Afforestation Programme.

I thank the Minister of State at the Department of Agriculture and Food, Deputy Browne, for coming to the House to respond to my remarks on an issue that has important implications for the development of this country, particularly its rural environment. I refer to the fact that Ireland has the lowest proportion of forest cover in the EU. Just 10% of this country is covered by forest, compared to an EU average of 35%. The Government must make every effort to increase this country's planting rates. It should fully support a programme of afforestation until Ireland has achieved a level of forest cover that can support a viable forestry processing and service industry within the rural economy. Ireland, which enjoys the advantages of its temperate climate, has some of the best growth rates in Europe for a wide variety of tree species. Worryingly, the EU Commission is now proposing a new rural development programme for 2007-13, which includes a proposed cut to afforestation grant rates from 100% to 50%, and 60% in less favoured areas. We are looking at a scenario where we can grow the trees but will be prevented from doing so in an economically viable manner. The EU is also proposing a reduction in the payment terms from 20 years to 15 years. I cannot emphasise enough that the proposed destruction of our afforestation programme cannot be permitted.

The introduction of decoupling has given Irish farmers the option to diversify. However, what has been given with one hand has been taken away with the other. The timing is not appropriate. Farmers make a major long-term commitment by planting their most valuable asset — their land. The average price for agricultural land in 2004 was €14,800 per hectare. A commitment to planting decreases the value of a farmer's land in the initial years and, unlike other agricultural enterprises, when a farmer commits his land to forestry, it must remain in forestry. This commitment has not been recognised in the past and it is certainly not being recognised under these proposals. While the 100% forestry grants went some way to compensate farmers, they will not be prepared to plant their land for less. The history of afforestation in this country indicates that most farmers will not be prepared to accept less than a 100% grant. Bearing in mind that this premium is paid to compensate farmers for the loss of income from agriculture, and that they must invest a significant amount of the premium in the ongoing maintenance of their crops to produce quality timber, it is not unrealistic to defend the 100% grant and the 20-year timeframe.

Since the introduction of the EU-supported forestry grants, more than 15,000 farmers have become involved in the forestry sector and a significant service infrastructure has built up around the forestry industry. There are currently more than 16,000 people involved in this sector. It is estimated that for every five jobs created within the forestry industry, an additional three will be generated elsewhere in the economy. The forest premium contributes more than €50 million to rural economies. Allied to the economic benefits, the forestry sector provides raw materials for renewable and environmentally-friendly products and contributes positively to the natural landscape, biological diversity, carbon storage and recreation. Wood is a building material, which has the lowest energy cost to produce. It is a renewable resource and has the unique ability to make a lasting and positive contribution to the environment.

With Ireland currently importing 86% of its energy requirements, and a spend of more than €7 billion on non-renewable fossil fuels each year, we have a huge dependence on oil, at great expense to the Irish economy. Only 2% of our energy requirements come from renewable resources. Using carbon neutral wood as an energy source would go a long way to fulfilling our commitments to limit greenhouse gas emissions. The Government strategy for forestry planting targets has not been met since 1996. The IFA believes that even though the 20,000 hectare target has not been met in recent years, if correct support structures were in place, farmers could surpass the 20,000 hectare per annum target, with accruing benefits to the Irish economy.

The EU position rests badly with the agricultural community. Structural weaknesses, over-prescription and regulation are perceived by Irish farmers to be the European input. Given such carry on, how can anyone be expected to vote for an EU constitution? The Minister of State's role is the protection of these benefits for farmers. If the EU proposals are to have a negative impact on their livelihood, he must oppose them vigorously. Nothing less will be acceptable to the farming community, the people who depend on the forestry industry for a living.

I thank Senator Bannon for raising this important issue and giving me an opportunity to outline to the House the present state of negotiations at EU level.

From the outset, the Irish position on the draft regulation in regard to forestry has been clear. We have continually and consistently made known our opposition to the Commission's proposals in regard to the planting grants, premiums and associated premium payment periods. The original proposal was to reduce the planting grant from one which covered 100% of costs to a standard rate of just 40%; to reduce the maximum premium from €725 per hectare in the case of farmers to just €500, and from €184 to €150 in the case of non-farmers; and to reduce the maximum premium payment period from 20 years to ten years. This would have a negative effect on Irish forestry and we made that point consistently at every level and at every forum. Very early on in the process, I established a forestry liaison group to bring together all elements of the sector to seek their advice on different aspects of the proposal and to ensure that the stakeholders would be kept informed at every stage of the negotiations. I would like to pay tribute to the work of that group and to the positive contribution it has made both here and in Brussels towards furthering the Irish case.

Subsequent redrafts of the regulation have yielded some improvement in so far as forestry is concerned. As the Senator outlined, the grant has increased to 50%, and to 60% in less favoured areas, while the premium payment period has been increased to 15 years. However, this is still far from being an adequate set of proposals and we continue to campaign for further improvements. As recently as 31 May, the Minister, Deputy Coughlan, and I put the Irish case to the Commission and the Presidency at a special trilateral in Brussels, convened on the margins of the Agriculture Council. We pointed to the low level of forest cover in Ireland compared to the rest of the EU — 10% in Ireland and an average of 35% across the EU. We also pointed to the crucial role played by forestry in this country, and the role it would play in future in underpinning the viability of rural communities. Some 16,000 jobs are dependent on forestry and, in addition, some 14,000 farmers have now invested in forestry. Forestry is essential if we are to meet our commitments under Kyoto and provide a basis for a real home-grown alternative to fossil fuels.

This year, the Government allocated €124 million to the forestry sector, the biggest financial package ever put together for the sector. We also secured a major concession in the negotiations on the reform of the CAP whereby farmers can now plant up to 50% of their holdings, while still drawing down the full single payment entitlement. I believe that farmers are now ready to invest their land in forestry. However, we must ensure that whatever package of supports is introduced post-2006 remains focused on encouraging the long-term involvement of farmers.

Negotiations on the Commission proposals are continuing within the Agriculture Council. As they progress, I will be pressing for the best possible outcome for Ireland on the package as a whole, including a satisfactory outcome on forestry issues. The Commission and Presidency have indicated they will present a revised text for consideration at the Agriculture Council which begins on Monday, 20 June, and which the Minister, Deputy Coughlan, and I will attend.

I assure the Senator and this House that we will continue to work at all levels to achieve the best possible deal for Ireland in the tough negotiations that lie ahead.

The Minister of State said that the grant has increased by 50%, and 60% in less favoured areas. My view is that it has been reduced by 50%. When referring to his bargaining position earlier, he spoke about an increase of 50%. It is incorrect to say it has increased by 50%.

I was making the point that when the regulations were presented in the EU Commission in July 2004, it proposed reducing the 100% grant to 40%. It has now gone to50%, and 60% for less favoured areas. However, it is still 40% short of the current 100%. The negotiations will continue next Monday and I will keep the Senator informed about what is happening. I take on board the point he is making that it is important to get the maximum grant for Irish farmers to continue to plant.

The grant must be 100%. Nothing less will be sufficient for Irish farmers.

The Seanad adjourned at 9.30 p.m. until10.30 a.m. on Wednesday, 15 June 2005.