I am pleased to present, for the approval of this committee, two Supplementary Estimates for the Department of Agriculture, Food and Rural Development. The first is for £20,246,000 which is mainly for animal health, headage payments and administrative expenditure on the delivery of services.
The second Supplementary Estimate is for £13,500,000, and that is required as some Structural Funds will be received in 2000 rather than in 1999. That is purely a technicality.
Before going into detail, I wish to comment on the general economic situation. Ireland has seen exceptional growth, increased employment and reduced inflation in the 1990s. Since 1993, for example, the economy has grown at more than 9% per annum, employment increased by more than a quarter, and unemployment has fallen from a peak of almost 16% to a mere 6%. Low inflation and falling interest rates have enhanced competitiveness while ESRI projections to 2005 forecast continued growth at a slower pace.
Agriculture and food have played a very important part in the stability of our economy in the past decade and made significant contributions to GDP and employment. In 1998, primary agriculture contributed 4.7% to Ireland's GDP and the agri-food sector as a whole contributed an estimated 11.5%. They were responsible for 8.7% and 11.8%, respectively, of total employment, and 10.2% of all Irish exports were from the agri-food sector which contributed 33% of Ireland's total non-foreign revenues from trade.
The agricultural sector has benefited from the general boom. Growth in employment has facilitated an increase in off-farm employment for farmers and their spouses. Many have been able to continue farming on a part-time basis where they would otherwise have had to leave. Wider access to employment has also provided a valuable source of income for future investment in the farming operation. Farmers have also benefited from the improvement in tax and social welfare, from reduced rates of interest and low rate of inflation.
I will now turn to the individual subheads. I will start with animal health. An extra £23 million has been provided under subhead C(2), Bovine Tuberculosis and Brucellosis Eradication, to meet expenditure on reactors and herd depopulation. There are also additional costs relating to testing and supplies. The number of TB reactors in 1999 is expected to be around last year's level of 44,500. Reactors have been identified throughout the country in some 8,500 herds. However, 99.5% of the country's 7.8 million cattle still pass the TB text each year. The committee will be aware that TB levels tend to be cyclical and that the 1997 level was the lowest recorded for many years. Nevertheless, I am concerned by the increase in 1998 and 1999 here, in Northern Ireland and in parts of the Britain. The general veterinary view is that there has been a real increase in the level of TB and that TB infected badgers are a major constraint to TB eradication - the level of TB that has been found in badgers is about 20%. The effect of badger removal on TB levels is being studied in detail. The east Offaly project is well established, and research commenced in 1997 in experimental project areas in parts of north Cork, Donegal, Kilkenny and Monaghan. Similar work recently started in the UK.
In anticipation of the outcome a vaccination strategy has been devised which is aimed at providing a solution to overcoming the wildlife constraint. We have taken initiatives in areas where disease levels are particularly high. Herds in these areas are subjected to an intensive testing regime on top of the annual round test. The additional testing is funded entirely by the Department, and there is some indication that reactor levels have peaked. Fewer reactors were identified in recent weeks compared with 1998. Even so, the position remains unsatisfactory.
On brucellosis, the committee will be aware that after a fairly stable period, the brucellosis position deteriorated in 1996, 1997 and 1998. The main problem was in the south-west. However, there has been at least one brucellosis breakdown in most counties in recent years. To address the problem, I introduced a series of measures during 1997 and at the beginning of 1998. These measures, which were retained in 1999, included annual blood testing of all eligible animals, a compulsory 30-day pre-movement test and movement restrictions on foot of tests, significant additional testing. Some five million samples were tested up to the beginning of November this year, compared with 4.8 million last year. In addition, administrative measures were introduced, including an awareness campaign, increased epidaemiology earlier removal of reactors, improved monitoring and other measures, such as, the use of An Post Swiftpost service to ensure the speedy delivery of blood samples to laboratories. In 1999, I introduced further initiatives, including the screening of cows at factories, improved arrangements in respect of a milk ring test regime, a review of laboratory testing procedures and wider contiguous monitoring of herds. The current regime was reviewed during 1999 by an EU veterinary mission which broadly endorsed the measures in place and being introduced.
