I welcome the Minister to the House. I call on Senator Naughten.
Adjournment Matter. - Early Retirement Scheme for Farmers.
Mr. Naughten
The matter I wish to raise is in respect of the early retirement scheme for farmers, I have not raised this issue to be critical.
I welcome this excellent scheme but, unfortunately, it raises three or four major problems. This scheme was approved in October 1993 by the Standing Committee on Structures and it will go before the European Commission, either at the end of November or early December next. It is of vital importance to the farming and rural communities that defects in the scheme are resolved before it is implemented and gets approval from Brussels because, when it is approved, it will be extremely difficult to alter it.
The Minister will be aware that a retirement scheme was introduced in 1973 which collapsed because it did not meet the requirements of the farming community. There were a number of difficulties with the scheme and, unfortunately, I see difficulties in the present scheme. It is a pity that a scheme like this was not introduced 30 years ago to help to create a turnover and put the farms into the hands of young farmers much earlier. Unfortunately, as we all know, a farm did not provide a living for two families. That caused a drain from the land throughout rural Ireland.
I appeal to the Minister and his Department to use maximum flexibility in implementing the measures. One of the major difficulties with the scheme is the criteria for additional land. I can understand why, with certain non-economic holdings, additional land would have to be obtained. However, if an economic holding is being transferred from father to son, from uncle to nephew or indeed from neighbour to neighbour, there should be no need for the requirement of additional land. I can see that requirement creating major problems for some farmers, taking over holdings — and who will be the leasees of those holdings — because of the additional financial pressure that purchasing or leasing that land will cause. A young farmers who leases or purchases land may be forced to purchase a far greater area of land than he would require under the terms of the scheme because parcels of land may not be available or suitable in his immediate area.
The other aspect of this is a situation which could well arise where people in the better farming areas in Munster and Leinster may decide to lease land in the west, plant it with trees, lock the gate and throw away the key. We have had our fair share of planting in the west and we do not want to see any more arable land planted in this region. I can see major difficulties for younger farmers and others in certain parts of the country in getting the additional parcel of land which they need. If there is a viable holding that requirement should be waived.
Another major difficulty in the scheme is in regard to part-time farmers. If the purpose of this scheme is to get land into the hands of young farmers, to give them an opportunity of getting a livelihood the scheme should be as flexible as possible. This part-time criteria should not be insisted on because it will have the effect of preventing the local Bord na Móna worker, who engages in seasonal work on the bogs, the temporary worker with the county councils, CIE or the Forestry from participating in the scheme, not because they have not put sufficient hours per annum into farming but because the income they will get from off-farm employment will be greater than that which they were earning from the land. That will create major problems in the west where there are so many part-time farmers. I appeal to the Minister to get that derogation now because it is vital that land, used by part-time farmers at present, is placed in the hands of young farmers who have undertaken the 150 hour course, done their term in agricultural college and are prepared to take over those farms and operate them in a satisfactory and efficient manner.
There is also the whole question of the lack of a land policy. This is not confined only to this scheme although we cannot discuss it without referring to this issue. I am deeply concerned about the amount of good land falling into the hands of either Coillte Teoranta or private afforestation. A significant amount of the land in the west, which was never suitable for farming, should have been planted 20 or 30 years ago. However, unfortunately we have now reached a stage where farms on the market are bought by Forestry. They comprise good, arable farming land and when it is planted it goes out of agricultural production indefinitely. That is a reality of life, indeed a tragedy, because when changes in the CAP and the GATT negotiations are completed and when matters settle, as happened with the milk quota regime, there could be a market for our produce. Millions of people are starving all over the world but I have no doubt that, in time, they will be able to pay other countries to supply food. For that reason we must be careful.
Another important issue is age. It would be a pity if in the first few years of the scheme the guideline of 66 years of age is strictly adhered to. There is a pool of land held by bachelors who have no close relative to inherit it. If they could avail of this scheme for a five-year period they might be encouraged to enter a leasing arrangement.
It will also be difficult to persuade people in many parts of rural Ireland to change the leasing culture. There is a tradition of 11 months leasing. As you will know, a Chathaoirligh, all of the land leasing in your area is done on an 11-month basis. It will require a change of culture to persuade people to accept the principle of longer-term leasing.
Many more issues arise from this retirement scheme. I welcome the principles of the scheme, which are excellent and will help put land in the hands of younger farmers. I would hate to see this scheme spoiled because of the requirement for additional land, the embargo against part-time farmers and the age limit, the three principal difficulties involved. Before this scheme is approved by the EC Commission, later this month or early in the next, these adjustments should be made. It would be a much better scheme and apply on a wider basis if these impediments were removed.
I thank Senator Naughten for raising this matter and bringing a number of points to my attention. He has asked if I can in some way resolve these problems. He also asked if I could change the culture in a particular area, which would be rather more difficult.
You are not familiar with the Athlone and south Roscommon leasing arrangements?
A Chathaoirligh, you are a most urbane and cultured individual and I would not attempt to change you.
