As was the case last year, the 2010 Estimate is presented against the background of continuing global economic upheaval, contraction in the economy and serious concerns with the public finances. The impact of the global downturn on the Irish economy has been particularly severe. Ireland has experienced double-digit economic contraction and significantly increased unemployment. The Government has taken decisive action over the past 18 months on those areas which are under its control, actions which have restored some considerable stability.
The latest Exchequer returns show revenues are now on target and provide evidence we have reached a turning point in the economy. Despite this progress, events internationally remove any scope for complacency. We must continue to take the necessary corrective action to address the situation in the public finances to protect competitiveness, restore the credit system and stimulate job creation and economic confidence.
In framing the 2010 budget for my Department, the Government recognised the difficulties that agriculture has faced and was mindful of the low commodity prices and poor weather which had an adverse impact on farmers' incomes in 2009. While it is important to maintain discipline over spending I am pleased to say that there are no reductions in funding this year to vital agricultural support schemes and the funding of, for example, the disadvantaged areas scheme, suckler cow welfare scheme and REPS are being maintained at 2009 levels.
The objective of the 2010 Vote is to facilitate the maximum contribution to the national economy of the agriculture, food, fisheries and forestry sectors while operating within the financial constraints. Despite the economic and financial difficulties we are experiencing, the 2010 Exchequer allocation for the Department is €1.785 billion or €1.403 billion net when receipts totalling €382 million are taken into account. When combined with the €1.288 billion in EU funds which is paid through the Department, this brings to over €3 billion the public funds being made available in 2010. This is a very substantial level of support by any standard and shows that the Government continues to invest in the productive sectors of the economy, particularly those with the potential to generate significant foreign earnings, including agriculture and the wider agri-food sector.
The Department's overall Vote for 2010 shows a reduction of approximately €152 million on the 2009 outturn. While on the face of it, this represents a significant reduction in the provisional outturn for 2009, the reduction can be accounted by exceptional items. There was a significant reduction in the operating costs of the Department which is reflected in the administrative budget and payroll adjustments. There was also a significantly reduced requirement for funding for costs associated with restoring market confidence following the pigmeat recall scheme. In addition, €45 million of payments on the farm waste management scheme was brought forward and paid towards the end of 2009. With the payment of €190 million in grants to farmers under the farm waste management scheme made in January this year, the total Exchequer funding for this scheme has exceeded €1 billion.
I will now briefly summarise the financial allocations for 2010 on the basis of the five strategic programmes which are set out in the annual output statement, AOS. The statement links the resources required for the programmes with the key outputs to be achieved in 2010 and includes information on the outcomes achieved in 2009.
I should mention at the outset that the Department's administrative budget costs are allocated across all of the four AOS programmes. The allocation of €257.6 million in 2010 reflects reductions in staff numbers and pay cuts amounting to approximately €33 million. The administrative budget accounts for just over 8% of the estimated total combine EU and Exchequer spend for the Department this year.
Programme 1 in the AOS focuses on establishing the policy framework to develop an internationally competitive, innovative and consumer focussed agri-food and fishing sector. This programme involves total expenditure of €341 million in 2010.
Policy in regard to agriculture and rural development is largely determined by the EU's Common Agricultural Policy. I am pleased to report that over the past year, Ireland has fared relatively well in terms of additional EU funding. We received a €26 million share of the European economic recovery package. This money will be split 50:50 between the agri-environment options scheme and the rural broadband reach scheme which will be implemented by the Department of Communications, Energy and Natural Resources.
I also secured a once-off emergency aid package to assist the dairy sector following the fall in milk prices amounting to €11.5 million of the total package of €300 million that was made available for the dairy sector in the 2010 budget. This funding was distributed as a flat rate payment of €590 to each dairy farmer who produced milk during the 2008-09 milk quota year. Other measures in the aid package included the option for member states to implement a quota buying-up scheme for the quota years 2009-10 and 2010-11. The EU has also been very active in supporting the milk sector through the market support measures. The committee will be aware that I actively campaigned in the Council and sought the support of ministerial colleagues for the extended use of intervention and aids for private storage in particular, both of which were critical last year in supporting prices during a very difficult period.
Under the final agreement on the health check of the CAP, I secured additional funds of €25 million annually from unspent CAP funds for three year from 2010. These funds are being allocated via three schemes which I announced in recent months. They include a dairy efficiency programme which involves the payment of €6 million per annum over the next three years to eligible dairy farmers who actively participate in the programme with a view to achieving significant efficiency gains on their farms. There is also a grassland sheep scheme involving the payment of €18 million per annum to sheep farmers for each of the three years 2010, 2011 and 2012. In addition, there is the Burren life-farming for conservation programme, providing €1 million each year for the next three years to support high environmental value farming in the Burren that is one of Ireland's outstanding landscapes and is world renowned.