The impact of the new measures is still being evaluated. There are some good signs. The testing regime up to 1 November 1999 identified 4,253 laboratory positive animals, a much lower figure than the 6,007 for the same period in 1998. There have also been fewer new herd breakdowns to the end of October than in the corresponding period in 1998. Nevertheless, the disease incidence and the costs remain much too high and it is essential to make rapid progress in reducing and eradicating brucellosis in the national herd.
The expert view held by, among others, the EU mission team is that some further time will be required but that the measures should deliver that objective. The view is that if we persist with the current regime on brucellosis, it will achieve results. Progress is being made on brucellosis and most experts believe that the regime in place will address the problem. The TB position is less clear, although the outturn for 1999 is unlikely to be as bad as predicted by some.
I am conscious of the level of expenditure on animal health and this must be considered in the context of the protection of trade in livestock and livestock products. This trade is worth over £2 billion annually to the economy and every measure must be taken to ensure that the situation regarding animal health allows the trade to be maintained and developed. This is not to suggest that we will avoid looking critically at the expenditure. In this regard, the committee will be aware that the current eradication regime is due for review. This review has commenced in the Department and with the assistance of the TB investigation unit and an economic input by an external consultant. I hope it will be possible soon to finalise proposals for a rapid improvement next year and to present them to the animal health forum for its views.
I am providing an additional £2 million under other animal health measures under subhead C.3 and £2.5 million under subhead C.5 for cattle registration and tagging to cover the cost of supplying the first 20 tags free of charge to all farmers. These tags were issued following discussions at the animal health forum. Farmers pay for any tags ordered in excess of that figure. It is generally acknowledged that the cattle registration system is working well and it has been reviewed by EU auditors.
An extra £10 million has been provided for headage. As Deputies will be aware, there has been a considerable improvement in the rate of processing of area aid applications and headage applications by my Department. The Department will be in a position to expend over £120 million in headage payments this year and maintain the progress made in 1999.
An extra £1.5 million is being provided to Teagasc which plays an important role in the agricultural sector and is a forward looking body. The additional £1.5 million will bring the Exchequer contribution to Teagasc this year to over £56 million. The amount is made up of £0.5 million towards the cost of capital development atTeagasc's research centre at Grange and £1 million to reduce Teagasc's core debt.
Regarding subhead H.3, Deputies will be aware that in July the Horse and Greyhound Racing (Betting Charges and Levies) Act, 1999, was processed in the House. This provided a new system for the financing of the horse and greyhound racing industries. One of the innovative features involved was the abolition of the 5% on course betting levies collected by the IHA and Bord na gCon. The introduction for the first time of tax free betting at racecourses and greyhound tracks has given a great boost to both industries. The new system introduced charges on off course bookmakers, the revenue from which will go directly to the IHA and Bord na gCon. This way of having the buoyant off course betting market part fund the breeding and racing industries, which provide the essential raw material, that is, quality horses and greyhounds, and a strong domestic racing environment is another welcome first.
We decided at the time that the State should also in a partnership approach make a special contribution of the sum equivalent to 0.3% of the off course betting turnover to the new financing arrangements to replace the income lost to the State bodies from the abolition of the on course levy. To ensure that the industries do not lose out in the changeover, I am proposing an increase in the 1999 grant-in-aid to the IHA under subhead H.3 of £1.5 million and an increase in the 1999 grant-in-aid to Bord na gCon under subhead H.4 of £400,000.
A supplementary sum of £7.671 million is being sought under my Department's 1999 administrative budget. This relates to increased costs in staffing, IT requirements, special projects and payments to temporary veterinary inspectors. The costs include meat inspection duties at former local authority abattoirs which, having been upgraded to export status, come under my Department's control. We have recruited staff for the veterinary labs to deal with increased blood testing of cattle. There has been a significant increase in the number of direct payments to farmers and we have expedited these payments as well as implemented demanding food safety regimes.
