I thank the Chairman and members. I am pleased to have the opportunity to meet the select committee to discuss the 2003 revised Estimates. I will set out the context in which they have been drawn up, identify the key priorities in the allocation of funding and say a few words on the main subheads.
I commend the revised Estimates to the committee. They were framed against the background of changing economic circumstances and after a lengthy period of unparalleled economic growth in the economy and public expenditure. Government spending on agriculture increased by 36% between 1997 and 2002. This reflected a significant increase in overall support by the Government for the agri-food industry generally. Total public pending on agriculture and food is expected to reach approximately €2.8 billion this year. The Estimates for voted expenditure by the Department for 2003 are somewhat lower than the outturn for last year but this is partly due to the fact that certain expenditures incurred last year do not have to met this year. For example, some of the BSE and foot and mouth disease outbreak related costs spilled over into 2002. In addition, there were non-recurring expenditures in 2002 relating to the arrears of compensatory payments in disadvantaged areas and the final tranche of agri-monetary compensation.
I am pleased that, having regard to the overall budgetary situation, the revised Estimates provide for gross expenditure of €1.246 billion. The provisions for some of the more significant schemes operated by the Department are well up on those for 2002. For example, the provision for the REP scheme is up 12%, while the allocation for the agricultural elements of the national development plan is 28% higher than the 2002 outturn.
One cannot fully describe the background to the revised Estimates without making reference to the substantial sums paid by the Department to farmers and the food industry on behalf of the European Union, which are not included in the Vote. Expenditure on these payments amounted to €1.6 billion in 2002. These payments are of enormous importance to farmers, particularly in the beef, sheep and arable crops sectors. When these measures are taken into account, total public spending on agriculture is expected to reach approximately €2.8 billion this year.
The main priorities in the 2003 revised Estimates are the protection of human and animal health by implementation of the national development plan and the CAP rural development measures and the provision of agricultural education, training and research. The protection of human and animal health is a major priority for the Department in the context of the development of our agriculture and food sectors. In the final analysis, for agri-food industry to flourish, consumers at home and abroad must have full confidence in the methods used in the production and processing of food and that the controls in place ensure only safe food products reach the marketplace and the final consumer. Some €258 million is provided in the Estimates, under a number of subheads, to enable the Department to meet these concerns, mainly through the implementation of effective disease control measures and a comprehensive cattle and sheep traceability system. In addition, about 48% of the salary costs in subhead A1 relate to almost 2,000 staff working on human and animal health. This is a reflection of the wide remit of the Department.
The provision under subhead C1, which covers the TB and brucellosis schemes, is €67 million. This is 13% lower than the outturn for 2002 and reflects an improved disease situation. During 2002 the incidence of brucellosis was down 22%. The progress in relation to TB is reflected in a reduction from 34,000 to 29,000 in the number of reactors disclosed in 2002, compared with that for 2001. This progress is expected to be maintained this year.
The reduction in the provision for subhead C2, which covers measures related to BSE, reflects a significant reduction in the incidence of BSE and a phasing out of the subsidy for the disposal of meal and bonemeal. With regard to the incidence of BSE, there is clear statistical evidence that the controls in place and enforced by the Department are working to protect public health and consumers while bringing down the numbers of animals with the disease. For example, up to the end of April this year, there has been a 38% reduction in the number of BSE cases, compared with the number in the same period last year. In addition, the trend in the age profile of animals identified with the disease provides clear evidence that the disease is being effectively controlled and will eventually be eliminated from the national herd.
Subhead C2 provides for financing of meat and bonemeal and a rendering subsidy. This subsidy was introduced in January 2001 as a short-term measure to allow time for the industry to adjust to the new situation. It was never the intention that it would be paid indefinitely and, in general, the policy of the Government has been to return financial responsibility for the disposal of waste to the industry.
