JOINT COMMITTEE ON AGRICULTURE AND FOOD díospóireacht -
Tuesday, 11 Nov 2003

Vol. 1 No. 24

Macra na Feirme: Presentation.

Chairman

I welcome Mr. Thomas Honner and his colleagues from Macra na Feirme. I congratulate Mr. Honner on his election earlier this year as president of Macra na Feirme. It is great to see young people getting involved in national organisations and I wish him well in the years ahead.

Before asking Mr. Honner to make his presentation, I wish to draw the witnesses' attention the fact that while members of the committee have absolute privilege, the same privilege does not extend to them. Members are reminded of a long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official by name or in such a way as to make him or her identifiable.

Mr. Thomas Honner

We appreciate the opportunity to attend this meeting and present very important issues for young farmers. I will cover the background to a number of issues first and then outline a number of other matters. I would appreciate, Chairman, if you would allow a number of my colleagues enter into a little more detail on the issues concerned.

Over the next decade Irish agriculture will undergo immense change. Undoubtedly this change will bring a number of challenges and one of the biggest challenges to continually face agriculture is the lack of new entrants to the sector. Recent changes to the structure of agricultural education, which were introduced to tackle the declining numbers, are welcome. However, the indications are that the number of young people choosing farming as a career is continuing to decline. The number of individuals choosing agricultural courses is declining and the graph - at figure 1 in our briefing document, which was sourced from Teagasc - outlines the numbers of first year entrants into the agricultural colleges. It shows that this year the number has fallen to 429 and this is a concern.

The recent decision by the EU Council of Agriculture Ministers in Luxembourg will fundamentally change the direction of farm supports to farmers. The decision reached in Luxembourg to reform the Common Agricultural Policy - CAP will, to a large extent, shape the future of Irish farming over the next ten years. The new system will undoubtedly put even more pressure on Irish young farmers, increasing the need for them to significantly scale up their enterprises if they are to survive.

Coupled with the pressures from the Fischler reforms, young farmers will also have to comply with increasing environmental measures. These measures will have a major impact on the future of Irish farming. It is central that sound scientific reasoning and well-informed decisions are made in consultation with the relevant stakeholders on these issues.

Going forward it is critical that the Government creates a favourable economic and structural environment within which young Irish farmers can operate. It is also crucial that the Government continues to use its influence at EU level to ensure decisions made are in the best interests of Irish farmers, and in particular young farmers.

I will now go through a number of the main issues that we see as extremely important currently. The capital gains roll-over relief, introduced in 1997, disappeared in 2003 when the Government abolished it in the budget. This measure was of particular benefit to young progressive farmers who were in the process of restructuring or consolidating their holdings, selling off a piece of land away from their home farm to buy another nearer home, where, in the case of dairy farming, the milking parlour would be situated. They are not allowed to re-invest in their business by disposing of an asset.

This measure has also benefited farmers who had a CPO served on them where they were hoping to repurchase land. Such land was not put up for sale but was purchased compulsorily, and the farmer had not had the opportunity to fairly re-invest in his own business. We want to see the immediate reintroduction of roll-over relief and the changes backdated to December 2002, the date the measure was discontinued.

Currently farmers over 55 years of age, or those incapacitated who are younger, are entitled to avail of a tax relief measure when leasing lands on a long-term basis. As stated earlier in the submission, a key factor in allowing for the future of young farmers is to allow them the opportunity to scale up their enterprises and this will enable farmers to source land at a reasonable cost. The latter has not been seen as a viable option as the purchase price of land has increased significantly in the recent past. The current measures to encourage long-term leasing of land are not seen as an attractive option and must be altered.

Macra wants to see the current tax relief arrangements amended so that the land leased to young trained farmers under 35 years of age on a long-term basis would be eligible for tax relief. Macra also wants the amount on which relief is available to be increased from €5,080 to €7,600 for leases up to five years and from €7,620 to €10,200 for leases of seven years.

Trained Department of Agriculture and Food graders currently carry out the practice of grading meat carcasses in factories. The EU Commission recently passed legislation to allow for the introduction of machines designed for the purpose of classifying carcasses. No such machines have been installed in any meat plants but trials on a number of machines are currently under way in some meat plants.

The Department of Agriculture and Food has also signalled its intention to withdraw its trained graders from January 2004 leaving the factories with the option of installing a mechanical grading machine or using their own trained staff who will be trained by the Department. Macra wants to see the retention of Department graders until such time as the mechanical machines are tested and readily available for use in factories. Macra also wants to see the introduction of a mechanical grading system in all meat plants in Ireland.

The on-farm investment schemes are a structural improvement measure budgeted for in the National Development Plan 2000 - 2006. In the recent social partnership deal, Sustaining Progress, the grant rate for the farm waste management scheme and the dairy hygiene scheme were revised upwards to 40% for farmers with less than 450 income units. In addition, young farmers in less favoured areas are eligible for a top-up of 15% on their grant, with those in other areas being eligible for a 5% top-up. To qualify for these top-ups, however, the young farmer must have started farming in the preceding five years. This condition has led to many young farmers being denied the top-up and that five-year clause must be deleted from the scheme criteria to allow all young farmers avail of these top-ups.

The EU nitrates directive and how it will be implemented is of grave concern to young farmers who see increased environmental restrictions as inevitable. While our members are committed to protecting the environment for the next generation, any such restrictions must be based on best available scientific knowledge. When I finish the initial presentation, I will ask a colleague to discuss this in more detail.

The installation aid scheme was introduced in 2000 and is scheduled to run until 2006. Currently a young trained farmer taking over a farm is eligible for a payment. Amendments to the scheme in 2002 saw the abolition of the 150 upper income unit requirement and the change was backdated to January 2000. Macra wants to see an increase in the payment from €9,500 to €12,500 to bring the scheme in line with the payments made to our counterparts in other European countries.

There are quite a number of CAP reform issues. As stated earlier in this submission, in June of this year the EU Council of Agriculture Ministers agreed the latest CAP reform measures. The Commission's decision to de-couple farm support payments from production will essentially change the environment in which farmers operate. We want to see a new system to accommodate farmers who enter during the reference period - that is, from 2001 to 2002 - and who can demonstrate that they were in the process of increasing production, by allowing them access to rights from the national reserve. They should be allowed to stack these rights from the national reserve.

Macra wants the new interim system to treat these young farmers as a going concern. These are the farmers who received a farm by gift or inheritance since the reference period. The farmer who is working the land when the new system is established should receive the entitlements that would have gone to the farmer who was farming the land during the reference period. We want to see, in a going concern, the entitlements passing on to the young farmer who takes over the farm.

Macra wants to see that the new system will allow these young farmers, who bought land since the reference period, to be eligible for entitlements from the national reserve.