At national level, the Government's commitment to fostering an innovation culture in our agri-food industry is evident in the €175 million which is provided in the Vote for research, education and training together with grants-in-aid to Teagasc and the Marine Institute. The development of a sustainable bio-economy is a vital element in our national economic development and investment in research, development and innovation is a critical component of this approach. This programme includes a €35 million capital grant provision as part of a multi-annual investment package to fund investment in the dairy, beef, sheep meat and other sectors. Some €20 million of the 2010 allocation is earmarked for the payment of grants to the Irish dairy processing sector. This is part of the €114 million in national grant assistance package which was awarded in 2007. A further €10 million is for the beef and sheep meat sectors. This is part of the supports announced for these sectors in 2009 that will trigger investment of €170 million in these vital sectors over a number of years.
I am particularly pleased that the 2010 Estimates include the first instalment, €9.5 million, of the €100 million food industry competitiveness and marketing fund announced in budget 2010. This is a critical sector which employs 45,000 people and supports exports of some €7 billion annually. A sum of €7 million will be provided to Enterprise Ireland towards measures aimed at competitiveness issues and €2.5 million will be provided to support Bord Bia marketing initiatives. The focus of the €7 million will be on enabling key exporting companies to adopt sustainable best-in-class lean business practices. Leading food companies will also be assisted in developing leadership and management capability to best international standards. In addition, €2.5 million is being provided to Bord Bia to be used in marketing initiatives principally aimed at assisting the industry to broaden its export reach. These include the recent highly successful Marketplace 2010 event hosted by Bord Bia which has as a target the promotion of €10 million in new business.
A second Bord Bia-Smurfit UCD programme is also planned following the success of the 2009-10 programme where 25 graduates have undertaken assignments in 12 locations with 113 food and beverage companies. A particular first in 2010 is the Bord Bia food and drink summit, which was organised in co-operation with Harvard University and the food and drink industry and will provide a very useful input into the 2020 strategy process currently underway.
In addition, funding of €4.3 million and €2 million is being provided respectively in 2010 for the quality assurance initiatives administered by Bord Bia and for the healthy eating initiative in schools. Finally, in addition to the €151 million that I have included for Teagasc and the Marine Institute, I have allocated a further €48 million by way of grants-in-aid for BIM and Bord Bia. Each of these agencies undertake important ongoing work in the development of the sector and in promotion quality Irish food products at home and abroad.
In so far as fisheries is concerned, 2009 was dominated by the introduction of the new control regulation for EU fisheries, ensuring compliance with the rules of the Common Fisheries Policy and the review of the CFP. Our priority during the negotiations leading up to the adoption of the new control framework was to secure measures that gave our fishermen confidence that there is real intent and the necessary tools in place that will address illegal fishing in the waters around our coast. I am satisfied that the measures adopted will help to deliver the level playing field on control that is necessary to rebuild fish stocks and protect the livelihood of our coastal communities which are fully dependent for their future on healthy fish stocks fished sustainable by all operators in our waters.
The process for the reform of the Common Fisheries Policy was launched by the EU Commission in April 2009 and following an extensive nationwide consultative process, contributions and written submissions from stakeholders were considered in the preparation of Ireland's submission. Additionally, in December 2009 a balanced and fair package of fishing opportunities for 2010 was successfully negotiated in extremely difficult circumstances after a marathon session at the EU Fisheries Council in Brussels.
This year is being dominated by the ongoing process at EU level on reform of the CFP which will shape the landscape of the European fishing industry for many years to come and has already been the subject of extensive debate at EU level. It has been clear for some time and that some member states have agendas which, if adopted, would be detrimental to Ireland's fishermen. My colleague, the Minister of State, Deputy Seán Connick, is robustly promoting Ireland's position across a range of key proposals and is actively pursuing alliances with like-minded member states to ensure Ireland's best interests are served in the new policy.
Other priorities issues for 2010 will be to continue to support initiatives to secure four-party multilateral arrangements on the management of the mackerel stock in which we face challenging negotiations during the latter part of the year. Preparatory work has already commenced on the fishing possibilities for 2011. This will again be finalised at the December Fisheries Council. Taken together, the €341 million expenditure proposed under this heading represents a substantial investment in the creation of a coherent policy and development framework for the agri-food and fisheries sectors and a vote of confidence in the future by the Government.
Programme 2 in the AOS relates to the maintenance of the highest possible standards of food safety, consumer protection, animal health and welfare and fish and plant health. This is the bedrock upon which consumer confidence in the agri-food and fisheries sectors, and in particular, our export trade, is built and expenditure under this heading in 2010 will amount to some €313 million. As part of this programme, €153 million is provided from within subhead C of the Vote in respect of food safety and public health, animal health and welfare and plant health measures.
