to provide. From my point of view it is a coincidence. There is no relationship between the two things. There is additional funding coming in 2018, there is the new classification in 2018, and there is the decision to be made on the use of the 10% discretion.
Chairman
Apart from discretion, is there an appeal process for a farmer who formerly had land parcels that were taken out?
Mr. Aidan O'Driscoll
We are not quite there yet. It will be scientifically determined so it would be very hard. There still would be a possibility. We have not planned this out precisely. I imagine that there will be a consultation process, which is, in effect, a bit like an appeal process in this context. If, for example, an area is deemed not to qualify on the basis of stoniness but the farmer can produce evidence that it is stony, that is where that would come in.
The current envelope for ANCs is about €225 million. Is that right?
Mr. Aidan O'Driscoll
It is €202 million.
If a portion of land is taken out as a result of not meeting the criteria, will the pot for ANCs remain the same or reduce? How does that impact on it?
Mr. Aidan O'Driscoll
That is a national policy decision. The EU gives us our pot for rural development and we decide how much to spend on individual schemes. Since the Government has committed to putting in an additional €25 million, I interpret that at the moment as meaning that it will be €227 million in 2018.
Areas will fall out of qualification. It is quite possible - quite likely - that areas that currently do not qualify will fall into qualification under these criteria. I keep repeating that we will have this 10% discretion. This could end up in a number of ways. We could end up, for example, with more areas overall, in which case the pot widens and shallows.
There are several ways this could shake out. I have no doubt this will be a big issue next year.
I skipped over several points that Deputy D'Arcy raised. The cash flow fund of €150 million is intended to be a very flexible fund for farmers, not just a low interest rate. There is provision in it for up to three years of interest only payments. A farmer who has low prices, high borrowings and big outgoings could, hopefully, with this product refinance that borrowing and get the benefit of a lower interest rate but if he felt his circumstances were such that he needed to go on interest only payments he could do so. That could cut his payments by a very substantial margin. That is one reason we are doing it this year.
That is not the issue. The issue is the criteria that will be applied by the two pillar banks. If the wrong criteria are applied it will be pointless. For example, Glanbia, Finance Ireland, Rabobank and the Ireland Strategic Investment Fund, ISIF, had a similar fund of €150 million. The concept was great but I spoke to farmers who did not meet the criteria, which were based on milk prices for the previous 12 months, and as we know the price collapsed. There were certain boxes that had to go green versus red and they all went red. The money was not given out in particular areas where it was really required. If the same structure, which is very prudent banking rules, is applied here the money will not be given out. That would make it a pointless exercise.
Mr. Aidan O'Driscoll
I take the point but the purpose of this is to make it widely available to farmers. The way in which this product is being structured is quite complicated. The Minister has had many discussions with the Strategic Banking Corporation of Ireland, SBCI. A key element is that the State is putting €25 million into this and part of that money is to reduce risk and another part is the interest subsidy. The risk reduction element is being put in by the State. In addition the European Investment Fund, EIF, is taking on some of the risk. That risk reduction should make the banks more flexible in the way they apply the product. We will also be determining that with SBCI. In the very near future we will, with SBCI, work out its finer details, then we will do a tender or call because banks do not have to participate in this, and wait for the banks to indicate their willingness to sign up. We are reasonably optimistic on that front. They will sign up to the detail of the scheme as set out by us and the SBCI. I will bear in mind the points the Deputy has just made. I am aware of the Glanbia fund which is very innovative.
It would be very important that, before the Department goes to the banks with its criteria and details, it make a presentation to this committee. This €150 million is to provide assistance to the cash flow. I spent two years talking to bankers at the banking inquiry and would hate to think that people with common sense knowledge of farming were not given some opportunity to have some input.
Mr. Aidan O'Driscoll
If the Chairman wants I can arrange for my colleagues and the SBCI to come here.
Chairman
It might be useful.
Mr. Aidan O'Driscoll
I have a large number of questions to reply to.
Chairman
Deer fencing was the next issue Deputy D'Arcy mentioned.