On the minimum level of farming activity, it is clear that those who are awarded the entitlements when this new system commences will continue to be the ultimate beneficiaries of the payments in the long-term. Macra wants to clearly state that, as an organisation representing young farmers, it believes fundamentally that all available supports under the Common Agricultural Policy should go to active farmers. This is a point we have been making from the outset, since the Fischler proposals were announced.

In establishing the national reserve and the ongoing reserve, there is a choice where the Government can opt for a national reserve of between I% and 3% skimmed or taken off all active farmers. Macra wants to ensure that there is an adequate national reserve. We need to know what national reserve is necessary and then make the decision on that basis. Macra believes that any farmer receiving entitlements from the national reserve should be allowed to stack those entitlements.

That concludes my overview of the presentation. Mr. Raymond Brady, chairman of Macra na Feirme's agriculture affairs committee, will discuss the roll-over relief and tax relief on land leasing in more detail.

Mr. Raymond Brady

I feel strongly about these two issues. The big threat in the Fischler proposals is that they encourage many farmers of an older generation to take farming a little easier. The de-coupling proposal suits them in that they can reduce their livestock numbers, take it easy and claim the payments - the cheque in the post. However, the fact that they must submit 100% of their land in the area aid application is effectively land-locking much of the country's land. If commercial farming is to survive into the future, the proposals must release land in whatever way possible - through the roll-over relief and land leasing - to create incentives for farmers to lease out land without being taxed unduly. In order for commercial farming to survive, it has got to release land to young farmers and farmers who are committed to staying in farming full-time and driving the industry in the future.

As Mr. Honner outlined, the roll-over relief is an important measure. It was introduced and then was cutback in the budget last year. A survey in my area showed that the average farmer has nearly 2.5 holdings - at least two, if not three, out-farms. If land comes up for sale beside a farmer and he wants to buy it, the farmer must sell one of his out-farms because, with the price of land, it is uneconomic for a farmer to buy land without selling some other land - it is just not possible for a farmer to buy land otherwise. The tax bill the farmer receives at one end is basically forcing him out of the market because he can no longer compete to buy land. This is a significant problem. I know of a couple of farmers in my county who were interested in buying land and had to pull out because they could not afford it without having to sell another farm. The absence of the roll-over relief meant it was not a viable proposition. I feel strongly about it and Macra na Feirme is pressing to have the measure re-instated.

My colleague outlined the current position for farmers over 55 years who are leasing land. I am fortunate to have some land near me on a land lease and the farmer is making use of that measure. However, the amount of land becoming available is small because, as I stated earlier, the system encourages farmers to hold on. In order for more land to become available, especially in the new era of the de-coupled payment, we must look seriously at freeing up more land. Leasing long-term, rather than on a con-acre basis, is what young farmers need. For forward planning purposes, young farmers need to know how many acres they will have at their disposal five, seven and ten years down the road and how they will farm into the future and make a living off that land. The committee will know how Macra na Feirme feels about land-leasing. We are seeking to have the relief re-instated so that young farmers who get the land can activate the increased payment using the tax relief.

Mr. Honner

My colleague, Mr. Patrick Kelly, will deal with some of the environmental issues.

Mr. Patrick Kelly

To follow-up on some of the points on the environment mentioned by Mr. Honner, Macra is concerned about the nitrates directive. We obviously want commercial farming to continue and we understand the need for a balanced approach.

On implementation, Macra feels strongly that the Government should commit to seeking a limit of no lower than 210 kilograms of nitrogen per hectare and seeking a derogation from the EU Commission for 250 kilogram of nitrogen per hectare to allow what is basically an environmentally sensitive type of farming to continue. It is important to bear in mind that our systems of agriculture are grass based when considering the environment and comparing Ireland with other European countries.

There are proposals to put levies on developments - agricultural buildings and houses - in rural areas. These proposals are coming from the local authorities. Macra is concerned about the proposed charges on farm developments ranging from forestry plantations to agricultural buildings - perhaps €5 per square metre on the construction of farm buildings. Much of the investment farmers will have to undertake over the next number of years will be to do with complying with environmental control measures. Macra wants the development of farm buildings excluded from any proposed county council development charges. We know that with the changing economic environment, farming will be much more challenging in the future and we certainly cannot afford to carry bureaucratic costs when we have to be competitive internationally.

Chairman

As that concludes the presentations, I call on Deputy Timmins to open the question and answer session.

Deputy Timmins

Deputy Sargent asked me to pass on his apologies. He had to attend Taoiseach's Question Time and could not wait.

I welcome the delegation from Macra na Feirme. I thank you, Chairman, for arranging for them to make a presentation. I wish Thomas Honner the best of luck in his role. He is not a new president any longer but this is the first time he has been before the committee as president.

It is easy for those of us in Opposition to call on the Minister to re-instate roll-over relief and I suppose we would all like to see it re-instated, but it is a political reality. From what the Minister for Finance stated in the past and in the Dáil, I do not see much hope of the roll-over relief being re-instated. The basis of the Minister's argument is that he must cut off reliefs to justify the reduction of capital gains tax from 40% to 20%. If he re-instated the reliefs, he would have to increase capital gains tax. It is a Catch 22 situation but I can see how beneficial the re-instating of the relief would be to Macra members.

Fine Gael will push for tax relief for land leasing. There is scope in that area, particularly to expand the bands mentioned in the Macra document because access to land is one of the main issues for young farmers. It is a policy issue we can implement and it should be done.

Macra makes a fair point about mechanical grading. The sooner the machines are introduced, the better. In the meantime the Department should retain its role.

On the point about the levies made by Mr. Kelly, it is important that Macra writes to the local authorities outlining these concerns. The levies will be draconian. It is not that they are bureaucratic, but that there is a shortage of funding at local level for infrastructure and the cost will be spread.

I do not know the extent of the levies in other countries, but in Wicklow it is proposed that the residential levies will be €140 per square metre. For a 2,000 square foot house, the levy will be €28,000. That levy has been announced today. It will probably be lowered, but the sums concerned are still large. For a grant-sized house and services, one is talking about a levy of €17,000 which is a phenomenal amount of money.

It is an unfair mechanism, in my view, because one must pay for two reasons. First, one must pay for an infrastructural deficit for which one may have suffered in the past. In addition, where there is a bad water supply, for instance, it will be upgraded with the money put into the system by the new person in the community. It is not an equitable tax. It will cause a great deal of difficulty around the country. We must look at the issue of a mechanism for local funding.

There was concern about the installation aid scheme and therefore it might be changed, but it should be okay.

On young farmers who received a farm by gift or inheritance since the reference period, Macra wants the entitlements to go to the person who gets the gift or inheritance. I would imagine that this it will be a matter for the person who owns the land. If a farmer is giving land to a nephew as a gift, he can choose to send entitlement on to the young farmer or to keep it. Is Macra saying that if the young farmer gets the land, he or she should get the entitlements? I am not sure that will work because if the uncle wants to hold on to the entitlements, he will not give the nephew the land. Perhaps Macra would clarify that issue. My understanding is that it would be up to the person who owns the entitlements to sell them with the land.

