I move amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann commends the Government and the Minister for Agriculture, Food and Rural Development for their continuing support for the agriculture, food and rural development sectors, and their efforts to deal with the issues currently affecting farmers through:
the success of the Minister in protecting and enhancing the incomes and prospects of farmers over the medium term through the agreement reached in negotiations on Agenda 2000;
the success of the Minister in relation to the European Commission's allocation of £1.75 billion towards the financing of the Rural Development Plan for Ireland;
the Government's inclusion of substantial funds in the draft National Development Plan to aid farmers and the food and rural development sectors in the years ahead;
providing very substantial direct income support to farmers involving record direct payments of over £1,000 million to farmers in 1998 and a high level of support to be continued in this year and future years;
providing very substantial market support for farm produce involving in excess of £500 million expended in 1998 to support the prices of farm produce;
supporting farmers and the food industry in maintaining high standards of food safety and animal welfare, so essential for the protection of consumers and the development of markets;
supporting farmers, particularly young farmers, through the restoration of the farm installation scheme and concessions in the taxation and stamp duty regulations;
the successful programme of improving the efficiency of our farms through continued reform of quota arrangements;
the continuing and successful efforts of the Minister to aid farmers and the food industry in expanding overseas markets for livestock and food exports;
the setting up of an agri-food 2010 Committee to develop a strategy for the long-term future of agriculture and the food industry.".
Agriculture, food and rural development are very important topics and it is appropriate that they should be debated in this House. I welcome any opportunity to inform Deputies of the developments taking place in agriculture. For that reason, I welcome the opportunity to contribute to the debate.
There are other reasons for me to welcome this debate. It gives me yet another chance to correct the numerous unfortunate misunderstandings that the Opposition seems to labour under regarding the main issues affecting agriculture. It allows me to address their inexplicable refusal to recognise that this Government has done tremendous work over the past two and a half years in helping Irish farmers through a series of difficulties and in putting the industry on a sound footing.
By any standard the outcome achieved in the Agenda 2000 negotiations was a tremendous success and secured the medium term future of Irish farmers' incomes and prospects. I make no apology for reminding all concerned of the anxiety caused by these proposals when they were first introduced in March 1998. These proposals would have involved a loss to Irish farmers of £233 million per annum, that is, a loss of £1,386 million over the seven year period. The final outcome involved a gain of £395 over the seven year period. That was a massive turnaround of almost £1,800 million. These gains were hard won after tough negotiations. I was particularly pleased that the Heads of Government of the 15 member states when they met in Berlin last March – a meeting I attended – agreed that the decisions adopted regarding the reform of the CAP within the framework of Agenda 2000 will constitute essential elements in defining the Commission's negotiating mandate for the future multilateral trade negotiations at the world trade round. That round is beginning in Seattle at the end of this month and it is important that the gains won in the Agenda 2000 negotiations will be retained.
Work is under way on a range of policies from improving the efficiency of Irish farms, through the reform of the milk quota systems, for example, to the highly significant work of planning the strategic direction of the sector's long-term future. The latter is being undertaken by the experts I appointed to the 2010 Committee set up in May following the successful conclusion of the Agenda 2000 negotiations. While I am not under any illusion that I can convince the Opposition to voice approval of this Government's significant achievements or of the importance and cohesion in our approach to planning for the future, I can set down for the House the facts and let them speak for themselves.
The Opposition motion refers to support for Irish farmers and their communities. The facts show the true picture. Last year, under my direction, the Department of Agriculture, Food and Forestry spent almost £2 billion supporting Irish farmers, the food sector and rural development. Such large expenditure, equivalent to 4 per cent of GNP, belies the accusation of lack of understanding and support for our 146,000 full time and part time farmers, for rural communities and for the food industry. The total commitment of the Government to support agriculture, food and rural development is beyond doubt, given the ongoing annual level of expenditure of almost £2 billion.
I will now outline the main forms of Government support for the sector. In practical terms the Government's commitment to farming can be seen in the level of direct payments made to farmers. In 1998, direct payments amounted to in excess of £1 billion. This represented 56 per cent of total farm income. Following the successful outcome of Agenda 2000, figures produced by the Food and Agriculture Policy Research Institute suggest that by 2007, direct payments will account for more than 70 per cent of farmers' incomes. In addition to this direct support, substantial indirect subsidies are also provided to Ireland's agri-food sector. For example, expenditure on market support measures such as export refunds and intervention amounted to almost £0.5 billion in 1998. National expenditure on disease eradication, research and training and administration of schemes amounts to almost £400 million.
