Dáil Éireann díospóireacht -
Thursday, 19 Oct 2000

Vol. 524 No. 4

Adjournment Debate. - Disadvantaged Areas Scheme.

Mr. Dukes

The move from a headage basis to an area basis for headage payments under the disadvantaged areas scheme which was agreed to by the Government has brought about serious injustices and economic harshness for a great many farming families.

The first problem that emerged was that some 30,000 farmers in disadvantaged areas throughout the country stood to lose substantial amounts of income support. This is at variance with the reason for having a disadvantaged areas scheme in the first place. The scheme was originally brought in when I was a civil servant in the European Commission and was intended to recognise the difficulties of farming in mountain and severely handicapped areas. It was based on the need to maintain population and its fabric and some level of viability of farming in those areas. It was not explicitly a part of the Agenda 2000 agreement that the most vulnerable farmers should lose out on direct income aids and these losses, which were and are involved, go against the spirit of what was agreed under the Programme for Prosperity and Fairness.

When the first problem emerged, that of the 30,000 farmers who stood to lose, there was considerable toing and froing between the Government and the Commission and, eventually, the Government put in place what I can only describe as a partial fix. In spite of the objectives of the disadvantaged areas scheme, it emerged during that toing and froing that the Minister for Agriculture, Food and Rural Development and Commissioner Fischler seemed to be on different wavelengths as to the objectives of the scheme. That partial fix provides for compensation for the losses on a declining basis over three years. In the fourth year, and we should never lose sight of this, farmers affected by the first major problem stand to bear the full extent of the loss.

However, even the partial fix put in place fails to meet the needs of mountain farmers and especially the needs of those who combine a sheep flock with a suckler cow herd. Today, 7,000 such farmers in the most disadvantaged categories and in the most disadvantaged areas of the country face the prospect of losing up to £1,500 next year and every year thereafter. To many people, £1,500 might not seem like a considerable sum of money. To a farm family in a remote mountain area with limited acreage, with or without commonage, and engaged in low return livestock farming, the loss of £1,500 means a sharp drop in its standard of living and in its capacity to maintain the level of operations on the farm.

It should be clear to the Minister that the Agenda 2000 agreement, which has produced these heavy blows for farmers in the disadvantaged areas, must be deeply flawed. The Minister might argue that it is too late to unpick that agreement and I would not be surprised to hear him say that, but he cannot avoid admitting that he connived in bringing it about. It is up to the Minister to find a remedy which is satisfactory and lasting, not temporary and digressive like the previous fix he put in place. The problem is acute. The effective reduction in the rates of aid is what has caused the problem and it is exacerbated by the fact that the farmers in question typically have small acreages so that even increases in the amount of aid would be of very limited utility in helping them overcome the problem.

So far, the Minister for Agriculture, Food and Rural Development appears to have broken his silence on this issue only once and that was, apparently, to give an unspecified commitment to the four so-called Independent Deputies who support the Government to bring a proposal to the EU that will seek to compensate farmers who have lost out on an ongoing rather than on a temporary basis. Bringing a proposal to the EU that will seek to resolve the problem is just not enough. We had that with the previous fix and it took considerable time to sort it out. That is the doctrine of "live horse and get grass". What low income families in mountain areas need now is a clear and specific statement of what will be done to ensure that, next year, they receive the same amount of direct income aid as that to which they are entitled today under the disadvantaged areas scheme. Nothing else will be just or acceptable.

Mr. Davern

I appreciate the Deputy's intervention in this matter and acknowledge his wide knowledge of the Commission and how it works. The position is that, under the Agenda 2000 agreement, headage grants in the disadvantaged areas are to move from a payment per animal to a payment per hectare basis. This part of the agreement was well signalled at the time. Under transitional arrangements the headage schemes as they have operated up to now will continue to apply for this year. A new area based scheme is to be introduced with effect from next year.

As provided for in the Programme for Prosperity and Fairness, a task force representative of the Department and the main farming bodies, was established to formulate a new scheme. The task force met on a number of occasions and, having considered a range of options, the group recommended a scheme which would involve, inter alia, a payment per hectare depending on the type of livestock on the holding. It was envisaged that each livestock unit would attract one hectare payment.

The group noted that any scheme which does not have a link to production produces winners and losers, whereas the scheme proposed resulted in very little redistribution of aid. We announced details of the proposed scheme on 29 May last. At the same time we announced a £120 million increase in the overall allocation of money for disadvantaged area payments. That scheme took particular account of the difficulties facing sheep farmers in mountain areas. Effectively we increased the annual provision for compensatory allowances from £120 million to £140 million over the period 2001 to 2006. The proposed scheme was then submitted to the European Commission as part of the overall rural development plan.

The Commission was unwilling to accept the scheme proposed, mainly on the grounds that it did not represent a clear shift from headage related payments to area related payments. The Commission viewed the fact that each livestock unit would attract one per hectare payment as continuing the link to production. In these circumstances the Department examined a number of alternative proposals. The only scheme acceptable to the Commission is one which totally breaks the link with production.

The scheme agreed in July and since approved by the European Commission, provides for area related payments as follows: more severely handicapped (lowland) – £70 per hectare up to 45 hectares; less severely handicapped (lowland) – £60 per hectare up to 45 hectares and mountain type land – £45 per hectare up to 60 hectares.

Where a farmer farms a combination of land categories he or she will be paid on lowland – more severely handicapped – first, lowland – less severely handicapped – second, and mountain grazings last. If a farmer has only lowland – more severely handicapped – and/or lowland – less severely handicapped – his overall limit is 45 hectares. If he or she has a combination of lowland – more severely handicapped and/or lowland less severely handicapped – and some mountain type land, he or she will be paid on up to 45 hectares lowland and up to an extra 15 hectares of mountain subject to an overall limit of 60

hectares. If a farmer has only mountain type land his or her overall limit is 60 hectares.

The Government has already committed £360 million additional funding for the scheme over the period 2001 to 2006. The new arrangements involve a cost of £180 million in 2001, representing an increase of about £60 million over the current scheme. There are no losers this year since the existing schemes remain in place under the transitional arrangements.

It is estimated that the number of farmers qualifying for payment under the new area based scheme will rise from 90,000 at present to 109,000 in 2001. From 2001, some 81,000 farmers stand to gain about £66 million annually while 28,000 farmers will incur some losses. We have, however, negotiated a compensation package for losers under which 90% of losses will be made good in 2001, 80% in 2002 and 50% in 2003. Under these arrangements the average loss in 2001 will be about £32 rising to £64 in 2002.

At the time the new scheme was agreed in July last the Irish Farmers Association in particular acknowledged that the package was balanced and backed by increased resources designed, as far as possible, to securing the incomes of vulnerable sectors, including drystock farmers and both mountain and lowland sheep farmers. The IFA also acknowledged that the new package meets the commitment in the Programme for Prosperity and Fairness that the incomes of farmers dependent on disadvantaged area payments will be protected.

The reality is that moving from an animal based payment system to an area based payments system based solely on the disadvantaged status of the land involves winners and losers. We have asked departmental officials to carry out a review of the scheme to see if an equitable long-term solution can be found to the problem of reduced payments.