I thank the Chairman and the members for affording us this opportunity to present the Estimate to the committee. As the Chairman indicated, the format for the discussion on the Estimates has changed slightly. The Ministers of State will speak on their areas of responsibility and I will give an overview of the process, after which we will be happy to address the issues raised by members of the committee. For the first time, the Estimates are accompanied by an annual output statement, AOS, which summarises my Department's main activities into five high level programmes. The 2007 annual output statement matches the resources required for these programmes with key output targets.
These programmes are closely aligned with my Department's 2005-2007 statement of strategy. They identify key priorities in a clear way. These include: the development of international competitiveness and consumer focus; high standards of food safety and consumer protection; the promotion of a vibrant rural economy; and ensuring agricultural activities make a positive contribution to the environment. They also require my Department to maximise its own operational capabilities, to ensure its standards of corporate governance are of the highest calibre and to operate direct payment and market support schemes efficiently and effectively.
The 2007 gross Estimate provision for my Department, including a capital carryover of €20.3 million from 2006, is almost €1.7 billion. The figures in the Estimate dovetail with those presented by the programme in the AOS. Moreover, the AOS also covers directly EU-funded expenditures, which do not appear in the Vote. I will go through the AOS indicating, where relevant, the linkages with the Revised Estimate for my Department. The administrative costs in the AOS are allocated across all of the main programmes of the Department. The administrative budget for 2007, at just over €295 million, is some 5% higher than the 2006 outturn. This increase results primarily from increases in salaries, wages and allowances under pay agreements, and in costs relating to office machinery and supplies, and IT outsourcing.
Similarly, the costs associated with programme 5, which covers IT, personnel, finance and other corporate services activities, are spread across the other four programmes. Actions under this programme include the implementation of the Department’s modernisation action plan under the social partnership agreement, Towards 2016. Progress on this plan will be assessed by the Civil Service performance verification group. They also include the implementation of the decentralisation plan, the Department’s HR and IT and the customer service action plan.
Programme 1 relates to improving competitiveness and increasing the focus on what the consumer wants, to facilitate international trade in Irish agrifood products. This is a key programme for my Department. The wide range of activities required to deliver it is fleshed out in significant detail in the Agri Vision 2015 action plan. There are a number of vital activities under this programme. They include the provision of support for research and training, and capital investment both at farm and processing level. It also includes focused assistance for the marketing of Irish products, to ensure that the Irish agrifood sector is equipped to take on competition from abroad and to take full advantage of market opportunities arising in traditional European markets and in emerging markets in the Far East.
Under this programme heading, support for research and training has increased significantly in 2007. The €34 million provided in subhead B is 19% higher than the provisional outturn for 2006. It includes almost €15 million for FIRM, which funds pre-commercial research by public research institutes, and €8.5 million for the stimulus fund, which provides grant assistance for agriproduction research. Some €12.4 million is provided for training programmes undertaken by Teagasc. In addition, €128 million is provided as grant-in-aid for Teagasc in subhead J. This is an increase of €6 million over the 2006 outturn. Teagasc has also been permitted to retain €27 million from the proceeds of the sale of its lands at Athenry, to fund the development of centres of excellence specifically geared to advancing research in the agriculture and food sectors. In the forestry sector, €4.35 million has been provided to COFORD, which deals with research in the forestry sector.
With regard to marketing, my Department provides grant-in-aid to Bord Bia to promote the marketing of Irish food, drink and horticulture products. The provision in 2007 is €26.5 million. This includes an additional €4 million to upgrade the board's marketing capabilities. Apart from its grant-in-aid provision, my Department has provided an additional €2.3 million for quality assurance schemes covering the beef and sheep sectors. In addition, a sum of just over €4 million is being provided for the healthy eating initiative in schools.
Under the competitiveness heading of programme 1, more than €152 million is provided in subhead H for the Department's investment grant programmes, compared with a 2006 outturn of €44 million. The largest element in this subhead relates to the farm waste management scheme, for which €82.8 million is provided. This compares with 2006 expenditure of €21.3 million. This allocation covers the cost of the revised scheme introduced in March 2006 to assist farmers to meet the additional requirements of the nitrates directive. These revisions included an increase in investment ceilings from €75,000 to €120,000, and in the standard grant rate from 40% to 60%, and to 70% in the four zone C areas. It also involved the extension of the scheme to cover horses, deer, goats, pigs, poultry and mushroom compost.