I recognise that the past few years were difficult for many farmers. This was due to problems caused by the BSE crisis, poor weather conditions last year and the closure of the Russian markets. In recognition of these difficulties, I introduced a range of measures to alleviate the situation last winter, including a £40 million fodder package. In order to support vulnerable farm households, the Government introduced a new farm assist scheme for which £43 million was provided. This was specifically targeted at low income farm households. To date, 7,404 farmers have been approved for this scheme, receiving average payments of almost £80 per week. Some 1,126 farmers are still in receipt of smallholders assistance with average payments of £74.60 per week. The Department of Social, Community and Family Affairs are in the process of transferring all remaining recipients of smallholders assistance who are eligible, to the farm assist scheme.
In spite of these difficulties in recent years, we must acknowledge that by comparison with other EU countries, Irish agriculture has performed very well in the 1990s. For example, average income from agricultural activity grew by more than 20 per cent in real terms in Ireland over the 1990s, compared to the average EU growth of only 12 per cent. In the UK, average income fell by almost 20 per cent over the same period. An increasing number of farmers are now supplementing their income through off-farm employment. This has been facilitated by the national economic boom and growth in employment that we are currently experiencing. On average, more than half the farm household income now comes from non-farming activities. I welcome this as a positive development which will ensure the economic viability of many farming families and farming communities in the future. Another benefit to farmers from the current economic climate is that interest rates are at very low levels. This is reflected in the fact that in 1998 interest payments amounted to almost 11 per cent of farm income, compared to almost 30 per cent during the period of the very high interest rates in the early 1980s.
Having set out the general background, I will now deal with the individual points raised by Deputies in their motion. First, in supporting young farmers, installation aid for young farmers has been restored. The early retirement scheme is also a valuable incentive for young farmers to take over the management of farms. In addition, there is stock relief, the two-thirds reduction in stamp duty, land leasing for farmers over the age of 55 who lease out their land, the first £4,000 of rental income is exempted from income tax where a lease is for a period of five to six years and the first £6,000 for leases of seven years or more. Similarly, relief under the capital acquisitions tax means that most farm transfers are exempt from this tax. An individual aged 55 years or more is exempt from capital gains tax provided the sales value of the farm is less than £250,000. If the disposal is to the owner's child, then the exemption applies irrespective of the sale price.
The National Development Plan is an exceptionally important plan which will be unveiled around the middle of this month. All the measures mentioned by the Deputies in the motion have been included in this plan. The measures will be financed by structural and guarantee funds. On-farm investment schemes such as the control of farm pollution and the installation aid for young farmers will operate under the Structural Funds. Total public funds for agricultural development under the Productive Investment Inter-Regional Programme will be of the order of £278 million over the seven year period. Allocations for individual schemes have not yet been finalised. In addition, total public funds amounting to £172 million will be available for rural development type measures addressing some of the commitments in the White Paper and alternative enterprises under the two regional programmes. The amount includes national matching funding for Leader Plus and approximately £35 million is expected from the EU for this community initiative.
All training and research activities under the National Plan are being brought together with a view to ensuring a co-ordinated approach and Departments will receive indicative allocations for their respective areas. The position in relation to the food industry is similar with allocations made across the industry as a whole, but with indicative allocations for the food sector to cover capital investment, research and development, marketing and promotion and training. Co-financing by the EU in respect of the above measures will be identified in the plan, but it is expected to be very small in comparison to the Exchequer funding being provided.
A special CAP rural development plan has been drawn up and submitted to the Commission for approval by the end of 1999 to draw down EU funds allocated for REPS, early retirement, compensatory allowances and forestry. These measures have been alluded to here tonight. As regards financing, very substantial Exchequer funds in the order of £3,405 million are being provided to cover these four measures, with approximately £1,740 million of the full amount coming from the EU. I expect that that substantial amount of money will be adequate to cover those schemes for the term of the plan.