I am glad to reply to the motion put down by Senator Naughten. The occasion allows me to give an up-to-date report on progress in the implementation of this scheme. The Government has formally approved the farmers' retirement scheme and it is expected expenditure under the scheme will amount to £150 million over the next five years. The EC Standing Committee on Agricultural Structures has agreed to the proposals in the scheme. These proposals must now be formally approved by the EC Commission before implementation and this is expected to happen in the next few weeks.
The farmers' retirement scheme, which was one of the measures accompanying the CAP reform agreement reached last year, involves pension payments of up to £9,000 this year. It is expected those payments will increase to £9,700 next year. That applies to a farm of at least 24 hectares and will be for a maximum of ten years but not beyond the retired farmer's 70th birthday.
The scheme is the culmination of extensive and protracted consultations between the Department and the EC Commission over the past year in relation to its detail and implementation in Ireland. The scheme has also been fully discussed with individual farmers and their representatives. The reason this proposal was so long in Brussels is the amount of detailed discussion I and officials of the Department had with the Commission to ensure this proposal was tailor made to Irish conditions as far as possible. We wanted to meet the requirements so ably stated tonight. The difficulty is the Commission is paying 75 per cent of the cost of the scheme and as the main contributors insisted on certain requirements and conditions.
The objective of the scheme is to help redress two major structural defects in Irish farming, farm size and the age profile of farmers. Because farm size is a problem the EC said it would provide £150 million but there would have to be an enlargement requirement. Initially the Commission wanted a 20 per cent enlargement but in negotiation that was reduced to 10 per cent.
I believe this scheme is attractive and flexible. If we find a major difficulty in its implementation, we can return to the Commission and ask that it be amended. I believe the objective of the scheme, putting farms in the hands of younger people, is worthy and badly needed.
I take the Senator's point that previous attempts at farmers' retirement schemes did not work because of various difficulties. Farmers are shrewd people and will not transfer farms if they are not sure of a scheme. I do not blame them. If a person of 55 cannot be certain about the outcome, he is entitled to be cautious. However I believe this scheme is sufficiently attractive. One of its most appealing features is that for the first time it applies to transfers within a family. The transferor will qualify for the pension in such a case.
I am discussing PRSI payments with the Department of Social Welfare because some farmers involved may not have paid their full requirement in contributions. When the ten-year pension has finished I would like to see them receive a contributory pension rather than having to go through a means test to receive the non-contributory old age pension. I think that would be unfair to people who have retired and transferred their farms. They should automatically qualify for the contributory pension.
I want this scheme to work. I know Irish farmers well enough to know that unless they are satisfied with the detail of the scheme they will not apply for it and it will be unworkable. No one wants that because a considerable amount of money has been provided for it. I allocated money in this year's budget so the scheme could be implemented straight away. We hope to receive approval from the Commission in the next few weeks. On the one hand people of 55 and upwards will receive a decent pension, some of them receiving a good income for the first time in their lives. On the other hand I also want younger people to take over farms.
One point raised by Senator Naughten was the enlargement requirement. Under the regulation, where a transferee succeeds a transferer but has no land of his or her own, the transferee must buy, lease or otherwise obtain additional land to increase the size of the holding. Where the proposed transferee already owns or leases land which has not been transferred to him or her by the transferer after 30 July 1992, the date the EC early retirement regulation came into force, then this land can be added to the released land to meet the enlargement requirement.
As the Senator said, in some parts of the country it is extremely difficult to obtain suitable land, especially by purchasing it. One could be a lifetime in a townland or a parish without a suitable piece of land becoming available. However we received a concession from the Commission in relation to leasing. If one leases five hectares, which is 12 and a half acres, for five years, that will satisfy the requirement. I feel this will cover most of the problems. If a transferee has better land that is fine, and it will satisfy the enlargement requirement. If they have not got it, then if they lease five hectares or 12.5 acres that will satisfy the requirement.
The Senator mentioned part-time farmers. Applicants for the pension must have been farming as a full-time occupation for ten years prior to the cessation of farming. Part-time is defined as deriving at least 50 per cent of income from and spending at least 50 per cent of time on farming or a combination of farming and forestry, tourism or craft activities. In the latter case farming must make up only 25 per cent of the total income. There will be reasonable flexibility there. More and more people must have off-farm income of some type and I make the point again that unemployment assistance or dole payments to farmers will not be treated as income and so will not affect the ratio of farm to non-farm income.
This is a good and attractive scheme. In the case of a married couple, if one of the spouses is over the age and the other is under, the younger spouse can make the application and qualify for the pension. There is some flexibility there also. This scheme is worthwhile and will change the face of rural Ireland for the better. If there is a particularly acute difficulty when we see it in practice, I will have no hesitation in going back to the Commission and stating that it is not working because of a particular problem and I want an adjustment or modification to it.
I am delighted to have the opportunity to spell out the up to date situation regarding this scheme. I thank Senator Naughten for raising the matter and I expect detailed information on the scheme and the application form will be available within this month when formal approval is given by Brussels. I have already asked officials in the Department of Agriculture, in addition to Teagasc, to have a series of information meetings throughout the country so that they can go through and if necessary assist in filling out application forms because there is tremendous interest in this worthwhile scheme.
The Seanad adjourned at 10.25 p.m. until 10.30 a.m. on Thursday, 11 November 1993.