The main Estimate for Agriculture for 1976, amounting to £114,361,000 net was passed on 17th June. The net amount of this Supplementary Estimate added to the original Estimate for 1976 represents a total net provision of £116,000,000. This figure shows an increase of £25,464,000 on the final total net Estimate for Agriculture, including the Supplementary Estimates, for 1975. The £1.6 million now sought takes into account various savings amounting to £19.8 million to which I shall be referring in the course of my statement.
At the outset I would like to announce, with reference to the sum of £1 million provided under subhead C.5, that the Government have given approval to a proposal for the allocation of this amount to provide special assistance for defined cases of hardship arising from the discovery of tuberculosis and brucellosis reactors. The £1 million will be paid into a special hardship fund from which assistance would be paid and would continue to be paid until the fund is exhausted. It is envisaged that the £1 million would be sufficient to cover all hardship cases during the current round of testing which should be completed later next year. When the £1 million is spent—at whatever time this should occur—there would be no further contribution from the Exchequer to the fund. Continuation of the fund beyond that time would, therefore, be dependent solely on an arrangement under which the fund would be financed by the agricultural industry through some form of levy or other contributions. Unfortunately the farming organisations do not favour farmer contributions and so the fund will terminate when the present injection of Exchequer grant of £1 million is exhausted. I have asked the Advisory Council on Animal Health and Disease Eradication to recommend to me the criteria which should be applied in defining hardship cases and the level of assistance to be given.
The next item I should like to refer to is the additional expenditure provided for various capital grant schemes. This reflects the exceptional level of investment by farmers in the development of farms during the past year. The extra provision of £2 million under subhead D.2 relates to land reclamation work completed under the former land project. Grants for this sort of work are now available under the farm modernisation scheme and the old scheme has, therefore, been effectively wound up since 30th September last. The announcement last year of the date for winding up the project prompted a great many farmers to push ahead and complete works on hands or to finish jobs which had been partially completed. This coupled with the general buoyancy in the level of investment by farmers during the year has led to the extra expenditure.
I should say as a general observation that there has recently been a noticeable revival of interest in land drainage. The exceptionally dry winters of the last two years seemed to have lulled many farmers into the false notion that lands would never again become waterlogged. It would be a pity if this notion were to continue. I am quite satisfied that there are still vast areas of lands which can be improved and brought to full productivity by drainage or clearance. It is in the national interest that these improvements should continue and I therefore welcome the revival of interest in this work which has become more evident in recent months.
Subhead D.3 relates to grants for farm buildings and installation of water supplies on farms under the former schemes. Again, consequent on the unexpected upsurge in demand in the context of the winding up of these schemes the expenditure arising in the present year will be in excess of that originally estimated to the extent of £620,000.
The main subhead providing for capital grants to farmers is now, and will be in future, subhead M.1 covering the farm modernisation scheme.
As I have mentioned already, the level of investment by farmers, has been consistently high throughout this year. This clearly reflects the very favourable returns from all sectors of farming. Apart from this, however, it also clearly illustrates that whatever else may be deficient in the farm modernisation scheme it does not in any way inhibit investments by farmers. Indeed, the contrary is the case. There are very generous grants for all types of capital investment but particularly for buildings and land drainage. I am very glad that farmers now recognise this and that they have responded to it. I might add that this expenditure on capital works is clearly beneficial also outside the farming industry in so far as it generates a great deal of employment in the building and other allied industries and, of course, its effect is dispersed throughout the economy.
Having said that, I would like to repeat just one word of caution which I think I have uttered here before. The cost of capital investment on farms can now run into substantial sums. There is a risk that farmers may be lured into overspending or spending unwisely. Careful consideration of investment proposals and careful planning are called for. I hope that both farmers and their advisers are availing of the chance which the farm modernisation scheme gives them to work closely together on the planning of developments on the farm and that between them they weigh all the pros and cons of the expenditure that may be necessary. In this way wasteful investment will be avoided and the greatest possible returns will be gained from the money that is spent. Given this careful and prudent approach by both farmers and advisers, I am confident that the industry will quickly make up for the lean years when the resources were not available to be ploughed back into the development of the industry.
