I thank the joint committee for the invitation to address it on the administrative priorities of the Department, with particular reference to customer service and plans to eliminate late payments and the key issues identified in the six-monthly progress report on developments in the European Union from July to December 2011.
On customer service and the elimination of late payments, taking account of the reduced financial and human resources available to the Department, we have made good progress on several fronts of interest to the committee and while not being complacent, we will continue to work to improve the service. On the matter of customer service, I wish to make several points on developments in the 12-month period 1 April 2011 to 31 March 2012.
Staff numbers in the Department fell by 194 or 5.5%, while staff numbers in non-commercial State agencies under the aegis of the Department fell by 166 or 9.2%. The Department has engaged in a local office reorganisation programme, under which 42 offices have been closed to the public. However, the establishment of 16 enhanced offices was completed on 20 May 2011. Since 2009 the programme has resulted in a reduction of 523 staff in local offices and the redeployment of 349 staff, 72internally and 277externally. This phase of the programme is well advanced and on schedule to be completed by the end of this year. The independent verification process undertaken as part of the review of the public service agreement has confirmed that the programme has yielded total savings of close to €80 million to date.
A major shared services scoping exercise has been completed and its findings are being implemented. The Department is providing full ICT infrastructure support on a shared services basis for the Department of Communications, Energy and Natural Resources. It has also agreed to provide the Department of the Taoiseach with a new ICT network on a shared services basis.
On the current farmers' charter and action plan, we are operating on the basis that it will stay in place until a new one is agreed to. I am of the view, and we have considered this, that it is preferable to delay discussions with the farming organisations on a new charter until we know the outcome of the Common Agricultural Policy reform negotiations, which I will deal with later. In the meantime the current charter is being followed.
Turning to the issue of late applications, payments worth in excess of €1.234 billion were made to 123,552 farmers under the 2011 single payment scheme. This averages €10,000 per farmer. In that scheme year, 1,700 farms lost out on €1.6 million in payments due to putting in unduly late applications or simply forgetting to put in an application. The closing date for receipt of applications has just been passed - it was 15 May for this year. There is a large amount of money to be lost and that underlines the need for all farmers to have a valid application in place by 15 May each year, as this application covers more than the single payment scheme. It also includes the disadvantaged areas scheme, the suckler cow welfare scheme, REPS, the grassland sheep scheme and others.
Why are there such severe penalties for late applications? An EU regulation lays down the detailed rules for the implementation of the single payment scheme concerning the application of penalties. It states that with the exception of cases of force majeure and exceptional circumstances, the submission of a late application after the relevant time will lead to a 1% reduction per working day in the amounts the farmer would get and if the delay amounts to more than 25 days the application will be considered inadmissible. That seems draconian and one may ask what is the Department doing to reduce the number of late applications.
Every opportunity is taken to publicise the need to put in a valid application before 15 May. For example, press releases are issued at intervals during the application period, in each case emphasising the closing date. There is widespread coverage of this in the farming press and weekly update stories are run in The Farmers’ Journal advising as to numbers of applications already submitted and emphasising the deadline in terms of the number of days to the closing date on a diminishing basis. The Department has developed a new system of text alerts and that was inaugurated during the 2012 application period. In excess of 90,000 farmers have their mobile telephone details registered with the Department and a series of text alerts was issued in the run up to the closing date advising the importance of the 15 May closing date. In addition, iNet, the Department’s on-line application facility, was further enhanced for 2012, with the introduction of an online mapping system option. Initially, farmers and their approved agents were attracted to iNet by the fact that it guaranteed immediate, verifiable receipt by the Department of their applications and, through the system of in-built validations, significantly reduced the numbers of errors that could be made and ultimately led to speedier payment. The ongoing success of the iNet facility can be measured in the fact that a record number of applications have been lodged online in 2012. Some 65,000 applications have been lodged and that represents an eight-fold increase since iNet was introduced in 2007. That is a huge success in terms of the rolling out IT for the benefit of farmers.