Perhaps the following question on the issue of land leasing and the cost of renting land is one for the policy officer. My initial view is that the cost of renting land could increase substantially because in the future people must have a certain amount of land to claim their entitlements and while they might have had easy access to it in the past, all of a sudden the person with no entitlements to it will adopt the approach that the person will earn a great deal of money on his land and, accordingly, will look for high rent. Is there a danger that the rent will increase to such an extent that it will be very difficult for a young farmer to rent land?

Does Macra have any idea of the views of the other farm organisation on the levy of 10% on the sale of entitlements? I am not aware of their views and Macra is the first group we have met since the mid-term review. In addition, will Macra clarify the point about the stacking up of entitlements because the point made in the document is not clear to me at first glance?

Since Mr. Honner took over the job of president of Macra, what has been the mood among younger farmers? Is there more optimism or pessimism as a result of the Fishcler proposals? Does Mr. Honner feel there will be more young farmers getting out of the business? For instance, does he hear many young farmers saying that they have established a certain amount of entitlements themselves and have decided to lease their land and entitlements to go off and do something else?

The following question is for Mr. Kelly. I do not see reference to this in the Macra document and perhaps it is a little unfair of me to ask this question. Does Macra have a policy on the disposal of meat and bone meal or proposals on how we might deal with that?

Deputy Upton

I welcome the Macra team. It is great to have them before the committee. I compliment them on their clear and succinct presentation.

I will not repeat the questions Deputy Timmins asked but there are other points I wish to raise. For the purposes of clarification, how does Macra define a young farmer? When does one stop being a young farmer and become a middle aged or older farmer? Clearly all Macra's concerns relate to young farmers and we need to measure its concerns against the concerns of others who are farming longer.

Although Macra did not address this point, it might offer a view on it nevertheless. Where does Macra stand on the issue of gender balance? Has Macra any views on the role of women in farming? Recently there was a constructive and detailed meeting on the role of women in farming and it might be useful to hear the views of Macra on that. They did not incorporate a view on this in the briefing document but a short comment on it would be helpful.

The document raises a number of issues that would influence young people to enter farming. Many of them are related to the economics involved and the future of farming. Are there any more innovative ideas in existence? This matter involves more than just the viability of farming. There probably are other issues which impact on young farmers or people considering entering farming and which might lead them to decide that it is not the career for them. Is there any way that matter can be addressed and are there any improvements or developments that our guests believe are important and would like to see implemented?

I have no difficulty with the baseline in respect of installation aid being lifted because it seems to be a modest amount of money to offer someone in order to encourage him or her to become involved. However, our guests may wish to comment on that matter further.

I understand from where our guests are coming on the nitrate directive, but Ireland is a small country and I wish to make a particular comment and observe our guests' reaction to it. If we start into a process of derogation and putting in place different rules for various regions or areas, is there a risk that we will again be compromised in terms of environmental factors and that we will be obliged to put in place a further level of bureaucracy in terms of how to define areas, how to manage them, how to calculate costings, identifying who should deal with the paperwork, etc.?

I echo Deputy Timmins's question in respect of stacking rights. I do not understand what is meant by it in the first instance, so perhaps our quests might clarify matters. Is there a danger that stacking rights for young farmers will in any way militate against established farmers? I may be misreading the position but perhaps our guests will comment.

The document suggests that those who reduce production to a negligible amount should not be eligible for entitlements. The mid-term review is very strong on bringing agriculture back to a point where much greater emphasis is placed on environmental factors, food safety and quality rather than on production for production's sake and aligning subsidies to headage payments, etc. What does the term "negligible" mean in this context and how far could production be allowed to fall before someone should not be involved in farming or availing of the facilities and supports on offer? Where does one draw the line? I am not asking our guests to quantify what would constitute a negligible amount or that they provide facts, figures or absolute measurements. However, we must begin to define what is negligible in order that we will know where to draw the line in respect of this matter.

Deputy Wilkinson

I offer my belated congratulations to the president on being elected to the position he now holds in Macra na Feirme. Since taking up office he has made some statements that have hit the headlines. I congratulate him on one of these, in particular, namely, the call to farming organisations to come together and form one body to represent farmers. That is an important statement.

On the numbers attending agricultural colleges, there is no doubt that the farming scene is changing dramatically. Part of the problem is that young people are not prepared to work the hours that are necessary in farming. I am aware of many well established, well run and well financed farms which do not have an heir, be it a young man or woman, to carry on farming there. This is a major problem because there are so many opportunities of an easier life available to young people.

I would agree with almost all of the points made by our guests. However, I would ask them to reconsider that which relates to older farmers taking it easy. These individuals kept the land when the land could not keep them. They worked hard for little reward. Many of them, perhaps through illness or the fact that they have no children or extended families to carry on their work, must take it easy. I agree that some scheme or mechanism to help these farmers make changes should be put in place. However, I cannot provide a solution in that regard at this meeting. I respect the position of these farmers.

I do not include Macra in this but, over the years, a negative approach to farming has been promoted by the farming organisations that represent older farmers. That has not been helpful. While there have been difficulties in farming and while things needed to be said, a constantly negative approach is not good in terms of promoting farming to young men intent on becoming involved in it. I congratulate Macra on its suggestion that there be an overall organisation to represent farmers and on its positive approach to farming.

Will our guests give their views on once-off rural housing, a burning issue which affects many farmers? As local representatives, we are aware that many farmers who are in serious debt and who might wish to sell a site or two cannot do so because of restrictions and the actions of organisations such as An Taisce and Dúchas. Some farmers have been unfairly treated. Macra na Feirme represents many young farmers and I ask it to consider this matter and contact the organisations to which I refer regarding what they are doing to rural areas.

On the nitrate directive, the restrictions will be an impediment to farming. However, there is also intensive farming taking place in terms of pig and chicken production where the disposal of manure or slurry is becoming a major problem.

What exactly do our guests mean vis-à-vis entitlements and stacking rights? I am not sure of the position in this regard. I thank the delegates for their presentation and congratulate them on their work.

Senator Scanlon

Some of the questions I wished to ask have already been posed by other members. I welcome our guests and thank them for their presentation, in which they made a number of good points. In my opinion they have a case in respect of rollover relief, particularly where lands are the subject of compulsory purchase orders. Rollover relief should be made available in such cases.

Mechanical grading is going to come into play and there is not much we can do about it at this stage. However, our guests make the point that these machines must be in place in factories in the near future.

