I am pleased to have the opportunity of addressing the Seanad on the farm retirement scheme. As Senators probably know, the proposals in this scheme have been approved by the EU Committee for Structural and Rural Development. However, before it can be operated the EU Commission must give its formal approval. I expect this will be forthcoming shortly.
The scheme involves the following: pension payments of up to close on £9,000 per year at current rates for a farm of 24 hectares or more for a maximum of ten years but not beyond the retired farmer's 70th birthday; payment of a pension to farmers between 55 and 66 years who have practised farming as a main occupation for the preceding ten years, who retire from farming for good and transfer their farms by gift, lease or sale to farmers who expand their holdings. Farmers who retired from farming on or after 30 July 1992 and who met the qualifying age limits will be eligible for the scheme; a minimum size of holding of five hectares, which is 12.35 acres, must be transferred to a transferee who must enlarge his or her holding by at least five hectares or 10 per cent of the transferor's holding, whichever is the greater; an upper age limit of 50 years for a farming transferee who should have an agricultural qualification or be otherwise suitably qualified. In certain circumstances transfer of land can also be to non-farmers or the transferor can reassign the land for non-agricultural uses, for example, forestry; payment of the pension where a farm being released has been managed jointly and where a member of the partnership meeting the age or other criteria is not the owner; payment of the pension to the spouse and/or dependants on the death of the pensioner, subject to certain income limits; and there is also a pension scheme for workers — or family helpers — between 55 and 65 years, under certain conditions, who lose their employment as a result of the farmer's early retirement. The rate of pension is £2,196 per year up to 65 years of age subject to a maximum of two workers per holding.
There are some aspects of the scheme which I wish to address further. It is a voluntary scheme which no one is being forced to take up. Each applicant as a transferor will have to ensure that he can comply with the conditions of the scheme. My Department will help by providing information and guidelines on how to complete the application. Applicants will also be free to consult other agencies such as Teagasc, solicitors and accountants; the choice is theirs.
Much has been said about the enlargement provision and perhaps I should elaborate on this because it is one of the main objectives of the scheme. The priority is to have land transferred to younger farmers to increase their viability. Where a person succeeds the transferor as head of the holding and has no land in his or her own right either owned or leased at the time of the transfer then he or she must expand the transferor's holding by five hectares or 10 per cent, whichever is the greater. It is important to remember that this expansion must be in terms of the utilisable agricultural area of the holding.
If, on the other hand, a transferee has a minimum of five hectares of land in his own right which was not transferred to him after 30 July 1992 — the date on which the regulation came into force — he can take over all the released land or five hectares or 10 per cent of the utilisable agricultural area of the released land, whichever is the greater. Splitting of farms after 30 July 1992 to provide land for the proposed transferees to overcome this enlargement provision will not be allowed. In other words, a father could not now give a son five hectares and then transfer the balance of the farm to qualify for a pension because no overall expansion would have taken place.
Where the proposed transferee has no land to start with he may have a problem obtaining land to meet the enlargement requirement; however, since the leasing of land is allowed this, I hope, will help overcome that problem. The scheme offers an attractive pension and not all applicants will have transferees in place so the land released in this way should be generally available to those aspiring transferees who are seeking land to expand. The enlargement provisions apply to farming transferees. However, if such cannot be found, the transferor has the option of transferring to a non-farming transferee who will use the land for non-farming purposes. A further option is to retain the land, again for non-farming purposes.
Another point which should be emphasised is that farmers who are between 55 and 66 years and who cease farming after 30 July 1992 can still avail of the scheme provided they have stopped farming and transferred their land before they reach 66. In the case of farmers who are over this age, if they have a spouse or someone else who is involved in the joint management of the holding, that person can qualify for the pension provided they meet the conditions of the scheme as outlined earlier.
I hope that the scheme will be formally approved by the EU Commission before Christmas. This would enable it to become operational in the New Year. There are still some matters to be clarified in relation to the interpretation of the conditions of the scheme but this should not unduly delay implementation. This scheme, in my view, offers a good incentive to older farmers to pass on land to a younger generation of farmers and will help redress the main structural problems in farming in Ireland, namely, farm size and the age profile of farmers. I believe it will prove of considerable help in improving farming structures and helping younger progressive farmers to expand.