On the horticulture side we require an additional £127,000 to meet capital grant commitments under the old horticultural schemes which have also been wound up and incorporated into the farm modernisation scheme.
As regard the provision for an additional £15,800 for the Farm Apprenticeship Board, Deputies will recall that, earlier in the year there was considerable publicity surrounding the financial difficulties of the board. In response to the board's representations, an additional grant of £15,800 over and above the £27,500 provided in the original Estimate was made available by my Department to the board to enable them to meet their commitments to the end of the current year.
Incidental expenses of market intervention in beef and skim milk powder are now estimated to amount to £24.4 million of which £17.5 million will be eligible for recoupment from FEOGA. This leaves a net cost of £6.9 million to be met from the Vote as compared with the £2.6 originally provided, an increase of £4.3 million. In the main this increase is due to higher interest charges on the capital tied up in the stocks of beef and powder held in intervention. I should explain here that the capital funds for intervention purchases of beef and skim milk powder have to be provided by us and that the rate allowed by FEOGA to member states generally in respect of interest is appreciably less than what the Exchequer has to pay on borrowings.
Although the slaughter premium arrangement terminated at the end of February, 1976, delayed claims for payment have continued to come to hand. It has been found necessary to provide a sum of £38,000 as the Exchequer contribution towards meeting those claims.
The special premium on exports of beef to the UK is a self-balancing arrangement whereby such sums as are received from the UK Government are passed on to our beef exporters. The proposed increase from £1.5 million to £1.7 million does not involve the Irish exchequer in any additional outlay, being matched by a corresponding increase in appropriations-in-aid.
The shortfall of £340,000 in receipts from slaughter fees arises from the fact that it has not yet been possible to make statutory provision for monthly, instead of half-yearly, collection of these fees. Accordingly, fees in respect of animals slaughtered in the second half of 1976, which it had been hoped would largely be collected before the end of the year, will not now fall due until next year.
I would now like to refer to certain items where savings accrued, beginning with the disease eradication schemes. There will be a substantial saving on the sum provided for bovine tuberculosis and brucellosis eradication. This saving arose from the veterinary dispute during which the normal round of testing was not in operation. When the dispute was resolved testing recommenced in October. Most of the expenditure incurred under these subheads this year related to the retesting of reactor herds identified in previous rounds and the removal of reactors for slaughter.
The estimate shows a saving of £800,000 on the fertiliser subsidies. This reflects the trend in fertiliser sales and usage in the early months of the year. I was most concerned at the reduced usage, and I have repeatedly called on farmers not to indulge in the false economy of reducing ultimate yields and profit for a short-term apparent saving of a few pounds. I am glad to say that recently sales of fertiliser have increased greatly and farmers are again increasing fertiliser usage.
While on this subject I would like to stress once again the desirability of expanding the tillage acreage. This is essential if we are to provide more winter feed for cattle, and also from the point of view of reducing our dependence on imported feed which is costing the country over £30 million a year. Furthermore, a tillage break, apart from being profitable in itself, is the most effective means of improving old unproductive grasslands.
The saving of £1.1 million on subhead D.4, beef cattle incentive scheme, derives from the fact that this scheme was withdrawn in the less disadvantaged areas on the introduction of the EEC beef cow scheme for which provision is made under subhead M.3— aids to farmers in certain lessfavoured areas. Similarly, the saving of £460,000 on sheep headage grants results mainly from the substitution of an EEC sponsored scheme in the less disadvantaged areas for our own sheep headage grants scheme. Total expenditure this year under subhead M.3 on the EEC cattle and sheep schemes will amount to £13.5 million —the sum provided—of which 35 per cent will fall to be recouped from EEC funds.
Finally, the saving under subhead E.2 is mainly accounted for by an increase in the level of FEOGA contribution to our consumer subsidy on butter. I have now dealt with the main items in the Supplementary Estimate and I look forward to any comments Deputies may wish to make.
The Minister would have liked very much to be present at the debate today but he is unavoidably absent.