From my involvement in the auctioneering business in the area in which I live I am aware that it is extremely difficult to get young, fully-trained farmers who are in a position financially to lease some of the farms that have become available under the early retirement scheme. However, I believe the position is going to change and that it will become easier to do so because the demand is not as great as it was and it will decrease even further as fewer people are becoming involved in agriculture. There will be major changes in the next year or two and the cost of land rental will be reduced. I have already seen evidence of the latter in County Sligo.

I understand that young farmers who have acquired land since the reference years will be catered for out of the national reserve. If that is the case, I would welcome it. From listening to the Minister, it appears to be his intention and that of the Department. I understand that the farmers to whom I refer will be able to apply to the national reserve and obtain priority from it.

Deputy Carty

Most of the points I wished to cover have been dealt with in questions already posed by other Members.

Deputy Timmins referred to the environment, particularly in respect of the levy to be implemented by local authorities. As far as I am aware, that must first go out for public consultation so that submissions can be made on it. Our guests should make submissions in respect of it. This is an important matter and it will have major repercussions for many sectors in rural communities. The matter should be submitted for public consultation in the coming weeks in most county council areas.

I thank our guests for appearing before the committee. I hope this is the first of many meetings we will have with them.

Deputy Stanton

I apologise for my late arrival. I was, however, following the discussion on the monitor.

On farm restructuring, our guests referred to exchanging land between close relatives. Will they indicate the extent to which this is happening? What is meant by the term, "restructuring or consolidating their holdings"?

The other issue that arises is where motorways or other roads traverse farms, meaning that farms are bisected. What difficulty does this cause? Are our guests aware that in countries such as France, for example, land is reorganised so that a farm is all on one side of a motorway or road? The system operated in France appears to work well.

Mr. Honner

There are quite a number of questions to answer. I will first deal with that of Deputy Upton in respect of who is a young farmer. The latter is someone who is a trained farmer under 35 years of age.

The Deputy also inquired about the gender balance. The other farm organisation held a recent seminar on women in agriculture. Prior to the IFA's involvement, we had two schemes that recognise women in agriculture; namely, new opportunities for women in the late 1990s and the women in agriculture project. We were leading the way and the IFA was merely following us.

A number of questions arose in respect of the restructuring of holdings, land leasing and roll-over relief. I will ask Raymond Brady to clarify the position in that regard, particularly what we mean by the restructuring of holdings.

Mr. Raymond Brady

The restructuring of holdings relates to where land is the subject of a transaction between uncles or aunts to their nieces or nephews where no money is exchanged. In some cases, however, the transaction is liable to capital gains tax and, in others, to stamp duty. That is what we mean by farm family restructuring. It is more to do with transfer between uncles or aunts and nieces and nephews than it does with transfer between parents and their children. Members are aware of our position in respect of this matter. We are seeking a postponement and that no capital gains tax or stamp duty will apply in such cases.

Chairman

If the person qualifies as a favoured nephew or niece, is there not a mechanism that relieves them of having to pay inheritance tax, etc.?

Mr. James Kelly

This issue arose through meetings with a number of young farmers. If a young farmer is fully trained, he or she is exempt through the favoured nephew or niece clause. In the majority of cases, these individuals are fully exempt. There are certain cases, however, where this arises out of the abolition of the roll over relief, where the indexation of land, etc., has led to particular individuals being obliged to pay a certain amount of stamp duty or capital gains tax. What we are seeking is a blanket exemption for these people. We are only talking here about a minority of cases. This was an issue in our pre-budget consultations throughout the country because we have come across a number of individuals who are obliged to pay. However, the majority will be covered.

Deputy Timmins raised the issue of meat and bonemeal, etc. As an organisation representing young farmers, we are concerned about how these are disposed of and managed. We know that a great deal of resources is required. As an organisation, we focus on key issues that affect young farmers going forward. I refer here to installation aid, stock relief, the stamp duty measure and, most recently, the family farm partnership under which new entrants are allowed to set-up, in conjunction with their parents, under their own herd number. The latter is a major development that has been underestimated and the benefits of it will only become apparent in time. Deputy Wilkinson referred to this, the numbers entering agriculture and the pressure being exerted to try to encourage people to enter farming.

Partnership is a definite and positive route we can take. It is a new experience here. There are only approximately 15 or 16 milk production partnerships operating here. Our national chairman, Patrick Kelly, is involved in one of these and he may wish to comment. Such partnerships definitely offer a positive model to follow. The Minister has opened up the scheme and there will be approximately 150 to 200 young farmers going into partnership with their parents this year. That was a key policy of our former president, Seamus Phelan, and Thomas Honner has taken it on and had it implemented. As an organisation, we represent young farmers. We focus on the key issues that relate to and benefit young people who are involved in farming. We leave the other issues to the older farm organisations.

Frank O'Mahony may wish to comment on the CAP and a number of general issues.

Mr. Frank O’Mahony

Several members, including Deputies Upton and Wilkinson, referred to the stacking of rights. I should first explain the context. Every acre of land has an entitlement for EU aid attached to it. For many young farmers who were developing their farms during the reference period, that entitlement could be significantly low. We want a situation where a farmer can acquire an additional entitlement and add it to the existing one. This would create a significant entitlement that would be useful to a young farmer. At present, a farmer who has a small or medium sized entitlement must, in order to obtain a larger entitlement, dispose of this and buy another. This is creating a system that benefits the seller rather than the purchaser because there will always be more purchasers than sellers. I hope that clarifies the position.

Deputy Upton also inquired about negligible activity. I refer to my own average sized farm.

I produce 50,000 gallons of milk annually and I deal with three different suppliers in the operation of my farm, including the person milking my cows this evening and Dairygold Ltd. to which I supply milk. It is important there is active farming in vibrant rural communities, of which our members are part. Under decoupling the link between production and premia has been broken but it is important that Ireland continues to produce a significant agricultural output. Deputy Upton referred to food safety and the environment and, as young farmers, they have always been our top priorities. We have always striven to attain the highest standards in environmental and food quality. We will do nothing different under decoupling, as we will still produce food of the highest standards. I am proud of the food I produce.

The worry is farmers farmed for premia in the past and there is a significant risk in future that farmers will hold land only for entitlement and will not farm it significantly. The entire rural economy will, therefore, suffer. The farmer will probably be no worse off but the 63 different suppliers, for example, with whom I deal in my local economy could suffer.

Reference was made to older farmers and the early retirement scheme is an issue. It has gone stale, as it only provides the equivalent of £10,000. The scheme was introduced by the mid-1990s and the funding has been affected by inflation in the meantime. The figure provided under the scheme must be increased, brought in line with and indexed with inflation to maintain the flow of land to young farmers. There is a risk older farmers could hold their land, claim their entitlements and not farm significantly.