Mr. Aidan O'Driscoll
The Minister of State, Deputy Doyle, is very familiar with this issue given his location. We will undertake this pilot project on deer fencing to see what it shows us. Deer fencing is expensive and difficult. I know some people who have done it recently. We will get the message out to prioritise deer fencing and we will certainly do it at least at an experimental level and see what we learn from that.
We could give a complete breakdown of the beef markets: 50% goes to the UK; 40% to the rest of the EU and 10% to third countries, approximately. We can give the committee a complete breakdown if it likes.
Chairman
Mr O'Driscoll can send that to us in due course.
Mr. Aidan O'Driscoll
We issued the exact breakdown of the €4.5 million to local authority harbours publicly on our website but we will send the list to the committee.
Chairman
When will the sheep scheme come in?
Mr. Aidan O'Driscoll
That will happen next year. We are dependent on the Commission clearing it. It is in the second amendment to the rural development programme, RDP, that I mentioned and the Commission has to agree it. We have submitted a specific very flexible proposal. Farmers get to choose from several options exactly what welfare measure they take. I cannot guarantee that the Commission will agree to it precisely as proposed. We are reasonably optimistic that it will agree to it but it usually wants to make its own input. We are aiming to get that cleared by the end of the year but that is very much at the discretion of the Commission. We will run it in the next calendar year.
Is that beginning in 2017?
Mr. Aidan O'Driscoll
Yes. That is the intention.
Chairman
Senator Conway-Walsh asked about seaweed.
Mr. Aidan O'Driscoll
That is right out at the edge of my knowledge. I know that my colleagues on the marine side are actively engaged with seaweed harvesters and there is very significant potential there. This has been discussed at several SeaFest conferences. There is amazing potential in some cases and there are a few companies mining this resource. It does lead into questions of foreshore licensing and so on, quite complex issues which have been troubled in the past. To be completely honest, I need to swot up on this before I can give a more comprehensive answer.
Forestry in Leitrim has received some coverage. There was some misinformation about the level of afforestation in some parts of the country. We have very detailed figures for every part of this country. I was looking at our remote sensing data and forestry mapping in the past few days with our colleagues in Wexford. It has to be understood that farmers still enjoy a significant advantage over non-farmers in afforestation because they get all the other payments as well, single farm payment, green low-carbon agri-environment scheme, GLAS and all the rest that non-farmers do not get. Over 80% of the planting in Leitrim is done by farmers, if I remember the data correctly. That is quite significant. The tax reliefs on forestry are generous. What an economist would call the subsidy, the tax breaks, the establishment grants and premiums all lumped together represent an enormous level of subsidy to forestry and overwhelmingly that goes to farmers.
It is establishing a new crop on Irish land and a new option for farmers, so they can go into a profitable new crop - new for many of them - on their land. In general, Irish farmers then plant only part of their land but there are exceptions. They do not reduce their agricultural production as they squeeze up their agricultural production a little bit on the rest of their land because their production is often very extensive. That is the pattern to date. At 11% of our land, Ireland has one of the lowest rates of afforestation in Europe, where the average is 38%. Some countries are 70% afforested. We have a national aim of getting up to 18%. This is an important measure. It is hugely important in the context of climate change and for our agriculture. As I said in my opening statement, it is one of the great challenges and it is not coming down the tracks; it is here right now. It is a real challenge for us. Forestry is a very important part of our strategy for dealing with it. It is also creating a new industry. I have been in some of the plants. I imagine we will have more discussion about it but this is the way we see it.
Haulbowline is a huge project with €61 million estimated as the overall cost for the three elements. The priority is the remediation of the east tip of the island where all the stuff from the old steel plant is and where the environmental risk is. The old steel plant factory area requires remediation also. The factory is no longer there but there is a very messy site. The third element is the rehabilitation of some very striking and beautiful old cut stone buildings. All of these have to be addressed and €61 million is the estimate of the total cost. Off the top of my head, I believe the Department has spent some €7.8 million - that figure that pops into my head - to date with Cork County Council. Cork County Council has recently done a tender, which it is now examining, for the main works.
For the wall and the capping?