Further details on the funding arrangements will be contained in the plan which will be published in the middle of this month. Overall, funding for this Department will be increased by approximately 50 per cent and this should ensure that increased demand can be adequately catered for over the seven years of the plan.
On 13 October I announced my proposals for the distribution of the additional milk quota and also in relation to quota management measures which are possible following changes in the EU regulations agreed as part of Agenda 2000. The additional quota was relatively small. Nonetheless, it helped to provide additional milk for some of the categories provided for.
In the distribution of the quota I had regard, on the one hand, to the need of younger farmers already in milk production and, on the other, producers with small or medium size quotas. The amount of milk was not great – 20 million gallons – and much more milk will become available under the new management of the milk quota regime.
I decided in the first instance to set down the rules only for the quota becoming available on 1 April 2000, that is, 20.5 million gallons at this stage, and leave decisions on the 11.5 million gallons becoming available on 1 April 2001 for a later date. On that basis I decided that 15 million gallons would be made available to producers with quotas below 55,000 gallons who meet certain strict criteria. I also decided that five million gallons of milk will be made available to a special scheme for younger active producers who commenced milk production since 1993, again subject to certain strict criteria.
The balance of 500,000 gallons available from the 20.5 million will be set aside for special cases arising out of the operation of the general distribution. This is to deal with exceptional cases where particular problems are encountered by some producers in meeting the eligibility criteria.
I now turn to the management of the quota regime. The agreement under Agenda 2000 allowed for a greater degree of flexibility in the application of the quota regime. I have decided to use the opportunity to change the system operating in Ireland to ensure that active committed producers have greater access to quota over the coming years. It is essential that the system should allow for greater certainty to those producers so that the dairy industry, which is highly export dependent, can meet whatever competitive challenges lie ahead.
I have decided, therefore, that the transfer of quota based on a rigid link between milk and land which has existed since 1984 will be replaced by one which allows for the sale of milk quota based on the existing restructuring scheme which has worked successfully in this country. This will be done in an equitable way aimed at encouraging the best possible development of the milk industry, while recognising the interests of the parties involved. It will facilitate a more orderly arrangement for the distribution of quota and will ensure that a large quota of milk will be available for restructuring.
Such a move will have several benefits. It will allow quota to be targeted towards priority categ ories while giving certain access to all producers. It will help to maintain quota within the less advantaged areas. Most importantly, however, it will keep the price of acquiring additional quota within the reach of smaller and medium sized producers. The current system of acquiring quota with land has led, over the years, to increased quota costs adding in turn to production costs. In many cases, producers were taking on the burden of additional land which they did not need and which was of no real help to their enterprise.
As part of the alternative system of quota transfer, I have decided to restrict the number of times in which dormant quota may be leased into the temporary scheme. It is important that these quotas should be available to active, committed milk producers on a permanent basis. This restriction will be introduced on a gradual basis but the final outcome must be that the milk quota is available to producers on a permanent rather than a year to year basis to enable them plan their production with some degree of certainty.
I recognise that introducing changes to a system which has been in place for 15 years is a complex and sensitive matter and I am conscious of particular situations, for example, inter-family transfers and cases of existing long-term leases, where some people have a substantial part of their quota on a long-term lease. There are no circumstances in which that can be terminated abruptly and I have no intention of doing that. The Department of Agriculture, Food and Rural Development has taken up these matters with legal advisers from the Attorney General's office and will also be meeting with the EU Commission in the near future to consider how these and other situations can be accommodated within the regulations.
The general reaction to my proposals both on the quota allocation and the quota management changes has been positive. It is accepted by most people involved in the industry that the proposals are fair and in the best interests of the dairy sector generally. They will reinforce the position of active milk producers as well as supporting young and smaller scale farmers.
With regard to expediting the national cattle breeding plan, I am particularly satisfied with the Government's track record on this issue. We recognised some time ago that our cattle breed improvement programmes needed upgrading and to be put on a fully commercial basis. We have to start with proper breeding programmes to breed the correct animals for specific markets. Every day of the week people are paid on quality, particularly for live cattle, and research is being carried out on an objective mechanical grading system which would be put in place shortly. The sooner that happens, the better.