Farm inspections are always an issue of great discussion. The Department, in the context of delivering the single payment scheme, the disadvantaged areas scheme and other area-based schemes, is required to carry out annual inspections covering the eligibility of the land declared to draw down payments and cross-compliance to ensure compliance with EU regulatory requirements in the areas of public, animal and plant health, environment and animal welfare. These inspections are mandatory; there are certain minimum numbers and types of inspections that must take place annually.
Land eligibility checks must be carried out on 5% of all applications. These checks are carried out to verify that the actual area claimed in the application corresponds to the area farmed by the farmer and to ensure that any ineligible land or feature on that land are deducted. Up to two thirds of these inspections are carried out without a farm visit as the information is verified using remote sensing via satellite.
The rate of inspections for cross-compliance, that is, the measures that must be adhered to, is 1% of applicants to whom these apply. However, 3% of farmers must be inspected under the bovine identification and registration requirements and 3% of sheep and goat farmers must be inspected covering 5% of the flock. It is a regulatory requirement that land eligibility inspections must be finalised before any payments can issue to any farmer in the country. On the other hand, cross-compliance inspections take place throughout the year. The area payment inspections must be done first and that starts the process of payment.
In so far as advance notice of inspections is concerned, which is always the subject of great controversy, all inspections, in general, should be unannounced; however, the regulations allow the Department to give 14 days' notice for land eligibility and cross-compliance inspections other than those related to animal identification and registration, feed, food and animal welfare. For checks involving cattle identification and registration, the maximum advance notice is 48 hours provided the purpose of the inspection is not jeopardised. For the regulatory measures dealing with feed, food and animal welfare, no advance notice may be given; these must, under the regulations, take place on an unannounced basis. As a general rule and following requests from the farming organisations, and this makes sense, the Department tries to integrate inspections, including all of the cross-compliance inspection elements, with a view to minimising the number of farm visits and avoiding more than one visit to the farm. In respect of those elements of the inspection for which advance notice is not possible, the farmer has the option of deferring those particular elements up to 48 hours in the case of animal identification and up to 14 days in the case of eligibility. In most cases and given the practicality involved, the farmer opts to have all elements of the inspection carried out on the same day and we try to facilitate that.
Since all eligibility inspections must be carried out before payment, these inspections are prioritised in order that payments under the disadvantaged areas scheme can commence in mid-September and advance payments under the single payments scheme can commence in mid-October. In total, 11,900 farmers were inspected under the 2011 schemes, including some 4,500 who were inspected using remote sensing. In other words, 7,400 inspections involved an actual on-farm visit while some 130,000 farmers apply annually under these schemes. Officials from the Department have recently held very successful information meetings with farmers around the country to clarify the position and to make sure that everybody fully understands the process.
I also wish to stress the annual value of these schemes to Irish farmers. Direct payments are of critical importance to farmers and the Irish economy, of which this committee is well aware. Annually these payments amount to some €1.8 billion, of which €1.25 billion is accounted for by the single payment scheme. Under that scheme, total payments since 2005 have reached €9 billion. These payments have in five of the past six years commenced in mid-October and have generally been completed by the end of the same year. They have given farmers a stable guaranteed level of income during these challenging economic times. We pay considerably in advance of most, if not all, other member states. It is therefore incumbent on us in the Department to ensure that the regulatory controls are comprehensively implemented to protect the payments and to avoid substantial EU disallowances or clawback of the money, which are a constant feature of this single payment system.
Payments under the agri-environment schemes are well advanced. There are just more than 30,000 participants in REPS and more than 29,000 have received full payment in respect of 2011. There are outstanding queries in regard to 1,000 or so applicants who are still awaiting payment and I expect that the vast majority of these will be resolved and that the applicants will be paid in a matter of weeks.
