Vol. 527 No. 3
33 Mr. Dukes asked the Minister for Agriculture, Food and Rural Development the progress that has been made towards defining action to offset the income losses caused to hill sheep and suckler cow farmers by the changeover from headage payments to area aid; and if he will make a statement on the matter. [28466/00]
I apologise for the absence of the Minister who is on his way to Cairo. 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.
The Minister announced details of the proposed scheme on 29 May last. 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, the Minister 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 a number of alternative proposals were examined. The only scheme acceptable to the Commission is one which totally breaks the link to production.
Additional Information.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; mountain type land – £45 per hectare up to 60 hectares.
The Government has already committed some £360 million additional funding for the scheme over the period 2001 – 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 the current 90,000 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. I 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 a balanced one backed by increased resources which is designed, as far as possible, to secure the incomes of vulnerable sectors including drystock farmers and both mountain and lowland sheep farmers. They 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 payment system, based solely on the disadvantaged status of the land, involves winners and losers.
The Minister has asked his 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. As I indicated earlier, the average loss in 2001, for those farmers who stand to lose, will be about £32. The Minister's immediate priority, therefore, is to concentrate on putting arrangements in place for delivery of the new area based system in 2001. The Minister is anxious, however, to find an equitable solution to this issue and I hope a review can be carried out during the early part of next year.
Does the Minister accept that the scheme which was agreed in July and subsequently implemented does not deal with the problem, as evidenced by the information provided in the reply that the scheme will compensate 90% of the loss in 2001, 80% in 2002, 50% in 2003 and that farmers will have to bear the full loss thereafter? Does the Minister also agree that the impact of the scheme on hill farmers, particularly those who keep sheep and suckler cows, has been less than in other areas? Does he accept there is an urgent necessity for a further measure to specifically address the difficulties of people in mountain areas who keep sheep, particularly those who keep sheep and suckler cows?
The Minister has accepted that there is a problem. The difficulties in regard to land allocations etc. – which I do not wish to go into at this point—
Put them on the record.
The average loss in 2001 will be £32 and the average loss in 2002 will be £64. At the time the new scheme was agreed in July, the IFA, in particular, acknowledged that the package was a balanced one, backed by increased resources and designed as far as possible to secure the incomes of vulnerable sectors, including drystock farmers and mountain and lowland sheep farmers. The IFA also acknowledged that the new package meets the commitment outlined in the PPF that the incomes of farmers dependent on disadvantage payments will be protected.
The Minister has asked 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. As I indicated earlier, the average loss in 2001 will be about £32, rising to £64 in 2002. The Minister's immediate priority, therefore, is to concentrate on putting arrangements in place for delivery of the new area based system in 2001. The Minister is anxious, however, to find an equitable solution to this issue and I hope a review can be carried out during the early part of next year.
Does the Minister agree that it was disastrous, in the first instance, for the Minister to have agreed to area based payments? Does he also agree that the losses which will be incurred by sheep and suckler cow hill farmers are much higher than the average losses to which he referred? Will the Minister please answer my question which sought to elicit what progress has been made towards defining action to offset those losses? Why is the Minister being coy about putting any of this on the record and why is he refusing to say what is being considered? Does that not simply indicate that nothing is being done about this matter?
I have already stated that the Minister has asked officials to carry out a review to examine this matter. It was not a question of the Minister accepting the Commission's decision; the Commission refused to accept any payments which were production based. The Commission would not even agree on one unit per hectare but instead agreed to an area based payment which has certain confines. Ireland was the only country which fought against the area based payment. However, it was accepted by the partners in farming that this was the only way forward.
Has a date been set?
Early next year.
How early?
As early as possible.