On CAP reform generally, I am glad, as a young farmer, a deal is in place. Hopefully, there will be stability but decoupling was part of a mid-term review that has resulted in policy reform from top to bottom. That is a concern because stability is needed. Funding is in place until 2013 and we hope the deal will remain in place until then. One member stated we should be positive about farming; young farmers are positive but there are three worrying aspects to the deal. The first is modulation. Money will be taken out of agriculture but we are not sure where it is going. We would like the money to be invested in young farmers through a mechanism that will benefit them but we do not know what will happen and there is uncertainty in this regard. Second, we are worried there might be another review in two year's time. The third is payments are available to support agriculture but they are not index linked. The signal these issues send is the Commission is not interested in agriculture in the long-term. A strong commitment to agriculture by the Commission is needed so that young farmers can plan ahead and go forward. I am not sure we are getting that currently.

Mr. P. Kelly

I will comment on the questions about the proposed local authority levies and environmental issues. I take on board the point made by Deputies Timmins and Wilkinson on the levy. This is a relatively new issue but it has been brought to the organisation's attention by many of its members in local areas. They are worried about the consequences of the proposed levies, both as people who would like to build houses in the communities in which they were raised and as farmers who are seeking both to diversify through forestry, for example, and to comply with environmental regulations in maintaining intensive or commercial agricultural activity. We will pursue this issue with our members. We will hold local meetings and we will follow those up by making representations to local authorities. This is a major issue for our organisation.

On the environment, the nitrates directive is very much to the forefront of farmers' thinking. There have been significant changes in agriculture over recent years but a number of commercial farmers are making a living out of the more intensive activities such as dairying and tillage farming. It is important to be balanced on the environmental issue and to use common sense and scientific evidence to reach decisions. Irish agriculture is based on grass. Our beef, sheep and dairying enterprises derive from grass-based production systems and there is little tillage activity. Animals are raised in an animal welfare-friendly environment. We must be careful that we do not over implement European regulations. Common sense must be brought to bear in this regard.

Water quality is a key issue but we live in rural areas and we hope to be around much longer than older farmers and to benefit from living in a fabulous environment. It is in our interest that air and water quality and other environment standards are maintained to the highest level. Ultimately, we are trying to run businesses that will generate an income to allow us to live in rural areas. Finance and quality of life issues must be to the forefront of that. We will be involved in the negotiations to implement the nitrates directive.

Deputy Upton referred to derogations under the directives. Environmental regulations will generate bureaucracy. There are many regulations and we must keep many records. If a farmer applies to erect a building, in most local authority areas the planning applications involve a great deal of red tape. One must provide information regarding where one will spread animal manure and maps must be provided. Regulations must be co-ordinated and common sense must prevail so that the industry is not strangled. Young farmers, through decoupling, will have an opportunity to assess their farms on a business basis. They are not fools and they will have entitlements, whether they farm or not. Many people farm because they enjoy the work but they will not do it for little income. They must compete with their peers in a high cost economy and Ireland must compete with many countries outside the European Union following the move at the world trade talks.

It is also important not to export environmental problems. It is better that the EU should be in control of environmental and food production issues rather than passing the buck to other parts of the world. Farming activities should be undertaken while acknowledging environmental issues to allow us all to go forward.

Mr. Seamus Heverin

Deputy Timmins referred to roll-over relief and another member referred to the issue of the division of farms. Roll-over relief would be vital in this case in that it could provide a mechanism under which farms could be restructured if they are split by a roadway or whatever. The Government has argued at different times that the relief has been reduced from 40% to 20% but this benefited in the majority of cases people who left farming and sold large tracts of land for development for significant amounts. However, we are concerned about the use of the relief in terms of land used for agricultural purposes. Even if one could obtain the relief on agricultural land that is replaced by development land, it would not cost the Government a significant amount as compared to what it is supposed to have lost through the reduction from 40% to 20%.

No one knows what will happen regarding the leasing of land, as many of the finer points must be addressed yet in terms of leasing and entitlement, but there will more than likely be massive demand for leasing in 2005 so that farmers can establish entitlements. We hope from then on more land will be available for leasing and a mechanism will be provided such as tax relief for young farmers so that this will happen after 2005.

Mr. Honner

We were asked what is the mood of young farmers. The number of students entering agricultural colleges is always a good barometer of the mood. If the numbers are reducing, as they are, the committee can be assured young people do not see agriculture as an attractive career. The negative attitude to farming, which was also mentioned, is linked to that. However, we do not like to portray a negative attitude to agriculture because every year when the leaving certificate results are announced, our organisation encourages students to take up agriculture as a good career. We are always positive and progressive in terms of people taking up farming and we are always encouraging people to do so. However, we are raising many issues at this meeting to make being a young farmer more attractive. The primary thing that a young farmer needs is access to land. Deputy Wilkinson referred to how older farmers have contributed over the years but we cannot, as young farmers, be emotional about where we are because we need access to land and we will need to upscale in future and to have the opportunity to use land and entitlements to the benefit of ourselves and the country.

Milk quota policy is also important because young farmers also need to be in a position to increase their milk quota. The milk quota increase must reduce to zero rapidly. Farmers will receive an entitlement for the milk they produce up to 2005 and from then on that should be their reward for doing so. Milk quota should cost zero from 1 April 2005 because the person who is getting out of farming will not be producing milk and the costs must be taken away from the producer, otherwise he will receive a lower price while bearing significant costs. The difference between both is his income and he will be caught.

Mr. O’Mahony

Significantly, from 1 April 2005 onwards, people who hold a quota will receive a premium entitlement regardless of whether they produce milk. They will receive compensation for producing milk without having to produce it. It is totally unacceptable that a young farmer who wishes to access a quota will have to pay again. Quota holders should not be paid twice. I am a young farmer in Cork and all young farmers, regardless of the size of their farms, or where they are located, need to expand their businesses. If one wants a vibrant agricultural business, one must be able to expand one's business and access to a milk quota is a significant element. A farmer who leaves the industry will receive compensation for his milk quota. It should have a zero value band and should be distributed accordingly.

Deputy Timmins

I refer to the development plans issue. Many young farmers are members of local authorities. A number of development plans contain mechanisms for farmers. Macra na Feirme is pushing the concept of full-time farming and I admire that but in the case of part-time farmers there should be policies in the development plans to allow farmers to diversify, particularly in light of modulation. The Minister stated the funds for modulation will remain under the control of the Department but how they are disbursed must be teased out.

I attended one of the meetings on the restructuring of dairying. One guy made the case that farmers who wished to get out of dairying should be allowed to sell their quota on the open market and he received a round of applause, which indicated that many farmers want to get out. Macra's full-time staff do an excellent job and they are under pressure. How is the organisation funded? Is it primarily through membership fees? I thank the representatives for their presentation.