A total of 8,773 valid applications were received under the agri-environment options, AEO, scheme and all but 636 have now been paid in respect of 2010 and almost 3,500 have been paid in respect of 2011. Under the EU regulations governing the scheme and other area-based schemes, a comprehensive administrative check of all applications, including cross-checks with the land parcel identification system, must be completed before any payment can issue. This is crucially important. Successive EU audits have made it very clear that compliance with the regulations must be strictly adhered to and that all administrative checks must be passed and eligibility conditions met before payment issues. As a result, the Department is obliged to ensure that individual payments do not issue until all aspects of a farmer's application are in order, all outstanding documentation is provided and all queries are resolved.
The outstanding payments under AEOS 1 remaining to be paid at this stage are the most complicated and difficult cases. The issues arising relate mostly to digitisation or to inaccurate or incomplete capital investment claims. The re-digitisation of land parcels is a particularly complex issue which can impact not only on the agri-environment application but also on the single payment scheme. It is important to ensure that the claims under both schemes correlate and do not conflict. Particular priority is being given to resolving cases from 2010 and I expect that the outstanding issues will be resolved in the next few weeks. In so far as 2011 payments are concerned, delays in payments are being caused due to a high level of queries on the capital investment claims submitted by farmers or by failure of large numbers of farmers to submit documented claims. Despite two letters and other reminders from the Department, many farmers have either failed to submit forms or have submitted incomplete or inaccurate forms.
A total of 6,895 applications were received under the scheme in 2011, AEOS 2, of which 6,616 applicants have been informed of their acceptance into the scheme. A substantial number have also been informed of, and asked to respond to, queries arising from their application forms. The administrative checks are well advanced for all AEOS 2 applications and I expect that payments will commence in June. Payments in respect of 2012 will commence later in the year.
The Department is acutely conscious of the importance of these payments to farmers' incomes and is making every effort to assist farmers in regularising their applications and claims for payment. Additional resources have been assigned to deal with queries and payments will continue to issue as quickly as possible as outstanding issues are resolved. The Minister is actively considering the possibility of re-opening AEOS to allow for the submission of applications either on an amended basis or from the existing scheme on a limited scale. He is looking, in particular, as he made clear in the Dáil, at the possibility of re-opening applications later in the year with a possible closing date for applications of the end of September and a commencement date for new participants of January 2013. A major consideration is funding and how the scheme can be funded within the expenditure ceiling for 2013 as set out in the Government's comprehensive expenditure report for 2012 to 2014.
The second element of the Chairman's letter to the Department related to the six monthly report. Moving on to developments in the EU, as the committee is aware there have been a number of important policy developments in the agrifood sector during 2011. Of most significance to Ireland was the publication by the Commission of proposals for reform of the Common Fisheries Policy in July 2011 and proposals for reform of the Common Agricultural Policy in October 2011. The CAP reform process is of particular importance in an Irish context and I am pleased to say that the Commission proposals are broadly in line with our national priorities for smart, green growth as set out in the Food Harvest 2020 strategy. Our priorities in the negotiations will be to deliver a well-resourced CAP; retain Ireland's share of CAP funds; maximise payment model flexibility for member states; ensure rural development policy supports competitiveness and sustainability; and keep the CAP as simple as possible and limit the costs and bureaucracy associated with implementing it.
The reform of the Common Fisheries Policy, CFP, is of equal importance to Ireland in achieving our overall goal of a sustainable, profitable and self-reliant fishing industry. The key issues for us in these negotiations will be transferable fishing concessions; discards; the application of maximum sustainable yield, MSY; regionalisation; and future funding. The Chairman and members will recall that the Minister, I and other senior officials have appeared before the committee on a number of occasions in recent times to update it on developments in these negotiations. Therefore, I do not propose to dwell too much on these topics - we can come back to them if the Chairman wishes - and I will concentrate on other aspects of our involvement at EU level.
The agrifood sector, in general, is a highly regulated one with a continuous flow of proposals being put forward. Since the Lisbon treaty, the majority of these proposals fall under the ordinary legislative procedure requiring agreement across the three EU institutions - the Council, the Commission and the Parliament. In a recent committee discussion on the CAP the MEPs were present. This adds a new dimension to the negotiation process and requires that the Department engage fully with all three institutions.