Mr. Aidan O'Driscoll
Yes, exactly, the wall and the capping. The council is now examining those tenders and will be talking to preferred bidders very soon.
Does Mr. O'Driscoll think the tender will be €20 million per project or more?
Mr. Aidan O'Driscoll
I think it would be better if I did not say it publicly. I do not want to hand other people an advantage.
That is fair enough, no problem.
Mr. Aidan O'Driscoll
I believe Cork County Council is doing this tender very well and the costs are coming in somewhat below the expectation.
Enough said.
Chairman
I refer to the issue of payments and in cases where there is a penalty, stopping payments at 70% and taking the penalty out of the 30%.
Mr. Aidan O'Driscoll
I do not think we can actually do that. The Department has to satisfy itself that a payment is properly due. If it is subject to an inspection and so on, we do not know that it is properly due, so we cannot pay the 70%. Again, I do not want to go on like a cracked record, but we are paying and Irish farmers are getting this money so much more quickly than everybody else in Europe by a mile. I suppose I will keep going on like a cracked record because it is a really important point in all of this. The great majority of farmers have received their payments. With regard to the issue the Senator has raised, in a way we are victims of our own success. As more people get paid, the more the remaining people are going to feel disadvantaged. That is just the way the world is. That is a difficulty but-----
Does Mr. O'Driscoll think there should be correspondence to say there is an issue or problem, rather than having a farmer waiting for a text and ringing the guy next door to see if he got the text? That kind of information gap annoys people.
Mr. Aidan O'Driscoll
I will undertake to look into that to see if we can provide better information to those who are caught up. Maybe as the system goes further online and automates more the problems hopefully will narrow and the opportunity to spend resources doing that kind of thing will increase.
Chairman
I take Mr. O'Driscoll's point about the scratched record, but if there is only one individual who does not get his payment, he will know about it.
Mr. Aidan O'Driscoll
He would be straight on to the Chairman.
Chairman
We will know about it.
Mr. Aidan O'Driscoll
That is the problem. The committee, as public representatives, know that while they hear from people who are not being paid, they do not hear from the others. Nobody is sending the members thank you notes for the money. We share your pain.
What is the point of having two phased payments if the Department cannot pay out the 70% and hold back 30%? What is the rationale for that?
Mr. Aidan O'Driscoll
It is an EU budgetary issue. In the regulations the actual amount is 50%. This is raised to 70% exceptionally. I understand that it is partly a budgetary issue. It is also a safety issue to ensure that everything is right before the final 30% is paid. A budgetary management issue arises there too.
It goes back to the point that if the 30% is there as a buffer for protection, surely that is precisely for the reason that the 70% would be paid with the 30% held back.
Mr. Aidan O'Driscoll
Yes, in inspection cases. The Senator also asked about a particular court case. I can say that the Department has adapted its control reports in respect of the court case. I have to make the point of course that the Department is appealing the entire court case and therefore I cannot go into more detail. As it happens, I can answer the question asked by Senator Conway-Walsh. We have adapted the way in which we do control reports, in light of the High Court findings.
Has the Department done an audit on what the aggregate liability might be were the court case to be successful? I appreciate that Mr. O'Driscoll cannot talk about a single case but I do think there is-----
Mr. Aidan O'Driscoll
Again, the Senator is getting me on to territory onto which I would prefer not to be drawn in the middle of a court case. I am just not certain, it is-----
Chairman
It is a fair point. The court case is ongoing.
That is fair enough, but I do think it is-----
I seek clarity about the eight-hour TB blood testing.
Mr. Aidan O'Driscoll
As I said in my opening statement, the mixture of the two tests is helping to more accurately identify reactors and get them removed more quickly - as I understand it - but I freely admit I am not an expert in this area. With the badger control programme, we are taking out some 6,000 badgers per year in carefully controlled areas. Both measures are driving TB down to very low levels of just over 3% of herds. For the first time ever we have set a target for elimination. We have said that it would be done by 2030. Obviously, it gets more and more difficult. Again, it is the usual thing in that the more successful we are the harder it gets and the last 3% will be the toughest. The plan is to get it done by 2030 at the latest but hopefully earlier. The blood tests are working and helping within the process. We are also working on a wildlife vaccine, which has had a good deal of success at the moment. That may also become the bigger feature as we move towards complete elimination. How many years have we been at this, as a nation? Getting rid of TB is like the third national aim. We got rid of brucellosis so we believe we can get rid of TB also. We are confident we can do this by 2030.