Mr. Honner

Primarily our members and the Department of Education and Science fund us because education is essential to our members. Full-time farming is a reality, not a concept. We recognise, in certain scenarios, farmers must acquire alternative incomes but farming is a career and a business and, if it is not identified as such, we will lose the point of what it is. Nobody in another profession is being asked to work part-time and we will not do so.

We are very much in favour of diversification but we must never take our eyes off the ball, which is the tried and trusted produce we have always produced. Diversification is always welcome but any company that diversified at the expense of its core business did not last long and we will not. We must identify the tried and trusted agricultural products we have always produced.

Mr. P. Kelly

Deputy Timmins referred to older farmers applauding the proposal to trade on the open market. We are a young farmers' organisation and we are keen that our members will be in the business for the next 20 to 30 years and that there will be a viable industry, which can compete with the best in the world because we produce the best quality foodstuffs in the world. We want to compete with other countries on a level playing field. Ireland must be careful not to make the mistakes of other European countries that operated free trade systems under which young farmers took on significant debt to buy quota. Older farmers established farms and looked after the land for previous generations but their quotas are a quirk of the European system. It did not cost them to establish their quotas but they are seeking money from an asset that cost them nothing. Young farmers need that asset to go forward and run viable businesses. Both sides cannot emerge totally happy because if older farmers emerge totally happy, it means young farmers will have major debts and will find it more difficult to survive in an increasingly competitive world. A carrot and stick approach to the issue is probably needed. Our policy dictates there should be a zero value on quota after decoupling because older farmers will still receive a decoupled payment, whether they remain in milk production. We are unashamedly in favour of the person who is active and taking the business forward. That is an important source of revenue for many businesses in rural areas. The Government has mentioned decentralising our economic activity but farming takes place in every townland on the island in some form or another and that is the ultimate form of decentralised economic activity. That must be at the core of rural development. It is important that a millstone is not put around the necks of young farmers as they go forward. One has only to look to Denmark and Holland to see the consequences paying too much for milk quota.

Deputy Stanton

How much discussion has the organisation had on the issue of stacking? How will the stacking proposal work in terms of the provision of entitlements? How will people be selected? What criteria will be used? What will be the limit in each case? It is an interesting proposal but has the organisation explored it?

Mr. J. Kelly

Our agricultural affairs committee has given the proposal some thought. Stacking would mean a farmer could achieve more viability and it is to be hoped he would get his entitlements regardless. The only way to draw them down through the national reserve is to acquire more land. The Government will give him certain entitlements but he will have to source extra land to draw them down. There needs to be a mechanism to facilitate farmers who are expanding. The Department will lay down the rules and criteria through a group similar to the milk quota review group, the suckler cow review group or the sheep quota review group. A benchmark will be established and each farmer will be treated on a case-by-case basis. All farmers will not be entitled to avail of stacking. It will be up to the Minister and the Department to establish a limit. We could come up with a favourable limit but delivering it would be another issue.

Mr. Honner

I refer to the five-year rule for on-farm investment. Provision remains for young farmers to avail of a top-up on a grant of 15% in disadvantaged areas and 5% in all other areas. However, that must be done within five years of taking up farming. Within the five years, no farmer will invest in infrastructure as he will invest in stock and in the land. Roadways and fencing, for example, are built before one begins to avail of on-farm investment and, therefore, almost every young farmer is eliminated from availing of the top-up. If a clause were to be inserted to prevent young farmers from availing of a scheme, the five-year rule is it.

Deputy Crawford

The Minister for Agriculture and Food stated during Question Time last week, in reply to Deputy Timmins, that only 35,000 farmers were involved in the REPS. He could not understand why and he wished that double the number would be involved. Why is there such a low take up of REPS, given that it provides a significant income boost to those who participate in the scheme?

Mr. P. Kelly

The REPS is undergoing change and many farmers have been in the scheme for a number of years. They are concerned about the consequences of the changes. Hopefully, the scheme will be more attractive but many farmers have held back until there is clarity about where the scheme is going. Over recent years as the mid-term review of Agenda 2000 approached, there was uncertainty and farmers were not inclined to change their systems. However, now that they know where they are going, there will be an opportunity for farmers to examine the various measures available. Intensive farmers are excluded from the scheme but with the move to decoupling and extensive farming there may be an opportunity for farmers to be rewarded under REPS for the environmental compliance measures they must undertake. That uncertainty was one of the key factors in farmers not becoming involved in REPS over recent years. There is a review under way and many of our questions will be answered.

Mr. J. Kelly

Mr. Patrick Kelly correctly stated that REPS is under review and under the Sustaining Progress deal eligibility has been increased to a maximum of 55 hectares. This is the first increase in payments since the scheme was introduced. We attended a REPS conference two weeks ago and the issue has been reproved in the farming media over recent weeks. Mention has been made of new accompanying measures with which farmers must comply. It is important that such measures will not erode the increase the farmer will receive. The compliance measures are stringent and every farmer adheres to them. If he does not, he will not be paid. It is important that our political masters realise this is the first increase since the scheme's inception and everybody should not put their hands in the pie.

Mr. Honner

May we ask a few questions?

Chairman

It is usually the other way round. We might not have the answer.

Mr. O’Mahony

As young farmers, we like to plan ahead to see where we are going and we know where we stand with the Government currently. Where do Deputies Timmins and Upton see agriculture going? What measures would they introduce in the short-term to improve the lot of young farmers.

Deputy Timmins

I could give a similar reply to Mr. Kelly on the meat and bonemeal question. We opposed the Fischler proposals on the basis that people have bought into a deal. The Common Agricultural Policy evolved as a result of food scarcity following the Second World War. We have moved on from that and that same emphasis is no more. The Commission's approach will be to minimise payments to Ireland because it has received money and done well over the years. Decoupling is the beginning of the break up of the CAP. When modulation and inflation are taken into account, what looks like a good entitlement today might not necessarily be so good in three or four years. It will be much easier to cease subsidies in 2013. Many European taxpayers will ask why they should pay for European food if food can be imported.

Most of those present are rural-based and place a strong emphasis on the concept of a rural community. However, Ireland has had a twofold approach to agriculture. Farm output and economic efficiency have been maximised on one hand while, on the other, the number of farm households has been maximised. In many respects those are diametrically opposed approaches. Irrespective of which parties are in Government, it is not possible to follow either approach fully because if the number of farm households is maximised, they will suffer economically and if economic efficiency is maximised, the number of farm households will decline dramatically. The State is always trying to achieve a balance.