I wish to refer briefly to some of the proposals presented by the Commission during the latter part of 2011, which is the period under review, starting with the proposal to increase the annual quota for imports of high quality beef from the US into the EU. The proposal has been adopted by Council and agreed by Parliament and is awaiting final signature. We were not particularly happy with the increased quota but it resolved a long-standing dispute between the EU and the US and possibly paved the way for the publication of a draft revised US BSE rule in March 2012. As the committee is aware, EU beef does not currently have access to the US market due to the current BSE rule and we believe that this is an important step in a process which should allow for the resumption of Irish beef exports to the US. We believe the United States could be an important market - perhaps at the outset a niche one - for Irish beef. The fact that we are banned there is a source of concern that we are taking up with the US authorities.
During 2011, the Commission commenced the process of reviewing EU-wide promotional measures for agricultural products. The focus will be on the image of EU food on markets. We welcome the broad thrust of the Commission's views to date as it acknowledges the need to simplify the model and make it more workable. Also in the food sector, the Polish Presidency put in a major effort towards the end of December to find a compromise in the discussions on food for the needy. The main contentious issue with this dossier revolved around how the programme has evolved and how it should be financed. Agreement was finally reached at Council and by the Parliament in early 2012 resulting in the continuation of the programme with provision for a review on how it will work in the future.
We are now approaching the end of the Danish Presidency of the EU Council and the main focus of this six month Presidency has involved intense detailed negotiations on the CAP and CFP areas. It is widely expected that the conclusion of the negotiations on these important dossiers will fall under the remit of the Irish Presidency in the first six months of 2013. For this to happen it will be necessary for the next multi-annual financial framework to be agreed and it will also be necessary for the three institutions - the Commission, the Council and the European Parliament - to participate actively in the negotiations. I noticed an article this morning in the Irish Farmers’ Journal about a prominent member of the European Parliament, Mr. Joseph Daul, MEP, who spoke in this country last night. He made it clear that as far as he is concerned he does not envisage the Parliament agreeing anything definitive on the CAP before the budget has been agreed. As the committee is well aware, previous Irish Presidencies have been regarded as very successful and we will do our upmost to continue in that regard. A key element of a successful Presidency will be our level of preparedness. Our Presidency will be the first in a trio of Presidencies that we share with Lithuania and Greece. Preparations are well under way in the Department. My officials actively participate in the various preparatory bodies. In addition to the main reform packages, it is expected that the Commission will publish some major dossiers this year and early next year covering animal health law, animal welfare and a new plant health strategy. It will also examine the meat inspection aspect of food and feed law and carry out a review of the seeds package. Chairpersons have been identified for the various Council working groups that we anticipate will be convened and they are currently participating in training.
As the committee would expect, we have intensified our interaction with key players through numerous meetings with relevant Commission officials and key Parliament players particularly the rapporteurs for the major dossiers. The Minister, senior officials and I are engaged in ongoing meetings with our counterparts in other member states both to emphasise the issues of importance to Ireland and to gauge the issues of concern to them so that we can be well placed to facilitate compromise positions in order to conclude negotiations on as many dossiers as possible. A Council of Ministers meeting was held on Monday and Tuesday of this week where we took the opportunity to have a number of bilateral meetings on the edges of the Council. The Minister met with the incoming Cypriot Presidency which is preparing for its Presidency. We met with the Danish Presidency which will wrap up and take it to the next stage. We had meetings also with the Belgian Minister en marge seeking aspects of commonality, particularly on the distribution of direct payments. That is an ongoing process of which the Chairman will be well aware.
The six-monthly report provides the committee with a summary of the proposals published by the Commission during the Presidency term. The report highlights any major developments across the various sectors, particularly those that impact on Ireland. If the committee would like clarification on these or any other issues we will be happy to supply them.