In relation to Leader groups, the Government is committed to the Leader model of rural development. The Leader concept is particularly suited to Irish conditions with our tradition of self-help and voluntary and community development. There is no doubt that Leader I and Leader II were highly successful in regenerating rural areas. It is my ambition to ensure that Leader II will continue the good work done under Leader I.
Leader Plus is the EU community initiative to which the European Commission is committed under Agenda 2000. The Commission has indicated that it will finalise the new community initiative before the end of the year. This will allow new programmes to be presented and approved as early as possible in 2000. I assure Deputies that once the terms and conditions of the new programmes are finalised by the Commission, there will be no delay in implementing the new programme either on my part or that of the Department. We intend to approach the implementation of Leader Plus in a carefully planned manner to ensure that the new programme makes the maximum contribution possible to the development of rural areas.
The EU has recently announced the allocation to Ireland of £35.4 million for the implementation of Leader Plus. In line with the reduction in the level of funding for community initiatives generally, the funding of Leader Plus is a reduction on the funding provided for Leader II. Nevertheless, the considerable allocation for the next programme is a demonstration of the EU commitment to continue the Leader model of development.
Provision for the additional State contribution to Leader Plus is being made in the national development plan and consideration is being given to provide funding to enable some of the useful experiences of Leader I and II to be incorporated into national programmes. These funds demonstrate the Government's commitment to the principle of "bottom-up" involvement in local development and will allow the momentum built up under Leader I and Leader II to be continued.
I will summarise the current position in the main market sectors. The level of throughput of finished cattle at meat export plants has increased by 14 per cent and considerable progress is being achieved in clawing our way back onto the EU markets we lost following the BSE problem.
As regards market access generally, I have gone out of my way in every possible situation to provide access to markets. It is a matter for the industry to make the most of those markets once they are opened up. The Department is continually providing veterinary requirements for Irish cattle and beef to ensure we get into those markets and stay in them.
I expect Deputies will join me in welcoming the lifting of restrictions on beef exports to Russia from five counties – Cork, Tipperary, Limerick, Clare and Donegal. Cavan, Meath and Monaghan are still subject to restrictions, a position which will be reviewed again next year. I would like to pay tribute to the veterinary experts in the Department of Agriculture, Food and Rural Development who have built up a tremendous degree of liaison with their Russian counterparts. That confidence has allowed the ban on those counties to be lifted.
I now turn to live cattle exports. When I came into office we did not have live cattle exports, we did not even have a ship to provide live exports. I had to go to Government to provide leasing of The Purbeck to resume live exports. I am glad live exports to date this year amount to 325,000 head, more than a ninefold increase on 1997. The trade this year includes almost 260,000 head of younger animals to continental markets and over 55,000 head of adult cattle to Lebanon. While it is unfortunate that the trade with Libya has not yet resumed, the significance of this market has to be viewed against the major improvement in live cattle exports generally.
I reiterate that agreement was reached with the Libyan Government. We went through the process of signing an agreement and it was ratified by the people's authority in Libya. I visited Libya earlier this year and it is clear that despite the intergovernmental agreement, there remains a blockage to the resumption of trade. We continue to make every possible effort to reopen that market. The Libyans have reneged on a solemn agreement between the two Governments. However, I am glad that 325,000 head of cattle have been exported from Ireland and I intend to maintain that momentum. From a situation where we had no ship on the high seas, we now have 16 dedicated ships and three with roll-on/roll-off facilities.
I am aware of the difficulties facing sheep producers and I am aware that they have been through a tough time. There is over-production here; we have in excess of 8 million sheep. There is also over-production in the UK. We used to sell live sheep to Spain and Portugal but there is also over-production there and they are now exporting. The low price stems from increased supplies of UK lamb to the French market. We supply about 70 per cent of sheep exports to the French market and anything which happens there has a knock-on effect here. Another factor is that French lamb is perceived by French consumers to be superior to imported product and, as a result, they are willing to pay premium prices for domestically produced lamb.
However, I have taken a number of measures to help address the difficulties in the sector. In response to my representations, the European Commission introduced aids for private storage last month to take 130,000 lambs off the market in Ireland and the UK. There has been strong interest in the scheme in Ireland and it has now been fully taken up. More importantly from our point of view is the fact that 115,000 lambs were taken off the UK market, which can only benefit our market. I am satisfied that this scheme has helped to alleviate the position in the sector to some extent.