The Department of Agriculture, Food and Rural Development has made great progress in recent years in the delivery of services. Since the reform of the CAP, the Department was subjected to a huge increase in administration and rigorous standards of accountability to the EU. An example of the scale of operations is that the total number of applications to be handled this year by the Department under the various schemes will be approximately 500,000 and a total of 1.2 million payments will have issued by the end of 1999. These payments must be made in accordance with complex EU regulations.
I wish to point out again that the Department's overall performance, particularly since accession to the European Community, has not been properly acknowledged. For example, in financial terms alone, it has secured and disbursed as the EU paying agency approximately £22 billion to assist Irish agriculture while incurring very minimal disallowances by the EU of less than 0.5%. This is one of the lowest figures in the entire EU. Ireland is one of the top three performers in the EU regarding the dispensing of necessary payments in cheques in the post to farmers. The Department has been exemplary given the magnitude of the pay out each year which involves 500,000 applicants. It is one of the best in the EU but that is not properly acknowledged.
I pay tribute to the administrative staff in the Department who work under extremely difficult circumstances. When the payments were introduced in the early 1990s, the Department had to move to Hume House and introduce a range of schemes, varying between ten and 22 months. No other Department deals with such a complexity of schemes. It is subject to EU audits and also to domestic auditing by the Comptroller and Auditor General. We are accountable to the Committee of Public Accounts and also to the House. It is important for accountability purposes that Members of both Houses can table parliamentary questions and raise matters on the Adjournment. They can also bring the Minister and officials before committees such as this one. This is not the case for all other bodies in this and other Administrations. Good work has been done and I want to acknowledge it.
Under subhead L.2, Market Intervention Losses, I am proposing an additional £2 million to cover disallowances in the clearance of the 1995 FEOGA accounts and some delayed payments of extensification premium. The main 1995 item relates to the stocking density for extensification and statistical data for REPS and the ewe premium.
Deputies will note there has been a net reduction in appropriations-in-aid. This is partly because expenditure on EU co-financed REP schemes will be lower than forecast. In addition, funding for Leader will be mainly channelled through the European regional development fund and accrue directly to the Exchequer rather than the Agriculture Vote.
There will also be a shortfall of £13.5 million in EU receipts under subhead N.17 and I am seeking a supplementary amount to cover this technical adjustment. EU recoupment in 1999 was based on a financial profile which has since been updated with Commission approval. The Estimates for 2000 will be adjustedto show higher receipts in 2000. The neteffect over the years 1999 and 2000 will be neutral.
Savings of approximately £76 million reduced the supplementary amount required. The main savings are £5 million under subhead F.1. This is because the EU examination of the Western Development Fund as an acceptable state aid will not be completed in time to allow payment in 1999. This payment will be carried forward to 2000 and there will be no loss in the amount earmarked under the Western Development Fund measures. Savings of £15 million arise under subhead L.1, Market Intervention Measures, as a result of reduced intervention intake, disposal of beef stocks and reduction in interest rates.
Savings of £17.5 million under subhead L.4 are linked to the timing of the introduction of REPS supplementary measure A and uncertainty over the rules of the new scheme. Regarding subhead M.1, Farm Investment, expenditure of £16 million will arise in 2000 rather than 1999. Regarding Leader, there is a saving of £9 million. While 94% of funds are committed at this stage, the number of projects completed is behind schedule. Under subhead M.8, there is a saving of £3.3 million regarding grants for institutional research and development. Expenditure in respect of 1994-9 can be carried forward to 2000 provided commitments have been entered into by 31 December 1999.
One of the priorities I set myself was to ensure that the Department's performance in the delivery of income support to farmers would be among the best in Europe. We have come a long way towards meeting that objective. While the Agenda 2000 agreement and the national development plan have established the overall framework for the development of agriculture well into the next decade, these Supplementary Estimates are necessary to meet ongoing commitments and so ensure that the sector can continue to be developed. I, therefore, commend these Supplementary Estimates.