With regard to disease eradication, I am pleased to report an improvement in the overall disease situation in the country and, in particular, in the case of brucellosis. We have not had a confirmed case of brucellosis since April 2006 and this enabled us to secure officially brucellosis-free status last July. We have significantly scaled down our testing programme, with the result that around 1.35 million cattle are no longer required to be tested for brucellosis on an annual basis. There are considerable benefits arising from these changes, particularly the significant reduction in the cost of testing to farmers and restrictions on trade in cattle generally. The total financial saving from the changes is estimated to be in the region of €5 million per annum.
While bovine TB is a much more intractable disease, particularly in view of presence of infection in wildlife, I am pleased to report that there has also been a significant improvement in the incidence of the disease last year. Reactor numbers fell to 23,800 compared with almost 30,000 in 2008. The overall downward trend continues and the number of reactors last year was approximately 50% of the levels recorded in 1999. The lower incidence of the disease is being maintained in 2010.
I am also acutely conscious of the need for continued vigilance against exotic diseases from abroad. My Department has comprehensive contingency plans in place to deal with any outbreaks and is closely monitoring the progress of such diseases globally. I am confident that our control systems are efficient and robust. The incidence of BSE continues to fall and the number of cases has declined from 333 in 2002 to just 1 so far in 2010.
This programme also includes €33 million for the animal welfare and breeding scheme for suckler cows. The scheme is designed to secure higher welfare standards, improve breeding information and, as a result, improve quality across the national beef herd which will be reflected in higher returns to the producer. Funding in the 2010 budget will pay for eligible animals born in 2009 along with any remaining eligible calves born in 2008. As a result of financial constraints, the rate of payment had to be reduced to €40 for calves born from 2009 onwards, but I believe that the scheme will make a very valuable contribution to beef production. There are currently 51,500 farmers participating in the scheme.
Programme No. 3 relates to the promotion of economic, social and environmental sustainability, and appropriate structural change in the agriculture, forestry, fisheries, bio-energy and food production sectors. Total expenditure under this programme in 2010 is estimated at €807 million. This includes more than €230 million from within subhead H for investment in capital infrastructure at farm level, through the farm waste management scheme, the farm improvement scheme, and a range of other investment schemes to assist the horticulture and the organics sectors. A sum of €200 million is being provided in 2010 for outstanding payments due to farmers under the farm waste management scheme. Due to savings made in 2009, the Department was able to pay almost €49 million to farmers which was otherwise due in 2010. The scheme represents the biggest ever investment in farm infrastructures in Ireland. It has been hugely successful and will provide very significant benefits to the environment and in competitiveness for the whole agriculture sector in Ireland.
This programme also includes almost €375 million to meet liabilities under the REPS and early retirement and installation aid schemes under the rural development programme for the period 2007-13. These elements of the programme represent a huge and continuing financial commitment to the rural economy. The 2010 allocation for REPS is €330 million. This is €11 million lower than the 2009 spend as I was able, with the agreement of the House to a Supplementary Estimate, to bring forward expenditure to 2009 utilising savings that became available last year. While REPS 4 is closed to new applicants, those already in the scheme will continue in their contracts and this means that there will be farmers in REPS 4 up to the end of 2014. By then, the total paid to farmers since the scheme was launched in 1994 will have reached around €3 billion.
The new agri-environment options scheme was launched on 30 March and the closing date for applications this year was 17 May. The new scheme consists of a menu of actions that can contribute to the key challenges of biodiversity, water quality and combating climate change. Over 8,000 applications have been received for this new scheme, reflecting farmers' genuine interest and support for protecting the environment. My Department is processing the applications with a view to approving entry into the scheme and commencing payments as quickly as possible.
The budget for the early retirement scheme and the installation aid schemes stands at €44.5 million under subhead G. Again, due to financial constraints, the schemes remain closed to new applicants in the 2009 budget and the 2010 Vote provision is to cover existing liabilities. A budget of €119 million is also provided under this programme and within subhead I for a comprehensive range of forestry measures, and a further €2.8 million is provided for bio-energy measures. I am committed to continuing support for afforestation in order to encourage further planting to protect jobs and the future of the industry and the environment.