In furtherance of this policy, I announced earlier this year that the remaining subsidy would be terminated at the end of February. However, in view of the difficulties which this situation would pose for the industry, I extended the subsidy at a lower rate until the end of this month in order to allow more time for the introduction of greater efficiencies in the area of the handling and disposal of animal waste. The cost of this extension is estimated to be €11 million, bringing total expenditure on meat and bonemeal this year to almost €40 million. This was a significant gesture to the farming community, particularly in the view of the background of difficult financial constraints on Exchequer spending generally. The overall Exchequer expenditure on supporting the disposal of meat and bonemeal since the introduction of the ban has been €140 million.
The Government has been generous in its support of the livestock sector in recent years, with public funding of some €500 million to help it through the BSE and foot and mouth crisis. We are continuing support for the storage of meat and bonemeal and for rendering of depopulated herds and of fallen animals.
The Government has also established an interdepartmental agency committee to examine the disposal options for meat and bonemeal in Ireland. The committee is currently examining all the options permissible under EU regulations and I expect its report shortly. It is evident that domestic disposal options would reduce the cost burden in this area.
I am providing €11.2 million this year under subhead C4 for the national beef assurance scheme and cattle registration and tagging schemes. The aim of the national beef assurance scheme is to provide an effective cattle identification and tracing system and to develop common high standards of production and processing of beef. The cattle identification and tracing element of the scheme has been in place since the beginning of 2000 and the bulk of expenditure proposed this year will be used to maintain the current arrangements and to develop the system further by introducing the new animal health computer system and by re-engineering the current movement monitoring system.
There has been substantial investment in this area over the past decade and this resulted in significant developments in the traceability of cattle in the same period. The CMMS is used extensively for disease control and to verify entitlements to the various EU livestock premia. On the latter point, the CMMS has enabled the Department to make payments under the cattle slaughter premium since 2000 without requiring farmers to submit formal paper based applications. This has helped to simplify procedures for this scheme and minimise bureaucracy. In addition, the Department has committed, in the recently adopted partnership agreement, to use the CMMS to the maximum extent possible, commencing this year, for the calculation of stocking density for the extensification premium.
Total expenditure on agricultural education, training and research will reach €120 million this year. Teagasc has a very important role to play in the implementation of the Government's strategy in this area. For that reason, substantial Exchequer resources are provided each year to enable Teagasc to provide first class research, training and advisory services for Irish farmers and the food industry. The funding provided by my Department to Teagasc for non-capital purposes has increased significantly in recent years, from €81 million in 1999 to €109 million this year. In addition, in spite of the tight budgetary situation this year, the allocation to Teagasc is the highest to date, representing a 5% increase from last year. These are substantial resources and reflect the Government's continuing commitment to supporting Teagasc. Nevertheless, I acknowledge that the level of grant aid to Teagasc for this year is somewhat lower than that sought by the organisation and that it will have to make certain adjustments to accommodate the actual provision.
It is a matter for the board and management of Teagasc to prioritise its activities in the delivery of agricultural research, training and advisory services and to allocate its resources in accordance with those priorities. Teagasc recently decided to rationalise its activities and concentrate the delivery of its services at fewer centres. However, I want to emphasise that, when these decisions are implemented, Teagasc will still have a network of more than 70 advisory and training centres nationwide, as well as nine major research centres and 11 agricultural colleges. The ability, therefore, of Teagasc to provide its range of services will not be diminished.
Under the CAP rural development plan, a total of €503 million is being provided for the three accompanying measures. In the case of the agri-environment programme, REPS, for example, the 2003 allocation of €190 million represents an increase of 12% on the outturn for last year. At the end of 2002, some 36,800 farmers were participating in REPS. In the case of the other two agricultural measures, the early retirement scheme and the compensatory allowances scheme for farmers in disadvantaged areas, the combined allocation of €313 million should suffice to meet expected commitments.
The new partnership agreement, Sustaining Progress, proposes significant changes to the REP and farm waste management schemes. These range from increased support rates to improved eligibility criteria with a view to increasing participation from approximately 37,000 farmers at present to 55,000 farmers by the end of 2005. The farm waste management scheme ceiling has increased to 450 income units and the investment ceiling to €75,000. The investment ceiling for the dairy hygiene scheme will be increased to €50,000. These improvements are subject to EU Commission approval and are likely to be considered in tandem with suggested changes that may emanate from the current mid-term independent evaluations of the NDP and the CAP plan. I am confident that the amendments will boost participation in these two schemes, which have a vital role to play in meeting our agri-environmental conditions.