We all spend our time talking about opening up high quality markets. Many statements were issued recently regarding our exports to Europe but our beef industry was saved by the outbreak of foot and mouth disease in England. Once the UK gets its house in order, Ireland will be under severe pressure because 200,000 extra tonnes have been exported to the UK annually for the past number of years. I do not oppose on-farm investment and it involves many cross-compliance measures, but how effective it is in terms of an economic return. Bord Bia, the sales wing of the Department, has one staff member in the US, which has a population of 400 million. That is crazy. There should be an emphasis on opening markets and that is the Government's role. It is then up to farmers to produce for those markets. I hope before the next general election, if I am agriculture spokesperson, Fine Gael will have a policy, though I do not know how sharp it will be. I have examined many agricultural policies as I am sure has Macra na Feirme and it is hard to distinguish significant differences because many were aspirational with statements such as, "we will aspire to cut back on bureaucracy and red tape; we will be anti decoupling and we will try to cut back on cross-compliance measures and so on."

It is like the Triple Crown - it is difficult to see anything tangible. One cannot say if the Green Party is in Government cows will have nappies. I probably have not given the answer required but I have tried to do so.

Deputy Upton

I disagree with one of the comments on the future of farming and the fact that it is seen as a stand alone career, which is a desirable aspiration. The practicalities, however, are different. I believe two things will happen in the future, that is, big will get bigger, and if one goes down that road, small will get smaller and disappear. Therefore, it is very important to make a serious effort to ensure there is off-farm employment and alternatives available for those people who cannot sustain a small farm and make a decent living from it. Much more money must go into this area in terms of investment, promotion and seeking alternatives. Deputy Timmins spoke about rural Deputies. I represent a Dublin constituency but I am from rural Ireland. I come from west Clare and I know about small farming and the difficulties small farmers face. I also recognise that there is an air of reality in recognising that many small farms are scarcely viable, therefore, they must look for alternative employment off-farm. It is probably too narrowly focused not to give considerable thought to what the future might bring in that area and the risks associated with it.

We must invest much more in research and development. My party and I supported the Fischler proposals from the beginning. There is a need for greater diversification into new product development. This is not the responsibility of farmers per se. It is the responsibility of co-operatives and the Government to promote the idea. I support Fischler to a great extent because one cannot just go on producing product without having a market for it, and this is what was happening. There was intervention, which meant we had a product no one wanted or needed. In order to add value to our product and have best quality product, we need to invest considerably more in research and development and in the production of new products to meet consumer demands here and in Europe, and also in the wider marketplace.

Deputy Timmins

The MacSharry proposals did no favours to agriculture. In the 1980s, the value of agriculture increased by approximately 2.5%. In the 1990s, it increased by 0.5% or 0.6% at a time when the national economy was doubling. It kept people in the industry. In the 1980s, the average age of farmers was dropping and the industry was more vibrant. In the 1990s, the structure of a premium payment placed no emphasis on quality and agriculture was held back during that period. The plus side of decoupling is that it is hoped it will assist in the restructuring of the industry. The people who want to leave farming should be let go so that those who want to farm can use the asset of the land. The role of any politician or Minister for Agriculture and Food should be to encourage on to the land people who will maximise the output from the asset.

Deputy Sargent

I apologise that I was interrupted by the Taoiseach's Question Time. I was keen to get an opportunity to respond to the President of Macra na Feirme and thank him for his presentation. I am sorry I was not here for everyone else's presentation.

The Opposition's position is straightforward enough in regard to demands for increased payments, indexation of the retirement scheme and so on. We will argue as strongly as possible on these issues but we need to be able to build an understanding of where farming is going and be able to work with that vision. This involves more than a little bit more money here and a little more there; it must look at the writing on the wall. I wonder whether there is a preparedness within Macra na Feirme to look at, for example, issues I have raised with each local authority in the country. This is the continuing monopolisation of meat factories and the closure of abattoirs, and putting more and more power into fewer and fewer hands to determine price. There must be an effort to try to reverse this trend and to have good quality local abattoirs. I am not referring to abattoirs that had no choice but to close down because they were in bad condition. I am referring to the need to try to counteract what appears to be a runaway trend, that is, disempowering farmers, disempowering consumers and leaving the large dominant players in the market with effectively all the power.

I travel throughout the country and wherever I can find farmers' markets, either in Kilkenny, Cork or Louth, I make a point of visiting them, asking farmers how things are going, what they need to see happen, how it can be improved and how they see their future in the context of local direct sales, for example. This is very important to provide a counter-balance to the dominance of monopolies, whether factories or multiple retailers. It is very important to get the message across that they are not the only show in town, even though they may be the biggest show in town. I can talk from experience in that regard as a representative of farmers and growers in north County Dublin.

Having visited Mellows College recently, I should like to ask what are the restrictions on farmers becoming involved in REPS? Numerous farmers are involved but I have been told that many more cannot get involved. I am aware that cost factors and margins must be looked at but it is important to get the views of Macra na Feirme. On agricultural colleges, Mellows College has finished with training and is just dealing with research. It appears there is a lax hanging over a number of agricultural colleges. The fall off in intake was referred to. Would Macra na Feirme like us to take a particular focus on that campaign. It appears that a certain amount of consolidation is taking place. Mountbellew Agricultural College appears to deal with all the training and Mellows College appears to deal with all the research, for example, in east Galway.

I agree with Deputy Upton that farms will get bigger but I would say the bigger one becomes the more vulnerable one will become. Specialisation tends to depend on a larger market over which one has less control but on which one very much depends. While I accept this is the pattern, I wonder whether there are moves afoot to build up alliances that would provide a level of safety net or plan B in line with building alliances with consumers, other rural neighbours who may not be involved in farming, but who should be on board in terms of arguing the case, and building alliances with those who are unaware of farming to the point that no matter what they have to pay for, whether a bit of meat or a vegetable, they believe it is too expensive. These people do not appreciate the cost involved in the production, and Agri Aware has done a good job in this regard. It is vital to broaden the support base to the greatest extent possible. In terms of diversification, in places like Monaghan building material is becoming a crop, and likewise in relation to energy crops which is another alternative enterprise. Meitheal na Gaoithe is developing wind energy on farms and we recently met them at the ploughing championships.

There are diversification opportunities and I hope we can get guidance on what aspects to consider. There is the aspect of added value produce, that is, taking the primary crop and giving it extra value. This was pointed out to me in Mellows College in regard to ham. It takes three years to cure a bit of ham in areas of France. They wondered whether we would have the patience here to stand over some of the processes which are important and treasured parts of the food heritage in that country. These are areas of diversification which, with decoupling, are not just options, but are absolutely essential to examine and check out in detail. Can we discuss these aspects as much as the additional payments which are required?

Mr. Heverin

In response to Deputy Timmins, we as young farmers are looking to the future. We are not talking about until 2012. We are talking about our livelihoods, business and so on for probably the next 20, 30 or 40 years. The majority of us had to put our farms on hold for the past year while the EU and everyone else made up their minds as to what they want to do for the next few years. One of the major problems is the possibility that all this will change in four years' time. One of the problems is that we do not know what the EU or the Government wants. Someone said people cannot have larger farms and keep all the households, yet consumers want to have cheaper quality food. We have dedicated ourselves to quality food products. It is like breeding a top thoroughbred racehorse. We have the top thoroughbred racehorse in terms of our food but, when it comes to the race, we have a 20 pound handicap. Food is being imported from Brazil and there are no questions asked about quality, additives and so on. There is no such thing as a level playing field.

