Vol. 527 No. 3
39 Mr. Sheehan asked the Minister for Agriculture, Food and Rural Development the steps he will take to compensate the 7,284 farmers whose land is classified as mountain land and who are facing a reduction of £3.9 million annually in their disadvantaged area payments from 2001 onwards. [28275/00]
Under the Agenda 2000 agreement the position is that 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. 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 Pros perity 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. The Minister announced details of the proposed scheme on 29 May last and at the same time he 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, he 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.
The Commission was unwilling to accept this 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 a number of alternative proposals were examined. The only scheme acceptable to the Commission is one which totally breaks the link to production.
The Government has already committed £360 million extra to the fund. The Minister has, 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. He has asked my 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, both in mountain and other areas. As I indicated, these losses will be about £32 in the first year. The Minister's immediate priority, therefore, is to concentrate on putting arrangements in place for delivery of the new area based system in 2001. He is anxious to find an equitable solution to this issue. It is hoped the review will be carried out early next year.
I am not happy with the Minister of State's reply. It is a pity the Minister himself is not here but, as we know, he is away on more serious business. It is evident that there are 7,284 farmers in mountain areas in the country with losses totalling £3.9 million by virtue of the changeover from headage payments to area-based payments.
A question, please.
The Minister of State said that there would be 90% recoupment for 2001, 80% for 2002 and 50% for 2003. However, after 2003 the whole lot falls by the wayside and there will be no compensation. Those farmers face a bleak future if they are relying on the Department of Agriculture, Food and Rural Development. Has it been written into the regulations of the Department that this compensation will be paid or will it be deferred as the years go by? We do not know.
It seems the area-based payments are aiding the ranchers and cutting out the small farmer.
Deputy Sheehan's minute has long since concluded. I ask him to allow the Minister of State to reply as he has already used a minute and a half of the time available.
The Minister of State should be more emphatic in his answer.
I am shocked to hear the Deputy talk about ranchers.
Aiding the rancher means cutting out the small farmer.
The ranchers are not too well associated with our side of the House. It is estimated that 1,000 farmers will stand to gain approximately £66 million while more than 28,000 farmers will lose to the tune of about £9 million. Those losses are to be compensated over the first three years at the rates I mentioned, 90% in 2001, 80% in 2002 and 50% in 2003.
And not at all afterwards.
That is what the Minister wants to do – to set up a review group to look at this. The only scheme in which there are no losers is where the most severely handicapped area land would attract a payment of £95 per hectare while less severely handicapped land would attract a payment of approximately £90 per hectare. The payment of £95 per hectare in the MSH areas would be required in order to claim a differential between MSH and the LSH. That is one of the difficulties here but I assure Deputies that the Minister is interested in achieving balance in this regard.
I am in favour of area-based programmes—
Absentee landlords will be paid.
Deputy Penrose without interruption.
—providing they are capped to ensure small farmers are not the ones that lose out. To carry into effect what was meant by those payments – they were to preserve the maximum number of family farmers – I favour them going to small to medium sized farms. That has always been my view.
A question please.
Is it the position that those small farmers are all in a category that will lose out? That is the antithesis of what should be achieved in relation to the payments system. Will the Minister of State ensure that from 2003 onwards they will be looked after?
The Government depends on Independent Deputies. Is it true that those Deputies have been agitating for this to be sorted out or are they toothless tigers when it comes to fighting for a national issue which affects the mountainous areas of the country, an issue on which it is vital they fight? Have they capitulated on this matter?
To give Deputies another figure, the 5,330 farmers who are exclusively involved in sheep farming will see their annual payments increase from £5 million to approximately £8.3 million under the new area-based system. There will be an increase of £956 to £1,159 in the average payout to farmers. Some intensively stocked farmers involved exclusively in seed production will be losers because they will have less than 49 hectares. The hill sheep farmers will, in general, be in those mixed sheep and suckler enterprises. We are trying to find a balance to that, something that will encourage them to stay on the land. I assure Deputies of the Minister's sincere interest in this matter. He has already instructed officials to start preparing the groundwork for an early review in the new year.
The Government promised sheep farmers £18 million last year.