In the case of the NDP agricultural development schemes, €31 million is being provided in 2003, which is a 29% increase on 2002. Agricultural development covers a range of measures including on-farm investment, development of equine and cattle breeding infrastructures and development of the horticulture sector. The farm waste management scheme is the largest measure under this heading. To date, some 6,000 farmers have applied for participation under this scheme.
The continued development of the food industry is an important objective for my Department. The Department, in co-operation with Bord Bia and Bord Glas, will continue to assist the industry to establish new export markets for Irish food products and to consolidate our presence in existing markets. Significant funding is being provided to the food sector under the national development plan to improve competitiveness, market orientation and innovative capacity. These initiatives cover capital investment, marketing, promotion and research measures. These measures are expected to increase sales of food and drink products by €2.5 billion by the end of 2006.
The grant-in-aid provided in subhead E1 is designed to assist Bord Bia in implementing a wide range of specialist marketing and promotion activities to enhance Ireland's international profile as a producer of quality food and drink products. Bord Bia's grant-in-aid increased by over 40% from €12.587 million in 2000 to €18 million in the past two years. Some 14 additional staff were appointed in the same period. In line with changing economic circumstances, the level of grant-in-aid funding in 2003 has been set at €17 million, which is slightly lower than in 2002. However, this is a significant budget and I am confident that An Bord Bia will continue to promote Irish food effectively this year.
In the context of promotion of exports, the independent Estimates review committee, in its report of December 2002, suggested that savings could be achieved by closer co-operation among Bord Bia, Bord Glas and Enterprise Ireland. The committee also recommended that, in the longer term, the functions of these bodies might be integrated under a single agency to achieve greater efficiencies and synergies in the promotion of Irish produce.
A Government decision formally approving the merger of Bord Glas and Bord Bia was taken on 19 March this year. Legislation to give effect to this decision is being prepared and will be presented to the Houses of the Oireachtas in due course, hopefully this year. The scope for more formal co-operation between these two bodies and the food sector development activities of the other bodies outside the ambit of the Department of Agriculture and Food will be pursued at official level.
Bord Bia and Bord Glas have each been successful. In a changing and challenging world the range of expertise available to a merged body will be of long-term benefit to the horticulture and amenity horticulture sector. It is proposed in the legislation to provide for a sub-board with responsibility for horticulture, including amenity horticulture, to include all Bord Glas activities, including support for producers.
The sum of €37 million has been provided for market intervention, approximately €9 million of which will be used for the storage and ultimate incineration of stocks of meat and bonemeal accumulated from the operation of the purchase for destruction and special purchase schemes. The remaining 39,000 tonnes of meat and bonemeal from the schemes must be disposed of in 2003. Destruction will be completed by the middle of the year which will enable the Department to draw down the final European Union contribution to the cost of purchasing animals for the scheme. The balance of the subhead will be used to finance the cost of operating the intervention system, especially in the dairy sector. A reduced level of activity is expected this year, especially in the beef sector where stocks are expected to be reduced to residual levels by the end of the year.
The budget for running the Department, €240 million, is provided for under subhead A. This represents less than 9% of total expenditure by the Department. The funding covers the cost of managing the measures and services provided for in the Estimates and the administration of non-voted FEOGA expenditure on direct aid to producers as well as the EU funded export and processing aids to industry.
Subheads A5 to A7, amounting to €13 million, are essentially geared to supporting the Department's information technology strategy, a key component of its modernisation programme. Investment in the latest technology is necessary to enable the Department to achieve the goals set out in the strategy statement and provide a top class service for the Department's beneficiaries and clients and the agriculture and food sectors generally. We have made significant strides in this area in recent years.
Overall, the revised 2003 Estimates represent a balanced and well-founded package of measures to support the agri-food industry. I commend them to the committee.