A budget of €3 million is provided for assistance for the development of organic farming. The programme for Government includes an objective of having 5% of farmland under organic production by 2012. The area under organic production is currently 1.2% and at the end of 2009, there were 1,548 organic operators in Ireland, with 49,165 hectares of land under organic production methods. The latest estimates are that the Irish organic retail market is currently worth €100 million. We are heavily dependent on imports and there are real opportunities for Irish farmers especially in the horticulture and tillage sectors
The programme includes a range of measures to develop a sustainable, consumer oriented fishing sector, including €5 million to support capital investment in the aquaculture sector and €1.5 million to support projects in the fish processing sector. The allocation for fisheries harbours is €10.7 million for 2010. Of this, €5.02 million has been allocated to the Castletownbere harbour development on which work is expected to be largely completed in 2010, with some expenditure being undertaken in 2011. The project will provide much needed additional quay length, safer access and greater depths for navigation into the harbour and greater berthing depths. The new development will cater for the modern larger vessels that are now part of the Castletownbere fishing fleet and will enable larger visiting vessels to use the harbour.
The provision of additional pontoons at Ros an Mhíl is another major project receiving funding in 2010. A major benefit of this project will be the separation of fishing and ferry activities, which will address many health and safety issues associated with the current operation. It will also free up the existing ferry berths, part of which can be utilised as a cargo berth for servicing the Aran Islands, and will provide a sheltered dredged area suitable for the development of a small boat harbour for the inshore fleet. Other projects being undertaken in 2010 include ongoing repairs to the east pier at Dunmore East. Furthermore, the 2010 budget provides for disability access, safety and maintenance works at the six main fishery harbours.
The 2010 grant in aid figure for BIM is €18.5 million. This is a considerable reduction on the 2009 figure and is due to the conclusion of the Fisheries decommissioning scheme in 2009. I have provided more than €11.3 million under subhead O for the Sea Fisheries Protection Authority.
Programme No. 4 involves expenditure in 2010 of €1.612 billion, and includes major schemes such the disadvantaged areas scheme, for which €220 million is provided in subhead E of the Vote, and the single payment scheme, which is financed off-Vote through the European agricultural guarantee fund and on which the estimated spend in 2010 is €1.245 billion. The programme also includes €31.7 million to deal with outstanding liabilities from the pig meat recall scheme.
My key objective is the provision of a quality customer service in the operation these schemes. Over €1.251 billion in single farm payments were issued to over 123,000 farmers by 31 December 2009, and payments worth €220 million were issued to more than 100,000 beneficiaries of the disadvantaged areas scheme, which meant that over 99% of the farmers charter and action plan targets for these two major schemes were met in 2009.
There were a number of other customer service developments in 2009, including the expansion of the range of on-line services available to customers. The promotion of the on-line application facility for the single payment scheme brought the numbers applying on-line from almost 20,000 in 2008 to over 34,000 in 2009 and 43,500 this year.
Programme No. 5 relates to the development of internal systems of corporate governance, the implementation of public service modernisation proposals and the management the decentralisation programme in a manner that ensures continuity of service and minimises operational risk. Costs in these areas relate entirely to the administrative budget and are apportioned over the four annual output statement programmes. The administrative budget is €257 million in 2010, which is a substantial reduction compared to the initial budget for 2009 of €301 million. This is due to decreases in pay, allowances and overtime rates as well as reduced staff numbers.
I am acutely conscious of the need for efficiency and value for money in service delivery. The Department is engaged in an ongoing review of operations to improve efficiency and effectiveness in the delivery of a wide range of schemes and services and the objective remains the provision of the best service possible at lowest cost.
The agri-food sector remains one of our most important indigenous sectors accounting for 8.5% of employment. Agri-food exports exceed €7 billion annually and continue to perform strongly, despite the challenging market environment. In terms of foreign earnings, the wider bio-sector is estimated to account for approximately one-third of the net flow of funds from primary and manufacturing industries. In addition, the high proportion of expenditure on local raw material and services, as well as the dispersed nature and composition of the sector, will ensure that the agri-food sector will play an integral part in the recovery of our economic success.
While the immediate prospects for the sector remain uncertain, there are grounds for some cautious optimism for the recovery in market demand and farm incomes. The first quarter of 2010 has shown some tentative improvements both internationally and domestically, particularly for milk and, to a lesser extent, for beef. Dairy commodity prices have been increasing steadily on EU and world markets and there is a positive outlook in the short-term. In Ireland there has been an earlier than anticipated strengthening of dairy markets. Producer milk prices have risen considerably and there is some expectation of further increases. Factors adversely affecting beef prices include reduced demand and a greater emphasis on cheaper cuts, resulting from the continuing global economic downturn and the strong euro to sterling exchange rate. Nonetheless, tightening slaughter supplies and currency adjustments may help reduce the downward pressure on prices as the year progresses, provided import volumes do not increase strongly.
The provision of almost €1.8 billion in the Vote for my Department represents a substantial ongoing level of support and is clear evidence that the Government remains firmly committed to the continued development of the sector.