In light of what we have heard here this evening it might be appropriate that someone such as Ms Margaret Good, who has a fantastic reputation in this field, might address the committee at some stage.
Chairman
We will look at the work schedule.
She is a world leader in that area.
Mr. Aidan O'Driscoll
I would be delighted to ask Margaret to come before the committee.
Chairman
We can include it in the committee's work schedule for a later stage. It is getting late. We shall move on as there are a few small issues to address. Deputy Martin Kenny asked about the potential drainage scheme, and I use the word "potential".
Mr. Aidan O'Driscoll
Potential yes. Drainage is actually a tricky issue. One would not get drainage though the Commission in the RDP.
I probably should not put that on the record. I think we would find it very difficult to persuade it.
Drainage has been a traditional issue in Ireland. Drainage on the wrong kind of land causes a lot of carbon emissions. When peatlands are drained, what actually happens is that a significant amount of carbon is emitted - I do not have the figures with me. This point has been made to me by our EPA experts. The Commission is very conscious of this issue. Drainage is a tricky subject in Europe in terms of getting things cleared. I am not saying "No"; it is not my role to say that. Rather, it is a policy issue. I cannot say "yay" or "nay", but I can definitely say that we would struggle with the Commission.
I would have expected that drainage of marginal land would increase the productivity of the land and its ability to grow grasses, and would have an impact in the opposite direction in that it would move the production of livestock on that land to the positive side of CO2 emissions.
Mr. Aidan O'Driscoll
That would be true of some mineral soils. It depends on the soil.
I refer in particular to meadow ground, where people want to get fodder.
Mr. Aidan O'Driscoll
I note what the Deputy is saying. It would increase the ability to grow crops or whatever. Willow and other crops like that will grow on quite wet land. The Deputy's question is a policy matter, in terms of whether drainage could be carried out. I will step back from that a bit. The only point I make is that we would struggle with the Commission.
Chairman
Okay. Deputy Kenny mentioned the equine sector.
Mr. Aidan O'Driscoll
Yes.
Chairman
I understand he referred to Connemara ponies.
Mr. Aidan O'Driscoll
In terms of the equine sector, we are putting in place knowledge transfer groups - I understand 24 have been approved. The Department is working with facilitators to get those up and running. There has been a delay in approving groups. As I understand it, this is due mainly to proving ownership of broodmares. Nevertheless, we will work through that. It is a very welcome new initiative. There is also a review of Horse Sport Ireland's relationship with its affiliates being undertaken, and how to best undertake that at the current time.
Chairman
There were questions on the mushroom and poultry sectors.
Mr. Aidan O'Driscoll
An issue that has been hanging fire for some time and on which I know the Minister, Deputy Creed, recently had discussions with the Minister, Deputy Naughten, is the question of the renewable heat incentive. It has been talked about for some time and we hope it is on the way. It could create a significant market for willow, in particular. It could be grown by farmers in areas where there are limited other options, including areas where they might not be so enthusiastic about forestry but may find willow a more conducive crop. This, of course, also delivers benefits to farmers at a much earlier stage. A farmer can start cropping willow after three, four or five years, or something like that, rather than 30 years. There are possibilities in that area. Under TAMS we provide some support for poultry houses, in particular for energy efficiency and so on.
There is a specific scheme North of the Border. There has not been an examination of trying to model something similar here.
Mr. Aidan O'Driscoll
I would have to examine the scheme. I suspect the Deputy might be talking about the renewable heat scheme in place in the North, and that is the issue to which I referred. It is the responsibility of another Government Department.
Has the consultation on that concluded? I understand it is in the pipeline.