This generous scheme has proven extremely attractive to farmers and by 31 December 2006, more than 48,000 farmers had applied. To facilitate those applicants, I recently extended the deadline for the submission of drawings, and confirmation that planning permission had been applied for, to the end of June. Subhead H also includes €42 million for investment grant aid to improve marketing and processing in the dairy, beef, sheepmeat and other priority sectors. This allocation includes the first instalment of a total package of €150 million in aid for the industry. The aid is competitive, with applications being evaluated and rated. Some €20 million of the 2007 provision is earmarked for the dairy processing sector. Applications for aid under this package are at the final stage of evaluation.
Provision of €14 million is made in 2007 for a beef and sheepmeat processing sector investment package. My colleague, Deputy Brendan Smith, will elaborate on some aspects of this in his contribution. The costs of my Department's food aid contributions to the World Food Programme are also included under the programme. The contribution in 2007 is contained in subhead L and amounts to €8.5 million.
Programme 2 in the AOS relates to food safety, animal health and welfare and plant health. These activities are the bedrock upon which the prosperity of the agrifood sector in Ireland is built. They are a key element in the development of trade and satisfying consumer demands for high quality, safe food. The programme costs in this area correspond with subhead C in the 2007 Estimate. The allocation under this heading is just over €166 million. This is up 23% on the corresponding 2006 outturn of €135.7 million, mainly due to the new suckler cow measure.
On disease eradication, I am pleased to report a significant improvement in the overall disease situation and, in particular, in the case of brucellosis and BSE. Members will note the good figures that have been circulated to them. We will continue to target disease levels as a key component under this programme heading. Subhead C also includes a new provision of €18 million for an important initiative aimed at improving welfare and quality in the suckler herd. Subject to EU approval, the scheme will involve an Exchequer provision of some €250 million.
Programme 3 focuses on the development of the rural economy and the protection of the environment. The 2007 Estimate includes the first year’s funding for a significantly enhanced package of rural development and farm waste management measures. These involve expenditure of €6.8 billion over the period 2007-13. This will include Exchequer funding of €4.7 billion, compared with €2 billion in the previous round. The agriculture measures in the new rural development programme will also attract €2.1 billion from the EU and modulation. The Rural Development Programme 2007-2013 has been sent to the EU Commission and I am seeking its early approval.
The 2007 Estimate includes €257 million in subhead E for disadvantaged area payments to over 100,000 farmers. Under the new scheme, it is proposed to pay an increase of 8% over the 2006 basic grant rate. In addition, €361 million is provided in subhead F for REPS. This compares with expenditure of €329 million in 2006. Subject to EU Commission approval, payment rates under REPS 4 will be 17% higher than those in REPS 3. This scheme has proved enormously popular with farmers in recent years and, by the end of 2006, participation was at a record level of more than 59,000. Significant increases have also been provided for land mobility schemes in subhead G, with more than €72 million provided for early retirement and over €8 million for installation aid.
The forestry sector also offers very significant potential, not only in terms of its timber value but also from an environmental perspective, including its potential for carbon sequestration and in terms of its potential exploitation as a source of bio-energy. The carryover of €20 million in capital is included in the 2006 figure with an overall budget of €131 million, which will be dealt with by the Minister of State, Deputy Mary Wallace.
Programme 4 relates to the operation of direct payments and market supports. In 2007, expenditure is expected to amount to about €1.4 billion. Most of this relates to the single farm payment, which is directly EU funded and therefore does not appear in my Vote. The administration of this scheme in Ireland has been a significant success story. There are complex issues to be addressed, however, particularly in the area of cost compliance and the application of penalties. These are not issues unique to Irish farmers. I have made clear my views on the need for simplification, both to Commissioner Fischer Boel and the German EU Presidency. Expenditure under this heading also includes €30 million provided in subhead D to fund financial and technical costs associated with the administration of EU schemes.
The output statement draws together key policy priorities, identifies target outputs, and quantifies the resources required to deliver them. I hope it gives members of the committee a better overview of what lies behind the complex range of activities within the Department. We have made great efforts to be as concise and focused as possible in this document. The output target dates for each programme are relatively few in number but are of key importance. Much more detailed performance targets are already set out in our strategy statement, the agrivision action plan, and our charter of rights for farmers.
I will be more than happy to answer questions in due course, Chairman. I will now ask the Minister of State, Deputy Brendan Smith, to contribute.