What is the Government's policy on GM foods? We can only operate within what we currently know. Many of the policies we are drawing up are based on the information we have. We would like to be able to say what we want over the next 30 years. First, we would probably need a lot more resources in order to be able to carry out more research and, second, we would need to be given some guidelines as to what Government and EU policy is.

Markets and diversification were mentioned. As Mr. O'Mahony said, our core business is farming and the core business of the majority of farmers is milk and meat production. Many of us would consider short rotation crops for energy, wind energy and so on. I compliment Deputy Upton on her comment on R&D. Much more money must be spent in this area in the long-term. We know what our long-term view is. We have no problem producing quality food, but we need to be given some guarantee that if we produce the best quality food tomorrow, someone will not come with another cheaper product and be told they can sell it here, as is currently the case with Brazilian beef. Another example is the milk war issue. No one argues that we must produce quality food but the farmers are the people who are made to suffer. Supermarkets do not have to take a cut, consumers are getting the benefit but farmers are made to suffer. We have no protection in the long-term. We are not given stability or guarantees and the playing field is changing each day.

Mr. P. Kelly

In reply to Deputy Sargent on the REPS scheme, unfortunately, he was not here when we had a brief discussion on the issue. To reiterate some of the points made, there has been a great deal of uncertainty in the agricultural field over recent years given the changes that are taking place. Now that a decision has been made on decoupling, there is clarity on where we are going in the medium term. There is an argument that the biggest beneficiary of decoupling will be the environment because there will be an inevitable move to more extensive type agriculture.

The key factor for farmers entering REPS is the financial package. Whether we like it or not, we can all be aspirational about our business, living in the countryside and having farms and a good lifestyle, but the first factor is having enough money to be able to pay the bills like everyone else in the country who must work for a living. Many people in the cities would look towards living in a beautiful environment but there is a lot of cost involved in this, and therefore finance must come first. It is not very Utopian, but money is the number one issue. There was a lot of uncertainty with the old REPS plan and the whole process is under review. I can foresee a scenario where the environment becomes a key element in the future with decoupling. Many people will be looking at alternative ways of adding value to quality produce and at diversifying.

The key issue is that one must have a core income. Mr. Heverin rightly identified that if the majority of farms, whether beef farms or dairy farms, fail as economic entities, the majority of farmers will be looking at off-farm income. There are statistics to prove that either their spouses work off the farm or the farmers work part-time. As there is a lot of construction work taking place many farmers find it very difficult to get people to work for them. Very often the young fellow who lives in the house next door works for a building contractor. While it is a good thing to live in such an environment, it presents many challenges for farmers and people living and working in rural areas. This comes back to a lifestyle issue of labour and management. These are challenges young farmers are not afraid to take on and deal with. They are realists and if they must go off-farm to get a substantial source of income, and perhaps run the farm in a more environmentally friendly manner, they will do so.

I am a dairy farmer who became involved because I really enjoy milking cows. I want to do this as much as I can. If this means having 300 cows down the line, that is the way I want to go. Being a realist, if limitations are placed on me and if that means considering off-farm income, so be it. Almost everyone involved in the business fundamentally enjoys the core work of farming.

On diversification, working for a contractor or working in a different environment may be a better option than looking to diversification. Many people have diversified but the environment needs to be there to encourage diversification. The price of oil is a key factor in regard to energy crops and there are arguments about what works and what does not work.

Deputy Sargent referred to abattoirs. Many farmhouse food producers talk about the level of regulation imposed on them by the health authorities and the Food Safety Authority. We are all in favour of quality produce and safety, but one must almost do a full analysis like a major food producing unit processing 100,000 cattle per year in order to kill ten or 15 cattle and add value to the produce. Sometimes the arms of the State almost come down on diversification and kill it at source. These are the issue legislators must bear in mind.

Mr. Brady

Deputy Upton referred to defending part-time farming. We all acknowledge the inevitability of more part-time farming. We are all for sustaining rural communities and it is great there are jobs in rural areas. However, if there is not a core of full-time farmers, if one takes one's eye off the ball, agriculture will suffer in the long-term.

Deputy Upton

What I am doing is addressing a reality. It would be ideal if full-time farmers could be just that. However, whether we like it or not, the reality of part-time farming needs to be addressed. My first comment was that big will get bigger. These farms will be sustainable and sustained. They will have the best facilities, which is the nature of economy of scale and so on. I want to see a vibrant rural Ireland and a clean and vibrant environment, including all the things that Irish people want to be able to sell and market abroad. For people to be able to stay on the land and sustain any kind of life in a rural environment, there will have to be a reality check in regard to off-farm employment.

Mr. Brady

In Cavan where I come from, dairy farming is very important. One of the problems is that farms are smaller than in other parts of the country. Policies should be put in place to encourage part-time farmers to release land to young farmers who want to build up a viable commercial entity. It is inevitable that part-time farming is the way forward. If we accept this, however, it could result in taking our eye off the ball and not encouraging as many full-time farmers as possible.

Mr. Honner

I thank the Chairman and members of the committee for allowing us to make a presentation. We are serious about our role as young farmers into the future. We take our career extremely seriously and we want our communities, the country and ourselves to benefit from our business. We believe the issues we raised today are essential in that process. Mr. Brady covered the roll-over relief and the tax incentive for land leasing. This is one of our priorities for a specific reason. We also covered mechanical grading. Mr. Patrick Kelly referred to the environmental issues that are extremely important. We referred to on-farm investment schemes and highlighted the five year rule and its importance in setting up a farm. It is very important to work in a clean environment and pass it on. People must be aware that we rely on working with the environment in order to produce a crop or an animal. It should be recognised that we are the custodians of the environment. As young people, we take that role very seriously.

The installation aid scheme and the decoupling issues are extremely important going forward. We referred to CAP and decoupling and how it will affect us, particularly in the initial years. I should once again highlight the importance of the national reserve to young farmers. That concludes our presentation.

Chairman

Is it agreed that we will send the contents of the submission to the Ministers for Agriculture and Food, Finance and Environment, Heritage and Local Government? I wish to thank Mr. Honner and his colleagues from Macra na Feirme for attending here and responding to a variety of questions from members. It was a very constructive meeting and I wish the representatives well in the future. They will be more than welcome back to the committee at any stage. There has been great co-operation with Mr. James Kelly and members of the committee on the numerous occasions they requested information. I hope this will continue. Once again, I wish the representatives the best of luck.

Sitting suspended at 3.54 p.m. and resumed at 3.56 p.m.