Mr. Aidan O'Driscoll
It has been in the pipeline for a while. We provided aid to farmers for many years to grow willow and, more controversially, miscanthus. There was a very low take-up of the scheme, and we suspended it last year for that reason while we reviewed the situation. I think willow has very significant benefits and provides opportunities for farmers, and in the future we may be able to re-enter the business. It is somewhat of a chicken-and-egg situation, in terms of having a market for the product.
For example, the power plant in Edenderry and some large installations, such as hospitals and so on, which have boilers are potential markets. It could be quite a significant crop for farmers, in particular those in more marginal areas. As we know, willow grows everywhere in this country. We need to join all of the dots.
There is a land use issue. Heat incentives are the responsibility of a another Department, as Mr. O'Driscoll said. Willow will grow anywhere, but for it to be commercially viable it needs to grow on reasonably arable land. Farmers cannot grow and cut it in a bog. There is competition with land that might be somewhat marginal but not quite marginal enough. The crop has to be accessible. Therefore, farmers are competing with pasture land, perhaps, or land that is being used for farming.
This was an issue when the former Minister, Pat Rabbitte, and the Minister for Housing, Planning, Community and Local Government, Deputy Simon Coveney, were in office. What conversations took place between the Departments? There is only so much land in the country and there were objectives for energy crops and ramping up agricultural production. Where was the crossover and competing interests? How was that teased out? Was it ever teased out?
Mr. Aidan O'Driscoll
That is true. I take the Senator's correction on land quality. She is quite correct. If farmers planted willow on peat or very low quality land it would not work. It requires a reasonable quality of land to grow. In many marginal counties, there is enough land that is good enough to grow willow.
I cannot remember the exact figure for the amount of willow and miscanthus that has been planted. It is something like 3,000 ha or fewer - perhaps 2,500 ha - in the whole country, out of a total of 4.4 million ha of agricultural land. We are a long way from having some sort of problem in terms of land use.
However, we found another problem. Willow has to be able to compete. Farmers know willow is a new crop and is, therefore, risky. From their point of view anything that is new is risky, which is a reasonable attitude. Farmers who have the most skill in this kind of thing and would probably have the easiest access to equipment would be tillage farmers. In the past, the returns they made were more than they would have made from willow or miscanthus. A study carried out by Fiona Thorn of Teagasc on this some years ago showed that quite clearly. Dairy farmers would not participate because they got more money from dairying, therefore they would not give over their land to grow willow.
At that time, the crop did not pay tillage farmers. Given the current difficulties in the tillage sector, maybe they would be more open to it now. Some beef farmers would benefit by giving over some of their land. It is similar to the forestry sector. It is not a matter of getting rid of a beef enterprise. Rather, it is a question of a farmer tightening up his or her beef enterprise a bit. As we know, a lot of beef farming is done very extensively on land. A farmer could tighten up his or her beef enterprise on a smaller land area and then grow willow on the rest.
I repeat that the Government as a whole and all of us have to get our act together. We all share responsibility. We have to try to join up the chain, and that has proven somewhat difficult to date.
A number of years ago, Bord na Móna put together a really good package for farmers, if I recall correctly, who lived within 40 km of Edenderry. It was a really good package that incorporated our grant scheme but it could not get people to sign up. To this day, I am not sure why that was the case. I believe there is an opportunity here.
The experience of some of the willow farmers who have planted is that the market does not exist because of a lack of end users. One needs a renewable heat incentive to make it worthwhile for people to install boilers. I understand that the Department of Communications, Climate Action and Environment will undertake a consultation within a year even though the process has been ongoing for a while. The Department seems to be proposing that the renewable heat incentive, that it is discussing, would only be introduced for boilers with a capacity of around 500 kW. That type of boiler is higher than what it takes to supply a mushroom house. It would be more suitable for a massive hotel with a leisure centre. In normal regional towns there are not many buildings with that level of need. An average farmer with a holding of 40 or 50 acres or 20 to 30 ha who is considering planting willow would not, on their own, have sufficient capacity to keep such a boiler maintained and fed. The Governments in the North and Britain provide funding for 100 kW boilers. Unless the Department of Communications, Climate Action and Environment will fund a renewable heat incentive for boilers with a capacity for 100 kW and 200 kW then the average farmer will not enter this market. Instead, those boilers will be fed through contracts with Coillte, for example, rather than with farmers. I urge the Department of Agriculture, Food and the Marine to engage with the Department of Communications, Climate Action and Environment to bend the proposals so that there is a certain number of those boilers. Once one gets to a 1,000 kW boiler the marginal return is better.
