I move:
That a supplementary sum not exceeding £19,898,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December 1990 for the salaries and expenses of the Office of the Minister for Agriculture and Food, including certain services administered by that Office, and of the Irish Land Commission, and for payment of certain grants, subsidies and sundry grants-in-aid.
I propose to follow the traditional approach of speaking on the main subheads at the outset of this debate and in the light of contributions by Deputies to respond to requests for additional information or to queries raised on any other subheads.
Before going on to the detail I would, however, like to comment immediately on a variety of statements made in the last two days that this Supplementary Estimate does not involve extra payments to farmers. This is patent nonsense. The expenditure on the Vote is up by £54 million compared to the original provision. This involves substantial additional expenditure on on-farm investment grants, headage, disease control and intervention activity, which is, of course, designed to support producer prices.
This additional expenditure is partly offset by additional receipts of about £34 million of which £32 million is coming from the Community and £2 million from farmer levies. Therefore, the vast bulk of the extra expenditure is of direct or indirect benefit to producers.
Taking account of the receipts, the net Supplementary Estimate is for about £20 million. This increase is due solely to my decision to bring forward into 1990 payments of about £10 million on on-farm investment grants and £9.3 million in headage which would otherwise have not been paid until 1991. I did this in order to improve the cash flow situation for farmers in view of the relatively difficult producer income situation this year.
Expenditure on on-farm investment grants will be over £50 million compared to £27 million last year. Payments from the Vote and FEOGA under the various livestock headage and premium schemes will come to £321 million in this year compared to £159 million in 1989, an increase of over 100 per cent. By any standards these are substantial increases and clearly give the answer to statements made in recent days that what we are dealing with here is not real increases for farmers.
The general public and individual farmers are certainly not impressed by the cynical reaction of some who are never disposed to welcome any positive development but prefer instead to luxuriate in the habitual and by now predictable complaint, even when much needed extra money is being provided.
In passing, I would emphasise that, as I have indicated on previous occasions, both the original Estimate and this Supplementary Estimate represent only a minor part of the total spending of my Department. As part of ongoing support from the EC for Irish agriculture, my Department oversee and supervise a large number of activities which are fully funded by the EC. These measures will result in expenditure of £1,250 million, that is £1.25 billion, this year from the FEOGA Guarantee Fund, while expenditure of another £900 million will be financed from borrowings for the purchase of products into intervention. The benefits of the intervention safety net for beef which I negotiated last year means that what would otherwise have been a disastrous collapse in prices has been averted. The total amount purchased into intervention this year will be well in excess of £1 billion.
Provision is being made for an additional £13.53 million under subhead L1. This is to cover the cost of grant payments to farmers in respect of works undertaken under the various farm development schemes. The original provision under this heading was £37 million. The demand however has been greater than expected and, as I have already said, the indications are that expenditure this year will be in the region of £50.5 million, including the £10 million brought forward from 1991.
The increased demand for grant aid is a reflection of the high level of on-farm investment. It is estimated that this will exceed £120 million this year. Such a level of activity is an indication that, despite any temporary difficulties they may have, Irish farmers still have confidence in the future of the industry. This confidence is vital for the future development of the industry and must not and will not be undermined by those who prefer to complain even about good news.
I am seeking an extra £9.3 million under subhead L3 to enable my Department to make extra payments under our disadvantaged areas schemes over and above the number that would normally be paid in 1990. The original provision of £67 million scheduled to be paid in 1990 was already the largest amount for headage grants in any single year since these schemes began in 1975 and the additional sum of £9.3 million will now provide a further £6.5 million for applicants under the cattle and equines headage scheme in the more severely handicapped areas plus an extra £2.8 million for applicants under the beef cow and equines headage scheme in the less severely handicapped areas on top of the existing provision. Over 56,000 applicants under the cattle and equines headage scheme and over 11,500 applicants under the beef cow scheme will be paid before the end of this year as a result of this extra allocation of funds, while nearly all applicants under the sheep headage scheme in the disadvantaged areas — some 30,000 in all — will have received their grants by the end of the year also.
Given the farm income situation this year, I am particularly pleased that payments that were originally scheduled to be made next year can be brought forward to December 1990 and, as far as possible, made before Christmas. I believe Deputies will be equally pleased that I am not only avoiding a repetition of last year's delays in payments but am also ensuring payment of a record number of grants this year.
In regard to the case put forward to the Commission for extending and reclassifying the disadvantaged areas, Deputies will be pleased to know that this is at an advanced stage. I am also glad to announce that when the new areas are approved we can then put in place the appeals procedure to which the Government are committed.
As the House is aware, when ERAD was established the Government undertook to maintain their financial commitment to the running costs of the eradication schemes. Accordingly, I am providing an additional £11 million in 1990 under subhead C2 to cover increased expenditure by ERAD. The approval for the increase in expenditure follows a review by the Government in June of this year of certain operational aspects as well as the financial position of the schemes. The programme put in place for 1990 continued the exceptionally high level of testing of the previous year with a consequential high level of reactor removal, including necessary depopulations both for TB and brucellosis. In the circumstances, the Government felt that it would be irresponsible and wasteful of previous expenditure not to make the necessary extra funding available for the continuation of the programme. On the other hand, the Exchequer could not be expected to cover the entire extra costs. It was decided, therefore, that an increase in the bovine diseases levies would also be necessary. The House will recall that regulations to implement increases were introduced with effect from 1 August this year. Over time these measures will maintain the original basis of the financing of the schemes which was that the farming community and the Government would fund the running costs in a ratio of 2 to 1 and on a 50:50 basis when allowing for the costs of administration.
As regards EC funding a detailed national programme for 1991 is being submitted to the Commission. I am hopeful that funding will become available next year. Such funding will, more than likely, have specific conditions attached, which could mean that certain operational aspects of the programme will have to be altered.
I should, at this point, reject out of hand the following suggestion attributed in this morning's Irish Independent to the President of the IFA:
It is obvious that the selective leaking of the ERAD report is politically motivated with the aim of pinning the blame on farmers for the lack of progress in disease eradication.
There is absolutely no foundation for that allegation. Indeed it is unworthy of any responsible leader of a farm organisation. It certainly does not contribute one iota to progress under this vital scheme for Irish farmers and our economy.
Subhead C3 — General Disease Control and Eradication — is a subhead where expenditure can fluctuate considerably depending on the disease situation in any particular year. In those circumstances, it is normal practice to make only token provision in the initial Estimate and to provide additional funding as and when needed. Unfortunately, 1990 has turned out to be one of the costly years because of an accumulation of factors.
The first and most important of these was the situation which arose because of BSE. We do not have a BSE problem — the low sporadic incidence of 25 cases over 2 years, 6 of which were imported animals, in a cattle population of 7 million, represents a spill-over from the United Kingdom. Yet we have encountered trading difficulties with third countries. But I believe that the efforts I have made to convince our trading partners of the absolute safety of Irish meat will bear fruit and very shortly. In the light of the trading difficulties that were encountered, there has been a general consensus among farming organisations, the meat trade and others, that a voluntary depopulation by herdowners themselves, with financial assistance from my Department, would be desirable. To that end a sum of £2 million is required.
The second factor relates to the occurrence of fowl pest in poultry. Two outbreaks are involved. The first occurred in November 1989 and the cost of eradication at £15,000 fell for payment in 1990. The second outbreak occurred in September last and it is expected to cost £572,000 in eradication expenses this year. In this case a total of 200,000 laying hens were slaughtered. It is vital that exotic avian disease should be kept at bay and that the high health status of our valuable poultry industry should be maintained. All told, a sum of £623,000 is required for poultry diseases.
The third factor relates to the unexpected discovery of enzootic bovine leukosis in the national herd. This disease was first imported into Ireland about 1977 in Canadian Holstein cattle. The outbreak, which affected 13 herds, was rapidly cleared up by slaughter of the reactor animals. A national round of blood testing was commenced this year, using the bloods collected for the brucellosis round, as a result of which ten herds have now been discovered with positive animals. The purchase of testing equipment and the slaughter of reactors, plus depopulation where necessary, will cost a total of £477,000. It is absolutely essential for trade reasons that we rid our national herd of this disease. Already, Northern Ireland has requested the testing of breeding animals moving North.
Subhead H1 provides for a grant-in-aid to Córas Beostoic agus Feola—CBF— for general purposes. This year has been a difficult one for those producing and selling beef—faced as they were with the triple hurdle of closure of the Iraqi market, the knock-on effects of BSE in the United Kingdom and a general sluggishness in Community prices. To help overcome these difficulties I am pleased to propose additional funding of £250,9000 towards CBF's promotion activities. Already the benefits of enhanced promotion programmes are clearly evident.
The fact that producers and the industry work closely with CBF and indeed fund an important part of the board's expenditure enhances the realism of CBF's promotional programmes and I am confident that the additional funding of £250,000 will bear further fruit in coming months.
Expenditure on intervention this year is at an historically high level and indicates the level of support available under Community measures to underpin prices in a period of market pressures caused by the Gulf crisis and other problems. Substantially increased use of intervention has led to the increase in expenditure under this subhead. This increase has, however, been more than offset this year by EC receipts.
As is the practice with this particular subhead—Market intervention losses by deficiency, accident etc. — initial provision was for a token amount of £500,000. Developments during the year require an upward adjustment of the provision by £1,100,000. The increase is due in the main to the fact £1.3 million was paid in settlement to two companies in respect of EC export refunds. This particular case has been the subject of discussion in this House and is the subject of correspondence between my Department and the EC Commission with a view to the financial consequences being borne by the Community budget.
Finally, I would repeat that the extra expenditure being provided will largely and substantially benefit producers whose incomes are under pressure this year. I look forward to the contributions from the Deputies who will speak on the Estimate. Of course I will reply to points of details at the close of the debate.