Mr. Aidan O'Driscoll
Yes.
Apparently the level of per kW return per cent for a 500 kW boiler is similar to what it is for a 100 kW. One only gets the marginal returns for boilers with a very high capacity. The Department of Communications, Climate Change and Environment mentioned that there would potentially be 3,000 large commercial end users. Even if the Department is targeting that group, if we could ensure that there is an allocation for a couple of 1,000, on a first come, first served basis, to include boilers of 100 kW. The provision would mean mushroom houses and the average sized hotel could install 100 kW boilers thus creating a market for smaller local producers to supply the boilers. It would be against the spirit of the initiative if one had to transport the product large distances. The pathway that the Department of Communications, Climate Change and Environment is on needs to be considered because the sector will not develop unless it adopts a different approach.
Chairman
We have covered most areas and it is getting late.
What about the ACAs?
Chairman
The accelerated capital allowances.
Mr. Aidan O'Driscoll
By the SEAI.
Chairman
I knew there was one issue left and apologise to Senator Mulherin.
Mr. Aidan O'Driscoll
For some time the Department has pressed for the benefit to be made available to farmers and it was announced in the budget that it would be made available to them. The Senator asked whether ACA only applied to 2017 or had it been extended beyond that year. I am not sure offhand but I shall check it out. l am not going to write future budgets for future Ministers for Finance but we hope that the scheme would last beyond the year.
The scheme was extended in 2015 for three years to the end of 2017 and it was extended to include sole traders in the most recent budget.
Mr. Aidan O'Driscoll
Yes.
I ask the indulgence of the Chairman to allow me time to discuss the Japanese knotweed that is a universal problem in County Mayo. Many signs have been erected on the sides of roads warning people not to interfere or cut in an area. Has the plant interfered with farming practices?
Chairman
The Senator has my permission to finish with this question.
Mr. Aidan O'Driscoll
The Japanese knotweed is a huge issue around the country. It has not interfered with farming in a significant way but the problem is it is a huge invasive species that is very difficult to kill. I know that NUIG, in particular, has done some work on the species. I am aware, personally, that it provides advice to people on ways to tackle the species. One must inject glyphosate into literally every single stem of a plant in order to kill it off. Japanese knotweed is extraordinarily difficult to get rid of and is like Rhododendron in other parts of the country. Japanese knotweed is even more invasive and it has taken over huge areas of the country. The problem would need to go much further before one saw an impact on agricultural production.
Has it affected pasture lands?
Mr. Aidan O'Driscoll
The plant has encroached on pasture lands in some areas and I have seen the evidence myself. In most cases, farmers keep it back. To the best of my knowledge, the only effective treatment is incredibly labour intensive where people literally inject glyphosate into every single stem and repeat the treatment until it works.
Mayo County Council, as part of its roads programme, will spray the plants for three years and not cut them. It is not a one-off treatment.
Mr. Aidan O'Driscoll
That is right. Recently I talked to two landowners who have struggled with the problem themselves. To be honest, they were hobby farmers.
Farming is just a hobby for them now.
Mr. Aidan O'Driscoll
They are hobby farming knotweed at the moment but they had hoped to do something more productive.
I take the Senator's point that the invasive Japanese knotweed is an extremely serious issue. I do not think that it has had a significant impact on agricultural production but it is very hard to get rid of.
I thank Mr. O'Driscoll for his comments.
Chairman
I thank Mr. O'Driscoll and members for their attendance. The meeting went on later than expected but we have covered a comprehensive range of issues. I thank Mr. O'Driscoll and his officials for coming here. I look forward to our continual engagement on many matters over the next period.